Data Neutral
Our next commentary will be issued on 9/4. For the past few sessions, we have been of the opinion that the major equity indexes were likely to see a pause in the recent rally. Thursday’s action now suggests said pause may be complete and a resumption of progress may be at hand. All of the indexes closed lower Thursday with negative internals on the NSYE and NASDAQ as volumes rose on both exchanges from the prior session. However, no violations of trend or support were noted on the charts while the data that was suggesting said pause has now returned to almost entirely neutral readings. Thus, we are now of the opinion that the short term pause may be complete while we maintain our near term “positive” outlook for the major equity indexes.
- On the charts, all of the indexes closed lower yesterday with negative internals on higher trading volume. All closed at or near their intraday lows. However, no technical events of import were generated on the charts, leaving all in short term uptrends intact with the exceptions of the COMPQX (Page 3) and NDX (page 3) that are neutral. There were no violations of support. The DJT (page 4) did register a bearish stochastic crossover signal but the signal has not become actionable as no violations of support or trend were seen. The cumulative advance/decline lines for the All Exchange/NYSE and NASDAQ remain positive and above their 50 DMAs.
- The data that had been sending some caution signals has now returned to almost entirely neutral readings including all of the McClellan OB/OS Oscillators (All Exchange:+22.38/+21.39 NYSE:+13.53/+34.5 NASDAQ:+32.92/+13.66). The Equity Put/Call Ratio (0.61), OEX P/C (1.31) and Open Insider Buy/Sell Ratio (30.7) are all neutral as well while the Total P/C (contrary indicator) is a bullish 1.03 as the crowd has become a bit unnerved. Valuation finds consensus forward 12 month earnings estimates for the SPX at $168.99, leaving the forward 12 month p/e for the SPX at 16.9 versus the “rule of 20” implied fair value of a 17.2 multiple. The “earrings yield” stands at 5.91%.
- In conclusion, the data shift back to neutral combined with the charts suggests the pause that had been forecasted may now be complete, allowing for the resumption of progress for the major equity indexes. We are maintaining iour near term “positive” outlook..
- SPX: 2,869/2,873
- DJI: 25,000/26,052
- NASDAQ: 7,786/7,936
- NDX: 7,294/7,507
- DJT: 11,114/NA
- MID: 2,000/NA
- Russell: 1,672/1,712
- VALUA: 6,455/NA