McClellan OB/OS Oscillators Remain Neutral
All of the indexes closed lower Friday with negative internals on the NYSE and NASDAQ as volumes rose on both exchanges from the prior session. The charts saw two violations of short term uptrends and several bearish stochastic crossover signals but the data remains largely neutral with some bullish signals from the Put/Call ratios. So in spite of the weakness, we are maintaining our near term “positive” outlook for the major equity indexes.
- On the charts, all of the indexes closed lower Friday with negative internals on higher trading volumes. The SPX (page 2) and DJI (page 2) closed below their short term uptrend lines, turning neutral from positive and joining the RTY (page 5) in that technical pattern. The SPX, DJI, DJT (page 4), MID (page 4) and VALUA (page 5) all flashed bearish stochastic crossover signals but did not violate support levels on the charts that would make said signals actionable. The rest of the indexes remain in short term uptrends while the cumulative advance/decline lines for the All Exchange, NYSE and NASDAQ have turned neutral from positive.
- The data is generally a mix of neutral and positive readings. All of the McClellan OB/OS Oscillators remain neutral (All Exchange:-22.24/-7.02 NYSE:-34.16/+3.74 NASDAQ:-10.62/-15.11) as does the Open Insider Buy/Sell Ratio at 34.1. However, bullish signals are coming from the put/call ratios as the crowd has become nervous as seen by the Total and Equity Put/Call Ratio (contrary indicators) at 1.2 and 0.7 respectively while the pros are now heavily in calls with a 0.52 OEX Put/Call Ratio. Valuation finds consensus forward 12-month earnings estimates for the SPX at $169.11, leaving the forward 12 month p/e for the SPX at 16.8 versus the “rule of 20” implied fair value of a 17.1 multiple. The “earrings yield” stands at 5.97%.
- In conclusion, in spite of Friday’s weakness, given the current state of the charts and data we are maintaining our near term “positive” outlook for the major equity indexes.
- SPX: 2,790/2,853
- DJI: 25,000/26,000
- NASDAQ: 7,786/7,936
- NDX: 7,294/7,507
- DJT: 10,925/11,254
- MID: 1,966/NA
- Russell: 1,654/1,712
- VALUA: 6,394/NA
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