The indices closed mixed on Tuesday. We saw negative internals on the NYSE while the Nasdaq had negative breadth but positive up/down volume, which is relatively cautionary. The S&P 500, Nasdaq Composite and Nasdaq 100 Index closed higher, with the rest posting losses.
The intraday action was a bit troubling, as selling appeared late in the day with sufficient power to push most of the indices back to their intraday lows, giving up all or most of the respectable gains achieved earlier in the session.
Chart advances on negative breadth are also less than desirable. But no support levels or trends were violated, leaving the SPX, Dow Jones Industrials, COMPQX and NDX positive, with the rest neutral. As mentioned yesterday, the Volatility Index is near levels seen before an increase in volatility.
Data Are Neutral
The 1-day McClellan Overbought/Oversold Oscillators (All Exchange:-12.86; NYSE:-16.0; Nasdaq:-9.92), Open Insider Buy/Sell Ratio (56.5) and detrended Rydex Ratio (+0.47) are all neutral. The new AAII Bear/Bull Ratio remains neutral as well, with the crowd fairly evenly split at 25.67/36.67.
Valuation is now approaching fair value. The forward P/E for the SPX sits at 17.0x on consensus earnings estimates of $167.06, vs. the "rule of 20" fair valuation at 17.4x. The spread has continued to narrow over the past several weeks.
While we are still near-term "neutral/positive" for the major equity indices, there may be some speed bumps ahead.