DJI Tests Support
OpinionWe continue to be of the opinion that the major equity indexes are likely to see some digestion of the rally off of the late August lows based on the current status of some of the data. The bulk of the charts remain in technically sound condition with the possible exception of the DJI, which was Friday’s worst performer that closed at its low of the day as well as its short term support level.
- On the charts, there were no technical sell signals as of Friday’s close in spite of the dips on high option expiration volume. However, as noted above, the DJI (page 2) did see a swelling of volume that pulled price back to its near term, high volume, support level in the 15,450 range. The rest of the charts saw some weakness but, by our work, their respective short term trends remain intact.
- The data suggests a bit more digestion is possible as the McClellan OB/OS Oscillators are still a bit elevated for the most part. The NYSE levels are mildly bearish on the one-day at +49.98 with the 21-day still overbought at +77.61. The NASDAQ 1 day is a neutral +33.18 with the 21-day at an overbought +58.76. The WST Ratio and its composite are cautionary at 70.0 and 160.6 with a mildly bearish detrended Rydex Ratio of 0.69 as well. The Gambill Insider Buy/Sell Ratio remains a neutral 9% as of 9/19.
- So, in conclusion, while the charts remain intact, the data is suggesting a bit more digestion of the notable rally from the 8/27 market lows as the higher probability.
- For the longer term, we remain bullish on equities as they remain undervalued with a 6.9% forward earnings yield versus the 10-Year Treasury yield of 2.73%.
- SPX: 1,690/?
- DJI: 15,455/?
- NASDAQ: 3,622/?
- DJT: 6,520/?
- MID: 1,230/?
- RUT: 1,054/?