Guy S. Ortmann, CMT | Oct 30, 2020 09:59AM ET
The major equity indexes closed higher Thursday with positive internals on the NYSE and NASDAQ as trading volumes declined form the prior negative session. All closed at or near their intraday highs, but none were able to violate resistance or trends, leaving all in near-term downtrends. The data remains mixed but the 1-day OB/OS that implied a positive session yesterday morning remain oversold.
As well, we believe we may be starting to see a positive shift in the psychology numbers. Yet, yesterday’s gains did stretch the valuation gap back to overvalued levels that, in our view, need to narrow. So while we are seeing some encouraging signs that suggest some attractive opportunities may be forthcoming, there has not been enough of a shift in the weight of the evidence to alter our current near-term “neutral/negative” outlook for the equity markets. Some patience may be required.
On the charts, all the indexes closed higher yesterday with positive internals on the NYSE and NASDAQ but on lighter volume.
The data saw some improvements, in our opinion.
In conclusion, while we are of the opinion that the markets may be heading toward some attractive buying opportunities, it is too early to alter our current “neutral/negative” outlook. More positive signals need to be seen before becoming more enthusiastic.
SPX: HVS3,250/HVR3,360
DJI: 26,290//27,557
COMPQX: HVS10,939/11,489
NDX: 11,077//11,495
DJT: 10,954/11,425
MID: 1,883/HVR1,966
RTY: 15948/1,590
VALUA: 6,265/6,5510
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