Data Neutral
Opinion
All of the indexes closed lower Tuesday with negative internals on the NYSE and mixed internals on the NASDAQ. Trading volumes rose from the prior session on the NYSE and sipped on the NASADAQ. Two minor cautionary events occurred on the charts while the data is now entirely neutral. So while the futures are indicating a negative open this morning, the current state of the charts and data suggest we maintain our near term “neutral/positive” outlook in place for the major equity indexes for the present.
- On the charts, all of the indexes closed lower yesterday, giving up early gains to close at or near their intraday lows. The NYSE saw negative internals on higher volume while the NASDAQ’s breadth was negative but up/down volume positive. Two technical events occurred that may be worth noting. The COMPQX (page 3) gave a bearish stochastic crossover signal, joining the NDX (page 3) that did so a few days ago. The MID (page 4) closed below its short term uptrend line, turning its trend from positive to neutral. So we now find the indexes evenly split regarding trend with the SPX (page 2), DJI (page 2) COMPQX (page 3) and MID (page 4) in neutral sideways patterns as the rest remain in short term uptrends. The cumulative advance/decline lines for the All Exchange, NYSE and NASDAQ remain positive and above their 50 DMAs. However, we would repeat our observation that the stochastic levels which are overbought may present some headwind for the near term. Should we see further bearish crossovers, the outlook would likely dim for the near term. Only two of the 8 indexes have do so at this point.
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- The data is now entirely neutral including all of the McClellan OB/OS Oscillators (All Exchange:+26.48/+40.69 NYSE:+24.32/+46.18 NASDAQ:+30.48/+38.07). The Equity (0.58), Total (0.83) and OEX (1.21) put/call ratios are neutral as is the OpenInsider Buy/Sell Ratio at 38.1. Valuation finds the forward 12 month P/E for the SPX based on forward 12 month consensus earnings estimates from Bloomberg of $163.21 at a 16.7 multiple versus the “rule of 20” implied fair value of 16.9.
- 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. However, recent action suggests a more “neutral” outlook may be on the horizon. Today’s action may be telling in that regard.
- 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