SPX Forward Earnings Estimates RiseOpinion
All of the indexes closed lower yesterday with negative internals and at or near their intraday lows. The gains from the prior session were largely erased. However, no technical events on the index charts were registered as no violations of support occurred. However, oil as seen via the USO (NYSE:USO) ETF closed above its long term downtrend line as noted below. The data remains largely neutral leaving our near term outlook for the markets at “neutral”. And although IBES has raised its forward 12 month earnings estimates for the SPX, we still see valuation near historic highs that also leave our intermediate term outlook at “neutral”.
- On the charts, all of the indexes closed lower yesterday with negative internals. Both the DJT (page 3) and RUT (page 4) closed back below their 200 DMAs. However, in spite of the losses across the board, none of the index support levels were violated. What may be of greater import at this point is the action in oil as seen by the USO ETF (page 9). The chart shows it closing above its 1 year downtrend line and above its 150 DMA. The combination of the two technical events suggest higher oil process over the near to intermediate term, in our opinion.
- The data remains largely neutral. The All Exchange and NYSE 1 day McClellan OB/OS Oscillators are neutral at -45.88 and -38.12 respectively, while the NASDAQ 1 day is oversold at -57.35. The OEX Put/Call Ratio (smart money) finds the pros neural as well at 1.18. Slightly positive signals are coming from the Total and Equity Put/Call Ratios (contrary indicators) that still show the crowd heavy in puts at 0.93 and 0.8 while insiders have continued to be buyers with the Gambill Insider Buy/Sell Ratio lifting to 20.0 but remaining in neutral territory.
- Finally, IBES has raised its forward 12 month earnings estimates for the SPX from $122.95 to $124.44, a notable raise.
- However, for the intermediate term, we remain “neutral” as the IBES forward 12 month earnings estimates for the SPX of $124.44 still leave market valuation in the upper end of its historical range.