Data Remains Largely Neutral
Opinion: All of the indexes closed higher yesterday with positive internals as volumes rose from the prior session on both exchanges. All closed at or near their highs of the day. Multiple improvements were registered on the charts including violations of resistance, downtrend lines and moving averages. Yet in spite of the sizable gains, the vast majority of the data remains neutral. As such, our near term outlook remains “neutral/positive”, with more strength likely, while the intermediate term has turned “neutral/positive” as well, due to improvement in market breadth.
- On the charts, all of the indexes closed higher with positive internals resulting in several positive technical events occurring.
- The SPX (page 2) closed above both its short and long term downtrend lines as well as its 50 DMA. It remains below resistance.
- The COMPQX (page 3) closed above resistance, its intermediate term downtrend line and its 50 & 200 DMAs.
- The DJT (page 3) closed above resistance and its short term downtrend line.
- The MID (page 4) closed above resistance and its short term downtrend line.
- The RUT (page 4) closed above resistance, its long term downtrend line and both its 50 & 200 DMAs.
- The VALUA (page 5) closed above resistance and its 50 DMA.
- We would also note the advance/decline lines for the NYSE and NASDAQ closed above their short term downtrend lines and 50 DMAs displaying broader participation within the bullish action.
- The data, however, saw little change from its prior neutral implications. All of the McClellan OB/OS Oscillators remain neutral (All Exchange:+11.01/-0.12 NYSE:-4.41/-21.84 NASDAQ:+32.72/-23.61). The Equity Put/Call Ratio and OEX Put/Call Ratio remain neutral at 0.6 and 1.07 respectively along with the WST Ratio and its Composite at 55.5 and 136.1. The Gambill Insider Buy/Sell Ratio remains a bullish 28.5 as insiders continue to add to their holdings. Thus the data is displaying no hindrance to further market strength at this point.
- In conclusion, both the charts and data are suggesting some further strength over the near term while the improvement in breadth has turned our intermediate term outlook to “neutral/positive” from “neutral”.
- Forward 12 month earnings estimates for the SPX from IBES of $124.52 leave a 6.0% forward earnings yield on a 16.7 forward multiple.
SPX: 2,039/2,083
DJI: 17,527/17,761
COMPQX; 4,771/4,876
DJT: 7,476/7,823
MID: 1,439/1,483
RUT: 1,103/1,146
VALUA: 4,447/4,627