McClellan 1-Day OB/OS Oscillators Remain Neutral
The major equity indexes closed mixed Monday with negative internals on the NYSE while the NASDAQ saw negative breadth, but positive up/down volume, as overall volume declined from the prior session on both exchanges.
There was a mix of positive and negative technical events on the charts, leaving the indexes in a combination of bullish and neutral near-term trends while market breadth remains positive.
The data is little changed with the McClellan 1-Day OB/OS Oscillators staying within the neutral range. The end result is we have yet to see the appearance of evidence that would warrant a change in our current “neutral/positive” macro-outlook for equities.
On the charts, the major equity indexes closed mixed Monday with mostly negative internals, as noted above, while trading volumes lightened.
- The SPX, COMPQX and NDX closed higher, making new all-time closing highs as the rest of the indexes posted losses.
- The MID closed below its 50 DMA while the VALUA closed below its near-term uptrend line and is back to a neutral near-term trend.
- As such, all remain in short-term uptrends except the DJT and VALUA at neutral.
- Market breadth remains positive with the cumulative advance/decline lines for the All Exchange, NYSE and NASDAQ positive and above their 50 DMAs.
- No stochastic signals were generated by yesterday’s action.
Regarding the data, McClellan 1-Day OB/OS Oscillators are still neutral and not yet threatening, in our opinion (All Exchange: +1.62 NYSE: -20.64 NASDAQ: +19.61).
- The Rydex Ratio (contrarian indicator) measuring the action of the leveraged ETF traders dipped to 1.21 and remains in bearish territory.
- This week’s contrarian AAII bear/bull ratio (23.4/40.57) was little changed and remains mildly bearish while the Investors Intelligence Bear/Bull Ratio (contrary indicator) saw a drop in bears and rise in bulls at a bearish 15.8/56.5.
- The Open Insider Buy/Sell Ratio dropped to 27.2 and remains neutral.
- Valuation finds the forward 12-month consensus earnings estimate from Bloomberg rising to $192.510 for the SPX. As a result, the SPX forward multiple now stands at 22.3 with the “rule of 20” finding fair value at approximately18.5.
- The SPX forward earnings yield is 4.49%.
- The 10-year Treasury yield closed at 1.48. We view support at 1.4% and resistance at 1.55%. The 10-year yield remains in a downtrend from its March peak that we view as a positive for equities in general.
In conclusion, we have yet to see enough of a shift in the weight of the evidence to alter our near-term “neutral/positive” macro-outlook for equities.
SPX: 4,220/NA DJI: 33,174/34,248 COMPQX: 13,910/NA
NDX: 13,974/NA
RTY: 2,290/2,350 VALUA: 9,536/9,807