Data Remains Mostly Neutral
The indexes closed mostly higher Thursday with the two exceptions of the DJT and RTY posting losses. Internals were positive on the NYSE and NASDAQ as overall trading volumes declined from the prior session. The charts saw little change except for the DJI closing above near term resistance. The data remains largely neutral with a couple of cautionary signs emerging but not with enough vigor to alter our near term “neutral/positive” outlook for the major equity indexes.
- On the charts, all of the indexes closed higher yesterday except for the DJT (page 4) and RTY (page 5) dropping on the session. Internals were positive but on lighter trading volume than the previous session. The only technical event of import that was registered came from the DJI (page 2) that closed above its short term resistance levels, thus turning its near term trend to positive from neutral. So the near term trends find the DJI, MID (page 4) and DJT (page 4) in short term uptrends with the rest neutral. The cumulative advance/decline lines remain unchanged with the All Exchange and NYSE neutral and the NASDAQ negative. All of the cumulative A/Ds are still above their 50 DMAs.
- The data is still largely neutral including all of the McClellan OB/OS Oscillators (All Exchange:-20.92/+22.5 NYSE:-18.5/+32.21 NASDAQ:-26.12/+15.72). The Total Put/Call Ratio (0.84) and Open Insider Buy/Sell Ratio (55.9) are also neutral while the Equity P/C (contrary indicator) has turned bearish at 0.5 with the crowd long calls as the pros measured by the OEX Put/Call Ratio now expect weakness having now loaded up on puts at 2.96. 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 17.2 versus the “rule of 20” implied fair value of a 17.0 multiple. The “earrings yield” stands at 5.82%.
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- In conclusion, there has not yet been enough of a shift in the evidence from the charts and data to cause us to alter our near-term “neutral/positive” outlook for the major equity indexes.
- SPX: 2,864/2,902
- DJI: 25,784/26,262
- 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