Data Mostly Neutral
Opinion: The indexes closed mixed Wednesday with mixed internals on the NYSE on lighter volume while the NASDAQ saw positive internals on higher volume. One of the indexes closed below its short term uptrend line and has now turned neutral while the rest saw no technical events of import being registered. The data is a bit mixed but generally neutral in its message. As boring as it may seem, the weight of the evidence continues to suggest we maintain our near term “neutral/positive” outlook for the major equity indexes for now.
- On the charts, the indexes closed mixed yesterday with positive breadth but negative up/down volume on the NYSE while the NASDAQ internals were positive on higher volume. The DJT (page 4) and VALUA (page 5) closed lower on the day as the rest made minor advances. The DJT closed below its short term uptrend line, turning its trend to neutral from positive while also flashing a bearish stochastic crossover signal. The COMPQX (page 3) closed at resistance but failed to violate. So we now find the NDX (page 3), RTY (page 5) and VALUA (page 5) still in short term uptrends with all the others neutral. The cumulative advance/decline lines for the All Exchange, NYSE and NASDAQ remain positive and above their 50 DMAs while half of the indexes have recently given bearish crossover signals with the balance remaining overbought.
- The data is a mixed bag. The McClellan OB/OS Oscillators are mostly neutral with the exceptions of the 21 day All Exchange and NYSE now mildly overbought (All Exchange:+24.41/+50.6 NYSE+20.51/+56.08 NASDAQ:+29.86/+48.36). The Equity Put/Call Ratio (0.65) and OpenInsider Buy/Sell Ratio (37.6) are both neutral with the Total P/C (0.99) and OEX P/C (0.53) bullish. Valuation finds the forward 12 month P/E for the SPX based on forward 12 month consensus earnings estimates from Bloomberg of $163.25 at a 16.7 multiple versus the “rule of 20” implied fair value of 17.0.
- In conclusion, we have yet to see enough of a shift in the weight of the evidence that would cause us to alter our current “neutral/positive” outlook for the major equity indexes.
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SPX: 2,671/2,741
DJI: 24,357/25,017
COMPQX; 7,140/7,415
NDX: 6,769/7,017
DJT: 10,549/10,995
MID: 1,917/1,979
RTY: 1,582/NA
VALUA: 6,124/6,288