Data Remains Mixed
The indexes closed mostly lower Tuesday with negative internals on the NYSE and NASDAQ as volumes declined from the prior session. The NDX was the only index to post a gain. Trading was a bit heavy as in the prior session. However, all of the uptrends remain intact. The data remains a bit mixed. As such, while we may see a bit more weakness given the action of the past two days, we are maintaining our near term positive outlook for the major equity indexes at this time.,
- On the charts, the indexes closed mostly lower yesterday with negative internals with the one exception of the NDX (page 3) posting a gain that pushed price above its short term resistance. That event shifted the NDX near term trend to positive as are the rest of the index charts. The cumulative advance/decline lines for the All Exchange, NYSE and NASDAQ remain positive as well. No support levels or uptrend lines were violated. However, with that said, we would note that several of the indexes closed at or near their lows of the day as was the case in the prior session. As discussed in yesterday’s comment, that session’s weak close raised a bit of a yellow flag. For the most part, yesterday’s action was similar. Those two sessions suggest there may be a bit more weakness in the offing within the current uptrends.
- The data remains mixed with the 1 day McClellan OB/OS Oscillators still neutral (All Exchange:+15.21/+8.92 NYSE:++11.01/+102.1 NASDAQ:++18.36/+66.89). The detrended Rydex Ratio (0.42) and new AAII Bear/Bull Ratio (24.0/37.67) are neutral as well. However, the Open Insider Buy/Sell Ratio is a cautionary 20.3 as insiders continue selling. We would note this is not an accurate timing indicator. The OEX Put/Call Ratio (1.62) finds the pros heavy in puts. The % of SPX stocks trading above their 50 DMAs remains near peak levels as well at 90.5. The spread between the forward p/e for the SPX based on consensus estimates from Bloomberg at $167.52 versus the “rule of twenty” has now shrunk to 16.7 versus 17.4. While positive, it is much closer to fair value as estimates have been declining while the SPX has risen.
- In conclusion, we have yet to see any sell signals on the charts with the uptrends staying intact, thus causing us to keep our “positive” near term outlook in place. However, the issues discussed above suggest a bit more weakness may be experienced over the very near term.
- SPX: 2,745/2,796
- DJI: 25,858/26.370
- Nasdaq: 7,404/7,575
- NDX: 7,008/7,206
- DJT: 10,298/10,675
- MID: 1,898/1,956
- Russell: 1,546/1,587
- VALUA: 6,135/6,330