The major equity indices closed mixed Thursday with positive internals. The S&P 500 (see below), DJIA and S&P MidCap 400 Index saw minor losses while the rest posted gains. Moves in both directions were minimal in terms of degree.
No technical events of import were generated, leaving all in their respective near-term uptrends and above their 50-day moving averages.
The cumulative advance/decline lines for the All Exchange, NYSE and Nasdaq remain positive with a series of higher highs since the market's bottom in December. At this point, we see no notable sell signals on the charts.
The data remains largely neutral.
The 1-Day McClellan Overbought/Oversold Oscillators find the All Exchange and Nasdaq levels back in neutral with the NYSE's mildly overbought (All Exchange:+49.46/+90.64 NYSE:+52.03/+113.49 NASDAQ:+49.45/+73.14).
The detrended Rydex Ratio (-0.28), Open Insider Buy/Sell Ratio (30.5) and recent AAII Bear/Bull Ratio (28.33/35.67) are also neutral.
At this stage, even with the size of the rally, the Rydex Ratio and AAII Bear/Bull Ratio show a lack of excessive optimism that would be problematic. We view that as a positive.
Valuation continues to appear to be appealing as it remains below fair value. The S&P 500 is trading at a forward P/E multiple of 16.4x consensus 12-month earnings estimates via Bloomberg of $168.00 per share, versus the "rule of 20" implied fair value multiple of 17.3x.
The "earnings yield" stands at 6.12%.
All of the charts are in short-term uptrends and lacking sell signals, internal breadth is positive, investor sentiment is not at levels suggestive of too much optimism, and valuation continues to appear appealing. Therefore, we are maintaining our near-term "positive" outlook for the major equity indices.