Potential vaccines, renewed China tensions, Fed and fiscal stimulus, unemployment numbers, earnings, states opening from coronavirus closures.
There's a lot going on right now affecting the markets.
But what are index charts and market data saying?
On the Charts
The S&P 500, DJIA, Nasdaq Composite, Nasdaq 100, and Dow Jones Transports closed lower Thursday with the S&P MidCap 400, Russell 2000 and Value Line Arithmetic Index posting minor gains.
While breadth was positive on the NYSE, the Nasdaq saw decliners outpace advances but on lighter trading.
The net result was no notable technical events were generated, leaving all in near-term uptrends with the exception of the Russell 2000 remaining neutral.
All are above their 50-day moving averages.
Source: Worden
The cumulative advance/decline lines remain neutral on the NYSE and Nasdaq and positive on the All Exchange.
And while all now find their stochastic levels in overbought territory, none have generated bearish crossover signals at this stage and can stay overbought for extended periods.
As such, the charts have yet to generate cautionary signals.
Data
The data continues to send a generally neutral message.
The one-day McClellan Overbought/Oversold Oscillators for the All Exchange, NYSE and NASDAQ returning to neutral levels (All Exchange: +36.72 NYSE: +45.29 Nasdaq: +30.52).
The Open Insider Buy/Sell Ratio at 76.4 is neutral as well as is the detrended Rydex Ratio (contrary indicator) at +0.46.
This week's AAII Bear/Bull Ratio (contrary indicators), at 49.1/25.87, continues to send a bullish message as the crowd has yet to embrace the market's strength from the March lows.
The counterintuitive percentage of S&P 500 issues trading above their 50-day moving averages has moved back into bearish territory at 81.0%.
Valuation
Valuation continues to be of concern with the S&P 500 trading at a P/E of 22.9x consensus forward 12-month earnings estimates from Bloomberg that have dropped to $128.83 per share, versus the "rule of 20" fair value multiple of 19.3x , suggesting the index remains overvalued.
The S&P's forward earnings yield is 4.37% while the 10-year Treasury yield is 0.68%.
Our Outlook
Thursday's market action left the charts and data generally intact from their prior conditions causing us to keep our near-term expectations for the equity markets at "neutral/positive" although valuation remains extended.
