Opinion: We refrained from issuing a comment yesterday as the data that is an integral part of our analysis was unavailable. Unfortunately, we have the same situation this morning. As such, we will be discussing only the charts, for the most part, for this edition. All of the indexes closed lower yesterday with negative internals on the NYSE and NASDAQ as volumes rose on both exchanges from the prior session. All closed at or near their intraday lows. No violations of support were registered although two of the indexes did close below their short term uptrend lines. As such, we are maintaining our near term “neutral” outlook for the major equity indexes.
- On the charts, all of the indexes closed lower yesterday with negative internals on higher trading volume. All closed near their intraday lows. While no support levels were violated, the SPX (page 2) and DJI (page 2) closed below their short term uptrend lines, turning their trends from positive to neutral. The rest remain in short term uptrends. Yet we continue to see all of the stochastic levels well into overbought territory while all of the charts are extended well above their 50 DMAs and support levels. In our opinion, the extended conditions suggest there is room on the downside although no sell signals have been generated. The VIX remains near its lows for the year at 12.94 implying the potential for some volatility reentering the markets as well.
- The data is unavailable this morning so we have no sense of where the OB/OS Oscillators are nor the put/call ratios. Valuation finds the SPX at fair valuation based on the forward 12-month consensus earnings estimates from Bloomberg of $163.30 at a 17.0 multiple versus the “rule of 20” implied fair value of 17.0.
- In conclusion, with no access to the data, we hesitate to make a full comment on the markets. Nonetheless, the levels of price extension on the charts combined with stochastic readings, valuation and the continue to suggest we maintain our near term “neutral” outlook for the major equities in place.
- : 2,736/2,784
- : 24,665/25,337
- : 7,418/NA
- NDX: 6,943/NA
- : 10,832/11,218
- : 1,950/NA
- : 1,628/NA
- VALUA: 6,291/NA