Data Mostly Neutral
Opinion
All of the indexes closed higher Friday with positive internals on the NYSE and NASDAQ as volumes rose on both exchanges from the prior session. Some new closing highs were achieved as well as reclamations of short term uptrend lines. Valuation remains stretched based on current forward consensus earnings estimates from Bloomberg but the data is mostly neutral, suggesting the current near term trends of the indexes should still be respected.
- On the charts, all of the indexes closed higher Friday with positive internals on good trading volumes. The SPX (page 2), COMPQX (page 3), NDX (page 3) and MID (page 4) made new closing highs as the SPX, NDX and MID reclaimed their short term uptrends from their prior neutral trends. As such, all near term trends are positive with the exceptions of the DJT (page 4), RTY (page 5) and VALUA (p-age 5) remaining neutral.
- The data in aggregate is sending a neutral signal, in our view, including all of the McClellan OB/OS Oscillators (All Exchange:-40.01;+11.94 NYSE:-40.54/+25.2 NASDAQ:-37.59/+5.21). No overbought conditions exist as a result of Friday’s gains. The Open Insider Buy/sell Ratio remains neutral as well at 35.1. The Total Put/Call Ratio is a mildly bullish 0.88, the Equity Put/Call Ratio mildly bearish 0.55 and the OEX Put/Call Ratio a bullish 0.5.
- Valuation remains stretched to an 18.9 multiple of forward consensus 12-month earnings estimates for the SPX via Bloomberg of $136.79. However, given the strong earnings last week from some large cap issues that have significant weighting in the composite, that multiple may dip should estimates rise.
- In conclusion, while valuation does remain a concern currently, the state of the charts and data suggest the near term trends of the indexes should continue to be respected, in our opinion.