Index Chart Trends Remain Bullish
After all of the major equity indexes closed higher, the charts and breadth are bullish.
You've reached your free article limit
You've read 0 of 1 free Pro articles.
All of the major equity indexes closed higher Wednesday with positive NYSE and Nasdaq internals as treading volumes rose on the NYSE and dipped on the Nasdaq from the prior session.
Closing in a mix between their intraday highs and midpoints, the only technical event of import registered was the MID closing above its 50 DMA. There were no changes in their near-term trends with all but one in bullish trends as is market breadth. However, the McClellan one-day OB/OS oscillators shifted back to overbought from neutral, suggesting the potential for some pause/consolidation of the recent gains.
Our Primary Concern
Our primary concern remains the extended valuation of the SPX versus ballpark fair value based on Bloomberg’s forward 12- month earnings estimates. With that said, we remain of the opinion that some selective buying can be done at this juncture while sell signals on individual names should still be honored.
On the charts, all the major equity indexes closed higher yesterday with positive NYSE and Nasdaq internals. As noted, the only technical event of import registered was the MID closing back above its 50 DMA. As such, all of the index charts remain in near-term bullish trends with the one exception of the DJT that is neutral. Cumulative market breadth remains in good shape with the All Exchange, NYSE and Nasdaq advance/decline lines bullish. However, all the stochastic readings are now overbought and in the 90s. While no bearish crossovers have occurred thus far, we are watching them closely should they occur.
Data Is Largely Neutral
The data is largely neutral. The one-day McClellan OB/OS oscillators are back to overbought form neutral, suggesting some pause/consolidation of recent gains (All Exchange: +68.44, NYSE: +74.13, Nasdaq: +65.6).
The percentage of SPX issues trading above their 50 DMAs (a contrarian indicator) rose to 74% but remains neutral and getting close to the cautionary 80% level. The detrended Rydex ratio (a contrarian indicator) dipped to 0.37 and neutral. This week’s AAII bear/bull ratio (a contrarian indicator) dropped to 0.73, staying neutral.
However, the Investors Intelligence bear/bull ratio (a contrary indicator) stayed bearish at 30.89% with investment advisor bulls continuing to outweigh bears by a wide margin. We believe the “wall of worry” could use some further strengthening. The Open Insider buy/sell ratio dropped to a neutral 30.8% as insiders did some more selling.
Finally, valuation remains a concern. The 12-month consensus earnings estimate for the SPX from Bloomberg rose to $250.91. But that leaves its forward price-to-earnings ratio of 22.4 still well above the “rule of 20" ballpark fair value at 16.2.
We believe this premium remains significant and presents some risk. Its earnings yield slipped to 4.46%. The 10-year treasury yield dropped to 3.78% and below support. New support is 3.70% and resistance at 3.94%. Its near-term trend is bearish. The U.S. dollar, via the UUP ETF, closed lower at $28.08. Its trend is bearish with new support at $28.07 and resistance at $28.35.
Bottom Line
In conclusion, the OB/OS are suggesting some tempering of strength countered by the bullish charts and breadth. Valuation for the SPX remains extended, but we have been selective buyers of late.
- SPX: 5,464/5,629
- DJI: 40,052/40,943
- COMPQX: 17,492/17,986
- NDX: 19,389/19,843
- DJT: 15,438/15,821
- MID: 3,008/3,063
- RTY: 2,100/2,195
Reviewing the Charts
The All Exchange ratio adjusted one-day McClellan OB/OS is +68.44 (bearish) and +19.06 (neutral) on the 21-day.
The NYSE ratio adjusted one-day McClellan OB/OS is +74.13 (bearish) and +58.95 (bearish) on the 21-day.
The NASDAQ ratio adjusted 1-day McClellan OB/OS Oscillator is +65.6 (bearish) and -6.11 (neutral) on the 21-day.
The NASDAQ cumulative advance/decline line is positive and above its 50 DMA.
The detrended Rydex ratio is 0.37 (neutral).
The AAII bear/bull ratio (using 3WMA) is 0.73 (neutral) as of August 19, 2024.
The investors Intelligence bear/bull ratio is 30.89 (bearish) as of August 19, 2024.
The Total and Equity put/call ratios are 0.84 (neutral) and 0.59 (neutral) on the 1-day. The 15 DMAs are 0.98 (neutral) and 0.67 (neutral) respectfully. The OEX put/call Ratio is 1-day is 5.5 (bearish) and 3.24 (neutral) on the 15 DMA.
% of SPX Stocks Above their 50 DMAs is 74% (neutral).
The Open Insider buy/sell ratio is 30.8 (neutral).
Leveraged ETF sentiment 9.3 % (neutral).
Data
- The all-exchange McClellan OB/OS ratio adjusted is +68.44 (bearish) three-week average +19.06 (neutral)
- The all-exchange A/D line is bullish and closed above its 50 DMA
- NYSE McClellan OB/OS ratio adjusted is +74.13 (bearish) three-week average is +58.95 (bearish)
- The NYSE A/D line closed above its 50 DMA and is short-term bullish
- NASDAQ McClellan OB/OS ratio adjusted is +65.6 (bearish) three-week average is -6.11 (neutral)
- The NASDAQ A/D line is short-term bullish and closed below its 50 DMA
- % SPX stocks above 50 DMA is 704 (neutral)
- The AAII bear/bull ratio is 0.73 (neutral) as of August 19, 2024
- The investors intelligence bear/bull ratio is 30.89 (bearish) as of August 19, 2024
- Leveraged ETF sentiment 9.3 (neutral)
- The detrended Rydex ratio is 0.37 (neutral)
- The Open Insider buy/sell ratio is 30.8 (neutral)
- Total and equity put/call ratio one-day readings are 0.84 (neutral) and 0.59 (neutral), respectively. The 15 one-day averages for the total and equity p/c are 0.98 (neutral) and 0.67 (neutral), respectively
- OEX put/call one day is 5.5 (bearish) the 15 DMA 3.24 (neutral)
- The Hang Seng, DAX and FTSE closed above their 50 DMAs
- The Nikkei closed below its 50 DMA
- The U.S. dollar measured by the UUP ETF closed lower at 28.08. It is short-term bearish. Support is 28.07. Resistance is 28.35.
Commodities in Uptrends
- Aluminum (closed above its 50 DMA)
- CRB Spot Raw Industrials (closed below its 50 DMA)
- Gold (closed above its 50 DMA)
- Silver (closed above its 50 DMA)
Commodities in Downtrends
- Hot Rolled Coil Steel (closed below its 50 DMA)
- Oil (closed below its 50 DMA)
Commodities Trading Sideways
- Baltic Dry Bulk Rate (closed below its 50 DMA)
- Copper (closed below its 50 DMA)
- Natural Gas (closed below its 50 DMA)
- Uranium (closed below its 50 DMA)
Market Internals
- The major equity indexes closed higher on Wednesday
- Internals were positive on the NYSE and Nasdaq
- Volumes were above the prior session on the NYSE and below on the Nasdaq
- NYSE: A/D: 2104/687, U/D Volume: 2.33B/839M, Total Volume: 3.2B
- NASDAQ: A/D: 3061/1182, U/D Volume: 3.65B/1.21B, Total Volume: 4.91B