• 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

Multiple Green Lights Say It's Time to Put Some Money to Work

Despite negative chart implications, data strongly suggest the worst may be over for the near term.
By GUY ORTMANN
Mar 14, 2023 | 10:49 AM EDT

Is the worst of it over?

While the major equity indexes closed lower Monday and several support levels were violated, all closed near the midpoints of the session, suggesting some buyers appeared near the close. Nonetheless, all the indexes remain in near-term bearish trends.

However, the stochastic readings are very oversold with most in single-digits. But it is the data dashboard that we find quite encouraging. It is sending multiple signals implying it's time to put some funds back into equities.

Insiders have notably increased their buying activity as the crowd is terrified and the previously onerous valuation gap has narrowed.

Our discipline suggests there is now a selective buying opportunity at hand.

Indexes Remain Bearish as Data Says 'Buy'

Chart Source: Bloomberg

On the charts, all the major equity indexes closed lower Monday with negative NYSE and Nasdaq internals on heavy trading volume.

All the near-term trends remain bearish and have yet to show signs of reversal while the Dow Jones Transports, Midcap 400, Russell 2000 (see above) and Value Line Arithmetic Index closed below their support levels.

Cumulative market breadth remains bearish as well with the advance/decline lines for the All Exchange, NYSE and Nasdaq negative.

A glimmer of hope is coming from the stochastic reading where several are very oversold but have yet to generate bullish crossover signals.

Despite negative chart implications, multiple data points on our dashboard strongly suggest the worst may be over for the near term and it is time to do some buying.

Multiple Data Points on Green Lights Say It's Time to Put Some $ to Work

Despite negative chart implications, multiple data points on our dashboard strongly suggest the worst may be over for the near term and it is time to do some buying.

The 1-Day McClellan Overbought/Oversold Oscillators are deeply oversold and suggest some near-term strength (All Exchange: -135.90 NYSE: -162.43 Nasdaq: -120.74)

The percentage of S&P 500 issues trading above their 50-day moving averages (contrarian indicator) remains at 17% and is bullish as well.

% of S&P 500 Stocks Above Their 50 DMAs Is 17% (Bullish)

Importantly, The Open Insider Buy/Sell Ratio rose to 42.1 from 26.5 and turned neutral from bearish as insiders increased their buying in contrast to other selling over the past few weeks.

The detrended Rydex Ratio (contrarian indicator) dropped to -0.38, staying neutral.

This week's AAII Bear/Bull Ratio (contrarian indicator) rose to 1.79 and is now very bullish as the crowd has run for the hills.

The AAII Bear/Bull Ratio Is 1.79 (Very Bullish)

The Investors Intelligence Bear/Bull Ratio (contrary indicator) is neutral at 24.7/45.2.

Valuation Gap Narrows

The valuation gap between the forward 12-month consensus earnings estimates from Bloomberg for the S&P 500 at $220.35 per share has narrowed with its forward P/E multiple at 17.5x while the "rule of 20" ballpark fair value rose to 16.5x. It remains at a premium but less than has been the case over the past four weeks.

The S&P's forward earnings yield is 5.71%.

We would also note the 10-Year Treasury yield closed lower at 3.51% and below support. It is short-term negative with new support at 3.40% and resistance at 3.62%, by our analysis.

Our Market Outlook

While the charts continue to paint a bleak future, the market's oversold conditions, active insider buying, intense crowd fear and a lessening of risk given the narrowing of the valuation gap with the % 50 well into bullish territory, in combination, are suggesting some selective buying is now appropriate.

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

How To Adjust Your Trading Style as Market Conditions Change

James "Rev Shark" DePorre
Mar 25, 2023 10:00 AM EDT

There is no single approach to the stock market that is inherently superior over the long run.

Stay Away From These Types of Stocks, They're Radioactive

Jim Collins
Mar 24, 2023 2:35 PM EDT

Here's what you're better off buying. I certainly have.

It's Not Whether the Next Shoe Will Drop, But Where and When

Bret Jensen
Mar 24, 2023 11:30 AM EDT

A few months of anxiety likely lies ahead of us, and caution remains the watchword of the day.

The Good, Bad and Ugly: What's Happening and What Investors Need to Do

Stephen Guilfoyle
Mar 24, 2023 10:45 AM EDT

Right now I have more in cash, or equivalents, than in equities. Ever hear of a Wall Street guy saying that before?

Dr. Copper Has a Lot to Say About China's Economic Growth

Maleeha Bengali
Mar 24, 2023 10:00 AM EDT

China's more focused on the domestic consumer which is the fastest way to get GDP numbers higher.

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

  • 01:56 PM EDT PETER TCHIR

    Very Cautious

    I am very cautious here. I don't like how the c...
  • 08:58 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    How to Adjust Your Trading Style as Market Conditi...
  • 05:00 PM EDT CHRIS VERSACE

    AAP Podcast on the Fed Decision!

    Listen here!
  • 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