Market Pulse
Author: Created: 3/10/2010 11:54 AM
Market Pulse
By Walter Murphy on 1/27/2011 5:26 PM
On Wednesday, the S&P posted its fourth straight gain with a rally of 0.4%.  Advancing stocks exceeded losers by a bit less than 3:1, while the up/down volume ratio was positive by a more modest 6:5.  Total volume increased by 2%.  The daily Coppock Curve has a bullish bias for 17 of the 24 S&P industry groups and for 18 of the 30 DJIA stocks.

During the first hour of Wednesday’s trading, the S&P gapped through the 1291-1292 breakout point mentioned in yesterday’s comment and followed through to a new recovery high just below 1300.  This rally fell a bit short of the 1301 objective implied by that breakout, but hourly momentum is oversold and, with a majority of industry groups benefitting from a constructive Coppock Curve, we will allow for continued follow-through in the days immediately ahead.  A rally through 1301-1302 would allow for further strength to the top end of the 1289-1313 range that we have mentioned in recent comments.

Prior resistance in the 1291-1296 area is likely important nearby...
By Walter Murphy on 1/26/2011 5:56 PM
On Tuesday, the S&P was under water for virtually the entire day but, thanks to a final hour rally, managed to eke out a 0.03% gain.  Similarly, advancing stocks marginally exceeded losers by a mere 28 issues (1.02:1); by contrast, the up/down volume ratio was negative by almost 2:1.  Total volume increased by 14%.  The daily Coppock Curve has a bullish bias for 15 of the 24 S&P industry groups and for 16 of the 30 DJIA stocks.

In recent comments we have pointed to 1271 as an important support point.  So we noted, with more than passing interest, that Tuesday’s weakness was enough to breach a trend line from the 1271 low.  That breach was temporary (a bear trap?) and the index is still in what is now a three-day trading range. It seems, therefore, that the post-November uptrend bent, but did not break.

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By Walter Murphy on 1/24/2011 8:30 AM
On Wednesday, the S&P fell 1.01%; that was the first time since late November (38 trading days) that the index lost more than 1.0%.  Declining stocks exceeded losers by more than 7:1 while the up/down volume ratio was bearish by more than 10:1.  Total volume fell by 12%.  The daily Coppock Curve now has a bearish bias for 16 of the 24 S&P industry groups.

An old proverb states that “a journey of a thousand miles begins with a single step.” So, given the overbought condition of the market, it is possible the Wednesday’s decline marks the beginning of an important intermediate decline.  However, Wednesday’s sell-off did little, if any, damage to the November-January uptrend.  At this point – and at the risk of mixing proverbs with idioms – it is a case of “no harm, no foul.”  The decline did not result in a lower low below the January 7 low.  It did not break any meaningful trend line.  And it did not seem to engender much concern if we can take the 0.84 CBOE put/call ratio an accurate measure of the day’s...
By Walter Murphy on 1/19/2011 3:26 PM
On Tuesday, the S&P recorded its fourth rally in five days with a gain of 0.1%.  Advancing stocks exceeded losers by almost 5:4.  However, the up/down volume ratio was bearish by almost 2:1 thanks to Citigroup.  Total volume increased 13%.  The daily Coppock Curve has a bullish bias for 18 of the 24 S&P industry groups and 16 of the 30 stocks in the DJIA.

Both the July-August and August-November rallies were corrective structures.  However, the current rally from the late November low has much more of an impulsive look to it.  Since the first two are corrective, the current rally will almost certainly end up being corrective as well.  With that in mind, the most straight-forward count is that a five-wave “A” ended on December 29 and the “C” wave began two days later.  This “C” will be 0.618 of the “A” at 1310, which is within the 1289-1313 first support range mentioned in the recent STR.  Nearby support is at 1262-1254.

S&P 500

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By Walter Murphy on 1/13/2011 8:38 PM
On Wednesday, the S&P gained 0.9%.  Advancing stocks exceeded losers by almost 7:2.  Indeed, this was the second straight day will more than 1000 winners; that has not happened since December 22.  The up/down volume ratio was bullish by a more robust 11:2.  Total volume increased by 4%. The daily Coppock Curve has a bearish bias for 14of the 24 S&P industry groups and 16 of the 30 stocks in the DJIA.

