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Chart Trends Unchanged

By Guy S. Ortmann, CMTStock MarketsSep 13, 2018 10:24AM ET
Chart Trends Unchanged
By Guy S. Ortmann, CMT   |  Sep 13, 2018 10:24AM ET
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Data Sees Some Minor Improvements

The indexes closed mixed Wednesday with positive internals on the NYSE while NASDAQ internals were mixed. Volumes rose on both exchanges versus the prior session. No technical events of import were registered on the charts, leaving all of the near terms trends unchanged. The data remains generally neutral but with a few minor encouraging signs. As such, we are maintaining our near term “neutral/positive” outlook for the major equity indexes.

  • On the charts, the indexes closed evenly split yesterday with the SPX (page 2), DJI (page 2), MID (page 4) and VALUA (page 5) posting gains as the rest saw losses. NYSE internals were positive while the NASDAQ had a negative advance/decline but positive up/down volume. No major technical events were registered although we did see successful tests of support on the COMPQX (page 3), NDX (page 3) and RTY (page 5) as those three indexes closed well above their intraday lows. It’s too early to tell, but we suspect that action may possibly be a short term bottom for those indexes. Some of the cumulative advance/decline lines improved as well with the All Exchange and NYSE A/Ds turning neutral from negative. The NASDAQ cumulative A/D remains in a negative slope.
  • The data remains largely neutral including all of the McClellan OB/OS Oscillators (All Exchange:-29.55/+30.57 NYSE:-29.65/+41.44 NASDAQ:-32.57/+22.57). The Total Put/Call Ratio is also neutral at 0.82 as is the Open Insider Buy/Sell Ratio at 60.2. We would note there has been a steady increase in insider buying via this metric over the past several sessions. And while the Equity P/C is mildly bearish (0.55), the pros measured by the OEX P/C continue to press their bets on a resumption of strength as they remain very long calls at 0.64. Valuation finds consensus forward 12-month earnings estimates for the SPX at $169.04, leaving the forward 12-month p/e for the SPX at 17.1 versus the “rule of 20” implied fair value of a 17.0 multiple. The “earrings yield” stands at 5.9%.
  • In conclusion, While we are seeing some signs of minor encouragement as noted above, there is not yet enough of a shift in the weight of the evidence to cause an alteration in our near term “neutral/positive” outlook for the major equity indexes.
  • SPX: 2,864/2,898
  • DJI: 25,600/26,052
  • NASDAQ: 7,891/8,108
  • NDX: 7,400/7,579
  • DJT: 11,222/11,442
  • MID: 2,020/2,053
  • Russell: 1,672/NA
  • VALUA: 6,514/6,635

Chart Trends Unchanged

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