Monday morning's news regarding Pfizer's (PFE) potential breakthrough for a Covid-19 vaccine is having major positive impact on the markets. Indeed, current index resistance levels may be easily overcome.
On the Charts
The equity indices closed mixed Friday with the S&P 500 (see below), Nasdaq Composite and Nasdaq 100 posting gains as the rest declined.
Internals were generally negative. However, no violations of support, resistance or trend occurred, leaving all but the Dow Jones Transports in bullish near-term trends.
Market breadth remains positive for the All Exchange, NYSE and Nasdaq as their cumulative advance/decline lines remain positive and above their 50-day moving averages.
The bulk of the stochastic readings are overbought but have not registered bearish crossover signals at this point. They have the capacity to stay overbought for extended periods.
The data is largely neutral.
The one-day McClellan Overbought/Oversold Oscillators that suggested a pause Friday morning have moved back into neutral territory (All Exchange: +30.15 NYSE: +33.23 Nasdaq: +26.59).
The Open Insider Buy/Sell Ratio dropped again to 39.9 as insiders shifted a bit further from being buyers to sellers during the session and remains neutral.
The Rydex Ratio (contrarian indicator) is at a neutral 0.99.
Last week's Investors Intelligence Bear/Bull Ratio (contrary indicator) was little changed and bearish at 20.2/60.6.
The valuation gap appears extended with the S&P 500 trading at a P/E multiple of 22.2x consensus forward 12-month earnings estimates from Bloomberg of $157.84 per share while the "rule of 20" finds fair value at 19.2x.
The S&P's forward earnings yield is 4.5% with the 10-year Treasury yield at 0.82%.
Monday morning's vaccine news is having a major positive impact on the market and may well further improve the charts technically. However, the status of the charts and data as of Friday's close require us to keep our current "neutral/positive" outlook for the equity markets in place.