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Near-Term Trends Remain Positive

By Guy S. Ortmann, CMTStock MarketsDec 04, 2017 09:43AM ET
Near-Term Trends Remain Positive
By Guy S. Ortmann, CMT   |  Dec 04, 2017 09:43AM ET
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Data Mixed


All of the indexes closed lower Friday during a volatile session. However, none of the near term uptrends were violated on the charts while support levels remain intact. Internals were actually positive on the NYSE as NASDAQ internals were negative. Trading volumes were below prior levels on both the NYSE and NASDAQ. The data is a mixed bag while valuation remains elevated near its historic highs. Given the fact that the chart trends remain positive with no major negative data signals, we remain of the opinion the current near term trends of the indexes should continue to be respected while valuation may prove to be a headwind.

  • On the charts, all of the indexes closed lower Friday. Volumes were below those of the prior session while NYSE internals were actually positive. Of greatest import on the charts, in our opinion, is all of the indexes survived the volatile session maintaining both their near term uptrends and support levels. All but the DJT (page 4) closed near their highs of the day suggesting buyers took advantage of the weakness to add to positions. The SPX (page 2) and COMPQX (page 3) tested their uptrend lines while the RTY tested support. The NDX (page 3) that has been showing some relative weakness over the past few sessions closed on its uptrend line while the COMPQX gave a “bearish stochastic crossover signal” that has not yet become actionable as support remains intact. All of the cumulative advance/decline lines remain intact and positive as well.
  • The data is mixed. All of the McClellan OB/OS Oscillators are neutral (All Exchange:+17.2/+22.42 NYSE:+32.26/+31.02 NASDAQ:+8.25/+17.74) as are the Total Put/Call Ratio (0.78) and Open Insider Buy/Sell Ratio (32.4). The Equity Put/Call Ratio (contrary indicator) is a mildly bearish 0.55 with the OEX P/C a very bearish 2.04. As such, there is no dominant signal coming from the data at present.
  • In conclusion, while extended valuation remains a concern, the indexes’ abilities to withstand Friday’s wild swings that left the charts intact suggests to us said near term trends should still be respected until proven otherwise.
  • Forward 12-month earnings estimates for the SPX from Bloomberg of $140.60 leave a 5.46 forward earnings yield on a 18.8 forward multiple.
  • SPX: 2,589/NA
  • DJI: 23,427/NA
  • Nasdaq: 6,759/NA
  • NDX: 6,292/NA
  • DJT: 9,978/NA
  • MID: 1,825/NA
  • Russell: 1,500/NA
  • VALUA: 5,837/NA

Near-Term Trends Remain Positive

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Near-Term Trends Remain Positive

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