More downtrends and resistance levels have been violated in the major equity indices.
Cumulative breadth has improved as well.
Still, there may be some slowing of progress off recent strength, as the data has moderated a bit.
Let's take a closer look.
Checking the Charts
All of the indices closed higher Thursday with positive internals as all closed at or near their intraday highs. Overall trading volumes dipped from the prior session.
Several improvements were registered as the Dow Jones Industrial Average (see above) closed above resistance while the Nasdaq 100 closed above resistance and its short-term downtrend line as did the Value Line Arithmetic Index and Russell 2000.
The Dow Transports and S&P MidCap 400 Index closed above their short-term downtrend lines.
The cumulative advance/decline lines for the All Exchange, NYSE and NASDAQ turned positive but remain below their 50-day moving averages.
Data Moderates Its Bullish Signals
The 1-day McClellan Overbought/Oversold Oscillators find the All Exchange and NASDAQ mildly overbought but all of the 21-day levels remain oversold (All Exchange:+50.29/-78.47 NYSE:+48.71/-67.68 NASDAQ:+53.66/-87.93).
However, in spite of recent gains, the Open Insider Buy/Sell Ratio (see below) remains very bullish as insiders continue to actively buy their shares with a 181.3 reading, although this is slowing slightly.
The OpenInsider Buy/Sell Ratio is 181.3 (very bullish)
The percentage of S&P 500 components trading above their 50-day moving averages (contrary indicator) remains very depressed at 25.2.
Seasonality remains encouraging. The November-to-April period coming out of a mid-term election year has seen positive returns since 1946 with a median return of 15% since 1930. Only two out of 21 periods were negative.
Valuation, assuming current estimates hold, remains below implied fair value with the S&P 500 trading at a forward P/E multiple of 15.9x 12-month earnings estimates via Bloomberg of $172.33 per share, versus the "rule of 20" implied fair value of 16.9x.
The "earnings yield" stands at 6.29%.
While the data is suggesting we may see some slowing of progress, the current condition of the charts and data continue to suggest we maintain our near-term "neutral/positive" outlook for the major equity indices.