Summer's over and a seasonally weak September is here. Indeed, the bulk of the equity indices declined Tuesday with negative internals on the NYSE while those on the Nasdaq were mixed.
Is this a sign of things to come? Let's take a closer look.
All of the equity indices closed lower Tuesday with the one exception of the Dow Jones Transports (see above), which posted a gain. NYSE internals were negative but while the Nasdaq saw negative breadth, buying volume was greater than selling volume.
No support levels or short-term trends were registered. However, the Dow Jones Industrial Average (see below) and Value Line Arithmetic Index gave "bearish stochastic crossover signals" as minor warnings. Still, said signals are not yet actionable as no support levels or trends have been violated.
The cumulative advance/decline lines for the All Exchange, NYSE and NASDAQ remain positive and above their 50-day moving averages.
The data remains largely neutral including all of the McClellan Overbought/Oversold Oscillators (All Exchange:-1.08/+36.79 NSYE-22.85/+36.8 NASDAQ:+18.95/+42.16). The Equity Put/Call Ratio (0.59), Open Insider Buy/Sell Ratio (35.7) and new AAII Bear/Bull Ratio (26.67/39.0) are neutral as well.
The Total P/C (contrary indicator) at 0.85 is mildly bullish while the OEX P/C finds the pros very bullish and long calls at 0.5.
The S&P 500 is trading at a forward P/E multiple of 17.1x 12-month earnings estimates $169.00 per share, even with the "rule of 20" implied fair value multiple of 17.1x. The "earnings yield" stands at 5.83%.
While a couple of minor caution signals have appeared on the charts, all of the near-term trends remain positive with the data remaining largely neutral in nature.
Therefore, both the charts and data suggest we maintain our current "positive" short-term outlook for the major equity indices at this time.