COMPQX Gives “Bearish Stochastic Crossover” Signal
Opinion
All of the indexes closed lower yesterday with mixed internals on the NYSE while NASDAQ internals were negative. Volumes declined on both exchanges form the prior session. None of the current chart patterns were violated, leaving the majority of them confined within their narrow rectangle patterns that have been in place for over a month. The data remains mixed and mostly neutral, leaving no strong near term directional implications for the equity markets. As such, both our near and intermediate term outlooks for the major equity indexes remain neutral while a few clouds of concern have formed.
- On the charts, all of the indexes closed lower yesterday with mixed NYSE internals and negative NASDAQ internals with volumes dropping on both exchanges. While no major technical signals were generated on the charts, the COMPQX (page 3) did give a “bearish stochastic crossover” signal. However, said signal has yet to become actionable as the COMPQX chart has yet to give an actual sell signal via price. Both the SPX (page 2) and DJI (page 2) tested support but held. So at this point, most of the charts remain confined in their near term sideways patterns while the COMPQX is in a short term uptrend and the RTY (page 4) is now in a short term downtrend. The weakening of the small caps may prove to be the first crack in the charts. Yet actual further weakness for the others is needed before turning more negative.
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- The data remains mostly neutral including all of the McClellan OB/OS Oscillators (All Exchange:-23.04/+14.94 NYSE:-8.27/+35.27 NASDAQ:-37.53/-13.56). And while the Total and Equity Put/Call Ratios (contrary indicators) are bullish at 0.95 and 0.72 along with the OEX Put/Call Ratio (smart money) at 0.68, investor psychology remains a concern with a very bearish 69.9 Rydex Ratio (contrary indicator) as the leveraged ETF traders are heavily leveraged long in contrast to insiders remaining largely active sellers as noted by the 8.6 Gambill Insider Buy/Sell Ratio. As such, the data appears to be stuck in the same quagmire as the charts in its lack of near term directional implications.
- In conclusion, the weakening of the RTY combined with investor psychology continues to be of some concern. Yet until there is some violation on the index charts, we are forced to keep our near term “neutral” outlook for the indexes in place.