McClellan 1-Day OB/OS Oscillators Remain Neutral Despite Weakness
All the major equity indexes closed lower Monday with negative internals on the NYSE and NASDAQ where NYSE volumes rose from the prior session as the NASDAQ volumes decline. Once again, all closed at or near their intraday lows as late session buying failed to appear.
Two of the indexes violated near-term support levels and were testing important long term uptrend lines that, if violated, would add another cloud to the forecast. Near-term chart trends remain a mix of neutral and bearish projections. Meanwhile the data remains largely neutral, including the 1-day McClellan OB/OS Oscillators that have yet to find their levels in oversold territory. As such, we have yet to see evidence presented via our discipline that would suggest a change in our current near-term “neutral/negative” macro-outlook for equities would be justified.
On the charts, all the major equity indexes closed lower Monday with negative internals on the NYSE and NASDAQ as all closed at or near their intraday lows as late session buyers failed to appear.
- The COMPQX and NDX both broke below their respective near-term support levels and are tested long-term uptrend lines that have been in effect for the past year. Standard technical theory suggests the longer a trend is in place, the greater the significance should said trend be violated. Thus, the COMPQX and NDX trends are now to be watched very closely, in our opinion.
- Near-term trends remain neutral on the MID, RTY, and VALUA with the rest in downtrends.
- Yesterday’s weakness did not help the already negative cumulative advance/decline lines for the All Exchange, NYSE and NASDAQ that remain negative and below their 50 DMAs.
- No stochastic signals were generated.
The data finds the McClellan 1-Day OB/OS Oscillators remaining neutral despite the weakness and have yet to enter oversold territory (All Exchange: -23.23 NYSE: -17.05 NASDAQ: -28.33).
- The Rydex Ratio (contrarian indicator) measuring the action of the leveraged ETF traders dipped to 0.91 and remains neutral versus its bearish implications prior to the current correction.
- The Open Insider Buy/Sell Ratio is still neutral at 34.0 as of its last reading.
- This week’s contrarian AAII Bear/Bull Ratio (39.73/26.8) turned mildly bullish as bearish sentiment increased while the bulls waned. That “crowd” is now nervous.
- The Investors Intelligence Bear/Bull Ratio (22.1/46.5) (contrary indicator) was little changed and remains neutral.
- Valuation finds the forward 12-month consensus earnings estimate from Bloomberg dipping to $212.68 for the SPX, after a notable increase yesterday. As such, the SPX forward multiple is 20.2 with the “rule of 20” finding fair value at approximately 18.5.
- The SPX forward earnings yield is 4.95%.
- The 10-year Treasury yield lifted to 1.48%. We see resistance at 1.55% with support around 1.38%.
In conclusion, yesterday’s action did not present any evidence to warrant a change in our near-term “neutral/negative” macro-outlook for equities as the chart trends, breadth and the data remain cautionary.
SPX: 4,228/4,384 DJI: 33,600/34,539 COMPQX: 14,030/14,670 NDX: 14,054/14,920
DJT: 13,976/14,290 MID: 2,617/2,680 RTY: 2,200/2,280 VALUA: 9,361/9,590
All charts courtesy of Worden
S&P 500
Dow Jones Industrials
NASDAQ Composite
NASDAQ 100
Dow Jones Transports
S&P Midcap 400
Russell 2000 Futures
