Two 1-Day McClellan OB/OS Oscillators Oversold
All of the indexes closed lower Monday with mixed internals on the NYSE and negative internals on the NASDAQ. Volumes declined from the prior session. The charts saw some violations of near term support, turning those indexes into negative near term trends. However, some of the data is implying a pause of the recent weakness may be forthcoming. Given the fact that some of the weakness has been concentrated in heavily institutionally owned large cap issues with significant market capitalization, said issues may be skewing the overall appearance of the markets in general. As such, we are inclined to maintain our near term “neutral/positive” outlook for the major equity indexes at this time.
- On the charts, all of the indexes closed lower yesterday with mixed internals on the NYSE and negative internals on the NASDAQ. The COMPQX (page 3) and NDX (page 3) both closed below near term support as some high visibility names continued to swoon. The COMPQX also closed below its 50 DMA while the MID (page 4) also broke support. So the near term trends now cover all of the bases with the DJI (page 3) and DJT (page 4) positive, the SPX (page 2), RTY and VALUA (page 5) neutral and the COMPQX, NDX and MID negative. The cumulative advance/decline lines for the All Exchange and NASDAQ are negative with the NYSE’s neutral.
- The data is holding out a little hope as the All Exchange and NASDAQ 1 day McClellan OB/OS Oscillators are now oversold with the rest neutral (All Exchange:-53.06/+20.25 NYSE:-37.2/+41.16 NASDAQ:-71.29/+2.58). The Equity Put/Call Ratio (0.72) and Total P/C (1.12) are bullish with the OEX a neutral 1.05 as is the OpenInsider Buy/Sell Ratio at 39.2 The new AAII Bear/Bull Ratio (contrary indicator) remains neutral at 26.33/36.0. Valuation finds consensus forward 12-month earnings estimates for the SPX of $168.40 leaving the forward 12-month p/e for the SPX at 16.6 versus the “rule of 20” implied fair value of a 17.0 multiple and a 6.01% earnings yield.
- In conclusion, while some of the index charts have turned negative, we suspect some of the prior market leaders with significant market capitalization may be exerting enough influence to make things look more negative than may actually may be the case. And while some shift in leadership may be at hand, we are maintaining our near term “neutral/positive” outlook for the indexes at this point in time.
- SPX: 2,790/2,853
- DJI: 25,000/26,000
- NASDAQ: 7,589/7,821
- NDX: 7,100/7,373
- DJT: 10,623/10,940
- MID: 1,956/1,982
- Russell: 1,654/1,712
- VALUA: 6,365/6,487