Charts, Data And Breadth Remain Mixed
The major equity indexes closed mostly higher Monday with two exceptions. Internals were positive on the NYSE and NASDAQ as trading volumes rose above those of the prior session. Only one technical event occurred on the chats with one closing back above its 50 DMA, leaving the near-term trends unchanged and a mix of neutral and bearish projections.
Market breadth saw some slight improvement, but was also mixed as were the signals from our data basket. As such, we have yet to see evidence appear to alter our current near-term “neutral” macro-outlook for equities.
On the charts, the major equity indexes closed mostly higher yesterday with positive internals on the NYSE and NASDAQ as trading volumes rose. The two exceptions were the COMPQX and NDX posting losses.
- Once again, the opening strength was the high point of the day as several charts closed at the midpoints of their intraday ranges.
- The only technical event worthy of note was the MID closing back above its 50 DMA.
- As such, the near-term trends were unchanged with the DJI, MID, RTY, and VALUA short term negative and the rest neutral.
- Market breadth saw some slight improvement with the NYSE cumulative advance/decline line turning positive and back above its 50 DMA. However, the A/Ds for the All Exchange and NASDAQ remain negative and below their 50 DMAs.
- No stochastic signals were generated.
The data finds the McClellan 1-Day OB/OS Oscillators still in neutral territory (All Exchange: -11.39 NYSE: -12.84 NASDAQ: -18.55).
- The Rydex Ratio (contrarian indicator) measuring the action of the leveraged ETF traders was unchanged at 1.21 and still finds the ETF traders heavily leveraged long and on a bearish signal.
- The Open Insider Buy/Sell Ratio was unchanged at 23.7 and remains bearish. They have yet to see price as attractive enough for purchase.
- This week’s contrarian AAII Bear/Bull Ratio and Investors Intelligence Bear/Bull Ratio (contrary indicator) were little changed. The AAII remained neutral (31.17/40.63) while the II turned neutral from bearish at 21.1/52.6.
- Valuation finds the forward 12-month consensus earnings estimate from Bloomberg dipping to $207.45 for the SPX. As such, the SPX forward multiple is 21.5 with the “rule of 20” finding fair value at approximately 18.7.
- The SPX forward earnings yield is 4.64%.
- The 10-year Treasury yield dipped to 1.32% but remained within its current trading range with resistance at 1.4% and support at 1.23%.
In conclusion, the state of the charts, market breadth, and data suggest we maintain our current “neutral” macro-outlook for equities at this time.
SPX: 4,440/4,535 DJI: 34,352/34,953 COMPQX: 14,890/15,379 NDX: 15,265/15,690
DJT: 14,239/14,732 MID: 2,676/2,737 RTY: 2,200/2,280 VALUA: 9,388/9,670
S&P 500
Dow Jones Industrials
NASDAQ Composite
NASDAQ 100
Dow Jones Transports
S&P Midcap 400
Russell 2000 Futures
