All Indexes Above Short Term Downtrend Lines
Opinion: All of the indexes close higher Friday with broadly positive internals as volumes declined slightly from the prior session. Positive events took place on the charts including all closing above their short term downtrend lines. However, the 1 day McClellan OB/OS Oscillators are now neutral across the board as well as some other data. So although we still suspect respective resistance levels will be be challenged, our near term outlook has turned neutral/positive while the intermediate term remains cautionary.
- On the charts, all of the indexes closed higher Friday as advancers swamped decliners by a sizable margin. Up/Down Volumes were very positive as well although overall volumes declined slightly. Positive events came in the form of all of the indexes closing above their short term downtrend lines, following the success of the DJT (page 3) and VALUA (page 5) from the prior session. As well, all of the indexes are now on bullish stochastic crossover signals.
- In our opinion, the next critical achievement required to bring more confidence back to further expectations of bullish action will be whether or not the indexes will be able to challenge and surpass their respective near term resistance levels listed below. We suspect tests of resistance are likely. Violations of resistance may be more problematic.
- The data has cooled a bit. All of the 1 day McClellan OB/OS Oscillators are now neutral post the recent rally (VALUA:-7.08 NYSE:-9.52 NASDAQ:-4.77). Yet the 21 day levels remain oversold (VALUA:-68.68 NYSE:-58.37 NASDAQ:-82.29). The OEX Put/Call Ratio (smart money) has dropped from bullish to mildly bullish at 0.97. As such, the thrust of the rally may have been somewhat depleted for the near term but not completely spent. However, the WST Ratio and its Composite are now both bearish at 62.9 and 152.1 respectively. So as a whole, the data is now mildly bullish versus its strongly bullish implications seen late last week.
3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or
remove ads
.
- In conclusion, we still see some positive potential for the indexes over the near term, but less so than a few days ago, thus turning our near term outlook to neutral/positive. The intermediate term remains a concern for several reasons as noted in earlier comments.
- Forward 12 month earnings estimates for the SPX from IBES are at $125.33 with a 6.57 earnings yield and a 15.2 forward multiple.
SPX: 1,822/1921
DJI: 15,383/16,340
COMPQX; 4,418/4,644
DJT: 6,580/7,022
MID: 1,230/1,315
RUT: 982/1,052
VALUA: 3,803/4,070