All 1-Day McClellan OB/OS Oscillators Overbought
The major equity indexes closed mostly higher with the exceptions of the DJT and MID posting losses. Internals were positive as NYSE volumes rose and NASDAQ volumes declined from the prior session. All closed near their highs of the day.
The only technical event of note on the charts was the COMPQX managing to close back above its near-term uptrend line, turning its trend bullish from neutral.
Meanwhile, the data finds the 1-day McClellan OB/OS Oscillators overbought with some very slight moderation on the AAII Bear/Bull Ratio. Forward 12-month consensus earnings estimates from Bloomberg saw another uptick. So, in our opinion, the combination of charts, data and valuation continue to imply some further consolidation is the more likely scenario, for the near-term, before a resumption of strength.
On the charts, all but the DJT and MID closed higher yesterday with positive internals on the NYSE and NASDAQ. While all closed near their intraday highs, only the COMPQX managed to register a technical event as it closed back above its near-term uptrend line, turning said trend to bullish from neutral. However, the rest of the charts remain neutral as resistance levels and trend have yet to shift.
Market breadth saw some improvement as the cumulative advance/decline lines for the All Exchange and NYSE turned positive from neutral with the NASDAQ’s staying neutral. No further stochastic signals were generated.
The data now finds the McClellan 1-Day OB/OS all back in overbought territory (All Exchange: +62.69 NYSE: +66.02 NASDAQ: +61.61).
- The % of SPX issues trading above their 50 DMAs (contrarian indicator) rose to 63% but remains neutral.
- The Open Insider Buy/Sell Ratio declined to 47.1, also staying neutral.
- The detrended Rydex Ratio (contrarian indicator) dipped to +0.39 and is neutral versus its prior bullish implications near the market lows.
- This week’s AAII Bear/Bull Ratio (contrarian indicator) slipped to 1.29 as the crowd became a bit less cautious, dropping its forecast to bullish from very bullish. Meanwhile the Investors Intelligence Bear/Bull Ratio (contrary indicator) is now 34.1/37.7 remaining very bullish, staying near peak fear levels seen 4 times over the past decade.
- The forward 12-month consensus earnings estimate from Bloomberg for the SPX lifted further to $234.01. As such, the SPX forward multiple stands at 19.6 with the "rule of 20" finding ballpark fair value at 17.6.
- The SPX forward earnings yield is now 5.11%.
- The 10-year Treasury yield closed higher at 2.41. We view resistance as 2.64% while support remains at 2.0%.
In conclusion, there has not yet been enough evidence presented, in our opinion, to imply the current period of consolidation in the markets is likely completed. As such, we suspect some further sideways action is more probable over the very near term.
SPX: 4,516/4,600 DJI: 34,697/35,202 COMPQX: 14,202/14,938 NDX: 14,642/15,358
DJT: 15,955/16,240 MID: 2,685/2,792 RTY: 2,050/2,090 VALUA: 9,551/9,922