Data Largely Neutral
Opinion
All of the indexes closed higher Thursday with positive internals on the NSYE and NASDAQ as volumes declined from the prior session. An array of positive technical events occurred on the charts as they continued to improve from the correction of last week. The data is largely neutral. As such, given the continued technical improvements, we are maintaining our near term “neutral/positive” near term outlook for the markets.
- On the charts, all of the indexes closed higher yesterday with positive internals on the NYSE and NASDAQ. Several technical improvements were achieved in various forms. The DJI (page 2), COPMPQX (page 3) and NDX (page 3) all closed above another near term resistance levels while the SPX (page 2), DJI, MID (page 4) and RTY (page 5) closed above their near term downtrend lines, thus shifting their trend from negative to neutral. The SPX, MID and VALUA closed at resistance that has yet to be overcome. We would also note the DJI recovered back above its 50 DMA. The cumulative advance/decline lines for the All Exchange, NYSE and NASDAQ have turned positive with the NASDAQ’s moving back above its 50 DMA.
- The data is largely neutral including all of the McClellan OB/OS Oscillators (All Exchange:+30.28/-37.29 NYSE:+25.61/-39.81 NASDAQ:+38.03/-30.39). The Equity Put/Call Ratio (0.61) and OpenInsider Buy/Sell Ratio (63.8) are neutral as well while the Total and OEX Put/Call Ratios are both bullish at 0.92 and .89 respectively. We would also note the % of SPX stocks trading above their 50 DMAs has improved from its bottoming signal of 17 last week to a neutral 45.58%. Forward consensus 12 month earnings estimates for the SPX lifted slightly to $157.57.
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- In conclusion, the recent technical improvements on the charts combined with the data suggest we maintain our near term “neutral/positive” outlook for the markets. The primary reason for not being more positive is a lot of the oversold conditions powering the advance have been spent while more resistance levels overhead remain on the charts that may now prove to be a bit more challenging to overcome.
- Forward 12-month earnings estimates for the SPX from Bloomberg are $157.57 leaving a 5.8 forward earnings yield on a 17.3 forward multiple.
- SPX: 2,626/2,728
- DJI: 24,945/25,239
- COMPQX; 6,956/7,280
- NDX: 6,538/6,898
- DJT: 9,975/10,582
- MID: 1,801/1,895
- RTY: 1,511/1,547
- VALUA: 5,818/6,093