Friday's rally was convincing for one index.
All of the major equity indices closed higher Friday with positive internals on lighter trading volume.
All closed at or near their intraday highs but only the S&P 500 (see below) managed to close above near-term resistance, leaving the rest in near-term downtrends.
The DJIA, and Nasdaq Composite closed at resistance.
The NYSE cumulative advance/decline line turned neutral from negative but the Nasdaq and All Exchange remain negative and below their 50-day moving averages. We continue to view the narrowing participation of stocks managing to gain traction as a cautionary component. Such conditions are frequently viewed as unhealthy with the leaders eventually succumbing to the general internal market weakness.
High "volume at price" (VAP) levels are negative on all of the indices with the exceptions of the Nasdaq Composite and Nasdaq 100 being neutral.
The data has turned entirely neutral including all of the one-day McClellan Overbought/Oversold Oscillators (All Exchange:-13.86 NYSE:-14.09 Nasdaq:-11.7). Their previously oversold condition that contributed to recent gains no longer exists.
The detrended Rydex Ratio (contrary indicator) remains neutral at -0.31 as is the percentage of S&P 500 stocks trading above their 50-day moving averages at 34.9.
Last week's AAII and Investors Intelligence Bear/Bull Ratios (contrary indicators) were neutral at 34.67/30.0 and 17.9/48.1, respectively.
The Open Insider Buy/Sell Ratio continues to show an increase in insider buying but remains neutral at 83.0.
Valuation appears appealing although forward estimates saw a minor but steady decline recently for the S&P 500. Currently, the 12-month forward consensus earnings estimate from Bloomberg for the S&P upticked to $172.04 per share, leaving the forward P/E multiple at 16.8x while the "rule of twenty" finds fair value at 18.5x.
The 10-year Treasury yield is 1.54%.
The earnings yield stands at 5.96%.
While Friday saw nice gains and Monday has seen an early rally, we believe the charts and data continue to suggest a "neutral/negative" near-term outlook remains appropriate.