Near-Term Outlook Remains “Neutral”Opinion
All of the indexes closed lower yesterday with negative internals on the NYSE and NASDAQ as volumes rose on the NYSE from the prior session while NASDAQ volumes dipped. No support or resistance levels were violated although one index trend turned neutral from positive for the near term. It was one of two yellow flags appearing on the charts while the data is largely neutral. Nonetheless, we have not seen quite enough of a shift in the weight of the evidence that would suggest a change in our near term “neutral” outlook for the major equity indexes.
- On the index charts, all closed lower yesterday with negative internals on the NYSE and NASDAQ while NYSE volumes rose. No support or resistance levels were violated. However, the COMPQX (page 3) did close below its short term uptrend line, the first yellow flag, leaving only the SPX (page 2) in a near term uptrend. All the rest are now neutral. Support levels were tested on the SPX, DJT (page 3), MID (page 4) and RTY (page 4) but not violated. The SPX did flash a “bearish stochastic crossover signal” raising the second yellow flag. However, it is not actionable, in our opinion, unless support is violated. Finally, the NASDAQ Advance/Decline line (page 9) returned to negative from neutral and remains on a “bearish divergence” signal, a condition worth noting but not as historically significant as if it was happening on the NYSE.
- The data is almost completely neutral including all of the McClellan Overbought/Oversold Oscillators (All Exchange:-10.65/+19.04 NYSE:-24.0/+17.98 NASDAQ:-18.71/+9.79). The Equity and OEX Put/Call Ratios are neutral at 0.65 and 1.12 respectively as is the Open Insider Buy/Sell Ratio at 32.6.
- In conclusion, while a bit more cautionary weight was placed on the negative side of the scales, we are not of the opinion that it warrants a change in our near term “neutral” outlook for the major equity indexes at this point in time. Violations of price support would have greater impact in that regard.