DJI Gives Bearish Stochastic Crossover Signal
Opinion: The indexes closed mostly higher yesterday with positive internals on the NYSE and NASDAQ as volumes rose on both from the previous session. None of the combination of near term neutral and positive short term chart trends were altered while the data has become a bit more mixed in its projections. While one cautionary signal was triggered on the charts, we have yet to see enough of a shift in the evidence to warrant a change in our near term “neutral” outlook for the major equity indexes.
- On the charts, The DJI (page 2) and DJT (page 3) closed lower yesterday while the rest of the indexes managed to post gains. Internals were positive on both exchanges as volumes rose from the prior session. The COMPQX (page 3) made a new closing high and, although its advance/decline line has turned neutral (page 9), it does remain on a “bearish divergence” signal. We would also note the DJT gave a “bearish stochastic crossover signal” but has not violated support that would make the signal actionable. The RTY (page 4) closed at resistance but failed to violate. As such, The SPX (page 2) and COMPQX remain in short term uptrends with the balance in neutral “rectangle” patterns.
- The data has become a bit more mixed but all of the McClellan OB/OS Oscillators are still in neutral territory (All Exchange:-0.82/+24.39 NYSE:-2.42/+32.1 NASDAQ:+2.86/+21.6) as is the Equity Put/Call Ratio at 0.62 and the Open Insider Buy/Sell Ratio at 32.6. However, the Total and OEX Put/Call Ratios are bullish as the crowd (contrary indicator) is leaning toward puts at 0.94 while the pros on the OEX are long calls at 0.6. So there is a slightly bullish tilt to the data but nothing suggesting significant strength.
- In conclusion, we see no cause to alter out short term “neutral” expectations for the major equity indexes based on the charts and data.
- Forward 12 month earnings estimates for the SPX from IBES of $134.56 leave a 5.63 forward earnings yield on a 17.8 forward multiple, near a decade high.
SPX: 2,381/NA
DJI: 20,659/21,008
COMPQX; 6,053/NA
DJT: 8,984/9,231
MID: 1,720/1,749
RTY: 1,377/1,400
VALUA: 5,447/5,554