Data MixedOpinion
All of the indexes closed higher Friday with positive internals on the NSYE and NASDAQ as volumes dropped from those of the prior session for both exchanges. Some of the index charts saw technical improvements as did overall breadth. The data is mixed without any strong near term projections as to direction. Yet in spite of Friday’s strength, we are not quite confident that the messages of the charts and data is sufficient to alter our near term “neutral” outlook for the major equity indexes at this time.
- On the charts, all of the indexes closed higher Friday with positive internals although overall volumes dissipated from those of the prior session. However, the moves were strong enough to push the COMPQX (page 3) and NDX (page 3) above near term resistance and their 50 DMAs to turn their near term trends positive. The VALUA (page 5) also broke above resistance and its 50 DMA but the break was marginal, leaving its trend neutral. The MID (page 4) and RTY (page 5) also rose above their 50 DMAs. So regarding trends, the COMPQX and NDX are now short term positive with the rest staying neutral. Some improvement was also seen in the cumulative advance/decline lines with the ALL Exchange and NYSE positive and above their 50 DMAs while the NASDAQ’s is positive but remains below its 50 DMA.
- The data is quite mixed. All of the McClellan OB/OS Oscillators are still neutral (All Exchange:+13.25/+5.57 NYSE:+13.36/+7.97 NASDAQ:+11.24/+2.86) as is the OpenInsider Buy/Sell Ratio at 45.4. And while the Total Put/Call Ratio at 0.96 (contrary indicator) and OEC P/C at 0.69 suggest more strength to come, the Equity P/C (contrary indicator) at 0.55 is bearish as the crowd by this measure is now heavily long calls. Valuation finds the forward 12 month P/E for the SPX based on forward 12 month consensus earnings estimates from Bloomberg of $162.38 at a 16.4 multiple versus the “rule of 20” implied fair value of 17.0.
- In conclusion, while the charts and data have abated some of our concerns noted in our past few comments, Friday’s action on lighter volume still leaves us a bit short from altering our near term “neutral” outlook for the major equity indexes.
- SPX: 2,613/2,683
- DJI: 23,825/24,690
- NASDAQ: 7,060/7,304
- NDX: 6,592/6,812DJT: 10,183/10,565
- MID: 1,873/1,912
- Russell: 1,545/1,595
- VALUA: 6,004/6,114