• 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

Bullish Trends, Stretched Valuation

Here's our latest look at the market's charts and data.
By GUY ORTMANN
Nov 21, 2022 | 10:15 AM EST

All the major equity indexes remain near-term bullish.

Meanwhile, the data are generally neutral except for investor sentiment (contrarian indicator) that still finds the crowd mostly bearish in their outlook. However, valuation remains a bit stretched.

We continue to believe that the overall outlook for equities remains positive with the caveat that price should not be chased. We suggest buying weakness near support levels is the more prudent approach.

All Chart Trends Remain Near-Term Bullish

Chart Source: Worden

On the charts, all the major equity indexes closed higher Friday with positive NYSE internals as the Nasdaq saw positive breadth but negative up/down volume.

The S&P 500 (see above) closed near its high of the day as the rest of the indexes closed near their midpoints.

All remain in near-term uptrends and above their 50-day moving averages.

Cumulative market breath remains neutral with the advance /declines for the All Exchange, NYSE and Nasdaq with only the Nasdaq below its 50 DMA.

The stochastic readings saw a bearish crossover signal registered at the close for the S&P 500.

In our view, the technical picture remains constructive.

Data Largely Neutral

The McClellan Overbought/Oversold Oscillators remain neutral across the board (All Exchange: +22.05 NYSE: +36.2 Nasdaq: +12.98).

The percentage of S&P 500 issues trading above their 50-day moving averages (contrarian indicator) moved into bearish territory, rising to 82%.

The Open Insider Buy/Sell Ratio saw an uptick to 36.9, staying neutral.

The detrended Rydex Ratio, (contrarian indicator) rose to -1.07 versus its prior -1.70 reading. While it remains on a bullish signal, the leveraged ETF traders have covered their previous extremely leveraged short exposure significantly, thus suggesting a sizable amount of that fuel has now been spent. Yet it still represents some potential demand exists.

The detrended Rydex Ratio is -1.07 (bullish)

Last week's AAII Bear/Bull Ratio (contrarian indicator) dipped to 1.53 but remained on a very bullish signal with the Investors Intelligence Bear/Bull Ratio (contrary indicator) at 36.6/35.2 as bears continued to outweigh bulls, staying bullish.

Valuation Remains Stretched

The forward 12-month consensus earnings estimate from Bloomberg for the S&P 500 is unchanged at $225.16 per share. As such, its forward P/E multiple is now 17.6x and at a premium to the "rule of 20" ballpark fair value of 16.2x.

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

The 10-Year Treasury yield closed higher at 3.82%. We see support as 3.56% with resistance at 3.95%.

Our Near-Term Market Outlook

Our outlook remains generally constructive given the charts and generally neutral data implications. However, the valuation gap, in our view, suggests buying weakness near support may continue to be the better approach versus chasing price.

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 | Technical Analysis | Treasury Bonds | U.S. Equity

More from Markets

12 Stocks I'm Tracking for When the Market Trend Turns

James "Rev Shark" DePorre
Mar 23, 2023 11:40 AM EDT

I'm positive conditions I favor will eventually develop and I want to be ready to act when the time is right.

3 Bombshells That Rocked the Market

Ed Ponsi
Mar 23, 2023 9:30 AM EDT

Between Powell and Yellen it was quite a day. And what a reaction we got.

Sorting Out the Market Impact of the Fed's Interest Rate Decision

James "Rev Shark" DePorre
Mar 23, 2023 7:36 AM EDT

To what degree can liquidity continue to override the obvious economic issues that have intensified due to the banking crisis?

Fed Fallout, Powell and Yellen's Dueling Messages, Statement Takeaways, Coinbase

Stephen Guilfoyle
Mar 23, 2023 7:07 AM EDT

We knew the Treasury Secretary was speaking elsewhere. We were just focused on the wrong financial policy maker.

No 'Guarantee' But Yellen May Have Just Set a Trap for the Bears

Bob Byrne
Mar 23, 2023 7:00 AM EDT

For once, Wall Street isn't blaming Powell for a market beatdown. Here's how I expect things to play out as we edge toward the end of March.

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

  • 05:00 PM EDT CHRIS VERSACE

    AAP Podcast on the Fed Decision!

    Listen here!
  • 02:38 PM EDT REAL MONEY

    Fed Hikes Rates 25 Basis Points

    Here's what stood out in the statement.
  • 10:28 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    There are exceptions to conventional trading wisdo...
  • 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