All the major equity indexes closed near their intraday highs Thursday with several closing above their resistance levels. All remain in near-term uptrends.
However, the McClellan 1-day OB/OS Oscillators that were already overbought are now even more overbought, with the NYSE in the extreme. Whether the market will continue to ignore their status has yet to be determined.
Thus, while market environment continues to improve, we are becoming more price sensitive on the buy side.
Checking Out the Charts
Chart Source: Worden
All the major equity indexes closed higher Thursday with strong internals on heavier volume as all closed at or near their intraday highs. All the charts remain in near-term bullish trends and above their 50-day moving averages.
Technical progress was seen as the DJIA, Nasdaq Composite, Nasdaq 100, Dow Jones Transports, MidCap 400 and Russell 2000 all closed above their resistance levels.
We would note, however, that the Nasdaq 100 (see above) is very near the upper end of its up-trending channel from the recent market lows that has been a rejection point of late.
Cumulative breath remains strong and above the 50 DMA on the All Exchange, NYSE and Nasdaq.
No stochastic signals were generated from their current overbought condition.
What About the Data?
The McClellan OB/OS Oscillators are more overbought with the NYSE extremely so (All Exchange: +87.64 NYSE: +118.38 Nasdaq: +65.57).
The percentage of S&P 500 issues trading above their 50-day moving averages (contrarian indicator) remains neutral, lifting to 73%.
The Open Insider Buy/Sell Ratio rose to 50.0, also staying neutral.
The detrended Rydex Ratio (contrarian indicator) is unchanged at -0.92 and mildly bullish versus its previous bullish status a few weeks ago.
This week's AAII Bear/Bull Ratio (contrarian indicator) finds the crowd staying very fearful, at 1.86 and very bullish.
However, the Investors Intelligence Bear/Bull Ratio (contrary indicator ) moderated to neutral with the bears and bulls being dead even at 35.2/35.2.
S&P 500 Valuation and Yields
The forward 12-month consensus earnings estimate from Bloomberg for the S&P 500 continue to decline and is down to $235.24 per share. As such, the S&P's forward P/E multiple rose to 17.3x and is now in line with the "rule of 20" ballpark fair value at 17.3x.
The S&P's forward earnings yield dropped to 5.78%.
The 10-Year Treasury yield closed lower at 2.68% and below support. We view new support as 2.49% and resistance at 2.92%.
Our Near-Term Market Outlook
The environment for equities continued to improve Thursday with no current signs of abating. However, we are more reluctant to chase price currently give the OB/OS and lift in market valuation. We suspect a little patience may be required for more opportunistic prices.
