Which Way Does It Go? Analyzing the Stock Market's Evenly Split Trends

 | Jul 20, 2018 | 10:30 AM EDT
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Even Steven. 4-4. That's what's facing us in terms after Thursday's trading action.

While no significant technical events occurred on the charts, two indices are challenging resistance, leaving the near-term trends for the major equity indices evenly split.

Let's break it all down for you and come to a decision on our overall outlook.


The indices closed mixed Thursday with mixed internals on the NYSE and NASDAQ. Both exchanges saw positive breadth but negative up/down volume. The S&P 500, Dow Jones Industrial Average, Nasdaq Composite and Nasdaq 100 closed lower on the day as the rest advanced.

Source: Worden

The Dow Jones Transports (see above) closed back above its 50-day moving average while the S&P MidCap 400 (see below) and Value Line Arithmetic Index (page 5) closed near resistance but have yet to violate to the upside. As such, the near-term trends remain evenly split, with the S&P, DJIA, Nasdaq Composite and Nasdaq 100 in uptrends with the rest neutral.

The cumulative advance/decline lines for the All Exchange and NYSE turned slightly positive while the of the NASDAQ's remains neutral.

Source: Worden


The data remains largely neutral. All of the McClellan Overbought/Oversold Oscillators are neutral (All Exchange:+21.33/+1.06 NYSE:+39.62/+2.68 NASDAQ:+5.55/-0.82) as are the Equity Put/Call Ratio (0.62) and OpenInsider Buy/Sell Ratio (39.8).

The Total P/C (contrary indicator) and OEX P/C are counterbalancing at 0.9 and 2.11 as the crowd is leaning toward puts while pros are once again betting on near term weakness reappearing.


The S&P 500 is trading at a P/E multiple of 16.7x consensus forward 12-month earnings estimates for the S&P 500 of $167.59 per share versus the "rule of 20" implied fair value of a 17.1x multiple, and with a 6.0% earnings yield.

Bottom Line

Given the current state of the charts and data, we see no evidence presented to alter our near-term "neutral/positive" outlook for the major equity indices at this time.

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