While no support or resistance levels were violated on the charts during Tuesday's stock market action, one potentially cautionary signal was generated.
Let's see where we stand right now on the major equity indices and how it affects our near-term outlook.
On the Charts
The indices closed evenly split Tuesday with the S&P 500, DJIA, Nasdaq Composite and Nasdaq 100 posting gains as the rest declined. Internals were mixed.
The only event of note was the Nasdaq 100 generating a "bearish crossover signal" (see below). While it may not be actionable at this point, it does increase the technical potential for some retracement within that index, in our opinion.
The S&P 500's near-term trend is neutral with the rest positive.
The cumulative advance/decline lines for the All Exchange, NYSE and Nasdaq remain positive while the high "volume at price" (VAP) levels remain supportive.
The data is largely neutral.
The one-day McClellan Overbought/Oversold Oscillators are now neutral for the All Exchange and NYSE as the Nasdaq's remains overbought(All Exchange:+46.15 NYSE:+37.74 Nasdaq:+59.25.
The detrended Rydex Ratio (contrary indicator) is neutral at +0.35 as is the percentage of S&P 500 stocks trading above their 50-day moving averages at 71.7%.
Tuesday's AAII Bear/Bull Ratio (contrary indicators) remained bullish at 37.33/29.0 with the Investor's Intelligence Bear/Bull Ratio (contrary indicator) staying neutral at 17.9/50.0.
The Open Insider Buy/Sell Ratio remains neutral at 38.1 but has been declining over the past week.
Valuation has compressed with the 12-month forward consensus earnings estimate from Bloomberg for the S&P 500 slipping to $171.37 per share, leaving the forward P/E multiple at 17.5x, while the "rule of twenty" finds fair value at 18.2x.
We would note that earnings estimates have been declining over the past two weeks from $172.25 as the markets have moved higher.
The 10-year Treasury yield stands at 1.81%.
The earnings yield is 5.7%.
The bearish stochastic crossover signal on the Nasdaq 100 slightly increases the potential for some pullback in that index, in our opinion. However, the rest of the data and charts continue to suggest we maintain our current near-term "neutral" outlook for the major equity indices.