Most of the major equity indexes closed lower Tuesday with negative internals on the NYSE while the Nasdaq's were mixed as trading volumes rose from the prior session on both exchanges.
While two of the indexes made new closing highs, the charts saw several indexes close below their near-term uptrend lines, turning said trends to neutral from positive.
Cumulative market breadth also weakened and is now neutral versus their prior positive trends. Meanwhile, the data is a mix of neutral and cautionary signals.
On the Charts
Only the Nasdaq Composite and Nasdaq 100 closed higher Tuesday to new closing highs as the rest posted decline for the session.
The S&P 500 (see above), Russell 2000 and Value Line Arithmetic Index closed below their near-term uptrend lines and are now in neutral trends while the Dow Jones Transports closed below its 50-day moving average and the DJIA gave a bearish stochastic crossover signal.
As such, only the Nasdaq Composite, Nasdaq 100 and DJIA remain in near-term uptrends with the rest now neutral.
Cumulative market breadth also weakened with the advance/decline lines for the All Exchange, NYSE and Nasdaq all turning neutral from positive with the All Exchange and Nasdaq back below their 50 DMAs.
The data finds the McClellan 1-Day Overbought/Oversold Oscillators all in neutral territory (All Exchange: +18.08 NYSE: -1.35 Nasdaq: +31.59).
The Rydex Ratio (contrarian indicator), measuring the action of the leveraged ETF traders, dipped slightly to 1.33 and still finds the ETF traders heavily leveraged long and in bearish territory.
The Open Insider Buy/Sell Ratio is unchanged at 23.1 and remains bearish versus its prior neutral level.
This week's contrarian AAII Bear/Bull Ratio and Investors Intelligence Bear/Bull Ratio (contrary indicator) both saw an increase in bears and bulls with the AAII remaining neutral (33.8/38.73) and the II bearish at 21.3/52.1.
Valuation and Yields
The forward 12-month consensus earnings estimate for the S&P 500 from Bloomberg lifted modestly to $207.64 per share. As such, the S&P's forward P/E multiple is 21.8x with the "rule of 20" finding fair value at approximately 18.6x.
The S&P's forward earnings yield is 4.59%.
The 10-Year Treasury yield rose to 1.37% but remains within its current trading range with resistance at 1.4% and support at 1.23%. We will watch the 10-Year yield closely for a possible breach above resistance.
Tuesday's generally weakening aspects suggests some further consolidation is possible. Nonetheless, we are not yet convinced a change in our near-term macro-equity outlook of "neutral/positive" is appropriate.