Data Mostly Neutral
Opinion: The indexes closed higher yesterday with the one exception of the DJI posting a minor loss. Internals were positive on both exchanges while volumes dipped from the prior session on the NYSE and rose on the NASDAQ. Three more new closing highs were achieved on the charts whose near term uptrends remain intact. The data is mixed and devoid of strong probability implications. So in spite of our valuation concerns, we remain of the opinion that the near term uptrends of the indexes should continue to be respected until proven otherwise.
- On the charts, the only index to close lower yesterday was the DJI (page 2). All the others advanced with the DJT (page 3), RTY (page 4) and VALUA (page 5) making new closing highs. All of the near term uptrend s remain intact as do the cumulative advance/decline lines for the NYSE and NASDAQ. Regarding the NDX (page 9), it also rose yesterday but remains below its 50 DMA. We will continue to monitor it closely for any important signals. The SPX (page 2) did give a “bearish stochastic crossover” signal but has not been validated by a violation of support on the chart.
- The data is mixed. The McClellan OB/OS Oscillators are in the same shape as the prior readings with the 1 day levels neutral and the 21 day levels overbought (All Exchange:+34.5/+70.97 NYSE:+34.46/+81.18 NASDAQ:+37.22/+65.6). The Equity put/call ratio is a neutral 0.69 while the Total P/C (contrary indicator) is bullish at 0.94. Again we see a complete flip on the OEX P/C as the prior heavy put exposure has migrated to heavy call expose at 0.52 as the pros continue to hop back and forth across this fence. The Open Insider Buy/Sell Ratio remains neutral at 41.1.
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- In conclusion, given the state of the cumulative advance/decline lines and short term uptrends, we continue to suggest respecting said uptrends until proven otherwise, in spite of our valuation concerns. We will continue to closely watch the NDX.
- Forward 12 month earnings estimates for the SPX from Bloomberg of $137.37 leave a 5.56 forward earnings yield on a 18.2 forward multiple, over a decade high.
SPX: 2,475/2,506
DJI: 22,047/NA
NASDAQ: 6,361/6,461
DJT: 9,542/NA
MID: 1,740/1,781
RTY: 1,425/NA
VALUA: 5,589/NA