I'm maintaining a near-term "Neutral/Positive" outlook for the major market indices. Let's check out why.
First, consider the fact that the Dow Jones Industrial Average closed higher Thursday, but the rest of the market's key indices posted losses with negative internals (albeit on lighter trading volume).
Here's a look at the Dow's chart:
And here's the S&P 500:
And the Nasdaq Composite:
None of the major indices violated trends or support/resistance levels Thursday, and all of them remain in short-term uptrends. However, all of their stochastic levels are overbought.
That doesn't necessarily mean prices are headed notably lower, but it does suggest the "sweet spot" for recent buying might have passed. All of the cumulative advance/decline lines also remain positive but below their 50-day moving averages.
Other technical indicators look mixed. For example, all of the one-day McClellan OB/OS oscillators remain overbought, presenting a short-term headwind. However, 21-day readings are neutral, as are the percent of S&P 500 stocks that are trading above their 50-day moving averages (49.0%).
On the positive side, the detrended Rydex Ratio (a contrary indicator) still finds that leveraged-ETF traders have heavily leveraged short at -1.81.
The market's historic seasonality also looks encouraging. Coming out of a midterm election, the November-to-April period has seen positive returns since 1946, with a median 15% gain since 1930. Only two out of 21 periods were negative.
Add it all up and I'm maintaining my "Neutral/Positive" outlook for the market's major indices over the near term, although the one-day McClellan OB/OS levels and stochastic readings imply some pause or partial retracement of the recent rally's gains.