Data Mostly Neutral
Opinion: Most of the indexes closed lower yesterday with mixed internals on the NYSE while NASDAQ internals were negative. Trading volumes were dull and below those of the prior session on both the NYSE and NASDAQ. No technical events of import were generated on the charts, leaving most in neutral sideways patterns. The data is largely neutral as well with a few encouraging signals. As such, our shift to a “neutral/positive” near term outlook form “positive” yesterday remains intact.
- On the charts, the indexes closed mixed yesterday with only the DJT (page 4) and MID (page 4) managing to post gains. The rest closed lower and near the midpoints of their intraday ranges. Internals were mixed on the NYSE with a negative breadth but positive up/down volume while NASDAQ internals were negative on both accounts. However, no technical events of import were registered as all support levels held. As such, we find the DJT and VALUA (page 5) to be the only indexes remaining in short term uptrends with the rest neutral. The cumulative advance/decline lines for the All Exchange, NYSE and NASDAQ are neutral and above their 50 DMAs.
- The data is largely neutral with a few encouraging signs. All of the McClellan OB/OS Oscillators are neutral (All Exchange:-9.42/+15.85 NYSE:-9.36/+29.4 NASDAQ:-10.43/+4.76) with the Equity P/C (0.61) and OpenIsider Buy/Sell Ratio (39.4) neutral as well. Positive signals are coming from the OEX Put/Call Ratio (0.6) as the pros are long calls with the Total P/C (contrary indicator) at 0.93 and the AAII Bear/Bull Ratio (35.67/31.33) finding the crowd a bit cautious. Valuation finds the forward p/e for the SPX based on forward 12 month earnings estimates for the SPX at a 16.7 multiple and close to implied fair value of a 17.0 multiple based on the “rule of 20”.
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- In conclusion, the weakness seen over the past three sessions needs to see some relief in order to return to a “positive” near term outlook for the major equity indexes from our current “neutral/positive” opinion.
- Forward 12 month earnings estimates for the SPX from Bloomberg are $161.18 leaving a 6.04% forward earnings yield on a 16.6 forward multiple.
SPX: 2,646/2,711
DJI: 24,269/24,982
COMPQX; 7,100/7,330
NDX: 6,625/6,935
DJT: 10,391/10,788
MID: 1,887/1,928
RTY: 1,545/1,595
VALUA: 6,045/6,256