Data Unavailable
Opinion: The majority of the indexes closed higher yesterday with positive internals as volumes expanded on both exchanges. The very weak opening saw tests of support levels as postulated in yesterday’s note. However, after the first hour, buyers entered the market and lifted prices through the remainder of the day resulting in a notable intraday reversal. The net result was successful tests of support by the indexes while one actually managed a test of resistance as well. The bulk of the data is unavailable this morning, leaving us primarily with the charts for our analysis. Yesterday’s action was encouraging but we suspect some further tests of resistance may be required before further progress can be made. As such, we are short term neutral and neutral on the intermediate term as well, given the improvements in market breadth.
- On the charts, most of the indexes closed higher yesterday, the exception being the DJT (page 3). All closed at or near their intraday highs. As well, all saw successful tests of their respective support levels while the RUT (page 4) also saw a test of resistance. As all will know, the RUT has been the worst performer over the past several months. Its test of resistance, in our opinion, is encouraging as it implies a further broadening of breadth, should said resistance be violated on a closing basis. Such an event would be positive for the markets as a whole, in our view.
- We would also note the VALUA (page 5) managed to join the DJT by closing above its 50 DMA, another positive sign.
- All of the stochastic levels remain overbought. They may stay that way for a while. Yet they add to our interpretation that current resistance levels may require further work before being violated, thus leaving us near term neutral in our outlook.
- Our intermediate term outlook remains neutral as market breadth has seen some improvement with both the All Exchange and NYSE A/Ds now in neutral trends. The NASDAQ A/D remains in its downtrend but the RUT offers some encouragement that this A/D may turn neutral as well.
- Hopefully, the data will be available again tomorrow to help shed further light on the market’s probabilities.
- Forward 12 month earnings estimates for the SPX from IBES is $123.12 leaving a 6.41% forward earnings yield with a 15.6 forward multiple.
SPX: 1,903/1,948
DJI: 16,204/16,660
COMPQX; 4,431/4,569
DJT: 7,057/7,513
MID: 1,289/1,346
RUT: 995/1,021
VALUA: 4,062/4,203