NYSE McClellan 1-Day OB/OS Overbought
All of the major equity indexes closed higher Wednesday with positive internals as volumes declined on the NYSE and rose on the NASDAQ. All closed at or near their intraday highs but no resistance levels were violated. Near term neutral chart trends remained intact. The data is generally neutral with the exception of one of the McClellan OB/OS Oscillators moving into overbought territory. The futures imply a positive open that may violate resistance levels. Yet given the status of things at yesterday’s close, we are maintaining our near term “neutral” outlook for the major equity indexes.
On the charts, all of the indexes closed higher yesterday with positive internals and mixed overall trading volumes.
All closed at or near their intraday highs but none were able to close above their near term resistance levels, leaving their neutral trends intact. However, the “ascending triangle” formations may be violated to the upside at the open this morning, given the futures setup. Should they close above resistance, the charts trends would turn more positive.
This may be somewhat counterbalanced by the stochastic levels now reaching overbought territory on the SPX (page 2), DJI (page 2) and DJT (page 3).
Cumulative breadth improved with the NYSE and All Exchange cumulative A/Ds turning positive and the NASDAQ’s turning neutral from negative. Lately they have been flip flopping depending on the day’s action and have become less instructive.
High “volume at price” (VAP) levels are supportive on the SPX, DJI and NDX (page 3). They are resistant on the rest.
The data remains largely neutral including most of the 1-day McClellan OB/OS Oscillators with the exception of the NYSE that is now in overbought territory (All Exchange:+43.48 NYSE:+58.07 NASDAQ:+30.88).
The detrended Rydex Ratio (contrary indicator) remains neutral at -0.72 as is the % of SPX stocks trading above their 50 DMAs at 39.6.
Tuesday’s AAII Bear/Bull Ratio (contrary indicators) remained bullish at 41.67/25.0. It continues to be counterbalanced by the Investor’s Intelligence Bear/Bull Ratio (contrary indicator) as investment advisors remained somewhat overly optimistic at 18.7/43.9 .
The Open Insider Buy/Sell Ratio remains neutral at 67.4.
Valuation continues to appear appealing, assuming current estimates hold, with the 12-month forward consensus earnings estimate from Bloomberg for the SPX at $172.02, leaving the forward p/e at a 17.0 multiple while the “rule of twenty” finds fair value at 18.5.
The 10-Year Treasury yield is 1.46%.
The earnings yield stands at 5.86%.
In conclusion, while we wish we could be more definitive in our outlook, the charts and data currently lack enough evidence to alter our near term “neutral” outlook for the major equity indexes.