All of the major equity indices closed higher Friday with positive internals with the Nasdaq 100 closing above resistance, making a new all-time closing high.
The Nasdaq Composite, Dow Jones Transports, S&P MidCap 400 and Value Line Arithmetic Index closed above resistance as well, turning those trends to positive from neutral. The S&P 500 (see below) closed at resistance while the Transports tested it resistance level but failed to violate.
So, all of the near-term trends are now positive with the exceptions of the DJIA and Russell 2000 remaining neutral.
The cumulative advance/decline lines are positive for the All Exchange, NYSE and Nasdaq although the Nasdaq's is making a notably lower high that suggests weakening breadth on that exchange.
However, our chart enthusiasm is somewhat tempered by the fact that all of the indices are well into overbought conditions on their stochastic readings. They may remain that way for extended periods. Also, when combined with the VIX near its lowest levels of the year that were followed by spikes in volatility, they suggest better buying opportunity may arise in the relatively near future.
The data remains mostly neutral, including all of the one-day McClellan Overbought/Oversold Oscillators (All Exchange:+37.41 NYSE:+35.05 Nasdaq:+41.51).
The detrended Rydex Ratio (contrary indicator) returned to neutral at -0.16. Last week's AAII Bear/Bull Ratio (contrary indicators) remained bullish at 38.0/24.67.
However, the Investor's Intelligence Bear/Bull Ratio (contrary indicator) stayed bearish at 17.0/49.1, suggesting an excess of bullish sentiment on the part of investment advisors continues.
The percentage of S&P 500 stocks trading above their 50-day moving averages is a neutral 65.7%.
Insiders have pulled back further from the buying table as it slipped to a 35.8 neutral Open Insider Buy/Sell Ratio.
Valuation continues to compress with 12-month earnings estimates for the S&P 500 slipping down to $172.68 per share via Bloomberg, leaving the forward P/E multiple at 17.5x while the "rule of twenty" finds fair value at 18.2x. S&P 500 estimates have been shrinking daily over the past several sessions.
The 10-year Treasury yield stands at 1.8%.
The earnings yield is 5.71%.
While the charts are sending a positive message, the VIX, stochastic levels, insiders cooling on their buying activity and the consistent slide in forward S&P 500 estimates suggest we maintain our "neutral" outlook.