• 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
    • Bruce Kamich
    • Doug Kass
    • 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
    • TheStreet Smarts
  1. Home
  2. / Markets

As Market Bounces, Plenty of Non-Believers Remain on the Sidelines

Demand for equities overtook supply as Fed fears seemed to relax a bit.
By GUY ORTMANN
Jan 23, 2023 | 09:45 AM EST

Are things finally turning up?

Indexes bounced Friday on string internals as speculation that the Fed may be lowering its pace of interest-rate increases entered the picture. 

While no violations of resistance occurred on the charts, all but three remaining in near-term bullish trends. Market breadth remains strong as well.

However, market oscillators have returned to overbought conditions, possibly suggesting some pause, while the rest of the data is generally neutral.

We remain of the opinion that the recent improvements in the equity market structure suggest buying weakness near support as plenty of non-believers remain on the sidelines.

Indexes Bounce With Strong Internals

Chart Source: Worden

On the charts, all the major equity indexes closed higher Friday with very positive NYSE and Nasdaq internals. In fact, up volume swamped down volume by a significant degree on the NYSE (3.4B/602M) and Nasdaq (5.29B/848M).

All the indexes closed near their session highs with the S&P 500, Nasdaq Composite (see above) and Nasdaq 100 closing back above their 50-day moving averages, leaving only the DJIA below that benchmark.

No violations of resistance were registered. Yet that left the bulk in near-term bullish trends with just the DJIA, Nasdaq Composite and Nasdaq 100 neutral.

Cumulative market breadth remains strong on the All Exchange, NYSE and Nasdaq and above their 50-day moving averages.

No new stochastic signals were generated.

McClellan 1-Day OB/OS Oscillators Return to Overbought

Regarding the data dashboard, the rally pushed the McClellan Overbought/Oversold Oscillators back into overbought territory and implying the potential for some pause of strength (All Exchange: +74.43 NYSE: +84.76 Nasdaq: +67.28).

The percentage of S&P 500 issues trading above their 50-day moving averages (contrarian indicator) rose to 61% and is on a neutral signal.

The Open Insider Buy/Sell Ratio remains neutral dipping to 25.9 but just shy of turning bearish.

The detrended Rydex Ratio (contrarian indicator) rose to -0.61 and is also neutral.

Last week's AAII Bear/Bull Ratio (contrarian indicator) dipped to 1.82 as bearish sentiment declined but remains on a very bullish signal.

The Investors Intelligence Bear/Bull Ratio (contrary indicator) was neutral at 32.9/41.4.

Market Valuation and Yields

The forward 12-month consensus earnings estimate from Bloomberg for the S&P 500 continued to slip to $225.50 per share. As such, its forward P/E multiple is 17.6x and a slightly higher premium to the "rule of 20" ballpark fair value of 16.5x.

The S&P's forward earnings yield is 5.68%.

The 10-Year Treasury yield closed higher at 3.48%. It is in a short-term negative trend with support at 3.4% and resistance at 3.67%.

Our Market Outlook

Friday's gains were strong with very healthy internals as demand for equities overtook supply as Fed fears seemed to relax a bit. At this stage, we remain of the opinion that the charts and data are still suggesting weakness should be bought when near support levels.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.
TAGS: Indexes | Markets | Stocks | Technical Analysis | Trading | Treasury Bonds | U.S. Equity

More from Markets

The Dollar and Interest Rates Are Taking Gold for a Ride

Carley Garner
Oct 3, 2023 2:15 PM EDT

Here are the price levels to watch on the yellow metal, how seasonality is supportive now, and why what happens this week will be critical.

Costco: Are We Witnessing a Bull Trap?

Bruce Kamich
Oct 3, 2023 1:08 PM EDT

When one of the last holdouts of the S&P 500 turns down the selloff is in full gear.

Looking for Capitulation? Don't Be Fooled by Minor Market Bounces

James "Rev Shark" DePorre
Oct 3, 2023 11:45 AM EDT

The market is trying to discount the impact of higher rates, but it's extremely difficult.

The Trickiest Stock in the Market

Stephen Guilfoyle
Oct 3, 2023 11:15 AM EDT

There's a lot to like about this name, but a lot that also sows the seeds of caution.

Treasury Pressure, Magnificent Flight, AI's Good and Bad, Five-Headed Fed Punch

Stephen Guilfoyle
Oct 3, 2023 7:56 AM EDT

While the Nasdaq has posted four consecutive winning sessions, the bottom fishing that has benefited the large tech names may be growing exhausted.

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

  • 12:13 PM EDT BRUCE KAMICH

    8 Trading Rules from T. T. Hoyne

    You just read the header for this missive and prob...
  • 08:42 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    How Elite Traders Make Big Profits
  • 02:58 PM EDT BRUCE KAMICH

    Classic Trading Rules From Bernard Baruch

    Bernard Baruch listed the rules (below) in his aut...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2023 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