Guy S. Ortmann, CMT | Jul 28, 2022 09:32AM ET
All the major equity indexes closed higher Wednesday with positive NYSE and NASDAQ internals as both traded heavier volume than the prior session. All closed near their intraday highs. Some technical improvements came in the form of violations of resistance and some intermediate downtrend lines that had been in effect since April 1.
The net result is all the charts are in near-term uptrends, as is cumulative market breadth for the All Exchange, NYSE, and NASDAQ.
The rally pushed the 1-day McClellan POB/OS Oscillators back into overbought territory that may temper the very near-term as forward 12-month consensus earnings estimates from Bloomberg for the SPX continue to slip to the point that the forward P:E is just shy of the “rule of 20” ballpark fair value. As such, we speculate that some near-term sideways action may be forthcoming within an overall improving environment for equities.
On the charts, all the major equity indexes closed higher yesterday with strong internals on heavier volume as all closed at or near their intraday highs.
However, yesterday’s rally pushed the McClellan OB/OS Oscillators back into overbought territory that may exercise some restraint of progress for the near-term (All Exchange: +69.27 NYSE: +92.92 NASDAQ: +53.7).
In conclusion, yesterday’s rally had a very constructive impact on the charts and market breadth. However, the OB/OS and narrowing of the SPX forward P:E to ballpark fair value suggest w may see the markets take a “time out” over the very near term before resuming progress.
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