Data Neutral
Opinion: The bulk of the indexes closed higher yesterday with positive internals as volumes slipped from the prior session. No major technical events occurred on the charts while the data has become more evenly balanced from its prior bullish signals. All of this may be a moot point as the markets now respond to last night’s election results. So far, the weak futures for the SPX do not indicate a violation of support. Hopefully, it will hold. As such, we are maintaining our near term “neutral” outlook for the major indexes. Forward 12 month valuation of the SPX near historic highs keeps the intermediate view at “neutral” as well.
On the charts, the only index to close lower yesterday was the DJT (page 3) with a minor loss as it was repulsed by its near term resistance levels. No support or resistance levels were violated on any of the other indexes although the rests tested resistance on an intraday basis. Minor positives came with the COMPQX (page 3), MID (page 4) and VALUA (page 5) flashing bullish stochastic crossover signals. However, they are meaningless at this point given the market indications of notably lower opens. The critical issue will now be whether or not the index support levels will be able to weather the storm.
The data scales are fairly evenly balanced. All of the 1 day McClellan OB/OS Oscillators are neutral while the 21 day levels are oversold (All Exchange:-11.66/-65.32 NYSE:-10.21/-52.76 NASDAQ:-12.76/77.69). The Total Put/Call Ratio (contrary indicator) shows the crowd remaining nervous and long puts at 1.48 while the OEX Put/Call Ratio (smart money) finds the pros heavily long puts as well at 2.16 as the look for weakness. The Gambill Insider Buy/Sell Ratio remains a mildly bullish 24.9. Thus there is now no strong implication coming from the data dashboard at this point regarding near term trajectory.
In conclusion, so far, the unexpected election results have not cracked the charts, in spite of their broadly negative indications this morning. That is the best we can say at this point. So we are leaving our near term outlook at “neutral” due to the data and charts while the 16.5 forward 12 month multiple for the SPX keeps the intermediate term view “neutral” as well.
Forward 12 month earnings estimates for the SPX from IBES of $128.94 leave a 6.07 forward earnings yield on a 16.5 forward multiple.
SPX: 2,084/2,145
DJI: 18,032/18,338
COMPQX; 5,058/5,207
DJT: 8,016/8,331
MID: 1,475/1,516
RTY: 1,190/1,235
VALUA: 4,687/4,830