Charts See More Minor Improvements
Opinion
All of the indexes closed higher yesterday with positive internals as volumes rose from the prior session. All closed at or near their intraday highs with two of the indexes seeing some minor improvements on their charts. The data remains largely in the neutral camp. So, for the near term, we find no reason to alter our “neutral/positive” short term outlook for the major indexes while extended forward valuation of the SPX remains an issue for the intermediate term which we view as “neutral”.
- On the charts, the indexes saw a good day yesterday as all closed higher and near their intraday highs with positive breadth on rising volume. While no important resistance levels were violated, the SPX (page 2) managed to close back above its 50 DMA along with the MID (page 4), leaving the DJI (page 2) as the only index not able to achieve that goal at this point. As well, the MID closed back above its intermediate term uptrend line that had been violated on Monday. The DJT (page 3) tested resistance but was unable to surpass it by the close. As such, the index charts remain in a mix of neutral and positive near term trends.
- The data remains mostly neutral including the All Exchange and NASDAQ 1 day McClellan OB/OS Oscillators at +18.1 and +18.85 respectively. The NYSE 1 day OB/OS is slightly overbought at +55.56. The WST Ratio/Composite (51.8/139.2), Equity Put/Call Ratio (0.65) and Gambill insider Buy/’Sell Ratio (13.4) are all neutral while the OEX Put/Call Ratio (smart money) remains on a bullish signal at 0.89 as the pros remain weighted in calls. So as a whole, the data continues to lack a strong projection, in either direction, for near term market probable action.
- In conclusion, the combination of the charts and data continue to suggest a “neutral/positive” outlook is the higher near term probability for the major equity indexes by our work. Historically high forward valuation of the SPX keeps our intermediate term view at “neutral”.