Data Largely Positive
Opinion: All of the indexes closed lower yesterday and at or near their intraday lows, essentially giving up all of Friday’s gains. Internals were broadly negative. However, volumes did decline versus the prior up session. While the performance was disappointing, no technical support levels were violated although some important sectors were notably weak. The data has turned largely supportive suggesting, in our opinion, that the markets are searching for a near term bottom with the potential for testing their respective resistance levels. We remain cautious for the more intermediate term.
On the charts, weak internals resulted in all of the indexes closing down and giving back all of last Friday’s gains. Yet no support levels were violated or tested. While the action was poor, volumes did decline versus the prior up session, offering a sliver of hope in a difficult environment.
- The data has shifted back to largely positive short term signals as both of the NYSE McClellan OB/OS Oscillators are oversold (-53.7/-94.51). While the NASDAQ and VALUA 1 day levels are neutral (-33.3/-42.5), their 21 day readings are oversold (105.41/-97.52) and still imply some near term bounce potential. The OEX Put/Call Ratio (smart money) is in agreement as the pros are very long calls at 0.49. The WST Ratio and its Composite are neutral at 61.1 and 145.9. As such, the data is offering some short term encouragement.
- We would note however, some troubling sector action that adds to our intermediate our concerns regarding term outlook. For a while, and particularly yesterday, the banks and other financial issues traded very poorly that is always worthy of observation. As well, the paper related stocks took a bath casting shadows over what is being purported to be a strengthening economy.
- In conclusion, we remain neutral/positive as we suspect both the charts and data are suggesting a possible test of resistance levels while the intermediate remains a concern for multiple factors including continued poor market breadth, poor DJT action and less than impressive revenue growth to name a few.
- Forward 12 month earnings estimates for the SPX from IBES are at $125.33 with a 6.57 earnings yield and a 15.2 forward multiple.
SPX: 1,822/1921
DJI: 15,383/16,340
COMPQX; 4,418/4,644
DJT: 6,580/7,022
MID: 1,230/1,315
RUT: 982/1,052
VALUA: 3,803/4,070