Market Direction: BULLISH alert
issued 11/10/2016
The Dow Jones Industrials made a new closing high on Tuesday, but investors
should keep their euphoria in check. A few factors arose that are raising some
questions as to whether or not the near-term trends will continue.
We remain of the opinion that said trends should still be respected until proven otherwise. However, factors discussed below suggest some degree of caution may be warranted.
All of the indexes closed higher on Monday, with positive internals on the NYSE and Nasdaq. The DJI made a new closing high, but was the only one to do so.
The SPX gave a bearish stochastic crossover signal, along with the MID.
Violations of support would be needed to become actionable. Another issue is the All Exchange cumulative advance/decline line, which made a lower low, joining the Nasdaq in turning its trend to negative.
Both imply a weakening of internal market breadth. The NYSE cumulative A/D remains positive. As well, the 10-year Treasury yield hit its highest point since May and above resistance at 2.41%.
So, while the near-term trends of the indexes are unchanged in a mix of neutral and positive trends, some issues are arising that are worthy of note and should be watched closely for any further developments.
Also, we find it curious that the VIX actually closed higher on Monday at 11.04. Given the markets advance, one would have expected it to decline.
The data are mostly neutral. All of the McClellan OB/OS Oscillators are neutral (All Exchange:-40.29/33.44 NYSE:-31.39/+44.5 NASDAQ:-46.69/+29.88). The Total and Equity Put/Call Ratios are neutral at 0.78 and 0.63 respectively as is the Open Insider Buy/Sell Ratio at 38.4.
The OEX Put/Call Ratio, however, is bearish at 1.76. Forward valuation of the SPX at a 15-year high of an 18.8 forward multiple of forward expected earnings is notable as well.
In conclusion, while the charts remain generally positive and should be respected until proven otherwise, a number of issues are gathering that should temper our enthusiasm, in our opinion. Some caution is warranted.
Forward 12-month earnings estimates for the SPX from Bloomberg of $136.79 leave a 5.33% forward earnings yield on an 18.8 forward multiple -- a decade high.
Bearish Signals???
We remain of the opinion that said trends should still be respected until proven otherwise. However, factors discussed below suggest some degree of caution may be warranted.
All of the indexes closed higher on Monday, with positive internals on the NYSE and Nasdaq. The DJI made a new closing high, but was the only one to do so.
The SPX gave a bearish stochastic crossover signal, along with the MID.
Violations of support would be needed to become actionable. Another issue is the All Exchange cumulative advance/decline line, which made a lower low, joining the Nasdaq in turning its trend to negative.
Both imply a weakening of internal market breadth. The NYSE cumulative A/D remains positive. As well, the 10-year Treasury yield hit its highest point since May and above resistance at 2.41%.
So, while the near-term trends of the indexes are unchanged in a mix of neutral and positive trends, some issues are arising that are worthy of note and should be watched closely for any further developments.
Also, we find it curious that the VIX actually closed higher on Monday at 11.04. Given the markets advance, one would have expected it to decline.
The data are mostly neutral. All of the McClellan OB/OS Oscillators are neutral (All Exchange:-40.29/33.44 NYSE:-31.39/+44.5 NASDAQ:-46.69/+29.88). The Total and Equity Put/Call Ratios are neutral at 0.78 and 0.63 respectively as is the Open Insider Buy/Sell Ratio at 38.4.
The OEX Put/Call Ratio, however, is bearish at 1.76. Forward valuation of the SPX at a 15-year high of an 18.8 forward multiple of forward expected earnings is notable as well.
In conclusion, while the charts remain generally positive and should be respected until proven otherwise, a number of issues are gathering that should temper our enthusiasm, in our opinion. Some caution is warranted.
$tockMarketDirection proprietary model is currently BULLISH. We strongly encourage you to monitor
positions closely, exercise proper money management strategies and follow us at $tockMarketDirection for ALERTS we
may issue advising a change in the current market direction. Stay tuned
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The all-time highs since our initial
recommendation to go LONG
this market. Here is how the markets have performed:
Stock Market
Direction Recommendation (9/21/2017)
|
||
Dow
|
up 1,126.02 points a 5.04% gain
|
10/24/17
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Nasdaq
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up 218.88 points a 3.41% gain
|
10/23/17
|
S&P 500
|
up 77.69 points a 3.11% gain
|
10/23/17
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Related Link: http://www.stockmarket-direction.com/
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