Charts See A Few More Cracks
Opinion: The indexes closed mixed yesterday as volumes declined from the prior session. Internals were positive on the NYSE and negative on the NASDAQ. While a few more weakening signals occurred on the charts, no support or resistance levels were violated. The data continues to have a slightly positive tone, but not to a significant degree to alter our near term “neutral” outlook for the major equity indexes. Historically high valuation keeps our intermediate term view at “neutral”.
- On the charts, the indexes closed mixed with the NYSE seeing slightly positive internal action while the NASDAQ internals were slightly negative. The finish line found gains on the SPX (page 2), DJI (page 2), MID (page 4) and VALUA (page 5) while the COMPQX (page 3), DJT (Page 3) and RUT (page 4) closed in the red. Negative chart action was registered on the COMPQX as it closed below its 50-DMA while the DJT closed below its short term uptrend line. No support or resistance levels were violated but the advance/decline lines for all of the indexes remain below their 50-DMAs and in short term downtrends. The counterbalancing of supports holding while breadth has turned negative leaves a neutral picture for the charts at this time, in our opinion.
- The data remains slightly encouraging with the 1-day McClellan OB/OS Oscillators still in oversold territory (All Exchange:-62.09 NYSE:-67.8 NASDAQ:-56.52). The WST Composite at 4.8 is at a low extreme and bullish while the OEX Put/Call Ratio (smart money) now finds the pros neutral at 1.33 versus their prior heavy exposure to puts over the previous two sessions. The Gambill Insider Buy/Sell Ratio and Equity Put/Call Ratio are neutral at 9.6 and 0.64 respectively.
- In conclusion, while the futures are pointing to a weak opening this morning, the current set up of the charts and data are implying we may be seeing a test of supports that have the potential of holding. Thus we remain near term “neutral” in spite of the futures. The intermediate term view remains “neutral” due to high forward valuation of the SPX. The pending earnings season may have some positive impact in that regard.