Data Neutral As Breadth ImprovesOpinion
The indexes closed mixed Friday with positive internals on the NYSE while NASDAQ internals saw positive breadth but negative up/down volume. Some improvements were seen on some of the charts while others are now at important resistance levels. The data is largely neural. So while we maintain our near term “neutral/positive” outlook for the indexes, important resistance levels present an issue while a large portion of the oversold “fuel” has been spent that resulted in ;last week’s rally. We suspect we may now see some near term sideways churning before said resistance can be violated.
- On the charts, The SPX (page 2), DJI (page 2), MID (page 4), RTY (page 5) and VALUA (page 5) closed higher Friday while the COMPQX (page 3), NDX (page 3) and DJT (page 4) declined. Internals were positive on the NYSE and mixed on the NASDAQ. The most positive event was the MID closing above near term resistance. Breadth has improved as well with the All Exchange, NYSE and NASDAQ cumulative advance/decline lines now positive and above their 50 DMAs. However, most closed near the lower end of their intraday ranges, having given up their early session gains. We now find the SPX, DJI and VALUA at important resistance levels that, given the data discussed below, may now prove to be a bit more difficult to overcome.
- The data finds all of the McClellan OB/OS Oscillators in neutral territory (All Exchange:+38.62/-21.91 NYSE:+35.87/-21.16 NASDAQ:+44.76/-17.88). These levels, while neutral, are well above the deeply oversold conditions seen at the beginning of last week. As such, while not negative, it suggests further gains may be more challenging over the very near term. The Equity Put/Call Ratio (0.52) is bearish and counterbalanced by bullish levels on the Total (0.93) and OEX (0.82) Put/Call Ratios. The OpenInsider Buy/Sell Ratio is a neutral 50.4.
- In conclusion, while we believe the correction lows have been put in place and potential for further progress exists, we suspect some sideways action may now be required before another upside push of import might be experienced.