The bulk of the major equity indices closed at or near their intraday highs Tuesday with a number of positive technical events, including he Nasdaq making new all-time closing highs.
Cumulative market breadth remains neutral while the valuation gap has narrowed a bit over the past several sessions. With the exception of investor psychology, the data are sending a generally neutral message.
Here's our latest look at the index charts and market data.
On the Charts
All the major equities closed higher Tuesday with positive internals on the NYSE and Nasdaq as trading volumes dipped from Monday's levels. Most closed at or near their intraday highs. Positive technical events occurred as follows:
Both the Nasdaq Composite (see above) and Nasdaq 100 made new all-time closing highs.
The DJIA and Value Line Arithmetic Index closed above their near-term downtrend lines and are now neutral versus their prior negative trend.
The S&P 500 closed above resistance and is back in a near-term uptrend while the DJIA and Dow Jones Transports gave bullish stochastic crossover signals.
The net result finds the near-term trends bullish for the S&P, Nasdaq Composite, Nasdaq 100 with the DJIA and Value Line index neutral and the rest still in near-term downtrends.
Market breadth was little changed with the cumulative advance/decline lines for the All Exchange, NYSE and Nasdaq staying neutral but above their 50-day moving averages.
Looking at the data, the McClellan 1-Day Overbought/Oversold Oscillators that suggested a bounce Monday morning are now neutral and not yet threatening, in our opinion (All Exchange: -23.4 NYSE: -32.03 Nasdaq: -15.62).
The Rydex Ratio (contrarian indicator), measuring the action of the leveraged ETF traders, dipped to 1.21 but remains in bearish territory.
This week's contrarian AAII bear/bull ratio (22.23/41.8) was little changed and remains mildly bearish, while the Investors Intelligence Bear/Bull Ratio (contrary indicator) is at a bearish 16.3/54.
The Open Insider Buy/Sell Ratio lifted to 24.3 but remains bearish as well.
Valuation finds the forward 12-month consensus earnings estimate for the S&P 500 from Bloomberg rising to $192.22 per share. As a result, the S&P's forward P/E multiple now stands at 22.1x with the "rule of 20" finding fair value at 18.5x.
The S&P's forward earnings yield is 4.53%.
The 10-year Treasury yield dipped to 1.47%. We view support at 1.4% and resistance at 1.55%. The 10-year yield remains in a downtrend from its March peak, which we view as a positive for equities in general.
We have yet to see enough of a shift in the weight of the evidence to alter our near-term "neutral/positive" macro-outlook for equities.