Near-Term Index Trends Unchanged

Near-Term Index Trends Unchanged

Data Mixed


The indexes closed mostly higher Wednesday with two exceptions. Breadth and up/down volumes were positive on the NYSE and NASDAQ as overall volume rose slightly on both exchanges from the prior session. One new closing high was achieved, leaving all of the near term chart trends intact. However, valuation remains at its prior peak level with the data a bit mixed while cumulative breadth could stand some improvement. We remain of the opinion that the combination of positive and neutral chart trends should continue to be respected until proven otherwise.

  • On the charts, all of the indexes closed higher yesterday with the two exceptions of the SPX (page 2) and MID (page 4) closing lower. One new closing high was achieved, that being the DJI (page 2). The bulk of the indexes closed at or near their intraday lows on generally positive internals. No technical violations occurred leaving all of the short term index trends positive with the one exception of the RTY (page 5) in a neutral pattern. Cumulative breadth improved slightly on the NASDAQ as it shifted to neutral from negative as the NYSE cumulative A/D remains positive and the All Exchange neutral. Yet in spite of the NASDAQ’s breadth improvement, we remain of the opinion that overall market breadth is not all that great as selectivity continues.
  • The data is mixed with two yellow flags appearing. All of the McClellan OB/OS Oscillators remain neutral with the one exception of the NYSE 21 day level moving into slightly overbought territory (All Exchange:+1.0/+34.28 NYSE:+4.45/+50.21 NASDAQ:-3.08/+23.04). The Equity and Total Put/Call Ratios are neutral at 0.75 and 0.57 as is the OpenInsider Buy/Sell Ratio at 48.5. However, the OEX Put/Call Ratio now finds the pros heavy in puts and expecting weakness at a very bearish 2.1 reading.
  • In conclusion, while breadth is still in need of improvement and valuation remains at its recent peak level, we continue to be of the opinion that until; the chart trends are altered on the indexes, said trends should be respected on their individual merits.
  • Forward 12-month earnings estimates for the SPX from Bloomberg of $140.60 leave a 5.46 forward earnings yield on an 18.9 forward multiple.
  • SPX: 2,589/NA
  • DJI: 23,427/NA
  • COMPQX; 6,759/6,910
  • NDX: 6,224/6,409
  • DJT: 9,978/NA
  • MID: 1,825/NA
  • RTY: 1,500/1,547
  • VALUA: 5,837/NA