Investing.com - Financial Markets Worldwide

Charts And Data Suggest Pause

ByGuy S. Ortmann, CMT
Published 01/09/2015, 09:43 AM
US500
0.59%
DJI
0.55%
US2000
1.23%
IXIC
0.53%
DJT
0.66%
US10YT=X
-0.29%
MID
0.86%

Insiders Remain Sellers

Opinion

The markets closed higher yesterday continuing the bounce with positive internals and good volume. There were some improvements on the charts as well. However, as new resistance levels are near at hand and some of the data turning cautionary, we are now of the opinion that said bounce may have run its course leading to a more neutral to slightly negative near term outlook.

  • On the charts, all of the indexes advanced yesterday with good volume and breadth. Improvements came in the form of all but the DJT (page 3) closing above their 50 DMAs and all but the COMPQX closing above near term resistance. However, new resistance levels (adjusted below) are very close at hand suggesting a possible pause or completion of the recent bounce rally as complimented by some of the data.
  • On the data front, all of the McClellan OB/OS Oscillators remain neutral (NYSE:+26.66/+26.25 NASDAQ:+6.59/+9.16). So, no overbought conditions exist on that front. However, the Equity Put/Call Ratio (contrary indicator) now shows the crowd heavy in calls after over a 600 point pop from the lows in the DJI while the pros have taken the opposite side of the trade with a 1.79 OEX Put/Call Ratio (smart money) as they are very heavy puts. As well, insiders remain fairly active sellers with a 8.6 Gambill Insider Buy/Sell Ratio while the Rydex Ratio (contrary indicator) still shows the leveraged ETF traders at peak levels of leveraged long exposure of 67.1.
  • In conclusion, the data is starting to cast a few clouds over the recent reflex rally suggesting the lion’s share of the bounce has likely already transpired. And while it is too early to say some downside might be expected over the near term, we are of the opinion that near term risk/reward has turned at least to neutral while sentiment leaves us still cautious for the more intermediate term outlook.

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