SPX Forward Earnings Estimates Rise
Opinion: All of the indexes closed lower yesterday with negative internals on the NYSE and NASDAQ. Volumes were modest with all closing at or near their intraday lows. Nonetheless, no important technical signals were generated on the charts by our work The data is now almost completely neutral while the forward 12 month earnings estimates for the SPX from IBES have lifted. As such, we remain near term “neutral/positive” for the indexes while valuation, in spite of some slight moderation, remains near its decade highs, keeping our intermediate term outlook “neutral”.
On the charts, all of the indexes closed lower yesterday with negative internals on modest volumes. While all closed near their intraday lows, no technical signals of import were registered on the charts, in our opinion. The SPX (page 2) did close below its short term uptrend line but remains above near term support. As such, the bulk of the charts have a neutral/positive tone at present.
The data is now almost entirely neutral, including all of the McClellan OB/OS Oscillators (All Exchange:-19.82/+25.64 NYSE:-21.36/+38.51 NASDAQ:-19.68/+13.75). The WST Ratio and its Composite are neutral at 58.9 and 135.3 along with the Equity Put/Call Ratio at .62 and OEX Put/Call Ratio (smart money) at 1.28. The Gambill Insider Buy/Sell Ratio has moderated further as well to a neutral 12.7 as insiders have mildly increased their buying.
What may be of greater import at this point is IBES raising its forward 12 month earnings estimates for the SPX from $126.36 to $127.38. While that does take a little pressure off of the forward p/e for the SPX down to 17.1X, valuation does remain extended, in our opinion.
In conclusion, nothing occurred yesterday on the charts or data to alter our near term outlook from “neutral/positive”. Valuation does keep our intermediate term view “neutral”.
Forward 12 month earnings estimates for the SPX from IBES of $127.38 leave a 5.86% forward earnings yield on a 17.1 forward multiple.
SPX: 2,160/NA
DJI: 18,374/18,582
COMPQX: 5,108/NA
DJT: 7,540/7,861
MID: 1,534/NA
RUT: 1,199/1,244
VALUA: 4,811/4,939