Breadth Sees Modest ImprovementOpinion
All of the indexes closed higher yesterday with the one exception of the DJT’s decline. Internals were positive on the NYSE and NASDAQ as volumes declined from the prior session on both exchanges. Multiple new closing highs were achieved on the charts as cumulative breadth saw some minor improvement. The data is largely neutral but with some deterioration in psychology. Valuation remains a concern but we remain of the opinion that the near term trends of the various indexes should still be respected until proven otherwise.
- On the charts, the only index to close lower yesterday was the DJT (page 4). All the others advanced with new closing highs being posted on the SPX (page 2), DJI (page 2), COMPQX (page 3), NDX (page 3) and MID (page 4). Most of the short term trends remain positive with the exceptions of the DJT, RTY (Page 5) and VALUA (page 5) remaining neutral. There was some modest improvement in cumulative breadth as the NYSE cumulative A/D turned positive from neutral and the NASDA turned neutral from negative. The All Exchange cumulative A/D remains neutral. We have yet to see violations of trend or support on the charts.
- The data is mostly neutral as are all of the McClellan OB/OS Oscillators (All Exchange:-22.48/-6.19 NYSE:-21.12/+15.5 NASDAQ:-25.68/-22.88). The Equity and OEX Put/Call Ratios are neutral as well at 0.61 and 1.14 respectively with the Open Insider Buy/Sell Ratio a neutral 28.9. And while the new AAII Bear/Bull Ratio also remains neutral at 29.33/40.33, the Investors Intelligence Bear/Bull Ratio (contrary indicator) finds almost all of the advisors on the bullish side of the boat at 14.4/63.5. Such a lack of concern on their part implies a potentially dangerous level of complacency, in our opinion.
- In conclusion, although extended valuation remains a concern, we remain of the opinion, based on the charts and data, that the current near term trends of the indexes should still be respected until violations of trend or support appear.