The equity indices closed mixed Tuesday with positive breadth but negative up/down volume on the NYSE while the Nasdaq's was negative on both accounts.
Trading volume increased well above that of the prior few sessions implying a bit of "churn" possibly entering the markets.
The Dow Jones Transports (see above), S&P MidCap 400 and Russell 2000 closed higher as the rest posted modest declines.
The only technical event worthy of note, in our opinion, was the Transports move above another resistance level after breaking above its previous high "volume at price" (VAP) resistance on Monday.
All indices remain in short-term uptrends and above their 50-day moving averages while the cumulative advance/decline lines remain positive on the All Exchange and NYSE with the Nasdaq's staying neutral.
High VAP levels are viewed as supportive on the DJIA, Nasdaq Composite, Dow Transports, MidCap 400 and Value Line Arithmetic Index.
Data Remains Largely Neutral
The one-day McClellan Overbought/Oversold Oscillators are all neutral (All Exchange:+5.68 NYSE:+10.9 Nasdaq:+1.92).
The detrended Rydex Ratio (contrary indicator) at +0.37 is neutral as is the Open Insider Buy/sell Ratio (66.6).
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 (81.2%) has entered bearish territory but we do not view it as an important "timing" indicator.
The S&P 500 is trading at a forward P/E multiple of 17.3x consensus 12-month earnings estimates of $173.85, versus the "rule of twenty" fair value multiple of 17.9x. As such, it is somewhat less compelling than previously viewed, but not negative.
The 10-year Treasury yield is 2.12%.
The earnings yield stands at 5.79%.
While some of the index charts may be slightly extended, the combination of charts and data continue to believe a near-term "neutral/positive" outlook remains appropriate.