Guy S. Ortmann, CMT | Aug 11, 2022 10:41AM ET
All the major equity indexes closed notably higher Wednesday with positive internals on the NYSE and NASDAQ in response to a weaker-than-expected CPI report. All closed near their highs of the day with several violations of resistance, while some 150 DMAs were surpassed as well. All remain in near-term uptrends that, in our opinion, should continue to be respected. However, the magnitude of yesterday’s gains pushed a few of the data points into cautionary levels. As such, they imply some discipline may be required regarding price on new equity purchases. In addition, forward 12-month consensus earnings estimates from Bloomberg continue to fade. Thus, while would not fight the trend, we would prefer to increase exposure on weakness.
On the charts, all the major equity indexes posted healthy gains yesterday as all closed at or near their intraday highs.
On the data, the McClellan OB/OS Oscillators moved back into overbought territory from neutral (All Exchange: +75.79 NYSE: +82.17 NASDAQ: +70.83). They suggest price sensitivity may now be prudent.
In conclusion, the tape remains bullish as it appears inflation fears are beginning to dissipate. We would respect the current uptrends but would be a bit more price sensitive at these levels given some of the data points and valuation spreads.
SPX: 4,090/4,223
DJI: 32,572/33,331
COMPQX: 12,386/12,973
NDX: 12,913/13,429
DJT: 14,508/15,044
MID: 2,488/2,569
RTY: 1,880/1,975
VALUA: 8,755/9,094
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