Data Remains Mostly Neutral
Most of the indexes closed lower Wednesday with two exceptions. NYSE internals were mixed with the NASDAQ’s were negative. Volumes rose on both exchanges from the prior session. Some charts saw minor deterioration while the data remains largely neutral in nature. So while a few yellow flags may have appeared, we are of the opinion that not enough of a shift in the weight of the evidence has occurred to cause a change in our current near term “positive” outlook for the major equity indexes.
- On the charts, the DJI (page 2) and DJT (page 4) closed higher yesterday while the rest posted losses. NYSE breadth was negative but up/down volume was positive. The NASDAQ internals were negative on both counts. Some deterioration was seen on the COMPQX (page 3) and RTY (page 5) as both closed below their short term uptrend lines, turning those trends to neutral from positive. As well, The SPX (page 2), DJI (page 2), NDX (page 3) and MID (page 4) gave “bearish stochastic crossover signals”. We would also note the cumulative advance/decline lines for the All Exchange, NYSE and NASDAQ have turned neutral from positive. They remain above their 50 DMAs. Yet with the issues just noted, we believe the recent action may be nothing more than normal consolidation after last week’s gains at this stage. Breaks of support would darken that picture.
- The data is mostly neutral including all of the McClellan OB/OS Oscillators (All Exchange:-16.98/+25.34 NYSE:-32.1/+27.11 NASDAQ:-4.19/+27.89). The Equity Put/Call Ratio (0.62) and Open Insider Buy/Sell Ratio (33.7) are neutral as well while the Total P/C (contrary indicator) at .99 is bullish and the OEX P/C finds the pros very heavily weighted in calls at 0.39 as they bet on near term strength resuming. Valuation finds consensus forward 12-month earnings estimates for the SPX at $169.00, leaving the forward 12-month p/e for the SPX at 17.1 versus the “rule of 20” implied fair value of a 17.1 multiple. The “earrings yield” stands at 5.85%.
- In conclusion, while some minor weakening has appeared on the charts, we are not yet convinced that portends enough of a wind shift to alter our near term “positive” outlook for the major equity indexes..
- SPX: 2,864/NA
- DJI: 25,600/26,052
- NASDAQ: 7,936/NA
- NDX: 7,655/NA
- DJT: 11,222/11,442
- MID: 2,020/2,053
- Russell: 1,672/NA
- VALUA: 6,514/6,635