Data Remains Mostly Neutral
Opinion
All of the indexes closed higher Monday with positive internals on the NYSE and NASDAQ as volumes declined on both exchanges from the prior session. The charts saw a pair of resistance levels violated and another new closing high. So the charts remain a mix of neutral and positive trends. The data remains largely neutral with a couple of minor cautionary signals appearing. As such, given the state of the charts and data, we are leaving our near term “neutral/positive” outlook for the major equity indexes intact.
- On the charts, all of the indexes closed higher yesterday with positive internals although demand seemed to dip as volumes declined from those of the preceding session. Positive events occurred on the DJT (page 4) and MID (page 4) as both closed above near term resistance, turning the DJT trend to positive from neutral. As swell, the RTY (page 5) made its third consecutive new high close. Both the SPX (page 2) and DJI (page 2 ) tested resistance but failed to violate on a closing basis. So the SPX, DJI and COMPQX (page 3) remain in neutral sideways trends with the rest positive. The cumulative advance/decline lines for the All Exchange, NYSE and NASDAQ remain positive and above their 50 DMAs but all of the stochastic levels remain overbought with the COMPQX still on a bearish crossover signal.
- The data is largely neutral. The NASDAQ 1 day McClellan OB/OS Oscillator slipped into overbought territory with the rest staying neutral (All Exchange:+49.35/+41.98 NYSE:+49.68/+49.45 NASDAQ:+50.56/+37.45). The Total (0.82) and OEX (1.0) Put/Call Ratios are also neutral as are the OpenInsider Buy/Sell Ratio at 41.5 and new AAII Bear/Bull Ratio at 25.0/32.33. The Equity Put/Call Ratio is a mildly bearish 0.54. Valuation finds the forward 12 month P/E for the SPX based on forward 12 month consensus earnings estimates from Bloomberg of $163.08 at a 16.8 multiple versus the “rule of 20” implied fair value of 16.9.
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- In conclusion, given the current state of the charts and data, we are maintaining our near term “neutral/positive” outlook for the major equity indexes in place for the present with the “neutral” aspect largely due to stochastic levels and valuation.
- SPX: 2,671/2,741
- DJI: 24,357/25,017
- NASDAQ: 7,140/7,415
- NDX: 6,769/7,017
- DJT: 10,549/10,995
- MID: 1,917/1,979
- Russell: 1,582/NA
- VALUA: 6,124/6,288