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McClellan 1-Day OB/OS Oversold

Published 10/27/2017, 10:11 AM
Updated 07/09/2023, 06:31 AM
NDX
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US500
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DJI
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RTYM24
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IXIC
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DJT
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MID
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Short-Term Trends Unchanged

Opinion

The indexes closed mixed yesterday with positive internals on the NYSE while NASDAQ internals were mixed. Volumes declined on both exchanges from the prior session. No changes were seen on the charts regarding short term trends or violations of support/resistance. The data remains mixed but the 1-day McClellan OB/OS remain oversold post yesterday’s advances. Forward valuation of the SPX remains extended versus current forward earnings estimates but strong earnings last night form some major technology companies may have some moderating effect in that regard. While we still believe some near term caution is warranted regarding valuation and debatable breadth, the current near term trends on the indexes should still be respected until proven otherwise, in our opinion.

  • On the charts, most of the indexes closed higher yesterday with the exceptions of the COMPQX (page 3) and NDX (page 3). NYSE internals were positive while the NASDAQ saw a slightly positive advance/decline but negative up/down volume. There were no violations of resistance or support levels with the near term trends staying intact as well with the DJI (page 2) and COMPQX positive. The rest are neutral. The cumulative advance/decline lines are negative on the All Exchange and NASDAQ and neutral on the NYSE.
  • The data remains mixed but the 1-day McClellan OB/OS Oscillators remain in oversold territory, in spite of yesterday’s advances, with the 21-day levels neutral (All Exchange:-63.42/+9.23 NYSE:-62.07/+23.49 NASDAQ:-62.55/+1.85). The Put/Call Ratio are mixed with the Total (0.87) mildly bullish, Equity (0.61) neutral and OEX (2.82) very bearish. The Open Insider Buy/sell Ratio is a neutral 37.1.
  • In conclusion, our concerns regarding historically high forward valuation of the SPX at an 18.7 multiple of forward 12-month estimates may have some cold water thrown on them given some very strong earnings released last night form some major technology companies. And while overall breadth remains a concern, we have to stay with our opinion that the near term trends of the indexes should continue to be respected until proven otherwise.
  • Forward 12-month earnings estimates for the SPX from Bloomberg of $136.79 leave a 5.35 forward earnings yield on a 18.7 forward multiple, just shy of a 15-year high.
  • SPX: 2,547/NA
  • DJI: 22,403/NA
  • NASDAQ: 6,464/NA
  • NDX: 5,994/NA
  • DJT: 9,542/9,986
  • MID: 1,810/NA
  • Russell: 1,450/1,512
  • VALUA: 5,646/5,843

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