While, the major equity indexes were mixed, the Nasdaq Composite bounced off of its long-term uptrend line Thursday. So far, the holding of this trend is a positive.
The data is largely neutral, while forward 12-month earnings estimates for the S&P 500, however, continued to rise.
Let take a closer look now.
On the Charts
Source: Worden
The indexes closed mixed Thursday with internals positive for the NYSE and negative for the Nasdaq. Trading volumes declined from the prior session on both exchanges.
The MidCap 400, Russell 2000 and Value Line Arithmetic Index posted gains as the remainder ended with losses.
The chart events of note were the Nasdaq Composite (see above) bouncing off of its long-term uptrend line from November 2020 while the Value Line index closed back above its 50-day moving average. However, the DJIA closed below support.
As of the close, we would view the Nasdaq Composite's successful test of long-term support as a plus.
The stochastic levels did flash bearish crossovers on the S&P 500, DJIA, MidCap 400 and Value Line index.
Cumulative breadth saw no changes in the current negative trends on the All Exchange and Nasdaq with the NYSE neutral.
Looking at the Data
The McClellan 1-Day Overbought/Oversold Oscillators are still neutral (All Exchange: +2.55 NYSE: +16.81 Nasdaq: -8.43).
The percentage of S&P 500 issues trading above their 50-day moving averages increased to 68% and remains neutral.
The Open Insider Buy/Sell Ratio slipped to 40.8 and remains neutral as well.
Meanwhile, the detrended Rydex Ratio (contrarian indicator), measuring the action of the leveraged ETF traders, lifted slightly to 0.97, also staying neutral.
This week's contrarian AAII Bear/Bull Ratio dropped to 1.12 but remained bullish as the crowd remains skeptical of the recent rally.
The Investors Intelligence Bear/Bull Ratio (24.4/55.0) (contrary indicator) was unchanged and remains neutral.
Valuation and Yields
The forward 12-month consensus earnings estimate for the S&P 500 from Bloomberg rose to $222.30 per share. This leaves the S&P's forward P/E multiple is 21.1x with the rule of 20" finding ballpark fair value at 18.3x.
The S&P's forward earnings yield is 4.73%.
The 10-Year Treasury yield rose to 1.73%. We view support for the 10-Year at 1.55% with resistance at 1.75%.
Near-Term Outlook
As the markets try to stabilize from the panic earlier this week, current investor sentiment, improved valuation, the neutral data and successful tests of long-term uptrends suggest we maintain our current "neutral/positive" macro-outlook for equities.
