Data Mixed
The indexes closed mostly lower Friday with one exception as internals on the NYSE were negative while those on the NASDAQ were mixed. No technical events of import were generated on the charts while the data is a bit more mixed in its signals. As such, we see no cause to alter our near term “neutral/positive” outlook for the major equity indexes although, as mentioned in Friday’s comments, some slowing of progress is likely, in our opinion, given the magnitude of the bounce off of the recent lows.
- On the charts, all of the indexes closed lower Friday with the one exception of the RTY (page 5) closing higher on the day. Internals were negative on the NYSE as volumes declined from the prior session while the NASDAQ saw positive breadth but slightly negative up/down volume as overall trading volume rose slightly. No technical events of import were generated on the charts, leaving all of them in near term neutral sideways patterns. We would note the MID (page 4) traded above resistance on an intraday basis but was unable to violate on the close.
- The data is a bit mixed as are the McClellan OB/OS Oscillators finding the 1 day levels for the All Exchange and NYSE neutral with the NASDAQ slightly overbought (All Exchange:+44.85/-78.47 NYSE:+48.71/-54.22 NASDAQ:+55.56/-70.18). All of the 21 day levels remain oversold. The % of SPX components trading above their 50 DMAs (contrary indicator) remains depressed at 25.2%. However, insiders continue to be active buyers with a 181.3 Open Insider Buy/Sell Ratio. Seasonality remains encouraging has the November to April period coming out of a mid-term election year has seen positive returns since 1946 with a median return of 15% since 1930. Only two out of 21 periods were negative. Valuation, assuming current estimates hold, remains below implied fair value with the forward 12 month earnings estimates for the SPX via Bloomberg dipping to $171.79, leaving the forward 12-month p/e for the SPX at 15.9 versus the “rule of 20” implied fair value of a 16.8 multiple. The “earnings yield” stands at 6.31%.
- In conclusion, while the data is suggesting we may see some slowing of progress, the current condition of the charts and data continue to suggest we maintain our near term “neutral/positive” outlook for the major equity indexes.
- S&P 500: 2,682/2,749
- Dow Jones Industrial Average: 24,776/25,500
- NASDAQ: 7,275/7,434
- NDX: 6,892/7,079
- DJT: 10,143/10,380
- MID: 1,812/1,8
- Russell: 1,500/1,
- 5VALUA: 5,930//6,156
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