Data Remains NeutralOpinion
All of the indexes closed higher yesterday with positive internals as volumes slumped from the prior session. No major technical events were registered, leaving all of the indexes in their essentially sideways patterns. The data remains largely neutral as well, unfortunately leaving the indexes in their doldrums that have been in place since the middle of July. As such, our near term outlook remains “neutral/positive” while high forward valuation of the SPX keeps our intermediate term view at “neutral”.
- Although all of the indexes closed higher yesterday with positive breadth, volume sagged leaving the technical picture unchanged as all of the indexes continue their protracted sideways trends intact. Both the COMPQX (page 3) and DJT (page 3) tested their respective resistance levels but were unable to violate on a closing basis. The VALUA (page 5) did manage to close back above its 50 DMA. Unfortunately, none of these events were sufficient to alter the current neutral action on the charts.
- Most of the data also remains neutral, including all of the McClellan OB/OS Oscillators (All Exchange:-17.02/+20.24 NYSE:-24.41/+22.23 NASDAQ:-8.39/+22.48). The Equity Put/Call Ratio (0.61), Gambill Insider Buy/Sell Ratio (8.7) and WST Composite (144.4) are all neutral as well. The OEX Put/Call Ratio (smart money) is flashing a warning signal at a very bearish 3.2 as the pros have become extremely heavily weighted in puts. However, we would note that over the past several months, the prescience of this indicator has declined.
- In conclusion, we have yet to see enough of a shift in the weight of the evidence to alter our near term “neutral/positive” projections for the major indexes while historically high forward valuation of the SPX keeps our intermediate term view at “neutral”. The upcoming earnings season may be the catalyst to push the indexes out of their doldrums.