Data Remains Mostly Neutral
All of the indexes closed lower Monday with mixed internals on the NYSE while NASDAQ internals were negative. Volumes rose from the prior session on the NYSE and dipped on the NASDAQ. The charts saw no important technical events registered, leaving the near-term trends a combination of positive and neutral. The data continues to send a generally neutral near term forecast. Thus we are maintaining our near-term “neutral/positive” outlook for the major equity indexes at this time.
- On the charts, all of the indexes closed lower Monday. The NYSE had negative breadth but positive up/down volume with the NASDAQ negative on both counts. The charts remain a mix of positive and neutral near term trends with the DJI (page 2) and DJT (page 4) in the positive camp. The rest are neutral. Overall breadth has deteriorated a bit with the All Exchange and NASDAQ cumulative A/Ds negative as the NASDAQ’s is now below its 50 DMA. The NYSE cumulative A/D remains neutral and above its 50 DMA. Two charts worth monitoring closely at this point, in our opinion, are the COPMPQX (page 3) and RTY (page 5) as both closed on their respective support levels yesterday. Violations of support would raise a yellow flag although those events have not yet transpired.
- The data remains largely neutral including all of the McClellan OB/OS Oscillators (All Exchange:-38.12/+14.67 NYSE:-33.82/+22.23 NASDAQ:-44.58/+9.71). The Equity Put/Call Ratio (0.61), Open Insider Buy/Sell Ratio (53.4) and recent AAII Bear/Bull Ratio (27.33/39.0) are neutral as well. The Total P/C (contrary indicator) at a bullish 0.92 is being counterbalanced by a very bearish 2.35 OEX Put/Call Ratio as the pros remain long puts, expecting further weakness. Valuation finds consensus forward 12 month earnings estimates for the SPX at $168.96, leaving the forward 12-month p/e for the SPX at 17.1 versus the “rule of 20” implied fair value of a 17.0 multiple. The “earnings yield” stands at 5.85%.
- In conclusion, while breadth has become more of a concern, we do not yet see enough of a change on the charts or I the data to cause an alteration of our current “neutral/positive” outlook for the major equity indexes.
- SPX: 2,864/2,902
- DJI: 25,784/26,262
- NASDAQ: 7,891/8,108
- NDX: 7,400/7,579
- DJT: 11,222/11,442
- MID: 2,020/2,053
- Russell: 1,672/NA
- VALUA: 6,514/6,635
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