The major equity indices closed mixed Thursday, with negative internals on the New York Stock Exchange while the Nasdaq saw negative breadth but positive up/down volume. Index gainers closed near their intraday highs while losers closed near their lows.
Some new closing highs were achieved, but the mixed action supports our perspective that the market is more selective than the more popular averages are implying. Nevertheless, all the charts remain in near-term uptrends. Meanwhile, the data has taken on a more neutral tone as discussed below. Thus, our interpretation of the charts and data suggest we maintain our near-term macro outlook for equites at "neutral," largely due to the selective nature of participants.
On the Charts
As noted, the major equity indices closed mixed Thursday. NYSE internals were negative on both counts while the Nasdaq had negative breadth but positive up/down volume as NYSE volumes rose and Nasdaq volumes declined from the previous session.
The S&P 500, Nasdaq Composite (below) and Nasdaq 100 closed near their intraday highs with gains, posting new closing highs.
The rest closed lower and near their intraday lows.
Yet, there were no violations of trend.
Cumulative market breadth remains positive on the All Exchange, NYSE and Nasdaq despite Thursday's weakness.
No stochastic signals were generated.
The data find finds only the Nasdaq still in overbought territory as the others dipped back to neutral (All Exchange: +43.54 NYSE: +32.58 Nasdaq: +53.22).
The detrended Rydex Ratio (contrarian indicator) measuring the action of the leveraged ETF traders was unchanged as 1.24 and remains in bearish territory as they continue their leveraged long exposure.
The Open Insider Buy/Sell Ratio lifted to 38.0 as insiders did a bit of buying and remains neutral.
This week's contrarian AAII Bear/Bull Ratio (29.67/41.53) remains neutral with the increase in bulls, as does The Investors Intelligence Bear/Bull Ratio (23.8/48.9) (contrary indicator).
Valuation and Yields
Valuation finds the forward 12-month consensus earnings estimate from Bloomberg dipping to $214.34 for the S&P 500. As such, the S&P 500 forward multiple is 21.8 with the "rule of 20" finding fair value at approximately 18.4.
The S&P 500 forward earnings yield is 4.58%.
The 10-year Treasury yield closed lower at 1.52%. Its uptrend remains intact with resistance at 1.70% and support at 1.47%.
We remain "neutral" in our near-term macro-outlook for equities despite the positive index trends as we observe what we see as increasing selectivity in market participants, as was the case in Thursday's trading.