Data Mostly Neutral
Opinion: Most of the indexes closed higher yesterday with exception of the SPX and DJI. Internals were positive on both exchanges with only one technical event of note being generated. All of the short term uptrend lines remain intact with the data still mostly in neutral territory. As such, our near term “neutral/positive” outlook remains in place along with that of the more intermediate term. Yet we would continue to note forward valuation is somewhat stretched again, post the recent gains.
- On the charts, all but the SPX (page 2) and DJI (page 2) closed higher on the day. The one technical event of note was the VALUA (page 5) closing above its short term resistance, adjusted below. Both the SPX and DJT (page 3) tested resistance but failed to violate while the DJT remains only index below its 50 DMA. The MID (page 4) closed on resistance. All of the short term uptrend lines remain intact while the stochastic levels are overbought but have yet to signal bearish crossovers.
- The data remains mostly neutral including all of the McClellan OB/OS Oscillators with the exception of the NASDAQ 1 day at a mildly overbought +58.33. A short term cautionary signal is coming from the OEX Put/Call Ratio (smart money) that now finds the pros very long puts at 2.77 and expecting some weakness near term. So although the OEX is expressing caution, we are of the opinion that the balance of the data is not supportive enough to tilt the scales from their generally neutral levels at present.
- In conclusion, we are of the opinion that the current short term uptrends combined with the data continue to have “neutral/positive” implications for the indexes over the near term. Positive breadth keeps us “neutral/positive” for the intermediate term, although valuation is becoming stretched again at a 16.8 forward 12 month multiple for the SPX.
- Forward 12 month earnings estimates for the SPX from IBES of $124.52 leave a 5.94% forward earnings yield on a 16.8 forward multiple.
SPX: 2,057/2,100
DJI: 17,527/17,922
COMPQX; 4,820/4,972
DJT: 7,476/7,823
MID: 1,453/1,493
RUT: 1,119/1,169
VALUA: 4,547/4,691