All of the major equity indices closed lower Friday except for the Dow Jones Transports, which posted a gain. Internals were negative on the NYSE and Nasdaq on lighter trading volume.
Some further weakening of the charts occurred as the S&P 500 closed below its short-term uptrend line, turning its trend to neutral from positive (see below).
The DJIA flashed a "bearish stochastic crossover" signal while the Nasdaq 100 also closed below its short-term uptrend line and is now neutral as well.
The Value Line Arithmetic Index closed below support and is now short-term negative. As such, the only indices remaining in near-term uptrends are the DJIA and Dow Transports.
The cumulative advance/decline line for the All Exchange is neutral with the NYSE's positive and the Nasdaq's negative.
High "volume at price" (VAP) is supportive on the Nasdaq Composite, Transports and S&P MidCap 400 Index. It is resistant on the Value Line index.
The data still remains largely neutral.
The one-day McClellan Overbought/Oversold Oscillators are all neutral (All Exchange:-25.08 NYSE:-26.34 Nasdaq:-24.9).
The detrended Rydex Ratio (contrary indicator) at +0.66 is neutral.
Last Tuesday's AAII Bear/Bull Ratio (contrary indicator) was also neutral at 30.33/31.67. We continue to view the lack of enthusiasm on the part of the crowd as a positive.
The percentage of S&P 500 stocks above their 50-day moving averages (74.8%) is neutral as well.
The Open Insider Buy/Sell Ratio (41.4), while remaining neutral, continues to see a decline in insider buying activity that may worth noting.
The 12-month forward consensus earnings estimate from Bloomberg for the S&P 500 is $173.71 per share, leaving the forward P/E multiple at a 17.1x while the "rule of twenty" fair value multiple is at 18.0x.
The 10-year Treasury yield is 2.05%.
The earnings yield stands at 5.84%.
The recent deterioration in the charts continued Friday. While not outright negative at this point, we believe that they, in combination with the data, suggest we maintain our near term "neutral" outlook for the major equity indices at this time.