Data Remains Neutral
The major equity indexes closed evenly split between gainers and losers Tuesday. Internals were positive on the NYSE and NASDAQ as trading volumes increased on both exchanges from those of the previous session. While some short term uptrend lines were tested, all of the indexes remain in short term uptrends. The data continues to send a generally neutral message. As such, we are maintaining our near term “neutral//positive” outlook for the major equity indexes at this time.
On the charts, the SPX (-age 2), DJI (page 2), COMPQX (page 3) and NDX (page 3) closed lower yesterday as the rest posted gains.
· Internals were positive on the NYSE and NASDAQ as trading volumes rose.
· The SPX, DJI, COMPQX and NDX all saw tests of their respective short term uptrend lines, all of which held. So, all of the indexes remain in near term uptrends and above their 50 DMAs.
· The cumulative advance decline lines for the All Exchange and NYSE remain positive while the NASDAQ’s is neutral.
· High “volume at price” (VAP) levels are seen as supportive on the DJT (page 3), MID (page 4) and VALUA (page 5).
The data continues its neutral message.
- The 1-day McClellan OB/OS Oscillators remain neutral (All Exchange:+8.36 NYSE:+6.92 NASDAQ:+10.45).
- The detrended Rydex Ratio (contrary indicator) at +0.76 is neutral as is yesterday’s AAII Bear/Bull Ratio (contrary indicator) at 29.0/33.0. We continue to view the lack of crowd enthusiasm as noted by these two contrarian indicators, in spite of the rally, as a positive. They have yet to reach levels associated with excess bullish sentiment typically associated with market tops.
- However, this is still somewhat counterbalanced as the Investors Intelligence Bear/Bull Ratio (contrary indicator) that remains bearish as advisors are largely bullish at 16.3/58.0.
- The % of SPX stocks above their 50 DMAs (74.5) is neutral as is the Open Insider Buy/sell Ratio (35.5).
- The 12-month forward consensus earnings estimate from Bloomberg for the SPX is $173.89, leaving the forward p/e at a 17.4 multiple while the “rule of twenty” finds fair value at 17.9.
- The 10-Year Treasury yield is 2.06%.
- The earnings yield stands at 5.74%.
In conclusion, the charts and data have yet to send signals that would warrant a change in our current “neutral/positive” near term outlook for the major equity indexes.