There Is Little Room for Mistakes Now

 | May 17, 2017 | 9:39 AM EDT
  • Comment
  • Print Print
  • Print

The bulk of the major equity indexes closed lower yesterday, with negative internals on the NYSE as volumes declined, while the Nasdaq saw mixed internals on higher volume.

There was no change within the current chart patterns, which remain mostly neutral while the data remain largely neutral as well.

As such, we have yet to see enough of a shift in the evidence to warrant a change in our near term "neutral" outlook for the major equity indexes. However, we would note that valuation is near historically high levels.

On the charts, all of the indexes closed lower yesterday, with the exception of the Nasdaq making another new closing high.

However, Nasdaq internals were less than appealing; decliners slightly outnumbered advances, while up volume swamped down volume -- yet another cautionary signal regarding debatable breadth within that index.

No support or resistance levels were violated on the other indexes, leaving them in sideways "rectangle" patterns, with only the Nasdaq in a short-term uptrend.

The data are mixed, but mostly neutral as well. All of the McClellan OB/OS Oscillators are neutral (All Exchange:-3.98/+28.28 NYSE:-7.86/+35.19 NASDAQ:-1.29/+25.78), as are the Total Put/Call Ratio (0.79) and Open Insider Buy/Sell Ratio (48.2).

The Equity Put/Call Ratio and ISEE Sentiment Index (contrary indicators) are bearish at 0.54 and 11.28, as the crowd is enthusiastic and long calls while the OEX Put/Call Ratio finds the pros slightly weighted in calls at 0.97, with a minor bet on near-term strength occurring.

In conclusion, over the past several sessions, the status of the charts and data have continued to imply a "neutral" near-term outlook for the major equity indexes as most appropriate at this point in time.

That is unchanged. However, we would note that the forward P/E of the S&P 500 is back near historic highs, suggesting there is little room for mistakes within a highly selective market as displayed by the percentage of S&P 500 components trading above their 50-day moving averages barely over half, at 54.1%.

Forward 12 month earnings estimates for the SPX from IBES of $134.56 leave a 5.63% forward earnings yield on a 17.9x forward multiple, near a decade high.

Columnist Conversations

today is a good day to lighten the load and take some positions off the table. SOLD WB OCT 85 CALL AT 11 (i...
I reached out last week to my close friend Ken Shreve, who is a prominent writer for the IBD.  I asked Ke...
I reached out last week to my close friend Ken Shreve, who is a prominent writer for the IBD.  I asked Ke...
View Chart »  View in New Window »



News Breaks

Powered by


Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.