On a very short term basis, the S&P has declined on six of the past 10 days.  However, a look back at the rally from the late November low reveals that, for all intents and purposes, short term declines have been unable to record even a false breakdown.  Thus, the post-November uptrend to date is an uninterrupted series of higher highs and higher lows.  The August-November rally was also an orderly uptrend.  As a result, the entire post-August uptrend represents the longest period of time since June 2006 to February that a rally has not been interrupted by even a relatively benign 5% correction.

S&P...
By Walter Murphy on 1/12/2011 8:08 PM
On Tuesday, the S&P broke a three-day losing streak with a rally of 0.4%.  Advancing stocks exceeded losers by 7:4 while the up/down volume ratio was bullish by a similar margin.  However, total volume fell 3% (to its lowest level of the new year). The daily Coppock Curve has a bearish bias for 18 of the 24 S&P industry groups and 18 of the 30 stocks in the DJIA.

Despite the fact that momentum has been – and still is – overbought for most indexes and a majority of the sectors and stocks that we monitor, the rally from July’s low has continued to make (and, for the most part, struggle to) new recovery highs.  However, there is evidence to suggest that the rally is overstaying its welcome.  Among this evidence is the 10-day CBOE put/call ratio.

S&P 500 with 10-day CBOE Put/Call Ratio

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By Walter Murphy on 1/11/2011 5:09 PM
On Monday, the S&P suffered its third straight loss (and sixth out the past eight) with a loss of 0.1%.  Advancing stocks edged out losers by 11:10, but the up/down volume ratio was negative by 4:3.  Total volume declined by 17%. The daily Coppock Curve has a bearish bias for 17 of the 24 S&P industry groups and 18 of the 30 stocks in the DJIA.

As noted, even though the S&P declined modestly, breadth was modestly positive.  Internally, breadth for the S&P itself was negative, but breadth for both the mid cap and small cap indexes was positive; indeed, up stocks in the S&P 400 exceeded losers by better than 3:1.  To a large degree, this outperformance by smaller cap stocks over large cap issues is a big reason why advance-decline lines have yet to record a meaningful negative divergence.

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By Walter Murphy on 1/5/2011 5:19 PM
On Tuesday, the S&P suffered its third decline in four days with a loss of 0.1%.    Declining stocks outpaced winners by 3:1 while the up/down volume ratio was negative by a more modest 4:3.  Total volume increased by 9%. The daily Coppock Curve still has a bearish bias for 14 of the 24 S&P industry groups.

As mentioned, Tuesday was the third decline in four days for the S&P 500; the same can be said for the broader S&P 1500.  However, in both instances Monday’s rally offset the losses recorded by the other three days.  So, on balance, the indexes are nicely higher than they were four days ago.  Thus, the trend remains up and all is well.  Correct?

S&P 1500 Daily A-D Line with Weekly Coppock Curve

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By Walter Murphy on 1/4/2011 2:54 PM
Happy New Year!  We thought we might be able to release January’s monthly Insights today.  It was not to be.  However, most of the writing is done and all the charts have been inserted.  So we fully expect to send it out tomorrow.

The S&P began the New Year with a bang.  The index rallied 1.1%, which was its best performance in a month.    Advancing stocks outpaced losers by a bit less than 5:1 while the up/down volume ratio was positive by almost 6:1.  Total volume more than doubled, reflecting traders’ return from what amounted to a long holiday week. The daily Coppock Curve still has a bearish bias for 14 of the 24 S&P industry groups and for 16 of the 30 stocks in the DJIA.

There is a case to be made that the rally from November’s low is a fifth wave up from July’s low.  This November-January fifth wave will equal the July-August first wave just above 1291.  Such a relationship (wave 5 equals wave 1) is a common Elliott Wave relationship, so a case can be made that the rally still has some breathing...
By Walter Murphy on 12/23/2010 11:49 AM
This is our final comment of the year.  We are off to celebrate another Christmas with children – and a first with a charming granddaughter.  In early January we will kick off with our thoughts on the prospects for 2011.  We hope that, in this season of joy and celebration, you are in the company of family and friends and have a happy and healthy New Year.

On Wednesday, the S&P 500 posted its 11th gain in 12 days with a rally of 0.3%.  Advancing stocks outpaced losers by a bit less than 3:2 while the up/down volume ratio was positive by a more modest 5:4.  Total volume increased by less than 1%, but has been below four billion shares for three straight days.  The daily Coppock Curve has a bearish bias for 20 of the 24 S&P industry groups and for 19 of the 30 stocks in the DJIA.

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