Short-Term Trends Remain Mixed
Insiders Step Up Buying
The indexes closed mixed Friday with mixed internals on the NYSE and NASDAQ as trading volumes increased from the prior session on both exchanges. One index managed to regain its 50 DMA. The data remains mixed as well. So although the futures are pointing up this morning from the NAFTA announcement, as of Friday’s close, the charts and data suggest we maintain our current “neutral” outlook for the major equity indexes. Should gains hold today, that outlook may become more positive.
On the charts, the NDX (page 3) and DJT (page 4) closed lower Friday with the rest posting advances. Internals were mixed. The NYSE had positive breadth but up/down volumes were negative. The NASDAQ also had positive breadth but up/down volumes were flat. Overall trading volumes rose from the prior session. The only technical event of note was the MID (page 4) moving back above its 50 DMA. It’s stochastic is very oversold as is that for the VALUA (page 5) but have not yet registered bullish crossover signals. The near term trends remain positive on the SPX (page 2), DJI (page 2) and NDX (page 3). The COMPQQX, DJT and VALUA are neutral with the MID and RTY (page 5) negative. Cumulative advance/decline lines for the All Exchange and NYSE are neutral and above e their 50 DMAs while the NASDAQ’s remains negative and below its 50 DMA.
The data is mixed. All of the McClellan OB/OS Oscillators are neutral (All Exchange;-22.21/-29.61 NYSE:-28.3/28.54 NASDAQ:-19.03/-30.76) as is the Equity Put/Call Ratio at 0.64. The Open Insider Buy/Sell Ratio is also neutral but shows a notable elevation in insider buying has it has moved up to 73.1, an encouraging sign. The Total P/C (contrarian indicator) and OEX P/C are counterbalancing with the crowd long calls at 1.06 while the pros are long puts at 2.15 respectively. Valuation remains a bit stretched with consensus forward 12 month earnings estimates for the SPX via Bloomberg at $168.48, leaving the forward 12 month p/e for the SPX at 17.3 versus the “rule of 20” implied fair value of a 16.9 multiple. The “earnings yield” stands at 5.78%.
In conclusion, while insider buying is encouraging as are this morning’s futures, we cannot yet alter our near term “neutral” outlook for the major equity indexes based on the state of the charts and data as of Friday’s close..
- S&P 500: 2,889/NA
- DJI: 26,127/NA
- NASDAQ: 7,891/8,108
- NDX: 7,444/7,658
- DJT: 11,255/11,494
- MID: 2,020/2,053
- Russell: 1,672/1,726
- VALUA: 6,514/6,576
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