Some Data Turns CautionaryOpinion
Most of the indexes closed lower yesterday with negative internals on both the NYSE and NASDAQ. Volumes declined from the prior positive session. The bulk of the indexes remain in their short term uptrends while the data remains largely neutral. However, there are a couple of data points that have turned cautionary. As such, although our near term view remains “neutral/positive”, we believe any bullish enthusiasm should be somewhat retrained, given the yellow lights appearing on the data screen. With the forward valuation of the SPX at a ten year high, our intermediate term view remains “neutral”.
- On the charts, most of the indexes closed lower yesterday with negative internals as volumes slipped form the prior session. While the DJI (page 2) and DJT (page 3) made new marginal closing highs, the rest of the indexes dipped. However, no support levels of trends were violated, leaving all but the RTY (page 4) in their short term uptrends. So the charts at this stage still are sending a positive projection.
- The data however, has turned a bit muddy. The majority of the McClellan OB/OS Oscillators remain neutral with the exception of the NYSE 21 day in overbought territory (All Exchange: +20.63/+37.42 NYS:+23.83/+53.13 NASDAQ:+4.93/+10.03). The Equity Put/Call Ratio remains neutral at 0.65 with the Total Put/Call Ratio at a mildly bullish 0.87. However, both the OEX Put/Call Ratio (smart money) and Gambill Insider Buy/Sell Ratio have turned bearish. The OEX P/C now finds the pros having jumped the fence back into heavy put exposure at 1.52 and expecting weakness while the Gambill Ratio level finds insiders ramping up their selling activity during the recent market strength to a bearish 7.4. They are, again, active sellers at these levels. With both the pros and insiders turning cautious, we think it advisable to not let our emotions be swept away with too much enthusiasm. Moderation, in our view, is key at this pointy in time. With the forward p/e for the SPX at a decade high 17.4, our intermediate term view remains “neutral”.