• 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

Better Buying Opportunities May Lie Ahead

Six of the eight major equity indexes violated resistance Friday.
By GUY ORTMANN
Aug 01, 2022 | 10:35 AM EDT

With all the charts of the major equity indexes near-term bullish and above their 50-day moving averages, what's not to like?

Cumulative breadth remains healthy as well.

Well, the McClellan 1-day overbought/oversold levels are flashing yellow lights while the S&P 500's forward 12-month consensus estimates dropped to a level that now finds the index trading at a premium to its ballpark fair value.

So, while we would definitely not fight the tape, some of the data are suggesting more opportune buying junctures may be forthcoming.

Checking Out the Charts

Chart Source: Worden

All the major equity indexes closed higher Friday with positive internals on the NYSE and Nasdaq as NYSE volumes rose and Nasdaq volumes dipped from the prior session.

All closed near their intraday highs with the S&P 500 (see above), DJIA, Nasdaq Composite, Nasdaq 100, Dow Jones Transports and Value Line Arithmetic Index closing above their respective resistance levels. So, all the near-term trends remain bullish on the charts and above their 50-day moving averages.

Cumulative market breadth continues to strengthen and remains positive on the All Exchange, NYSE and Nasdaq.

All the charts are overbought from a stochastic perspective but have yet to generate bearish crossover signals.

Digging Into the Data

The McClellan Overbought/Oversold Oscillators pushed deeper into overbought territory with the NYSE extremely so (All Exchange: +96.06 NYSE: +133.37 Nasdaq: +69.83). They are at cautionary levels.

The percentage of S&P 500 issues trading above their 50-day moving averages (contrarian indicator) remains neutral, lifting to 76%.

The Open Insider Buy/Sell Ratio dipped to 49.9, also staying neutral.

The detrended Rydex Ratio (contrarian indicator) lifted slightly to -0.92 and remains mildly bullish versus its previous bullish status a few weeks ago.

Last week's AAII Bear/Bull Ratio (contrarian indicator found the crowd staying very fearful, at 1.86 and very bullish.

However, the Investors Intelligence Bear/Bull Ratio (contrary indicator) moderated to neutral with the bears and bulls being dead even at 35.2/35.2.

S&P 500 Trades at a Premium

The forward 12-month consensus earnings estimate from Bloomberg for the S&P 500 dropped notably to $233.20 per share. As such, the S&P's forward P/E multiple rose to 17.7x and is now at a slight premium to the "rule of 20" ballpark fair value at 17.4x.

The S&P's forward earnings yield dropped to 5.65%.

The 10-Year Treasury yield closed lower at 2.64%. We view support as 2.49% and resistance at 2.92%.

Our Market Outlook

The strong market lift over the past several sessions has yet to show any signs of abating from a chart perspective. Yet, while we would not fight the tape, current overbought conditions and increase in the valuation multiple suggest some near-term patience may be appropriate, awaiting better buying opportunities.

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 | Markets | Stocks | Technical Analysis | Trading | Treasury Bonds | U.S. Equity

More from Markets

I'm Making Small Bets With These 2 Stocks

Bret Jensen
Jan 27, 2023 11:30 AM EST

While I remain cautious on the overall market, I continue to act upon the limited opportunities I'm finding in the current market.

Adani Companies Plunge Under Hindenburg Attack, Hurting Secondary Sale Attempt

Alex Frew McMillan
Jan 27, 2023 9:30 AM EST

Retail investors may baulk now they are being offered Adani Enterprises shares at a range well above their current trading price.

Rising Above the Resistance

Guy Ortmann
Jan 27, 2023 9:11 AM EST

Five of the indexes rose above their respective near-term resistance levels. Here's what that means for the market.

As the Bears Battle the Bulls, the Market Action Remains Choppy

James "Rev Shark" DePorre
Jan 26, 2023 11:40 AM EST

GDP, unemployment claims, and durable goods reports were better than expected, creating hope that the Fed will be able to create a soft economic landing.

Should You Trade Tesla Now? Here's the Way to Do It

Stephen Guilfoyle
Jan 26, 2023 10:47 AM EST

Elon Musk says he's not worried about any damage done to the Tesla brand due to his activity on Twitter.

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

  • 11:48 AM EST REAL MONEY

    Watch Doug Kass on the Daily Rundown!

    In today's Action Alerts PLUS Daily Rundown, Doug ...
  • 11:03 AM EST JAMES "REV SHARK" DEPORRE

    This Weekend On Real Money

    It's time to start using this power to build great...
  • 03:06 PM EST BOB LANG

    LEAPS Webinar

    This week, I offered a free webinar session talkin...
  • 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