Guy S. Ortmann, CMT | May 26, 2022 09:04AM ET
Data Generally Neutral Except Positive Sentiment Data Near Peak Fear Levels
The major equity indexes closed higher Wednesday with positive internals on the NYSE and NASDAQ as trading levels dipped from the prior session. All closed near their highs of the day with the S&P 500 and Dow Jones Industrial Average closing above their near-term downtrend lines and are now neutral versus their prior bearish projections while the rest if the indexes remain in downtrends. The data is generally neutral although some of the McClellan OB/OS Oscillators are now in overbought territory. On the other hand, the extreme levels of investor fear, that are contrarian indicators, are near decade highs that have been coincident with market lows which we continue to find encouraging. Yet, while yesterday did offer some improvement, we believe more positive action is required to become more optimistic for the near-term. Mid to long term investors, however, may find prices attractive at current levels.
On the charts, all the major equity indexes closed higher yesterday with positive internals on lower volume for the NYSE and NASDAQ.
Regarding the data, the McClellan 1-Day OB/OS oscillators are mildly overbought for the All Exchange (+52.67), overbought on the NYSE (72.42) and neutral on the NASDAQ (+39.48).
In conclusion, yesterday’s chart action saw some encouraging signals appear. However, more technical improvements are necessary to become more optimistic for the short term. Yet, we believe investor sentiment and valuation suggest medium to long term investors may want to start putting some money to work.
SPX: 3,910/4,045 DJI: 31,504/32,270 COMPQX: 11,037/11,563 NDX: 11,485/12,058
DJT: 13,107/14,272 MID: 2,337/2,439 RTY: 1,755/1,855 VALUA: 8,378/8,551
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