Thursday, October 6, 2022

Dow Jones Transport Chart Turns Neutral From Negative

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Data Remains Mostly Neutral

All the major equity indexes closed higher Tuesday with positive internals on the while the ’s were mixed. Trading volumes rose on both exchanges from the prior session. All the indexes closed near their intraday highs with the turning to a neutral trend from negative while the made a fractional new closing high. The data remains generally neutral. So, at this stage, we see no evidence to alter our current near-term “neutral/positive” macro-outlook for equities.

On the charts, all the major equity indexes closed higher yesterday on higher trading volume.

  • The NYSE saw positive breadth and up/down volume while the NASDAQ had slightly negative breadth but positive up/down volume.
  • The two technical events on the charts worth noting were the SPX (page 2) making a new closing high, although by a small measure, as the DJT (page 4) finally closed above its downtrend line that had been in place since the beginning of June. As such, its near-term trend turned neutral from bearish.
  • So, regarding trends, the SPX, COMPQX (page 3) and MID (page 4) are positive with the rest neutral.
  • No change was seen in cumulative breadth with the All Exchange and NASDAQ A/Ds neutral and the NYSE’s positive.
  • No stochastic signals were generated.

The data still finds all the McClellan 1-Day OB/OS oscillators in neutral territory (All Exchange: +1.78 NYSE: +9.82 NASDAQ: -5.21).

  • The Rydex Ratio (contrarian indicator page 8) measuring the action of the leveraged ETF traders was unchanged at 1.33 and remains bearish.
  • Meanwhile, the Open Insider Buy/Sell Ratio dipped a bit further to 39.1 but remains in its neutral range as insiders again backed off their recent buying activity.
  • This week’s contrarian AAII bear/bull ratio (27.17/34.32) and Investors Intelligence Bear/Bull Ratio at 16.5/52.6 (contrary indicator page 9) saw little change leaving the AAII neutral and the II bearish.
  • Valuation finds the forward 12-month consensus earnings estimate from Bloomberg lifting to $204.54 for the SPX. As such, the SPX forward multiple is 21.6 with the “rule of 20” finding fair value at approximately18.8.
  • The SPX forward earnings yield is 4.62%.
  • The Treasury yield closed at 1.18. We view support to be 1.13% and resistance at 1.3%.

In conclusion, yesterday’s action left the charts and data at levels that suggest we maintain our current “neutral/positive” macro-outlook for equities intact.

SPX: 4,374/NA

: 34,718/35,150

COMPQX: 14,585/14,780

NDX: 14,800/15,050

DJT: 14,100/14,701

MID: 2,667/2,729

RTY: 2,120/2,225

VALUA: 9,415/9,704

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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