Data Turns Neutral
Opinion: The indexes closed mixed yesterday with minor moves in both directions on slightly positive internals on the NYSE and NASDAQ as volumes rose from the prior session. One chart saw a break above resistance as the rest remain confined within their ranges that have been in place since late March. The data is completely neutral, yielding no strong near term directional implications. As such, until we see evidence of violations of either support or resistance on the charts or a notable shift in the data, our discipline requires us to maintain our near term “neutral” outlook for the major equity indexes in place.
- On the charts, the indexes saw minimal moves up and down yesterday with slightly positive internals on higher than prior volumes. The COMPQX (page 3), DJT (page 4), MID (page 4), RTY (page 5) and VALUA (page 5) posted minor gains with some tests of resistance. The VALUA did, in fact, close above resistance but new resistance is within just a few points of current levels. The rest posted minor losses. Only the COMPQX, NDX (page 3) and VALUA are in near term uptrends with the rest neutral. As well, we now find the stochastic levels for the COMPQX\, NDX, and MID in overbought territory. However, said stochastics can remain overbought for extended periods, thus not making them actionable until bearish crossovers are registered.
- The data is entirely neutral including all of the McClellan OB/OS Oscillators (All Exchange:+27.75/+30.17 NYSE:+25.72/+30.17 NASDAQ:+29.56/+27.39). The Equity P/C (0.61), Total P/C (0.83) and OEX P/C (1.0) are all neutral as well as the OpenInsider Buy/Sell Ratio (41.9) and detrended Rydex Ratio (0.03). So as a group, they are not sending any notable near term directional message. Valuation finds the forward 12 month P/E for the SPX based on forward 12 month consensus earnings estimates from Bloomberg of $162.50 at a 16.4 multiple versus the “rule of 20” implied fair value of 17.0.
- In conclusion, while the futures suggest the SPX and NDX will open near resistance levels this morning, the bulk of the charts remain stuck in sideways patterns while the data scales are not yielding any strong signals regarding near term market directional probabilities. Thus we maintain our near term “neutral” outlook for the major equity indexes given current conditions.
- SPX: 2,613/2,683
- DJI: 23,825/24,690
- nasdaq: 7,060/7,304
- NDX: 6,592/6,832
- DJT: 10,183/10,565
- MID: 1,873/1,912
- Russell: 1,545/1,595
- VALUA: 6,004/6,147