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Charts See More Technical Improvements

Published 09/23/2016, 10:15 AM
Updated 07/09/2023, 06:31 AM

Short-Term Outlook “Neutral/Positive”

Opinion

All of the indexes closed higher yesterday with positive internals as all closed near or at their intraday highs with the exception of the DJT (page 3). Several positive technical events occurred on the charts, following on the heels of Wednesday’s improvements discussed yesterday. The data remains mostly neutral. However, some of the OB/OS Oscillators have crept into overbought territory causing us to temper our enthusiasm for the near term from “positive” to “neutral/positive”. This may possibly be expressed with more modest action over the next few sessions. Forward 12-month valuation of the SPX is back near historical highs leaving our intermediate term view at “neutral”.

  • On the charts, all of the indexes saw gains yesterday with positive internals. Positive technical events were registered in the following manner. The SPX (page 2) and MID (page 4) both closed above resistance and their 50 DMAs. The DJI (page 2) and VALUA (page 5) closed above resistance while both the COMPQX (page 3) and RUT (page 4) made new closing highs. The DJT (page 3) attempted a break of resistance on an intraday basis but failed to do so on the close. All of the advance/decline lines for the indexes remain positive. We would note the COMPQX stochastic is now overbought but not yet actionable.
  • The data remains mostly neutral including the WST Ratio/Composite (58.1/149.7), Equity Put/Call Ratio (0.57) and Gambill Insider Buy/Sell Ratio (18.0). However, we now find the 1 day McClellan OB/OS Oscillators for the All Exchange and NYSE in overbought territory at +51.93 and +60.73. While not extreme, they are the primary reason for our slight tempering of enthusiasm for the near term. The COMPQX 1 day remains neutral at +46.58 along with all of the 21 day readings. The OEX Put/Call Ratio (smart money) has finally jumped the fence again as the pros are now mildly long calls at 0.88 after being heavily weighted in puts over the past few sessions. So the data, while essentially neutral, now has some implications of possible slower progress given the OB/OS levels discussed.
  • In conclusion, while the charts remain positive, the data is suggesting a shift to “neutral/positive” from our “positive” outlook yesterday regarding the near term. The elevated forward p/e for the SPX keeps us intermediate term “neutral”.
  • Forward 12-month earnings estimates for the SPX from IBES of $127.97 leave a 5.88% forward earnings yield on a 17.0 forward multiple.
  • SPX: 2,138/2,187
  • DJI: 18,117/18,515
  • NASDAQ; 5,221/NA
  • DJT: 7,744/7,957
  • MID: 1,526/1,573
  • Russell: 1,227/NA
  • VALUA: 4,848/5,002

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