While all the major equity indices closed at or near their intraday lows Tuesday, no technical damage was registered on the charts, leaving their mix of neutral and bullish trends intact.
Meanwhile the data -- remarkably, in our view -- continues to send a generally neutral message, while valuation continues to appear extended even with the spike in consensus forward 12-month earnings estimates.
On the Charts
All the major equity indices closed lower Wednesday with negative internals but with lighter trading volumes on the NYSE and Nasdaq from the previous session. While all closed at or near their intraday lows, no violations of support or trend were registered.
The S&P 500, Nasdaq Composite and Nasdaq 100 remain in near-term uptrends with the rest of the indexes neutral. All the charts remain above their 50-day moving averages.
Tuesday's negative breadth did shift the cumulative advance/decline lines for the All Exchange, NYSE and Nasdaq to neutral from positive.
No bearish stochastic crossovers were registered.
The data remains remarkably neutral, in our opinion, including the one-day McClellan Overbought/Oversold Oscillators (All Exchange: -32.3 NYSE: -34.03 Nasdaq: -31.97).
The Open Insider Buy/Sell Ratio is neutral as well at 37.8 with the detrended Rydex Ratio (contrary indicator) unchanged and neutral at 0.39.
This week's AAII Bear/Bull Ratio (contrary indicator) again saw an increase in bearish sentiment within the crowd and has turned bullish at 47.52/23.55 as bears continued to outnumber bulls.
The counterintuitive percentage of S&P 500 issues trading above their 50-day moving averages is neutral at 72.3%.
Valuation continues to appear extended with the S&P 500 trading at a P/E of 22.1x consensus forward 12-month earnings estimates from Bloomberg of $142.47 per (up notably from $129.00 as of last week), while the "rule of 20" finds fair value at a multiple of 19.4x.
The S&P's forward earnings yield is 4.48% with the 10-year Treasury yield at 0.65%.
While Tuesday's action was negative, there was little to no evidence to warrant changing our current near-term outlook for the major equity indices from "neutral/positive."