Data mixed
Opinion: The indexes closed mixed yesterday with mixed internals on the NYSE while NASDAQ internals were positive. Volumes dipped on the NYSE from the prior session as NASDAQ volumes rose. The indexes closed well off of their early session lows with some closing above resistance levels. Cumulative breadth improved as well. The data is a mixed bag, giving no clear forward projections. As such, we believe there has been enough improvement on several of the charts to warrant a shift from “neutral” back to “neutral/positive” in our near term outlook for the major equity indexes.
- On the charts, the indexes closed mixed yesterday with the COMPQX (page 3), NDX (page 3), MID (page 4) and RTY (page 5) closing higher on the day as the rest saw minor losses. Importantly, all closed well above their early session lows with the DJI (page 2) having a successful teste of support as speculated in yesterday’s comments. As well, the COMPQX, NDX, and MID closed above resistance with the RTY closing on resistance. We are now of the opinion that those index charts have turned near term positive from neutral. The MID also closed above its 50 DMA. The cumulative advance/decline lines for the All Exchange, NYSE and NASDAQ have improved as well as all are now positive and above their 50 DMAs.
- The data is mixed. All of the McClellan OB/OS Oscillators are now in overbought territory to varying degrees (All Exchange:+56.08/+56.88 NYSE:+50.26/+60.69 NASDAQ:+66.18/+59.86). However, the OEX and Total Put/Call Ratios are both bullish at 0.95 and 1.05 respectively with the Equity P/C a neutral 0.58. The OpenInsider Buy/Sell Ratio remains neutral at 32.2.
- In conclusion, although the OB/OS levels are less than ideal, we are of the opinion that enough improvement has been seen on the charts and breadth to warrant a shift to “neutral/positive” from “neutral” in our near term outlook for the major equity indexes.
- Forward 12 month earnings estimates for the SPX from Bloomberg are $157.99 leaving a 5.8% forward earnings yield on a 17.3 forward multiple.
SPX: 2,695/2,746
DJI: 24,544/25,297
COMPQX; 7,011/7,439
NDX: 6,668/6,987
DJT: 10,308/10,601
MID: 1,878/1,949
RTY: 1,510/1,574
VALUA: 5,930/6,155