Short Term Outlook Remains “Neutral/Positive”
Opinion: All of the indexes inched higher yesterday with positive internals on the NYSE and NASDAQ. Volumes rose on the NYSE form the prior session while NASDAQ volumes dipped. A few positive chart events occurred, discussed below, while the data remains evenly balanced and lacking directional implications. As such, we remain near term “neutral/positive” while high historical valuation keeps our intermediate term view at “neutral” for the major equity indexes.
On the charts, all of the indexes managed to scratch out gains yesterday in what has been a largely sideways move over the past 2 weeks. Internals were positive on the NYSE and NASDAQ with higher NYSE volumes, versus the prior session, and lower volumes for the NASDAQ. A few positive events occurred on the charts. Both the MID (page 4) and VALUA (page 5) made new closing highs while the RUT (page 4) closed above its prior resistance level. The advance/decline lines for the NYSE and NASDAQ remain in their current uptrends as well. So the recent sideways/positive tone of the chats remains intact.
The data continues to send its neutral and non-directional message with the bulk of the indicators in neutral territory. All of the McClellan OB/OS Oscillators remain neutral (All Exchange:+0.98/+39.7 NYSE:-7.6/+45.2 NASDAQ:+11.76/+35.06). The Equity Put/Call Ratio is a neutral 0.56 along with the WST Ratio and its Composite at 58.7 and 139.9. The Gambill Insider Buy/Sell Ratio remains 14.1 and neutral as well. The OEX Put/Call Ratio (smart money) and Total Put/Call Ratio (contrary indicator) counterbalance each other at 1.41 and 0.86 respectively. So the data scales persist in their lack of directional near term implications and neutral.
In conclusion, we have yet to see anything from the charts or data to alter out near term “neutral/positive” outlook for the indexes as has been the case for the past two weeks. High valuation keeps our intermediate term view at “neutral”.
Forward 12 month earnings estimates for the SPX from IBES of $127.22 leave a 5.82% forward earnings yield on a 17.2 forward multiple.
SPX: 2,160/NA
DJI: 18,374/NA
COMPQX: 5,160/NA
DJT: 7,795/7,974
MID: 1,534/NA
RUTNU: 1,221/1,266
VALUA: 4,904/NA