The major equity indices closed mixed Friday with the S&P 500, DJIA and Value Line Arithmetic Index advancing as the rest declined.
NYSE internals were positive while the Nasdaq saw negative breadth but positive up/down volume. However, it is Thursday's action that warrants a review.
At Thursday's close, all of the indices had advanced with the all but the Russell 2000 closing above their near-term resistance levels.
Additionally, the S&P (see below), DJIA, Nasdaq Composite and Nasdaq 100 closed above their 50-day moving averages pushing all into near term uptrends, with the exception of the Russell, from their prior neutral conditions.
While that action was bullish, it also moved all of the stochastic levels into overbought territory. Said stochastic levels are one of the reasons we are keeping our near-term neutral outlook in place as they imply potential for some retracement of the recent gains.
High "volume at price" (VAP) levels are supportive on the S&P, DJIA, Nasdaq Composite and 100. They are resistant on the rest.
The cumulative advance/decline lines are positive on the NYSE, NASDAQ and All Exchange.
Data Turns More Mixed
All of the one-day McClellan Overbought/Oversold Oscillators are now in overbought territory with the Nasdaq's mildly so (All Exchange:+59.54 NYSE:+69.01 Nasdaq:+53.61). As such, like the stochastic readings, they imply retracement potential.
The detrended Rydex Ratio (contrary indicator) turned bullish at -1.01 with the percentage of S&P 500 stocks trading above their 50-day moving averages at a neutral 55.8.
Last Tuesday's AAII Bear/Bull Ratio (contrary indicators) remained bullish at 41.67/25.0. It continues to be counterbalanced by the Investor's Intelligence Bear/Bull Ratio (contrary indicator) as investment advisors remained somewhat overly optimistic at 18.7/43.9.
The Open Insider Buy/Sell Ratio remains neutral but dropped to 50.2.
Valuation continues to be appealing, with the 12-month forward consensus earnings estimate from Bloomberg for the S&P 500 dipping to $171.96 per share, leaving the forward P/E multiple at 17.3x while the "rule of twenty" finds fair value at 18.5x.
The 10-year Treasury yield is 1.55%.
The earnings yield stands at 5.77%.
Thursday's action was bullish but we are keeping our neutral outlook in place for the reasons discussed above.