Data DelayedOpinion
All of the indexes closed higher yesterday with positive internals. However, volumes declined from the prior session. Nonetheless, several positive events took place on the charts as multiple resistance levels and 50 DMAs were violated on the upside. Some improvement was seen in two of the Advance/Decline lines as well, offering further encouragement. The data is delayed, hampering our analysis. The McClellan OB/OS Oscillators are overbought but, when combined with the rest, may suggest a slowing of progress as opposed to near term weakness. As such, we remain neutral for the near term, although some further progress may be seen, while our intermediate term view is now mildly positive.
- On the charts, all of the indexes closed higher yesterday with positive internals as all closed at or near their intraday highs. However, volumes declined suggesting a lessening of demand. Several positive chart events occurred. The SPX (page 2), DJI (page 2), MID (page 4) and VALUA (page 5) all closed above their 50 DMAs, following the DJT’s lead that accomplished that feat on 2/17. As well The SPX, DJI, COMPQX and RUT all closed above their short term resistance levels that have been adjusted below. All in all, it was a good day. However, we will keep a watchful eye on the stochastic levels as all are overbought but have yet to signal bearish crossovers. Should such crossovers appear, it would temper our near term expectations.
- The data is delayed this morning but there is enough evidence to draw some conclusions. All of the McClellan 1 day OB/OS Oscillators are overbought (All Exchange:+79.61 NYSE:+85.15 NASDAQ:+76.88). Those are readings as of Wednesday’s close. So, they are likely even more overbought this morning. The NYSE 21 day level has entered overbought territory as well at +53.2. Thus there is some increase in near term risk in that regard. However, in spite of its moderation, the Gambill Insider Buy/Sell Ratio at 25.7 (mildly bullish) still sees some buying action from the insiders while the Rydex Ratio (contrary indicator) at 38.6 is only mildly cautionary. Yesterday’s OEX Put/Call Ratio (smart money) of 0.95 found the pros mildly bullish.
- In conclusion, the charts are suggesting more progress while the data is suggesting a moderation of strength for the short term. Improved breadth is resulting in our intermediate term outlook shifting to mildly positive.