Guy S. Ortmann, CMT | Jun 01, 2023 03:57PM ET
All the major equity indexes closed lower on Wednesday with negative NYSE and Nasdaq internals as trading volumes rose on both from the prior session. Most closed near their lows of the session as three indexes broke support, shifting the trend on two from neutral to bearish. While there was some weakening of market breadth, the data dashboard is unchanged in sending its largely neutral readings except for high bearish sentiment among the crowd that should be viewed as a potential positive. However, forward valuation for the S&P 500 remains quite elevated versus ballpark fair value. As such, the weight of the evidence continues to suggest that any buying should be done on a very selective basis given weakening breadth and extended valuation as not all boats are rising with the tide.
On the charts, the major equity indexes closed lower yesterday with negative NYSE and Nasdaq internals on heavy volume.
The data dashboard remains largely neutral and still lacks any high-probability movement signals for the near term.
In conclusion, while some of the indexes are still in uptrends, the number of stocks participating remains very selective as the charts and market breadth are mixed and questionable. As well, extended valuation is a concern. However, the high level of crowd fear is somewhat of a counterbalance. Thus, we remain of the opinion that any buying should be done on a highly selective basis.
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