Friday saw negative internals on the NYSE equity index while internals were mixed on the Nasdaq -- both on declining volumes. The equity indices rallied off of their intraday lows to close near the upper end of intraday ranges.
The S&P 500, Nasdaq Composite Index, and Nasdaq 100 Index (see below) closed higher on Friday -- but on negative breadth -- while the rest of the indices posted losses. However, no support levels were violated. The data are largely neutral, with some sending cautionary signals, so our near-term outlook remains positive for the major equity indices.
Looking At the Data
The data are also mostly neutral -- including the 1 day McClellan Overbought/Oversold Oscillators (All Exchange:18.16/+67.93 NYSE:+15.15/+89.16 Nasdaq:+22.88/+51.99). The pros are also neutral, as we can see with the OEX Put/Call Ratio at 1.29.
But the insiders are pulling back significantly on their buying activity, as the Open Insider Buy/Sell Ratio (see below), while still in neutral territory, is now at 29.2, while the percentage of SPX stocks trading above their 50-day moving averages is a cautionary 78.2.
The Open Insider Buy/Sell Ratio is 29.2 (mildly bearish).
Valuation Is Appealing
Valuation is still below fair value, with the forward 12-month earnings estimates for the SPX via Bloomberg at $168.16, leaving the forward 12-month P/E ratio for the SPX at 16.1x, vs. the "rule of 20" implied fair value of a 17.4x multiple. The "earnings yield" stands at 6.21%. So valuation is indeed still appealing.
The charts and data are still showing the potential for further consolidation of the recent market rally, but our broader near-term outlook is still positive.