• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing
  3. / Stocks

Market Deadlock: Charts and Data Grapple for the Upper Hand

The stalemate continues.
By GUY ORTMANN
Dec 18, 2020 | 11:00 AM EST

While the charts of the major equity indices remain positive and lacking sell signals, the psychology data and valuation continue to imply a fairly high level of risk currently exists for equities, as discussed below.

On the Charts

All the major equity indices closed higher Thursday and at or near their intraday highs with positive internals on higher trading volumes.

All made new all-time closing highs with the one exception of the Dow Jones Transports, which is now the only index in a near-term neutral trend as the rest are bullish.

Market breadth remains positive as well with the cumulative advance/decline lines for the All Exchange, NYSE and Nasdaq positive and above their 50-day moving averages.

All but the Dow Transports are overbought on their stochastic readings but none have generated bearish crossover signals at this point.

In our opinion, we have yet to see sell signals generated for the indices, which suggests the current positive trends should be respected until proven otherwise.

Data

The data, continue to counterbalance the positive chart trends.

The one-day McClellan Overbought/Oversold Oscillators remain neutral on the All Exchange, NYSE and Nasdaq (All Exchange: +24.22 NYSE: +15.91 NASDAQ: +31.59).

The Investors Intelligence Bear/Bull Ratio is 16.8/64.4 (bearish) as of 12.14.20

Psychology data and valuation, on the other hand, are flashing what have historically been prescient warning signals.

The Open Insider Buy/Sell Ratio at 24.2 is now officially in bearish territory as selling transactions have dominated throughout the recent rally.

In contrast, the leveraged ETF traders, measured by the detrended Rydex Ratio (contrarian indicator), remain leveraged long at a bearish 1.3, while this week's Investors Intelligence Bear/Bull Ratio (contrary indicator, see above) saw little change at a bearish 16.8/64.4 as advisors remain at historically high levels of bullish sentiment. Meanwhile, the AAII Bear/Bull Ratio saw a lift in bulls at 25.68/48.14 and near peak levels seen over the past decade as well.

Historically, periods of active insider selling when the crowd has very high bullish expectations have led to important market corrections. However, they are not a short-term timing tool as those conditions can exist for extended periods.

S&P 500 Valuation

The valuation gap still appears extended with the S&P 500 trading at a P/E multiple of 23.2x consensus forward 12-month earnings estimates from Bloomberg of $160.52 per share, while the "rule of 20" finds fair value at 19.1x.

The S&P's forward earnings yield is 4.31% with the 10-year Treasury yield at 0.93%.

Near-Term Outlook

Our near-term macro market outlook remains "neutral" as the charts and data are at what we view as a stalemate.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Ortmann had no positions in any securities mentioned.

TAGS: Indexes | Investing | Markets | Stocks | Technical Analysis | U.S. Equity

More from Stocks

I Find Draganfly's Connection to American Airlines Intriguing

Timothy Collins
Jan 15, 2021 12:29 PM EST

Drones are set to become a bigger and bigger part of the commercial world and our day-to-day lives.

GameStop's Charts Show Us More Risk Than Reward

Bruce Kamich
Jan 15, 2021 12:04 PM EST

Let's check and see what clues we can glean from the charts and indicators.

An Undervalued Stock Yielding Over 6%

Bob Ciura
Jan 15, 2021 12:00 PM EST

With a high yield of 6.4%, this is an attractive stock for income investors.

Twitter Shares Are Just Plain Overvalued

Jim Collins
Jan 15, 2021 11:45 AM EST

Here's where Jack Dorsey's ship will start to sink.

We Now Have Some Weak Action That's Looking for a Good Explanation

James "Rev Shark" DePorre
Jan 15, 2021 11:31 AM EST

I view this as just some routine and much needed corrective action rather than a major trend change.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 09:01 AM EST JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    When it's time to sell, will you act or freeze?
  • 08:35 AM EST GARY BERMAN

    Wednesday Morning Fibocall for 1/13/2021

    Lower highs... SPX (Long-Term View) The 1/8/2...
  • 08:07 AM EST GARY BERMAN

    Tuesday Morning Fibocall for 1/12/2021

    Watch if the recent trend of lower highs continues...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

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

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.

FactSet 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.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login