Opinion: The bulk of the indexes closed higher Friday with positive internals on the NYSE and NASDAQ as volumes rose on both exchanges from the prior session. The COMPQX and NDX closed lower on the day. There was little change on the charts while the data is almost entirely neutral. The futures are indicating a weak opening for the markets, suggesting we may likely see a test of support levels on the SPX and NDX. However, given Friday’s action and the current state of the data, we are maintaining our near term “neutral” outlook for the major equity indexes until the evidence suggests otherwise.
On the charts, only the COMPQX (page 3) and NDX (page 3) closed lower Friday. The rest of the indexes closed in the green. No major technical events of import were registered although the VALUA (page 5) closed back above its 50 DMA. As such, all of the indexes remain in near term neutral trends with the exception of the DJT still in its short term uptrend. The DJI (page 2) and DJT (page 4) are trading below their 50 DMAs with the balance trading above. The cumulative advance/decline lines for the All Exchange, NYSE and NASDAQ remain neutral and above their 50 DMAs. However, weak futures this morning suggest the SPX and NDX may well test their respective support levels. The close will be the telling point as to whether or not they hold.
The data is almost entirely neutral, including all of the McClellan OB/OS Oscillators (All Exchange:+26.24/+45.21 NYSE:+25.29/+48.2 NASDAQ:+26.78/+47.08). The Equity P/C (0.63), OEX P/C (1.08) OpenInsider Buy/Sell Ratio (34.1) and AAII Bear/Bull Ratio (24.33/35.67) are all neutral as well. Only the Total P/C (contrary indicator) is bullish at 0.96.
In conclusion, we see no evidence yet that would cause an alteration in our near term “neutral” outlook for the major equity indexes given the current state of the charts and data. However, as noted above, weak futures suggest we may see tests of support on the NDX and SPX early in today’s session.
Forward 12 month earnings estimates for the SPX from Bloomberg are $157.88 leaving a 5.74% forward earnings yield on a 17.4 forward multiple.
- SPX: 2,723/2,799
- DJI: 24,707/25,705
- COMPQX; 7,374/NA
- NDX: 6,926/NA
- DJT: 10,475/10,761
- MID: 1,902/1,960
- RTY: 1,561/1,600
- VALUA: 6,105/6,251
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