Opinion: The indexes closed mixed Friday on heavy volume due to options expiration. NYSE internals were mixed as the A/D was positive but up/down volumes were negative. NASDAQ internals were negative. No changes in trends or resistance were registered while the data remains mixed as well. So although we have yet to see the charts generate sell signals, we remain cautious and negative in our near term outlook as none of our concerns regarding extended valuation, high margin debt and advisor complacency have moderated, in spite of the positive futures implications this morning.
- On the charts, the indexes closed mixed Friday with all closing near their intraday highs. The SPX (page 2) closed fractionally higher as did the DJI (page 2), DJT (page 3) and MID (page 4) with the DJI making a new closing high by 10 points. The short term trends of the COMPQX (page 3) and RTY (page 4) remain neutral with the rest positive. The All Exchange and NYSE cumulative advance/decline lines are positive with the NASDAQ neutral. No important sell signals currently exist as the trends remain intact.
- The data is mixed. The bulk of the McClellan OB/OS Oscillators are neutral with the exception of the NYSE 21 day in overbought territory (All Exchange:-13.17/+33.48 NYSE:+2.05/+65.78 NASDAQ:-22.18/+25.71). The Equity Put/Call Ratio is a neutral 0.67 while the OEX P/C is bearish at 1.7 and the Total P/C (contrary indicator) is very bullish at 1.09. The Open Insider Buy/Sell Ratio is also neutral at 38.2. As such, the data has no particularly strong message to impart.
3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or
remove ads
.
- In conclusion, as all those who care to read these comments are already aware, high forward valuation of the SPX in combination with high margin debt and advisor complacency continue to be a cause of real concern. We will spare details today as they have been repeated ad nauseam in our recent comments. We still believe risk remains high with unfavorable comparative reward, thus causing us to keep our near term “negative” outlook in spite of the positive futures this morning.
- Forward 12 month earnings estimates for the SPX from IBES of $133..96 leave a 5.55 forward earnings yield on a 18.2 forward multiple, near a decade high.
SPX: 2,400/NA
DJI: 21,042/NA
COMPQX; 6,121/6,304
DJT: 9,160/9,487
MID: 1,715/NA
RTY: 1,391/1,426
VALUA: 5,473/NA