Data Mixed
Opinion: All of the indexes closed lower Friday with negative internals as volumes rose on the NYSE but declined on the NASDAQ. No technical events of import occurred, leaving the indexes in their generally sideways patterns. The data has become more of a mixture of positive and negative signals but leaves the scales essentially neutral in their near term projections. Thus, we remain “neutral/positive” in our short term outlook while historically high forward valuation of the SPX keeps our intermediate term view at “neutral”.
· On the charts, all of the indexes closed lower, with negative internals, as all closed near the midpoints of their intraday ranges. Several technical tests occurred with the SPX (page 2) and MID (Page 4) testing support. Both the COMPQX (page 3) and DJT (page 3) tested their short term uptrend lines. The VALUA (page 5) weakened as it closed below its 50 DMA and intermediate term uptrend line. Yet it remains confined within its current sideways pattern. No support or resistance levels were violated, leaving all of the “rectangle” patterns intact.
· The data has become more diverse but, in the end, leaves the scales fairly evenly balanced. The 1 day All Exchange McClellan OB/’OS Oscillator is mildly oversold at -52.38 while the NYSE 1 day is an oversold -62.97. All of the other OB/OS levels are neutral. The Total Put/Call Ratio (contrary indicator) finds the crowd long puts at 1.18 while the OEX Put/Call Ratio sends a countering message at 1.8 as the pros are very long puts and expecting weakness. The Gambill Insider Buy/Sell Ratio (8.7) remains neutral along with the WST Ratio/Composite at 48.5/122.5. So he overall data picture remains noncommittal regarding near term market projections.
· In conclusion, although the futures are indicating a positive open, the data and charts continue to send a “neutral/positive” message with the indexes remaining confined within their current trading ranges that have been in effect for the past several sessions. The 16.9 forward 12 month multiple for the SPX keeps our intermediate term outlook at “neutral”.
· Forward 12 month earnings estimates for the SPX from IBES of $127.74 leave a 5.93 forward earnings yield on a 16.9 forward multiple.
SPX: 2,146/2,187
DJI: 18,078/18,515
COMPQX; 5,221/5,329
DJT: 7,954/8,144
MID: 1,526/1,573
RUT: 1,227/NA
VALUA: 4,848/5,002