Data Largely NeutralOpinion
All of the indexes closed lower Friday with negative internals on both exchanges as volumes declined on the NYSE but rose on the NADAQ. All closed at or near their intraday lows. Some short term uptrend lines were violated on the charts with one break below support. The data has turned largely neutral as a result of Friday’s action. Thus at this point, we are maintaining our near term “neutral/positive” outlook for the major equity indexes.
- On the charts, all of the indexes closed lower Friday with negative internals. Some weakening of the charts was seen in the MID (page 4) and RTY (Page 4) as both closed below their respective short term uptrend lines, turning their trends from positive to neutral. However, their support levels were unchallenged. The same cannot be said for the DJT that closed below near term support but remains in a near term neutral pattern as well. The index had flashed a “bearish stochastic crossover” on Thursday as noted in our comments. As such the near term trends for the indexes is a mix of neutral and positive.
- The data turned largely neutral including all of the McClellan OB/OS Oscillators (All Exchange:+34.78/+37.90 NYSE:+13.22/+49.62 NASDAQ:+31.02/+12.05), relieving the prior overbought conditions. The Equity and OEX Put/Call Ratios are now both neutral as well at 0.68 and 1.1 respectively while the Openinsider Buy/Sell Ratio finds insider activity also neutral at 34.6.
- In conclusion, although the markets remain near historically high forward valuation with a 17.7 forward multiple on the SPX, based on forward 12-month IBES earnings estimates, and advisor sentiment is very complacent, there is not enough change in the charts or data at this time to cause a shift in our current near term “neutral/positive” outlook for the indexes.