Data Remains Mixed
Opinion: The indexes closed mixed yesterday with positive internals on the NYSE while NASDAQ internals saw negative breadth but positive up/down volumes. Trading volume dipped on the NYSE and was flat on the NASDAQ. All of the current short term trends continue to be a mix of neutral to modest up trends for the indexes. The data remains mixed as the psychology element is still troubling, in our opinion. As such, there is no sufficient shift in the weight of the evidence to alter our near term “neutral” outlook for the major equity indexes while historically high forward valuation of the SPX keeps the intermediate term view “neutral” as well.
· The indexes closed mixed yesterday with the DJI (page 3) and RTY (page 4) closing lower on the session. The RTY remains below its 50 DMA. The rest saw modest advances with the COMPQX (page 3) making another new closing high. There were no alterations in the current sideways trends for the DJT, MID (page 4), RTY and VALUA (page 5) with the SPX (page 2), DJI and COMPQX in modest near term uptrends. We would reiterate our comment yesterday regarding the % of SPX stocks trading above their 50 DMAs staying in a short term downtrend, implying a weakening of breadth within that index that may prove problematic. However, until violations of support occur, current trends should be respected.
· The data is also mixed. All of the McClellan OB/OS Oscillators remain neutral (All Exchange:-16.03/+16.08 NYSE:-3.13/+44.8 NASDAQ:-27.25/-1.36) as well as the Equity Put/Call Ratio at 0.69. However, the OEX Put/Call Ratio (smart money) still finds the pros betting heavily on expectations of near term weakness at 1.99 while the Gambill Insider Buy/Sell Ratio continues its warning signal at 7.5 as insiders continue to take advantage of recent market strength as a selling opportunity.
· So, in conclusion, the message of the charts and data remains “neutral” in nature, as has been the case for almost the past two months. The historically high forward valuation of the SPX at a 17.4 multiple keeps the intermediate outlook also “neutral”.
· Forward 12 month earnings estimates for the SPX from IBES of $132.10 leave a 5.75 forward earnings yield on a 17.4 forward multiple, near a 12 year high.
SPX: 2,253/2,298
DJI: 19,832/20,097
COMPQX; 5,576/NA
DJT: 9,000/9,325
MID: 1,659/1,710
RTY: 1,356/1,357
VALUA: 5,290/5,393