McClellan OB/OS Oscillators Remain Overbought
The indexes closed mixed Monday with positive internals on the NYSE and NASDAQ as NYSE volumes slipped from the prior session while the NASDAQ’s rose modestly. The charts saw a mix of mildly negative and positive events, leaving all of the near term uptrends intact. The data is mostly neutral with the exception of the McClellan OB/OS Oscillators remaining overbought. As such, while we remain “neutral/positive” in our near term outlook, the OB/OS levels are of some concern, suggesting at least the potential for some tempering of momentum.
- On the charts, the indexes closed mixed yesterday although internals were positive on both the NYSE and NASDAQ. The SPX (page 2), DJI (page 2) and DJT (page 4) closed lower on the day with the DJI and DJT both closing back below their 50 DMAs. The rest of the indexes advanced with the COMPQX (page 3) and NDX (page 3) posting new closing highs. The MID (page 4) closed above its near term resistance. All of the near term trends remain positive while the All Exchange, NYSE and NASDAQ cumulative advance/decline lines are positive as well with the NASDAQ’s making a higher high. Several of the stochastic levels are overbought but have yet to flash any bearish crossover signals.
- The data is mostly neutral with the exception of the McClellan OB/OS Oscillators remaining overbought (All Exchange:+79.88/+87.93 NYSE:+75.24/+91.26 NASDAQ:+87.69/+92.42). The OB/OS levels are our primary reason for not being more positive in our near term outlook as at current levels, they imply the probability of at least some near term slowing of momentum if not some retracement of recent gains. The Equity and OEX Put/Call Ratios are neutral at 0.57 and 1.0 respectively with the Total P/C a mildly bullish 0.87. The Openinsider Buy/Sell Ratio remains neutral at 32.0 with the new AAII Bear/Bull Ratio (contrary indicator) moderating to a neutral 24.33/35.67.
- In conclusion, we remain “neutral/positive” in our near term outlook for the major equity indexes. Current OB/OS levels are the primary reason for not being more enthusiastic.
- Forward 12-month earnings estimates for the SPX from Bloomberg are $157.86 leaving a 5.67% forward earnings yield on a 17.6 forward multiple.
- : 2,723/2,799
- : 24,883/25,705
- : 7,374/NA
- : 6,926/NA
- : 10,475/10,761
- : 1,902/1,960
- : 1,565/1,608
- VALUA: 6,105/6,251