While short-term market trends remain a mix of positive and neutral, the intermediate trend of the Nasdaq's cumulative advance/decline is a concern.
Let's take a close look at the index charts, data and valuation.
On the Charts
All of the major equity indices closed higher Thursday with positive internals on slightly stronger trading volumes.
The only technical event of note was the S&P MidCap 400 Index closing above its near-term resistance. Yet that achievement was not sufficient to alter its near-term neutral trend as is also the case on the DJIA, Dow Jones Transports, Russell 2000 and Value Line Arithmetic Index.
Near-term trends are positive on the S&P 500, Nasdaq Composite (see below) and Nasdaq 100.
The short-term cumulative advance/decline lines remain positive on the All Exchange, NYSE and Nasdaq.
The Nasdaq's intermediate-term trend remains troubling, however, as while the index approaches its recent all-time highs, its cumulative A/D is making a significantly lower high than that registered at its September peak. This suggests a significant deterioration of the number of stocks in that index managing to participate in rallies.
The stochastics remain overbought on most of the indices while high "volume at price" (VAP) levels are supportive on the S&P, DJIA, Nasdaq Composite and 100 while resistance on the rest.
The data remains mostly neutral, including all of the one-day McClellan Overbought/Oversold Oscillators with the exception of the Nasdaq's one-day that is now mildly overbought (All Exchange:+43.01 NYSE:+35.26 Nasdaq:+53.16).
The detrended Rydex Ratio (contrary indicator) is bullish at -2.03 suggesting a more cautious crowd outlook.
The percentage of S&P 500 stocks trading above their 50-day moving averages is a neutral 64.0%. This week's AAII Bear/Bull Ratio (contrary indicators) also turned bullish at 38.67/23.33, echoing the Rydex data.
However, the Investor's Intelligence Bear/Bull Ratio (contrary indicator) remained bearish at 17.2/47.6 suggesting an excess of bullish sentiment on the part of investment advisors continues.
The Open Insider Buy/Sell Ratio is neutral at 47.7.
Valuation is appealing, but a bit less so, with 12-month earnings estimates for the S&P 500 slipping again to $173.80 per share via Bloomberg, leaving the forward P/E multiple at 17.2x while the "rule of twenty" finds fair value at 18.3x.
The 10-year Treasury yield stands at 1.76%.
The earnings yield is 5.8%.
The current state of the charts and data is guiding us to maintain our near-term "neutral" outlook for the major equity indices.