COMPQX Makes Another New Closing High
Opinion
Most of the indexes closed higher Friday with positive internals as volumes dropped on both exchanges. The one exception was the DJI closing lower on the day. All of the current sideways trends remain intact while the bulk of the data remains neutral as well, with the exception of the psychology data. As such, there has yet to appear enough evidence to shift our current near term “neutral” outlook for the major indexes while historically high forward valuation of the SPX keeps the intermediate view “neutral” as well.
- On the charts, all of the indexes closed higher Friday with the exception of the DJI (page 2) closing lower in the day. While internals were positive, overall volumes declined on the session. The COMPQX (page 3) managed to post another new closing high while the balance of the indexes remain confined within there month long sideways patterns. The VIX chart (page 9) remains at its 12-month lows and continues to imply, in our opinion, the potential for volatility to reenter the markets that may result in possible sell signals. However, such signals have yet to appear.
- The data remains mostly neutral with the exception of the psychology data. All of the McClellan OB/OS Oscillators are neutral (All Exchange:+13.35/+26.74 NYSE:+26.32/+44.71 NASDAQ:+1.38/+0.92) as well as the Equity Put/Call Ratio at 0.63. The OEX Put/Call Ratio (smart money) remains bullish at 0.55 as the pros expect some strength that has yet to appear.
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- The psychology data is what we find to be troubling. The crowd is overly bullish as noted by the Investors Intelligence Bear/Bull Ratio of 18.3/58.6 with advisors devoid of concerns as well as the AAII Bear/Bull Ratio of 26.97/43.64. The Rydex Ratio (contrary indicator) still shows the leveraged ETF traders very leveraged long at 65.3. In sharp contrast, the Gambill Insider Buy/Sell Ratio at 6.3 shows insiders very active sellers at current prices and, in fact, have been increasing their selling activity of late. We repeat our concerns of a bullish crowd when insiders are exiting the markets.
- In conclusion, even with our concerns noted above, the charts have yet to break their noncommittal patterns that have been in place for the past month. Thus we are unable to alter our near term “neutral” view, in spite of some of our concerns.