Data Remains Mixed
Opinion: The indexes closed mixed Friday with negative internals on the NYSE and positive internals on the NASDAQ. Volumes rose on the NYSE and declined on the NASDAQ. A few positive events occurred on the charts while the data remains a combination of conflicting signals. As such, the combination of the data and charts in context of recent gains leaves our short term outlook for the major equity indexes at “neutral” while extended forward valuation of the SPX keeps the intermediate term view “neutral” as well.
· On the charts, the indexes closed mixed with negative internals and higher volumes on the NYSE while the NASDAQ internals were positive but volumes declined. Closing prices came at varying points within the respective intraday ranges. As such, it was a mixed session with the DJT (page 3), MID (page 4) and RTY (page 4) closing higher while the rest declined. Positive events were seen with the DJT closing above resistance while the MID and RTY made new closing highs. No important sell signals were generated as the trends and supports remain intact.
· However, the data remains a combination of mixed signals. The All Exchange and NASDAQ 1 day McClellan OB/OS Oscillators remain in overbought territory at +54.67 and +80.72 while the rest are neutral. The Gambill Insider Buy/Sell Ratio continues to see slippage as it dipped further into neutral territory at 14.5 from its prior bullish signals. Its message is insiders continue to back away from the buying table now that prices have risen notably over the past several sessions. Yet the pros measured by the OEX Put/Call Ratio (smart money) now are now very heavily weighted in calls at 0.42 as they expect strength to continue over the near term. So, in our opinion, the data is too conflicted at this point to suggest a strong directional implication for the indexes over the near term.
· In conclusion, given the charts and data discussed, our net takeaway is a “neutral” near term outlook for the indexes that may take the form of some consolidation or slowing of momentum. The SPX valuation back near historic highs keeps the intermediate term view at “neutral” as well.
· Forward 12 month earnings estimates for the SPX from IBES of $129.76 leave a 5.95 forward earnings yield on a 16.8 forward multiple.
SPX: 2,150/2,187
DJI: 18,603/NA
COMPQX; 5,190/5,339
DJT: 8,115/8,908
MID: 1,540/NA
RTY: 1,250/NA
VALUA: 4,962/NA