Cumulative Market Breadth Neutral
The major equity indexes closed mostly lower Monday with mixed internals on the NYSE while NASDAQ internals were negative as volumes dropped on both exchanges from the prior session. One index did manage to squeeze out a new closing high as the near-term trends on the index charts remain a mix of neutral and positive projections. The data remains generally neutral as well. As such, no evidence appeared on our radar at the close to warrant a change in our near-term “neutral” macro-outlook for equities.
On the charts, the major equity indexes closed mostly lower yesterday with generally negative internals on lighter volume.
- Only the DJT and MID managed to post gains as the rest declined.
- The only technical event of note was the MID managing to post a new closing high.
- There was no change in the near-term trends as the DJT, MID, and VALUA remain positive with the rest neutral.
- Cumulative market breadth remains neutral on the All Exchange, NYSE and NASDAQ.
- No stochastic signals were generated.
The data finds the McClellan 1-Day OB/OS still in neutral territory (All Exchange: -3.54 NYSE: -6.28 NASDAQ: -2.36).
- The detrended Rydex Ratio (contrarian indicator) measuring the action of the leveraged ETF traders dipped to 1.33 but remains well inside bearish territory as they remain extended in their leveraged long exposure.
- The Open Insider Buy/Sell Ratio lifted to 27.2 and remains neutral.
- This week’s contrarian AAII Bear/Bull Ratio (0.65) remained neutral as does the Investors Intelligence Bear/Bull Ratio (22.3/56.5) (contrary indicator).
- Valuation finds the forward 12-month consensus earnings estimate from Bloomberg dipping to $214.04 for the SPX. As such, the SPX forward multiple is 21.9 with the “rule of 20” finding fair value at approximately 18.4.
- The SPX forward earnings yield is 4.57%.
- The 10-year Treasury yield closed at 1.62 and above resistance We view new resistance at 1.68% and support at 1.57%.
In conclusion, while we would like to be more upbeat regarding the market’s near-term prospects, the charts and data discussed above suggest we maintain our near-term “neutral” macro-outlook for equities.
SPX: 4,620/NA DJI: 35,904/36,203 COMPQX: 15,598/15,873A NDX: 15,975/16,200
DJT: 16,000/17,000 MID: 2,852/2,899 RTY: 2,400/2,450 VALUA: 9,937/10,151