OEX Put/Call Ratio Flips Bullish
Opinion: The indexes closed mixed Friday with negative internals on the NYSE and positive internals on the NASDAQ. Most indexes saw little change in price as all closed at or near their intraday highs. No important chart signals were generated. The data is sending mixed signals while most of the charts remain confined within their current sideways patterns. Yet when we take all of the information into account, we suspect the indexes may have a bit more upside remaining to be achieved over the near term while advance/decline lines still keep us cautious for the intermediate term outlook.
- On the charts, the indexes did take a pause Friday, as suspected, as most closed very close to the prior session closes. Internals were negative on the NYSE and positive on the NASDAQ. All closed at or near their intraday highs. Some important resistance levels remain to be challenged and may see attempts at being breached today given the state of the futures this morning. The only point of interest to be noted is all of the indexes are overbought on their stochastic levels with the exceptions of the COMPQX (page 3) and RUT (page 4). Yet we would emphasize that said stochastics can remain overbought for extended periods and would only become “actionable” should bearish crossover signals be generated,
- The data remains mixed with all of the 1 day McClellan OB/OS Oscillators overbought (All Exchange:+71.3 NYSE:+76.78 NASDAQ:+69.74). However, those cautious signals are being counterbalanced by the Total and Equity Put/Call Ratios (contrary indicators) that show the crowd very nervous and long puts at 1.06 and .87 while insiders remain active buyers of their stock according to a very bullish Gambill Insider Buy/Sell Ratio of 57.7. Of particular interest this morning is the reversal in the OEX Put/Call Ratio (smart money) that has flipped from a bearish reading Friday morning to a very bullish 0.46 as the pros are now heavy in calls and expecting strength. As such, we find the data tilting now to a more positive short term projection.
- In conclusion, with multiple mixed signals coming from the charts and data, we see the scales tilting slightly more positive from Friday’s call for a rest. However, advance/decline liens have yet to recover to the point that would shift us from our current cautious view for the more intermediate term.
- Forward 12 month earnings estimates for the SPX from IBES is $123.27 leaving a 6.43% forward earnings yield with a 15.6 forward multiple.
SPX: 1,874/1,937
DJI: 15,893/16,483
COMPQX; 4,280/4,547
DJT: 6,790/7,022
MID: 1,262/1,317
RUT: 958/1,021
VALUA: 3,830/4,074