Near-term trends for the major equity indices are split while data remains generally neutral. However, forward 12-month earnings estimates for the S&P 500 continue to decline.
On the Charts
All of the major equity indices closed lower Thursday with the exception of the Nasdaq 100 posting a fractional gain.
Internals were negative as overall trading volumes decline.
Some deterioration was seen on some of the charts as the Dow Jones Transports closed below near-term support after flashing a bearish stochastic crossover signal on Tuesday's close.
Meanwhile, the S&P MidCap 400, Russell 2000 and Value Line Arithmetic Index closed below their near-term uptrend lines thus turning their trends to neutral from positive.
So, the near-term trends are now evenly split with those just mentioned neutral while the S&P 500, DJIA, Nasdaq Composite and Nasdaq 100 are positive.
The cumulative advance/decline lines for the All Exchange, NYSE and Nasdaq turned neutral as well.
The stochastic levels are very near flashing bearish crossover signals across the board but have yet to actually trigger.
The VIX, which we have recently highlighted, did lift a bit but remains at levels preceding market corrections three times over the past 12 months.
The data remains mostly neutral including all of the one-day McClellan Overbought/Oversold Oscillators (All Exchange:+5.1 NYSE:-4.6 Nasdaq:+13.96).
The detrended Rydex Ratio (contrary indicator) remains neutral at +0.48.
This week's AAII Bear/Bull Ratio (contrary indicators) remained bullish at 34.33/29.33. However, the Investor's Intelligence Bear/Bull Ratio (contrary indicator) stayed bearish at 17.2/47.6 suggesting an excess of bullish sentiment on the part of investment advisors continues.
The percentage of S&P 500 stocks trading above their 50-day moving averages is a neutral 65.9% as is insider buying at a 42.2 Open Insider Buy/Sell Ratio.
Valuation has compressed with 12-month earnings estimates for the S&P 500 slipping down to $172.27 per share via Bloomberg, leaving the forward P/E multiple at 17.6x while the "rule of twenty" finds fair value at 18.3x. S&P 500 estimates have been dropping literally every day over the past several sessions.
The 10-year Treasury yield stands at 1.69%.
The earnings yield is 5.67%.
With the chart trends split combined with the VIX, stochastic levels and the consistent slide in forward S&P 500 estimates, we are maintaining our "neutral" outlook.