The see-saw market action seen over the past month persists, with no resolution as of yet. Meanwhile, the charts and bulk of the data continuing to send neutral messages.
So, where do we go from here?
On the Charts
All of the indices closed lower Tuesday with negative internals on the NYSE and Nasdaq. All tested their respective near-term support levels successfully with the exception of the Nasdaq Composite (see below) that closed below its prior support.
All of the charts remain in near-term sideways patterns as the see-saw action of the past month continued.
We would note the S&P 500, DJIA, Nasdaq Composite and Nasdaq 100 appear to be forming "ascending triangle" patterns over the past month. Said patterns consist of a series of higher lows with a flat/ horizontal top suggesting buyers have been getting more aggressive on each subsequent pullback. These patterns are considered to have a potentially bullish tone should the resistance levels be violated. However, violations have yet to appear and may not. As such, they are not yet actionable.
On the cautionary side, breadth has deteriorated with the All Exchange and NYSE cumulative advance/decline lines turning neutral from positive as the Nasdaq's has turned negative.
High "volume at price" (VAP) levels are supportive on the DJIA and Nasdaq 100 and resistant on the rest.
The data remains largely neutral including all of the one-day McClellan Overbought/Oversold Oscillators (All Exchange:+9.82 NYSE:+16.74 NASDAQ:+2.71).
The detrended Rydex Ratio (contrary indicator) remains neutral at -0.27 as is the percentage of S&P 500 stocks trading above their 50-day moving averages at 39.6.
The new AAII Bear/Bull Ratio (contrary indicators) remains bullish at 41.67/25.0. It continues to be counterbalanced by the Investor's Intelligence Bear/Bull Ratio (contrary indicator) as investment advisors remained somewhat overly optimistic at 18.7/43.9.
The Open Insider Buy/Sell Ratio remains neutral at 81.7.
Valuation continues to be appealing, with the 12-month forward consensus earnings estimate from Bloomberg for the S&P 500 at $172.15 per share, leaving the forward P/E multiple at 16.9x while the "rule of twenty" finds fair value at 18.5x.
The 10-year Treasury yield is 1.47%.
The earnings yield stands at 5.92%.
The mixed chart signals, market breadth and data still suggest we maintain our near-term "neutral" outlook for the major equity indices.