Market Pulse
Author: Created: 3/10/2010 11:54 AM
Market Pulse
By Walter Murphy on 10/27/2011 11:45 AM
On Wednesday, the S&P 500 posted its fourth gain in five days with a rally of 1.1%. Winning stocks exceeded losers by almost 5:1 while the up/down volume ratio was positive by a more modest 7:2 margin. Turnover increased by 9.0% and broke out of its recent 4.2-4.4 billion share range. However, the daily Coppock Curve has a bearish bias for 19 of the 24 S&P industry groups as well as for 17 of the 30 DJIA stocks.

Most of the attention on Tuesday was on stock markets in general and the European debt crisis in particular. Meanwhile, gold’s breakout seemed to be flying under the radar. As our regular readers are aware, we often review a 1%x3 point-and-figure chart of GLD, the gold SPDR. Today, GLD completed a base with what is known as a triple top breakout. Regardless of the name, the bottom line is that what was previous resistance at 161.56-164.16 is now support.

image...
By Walter Murphy on 10/26/2011 4:12 PM
On Tuesday, the S&P 500 suffered it biggest decline (2.0%) since the early October low and, in the process, broke a three-day winning streak. Losing stocks overwhelmed winners by almost 11:1 while the up/down volume ratio was bearish by less than 9:1. Turnover has been in a 4.2-4.4 billion share range for five sessions. The daily Coppock Curve now has a bearish bias for 18 of the 24 S&P industry groups as well as for 18 of the 30 DJIA stocks.

In both Sunday’s blog and yesterday’s STR we indicated that near term momentum is overbought, suggesting that the short term trend is mature and approaching a top. Thus, while there are a number of “reasons” for today’s decline (Europe, earnings, consumer confidence), those reasons are merely a cover for a market that was in need of some rest.

The daily Coppock Cure is rolling over. This suggests that near term pressures should last into November. However, we expect that the improving intermediate trend will be able to withstand these pressures and sentiment...
By Walter Murphy on 10/25/2011 10:17 AM
Stocks: Not surprisingly, the rally of recent weeks has become overbought on a short term basis. However, the overall move fits with our expectation for a year-end rally and, despite the near term overbought condition, the positives still outweigh the negatives.

Interest Rates: Despite TLT’s recent pressures, sentiment is still at overly optimistic levels and weekly momentum is overbought – and peaking. While the daily Coppock oscillator (which is at its deepest level in 28 months) is positioned to bottom this week, the downtrend from the early October high will be able to withstand a resulting reaction rally.

Commodities: The two commodities that interested us the most this week were oil and copper. We have mentioned that commodities as a group are preparing for an intermediate rally and these two are good examples of that. Oil appears to be forming a head-and-shoulders bottom while copper is in a fifth wave down from its August high.

US Dollar: Regarding the greenback’s recent weakness,...
By Walter Murphy on 10/23/2011 8:54 PM
We are just back from our granddaughter’s baptism. As a result, the STR will be a bit late this week.

Last week, the S&P 500 posted its third straight gain with a rally of 1.1%. While this winning streak is the longest since February, the more important feature may be that the three-week gain (9.4%) is the best since July 2009. That 2009 surge was a breakaway move and there are signs that this recent strength may have similar implications.

That said, we still need to see more evidence – a confirmation – that the intermediate trend is changing. The short term trend is constructive; the five-day ema is nicely above the 21-day ema and the daily Coppock Curve has a bullish bias for all 24 S&P industry groups. However, near term momentum is overbought for all groups, which suggests that the short term trend is mature and approaching a top.

image

...
By Walter Murphy on 10/19/2011 11:38 AM
Stocks: The prospects for a fourth quarter rally have been buttressed by the fact that the daily Coppock Curve just recorded a new August-October high and the weekly oscillator is bottoming. Moreover, from a bottoms-up perspective, the weekly oscillator now has a bullish bias for all 10 S&P economic sectors and for 23 of the 24 S&P industry groups. Along with this positive momentum condition, the market should also benefit from favorable cycle, seasonal, and sentiment underpinnings.

The Rest of the World: The weekly Coppock guide has bottomed for the All World index. The oscillator has also bottomed for most of the developed markets in our universe and is expected to do the same for a majority of the developing markets either this week or next. This, plus the breakout by our global a-d line, suggests that it is only a matter of time before the composite breaks out and reverses its downtrend.

Interest Rates: In an environment where global equities are positioned for a year-end rally, the same can...
By Walter Murphy on 10/14/2011 12:26 PM
On Thursday, the S&P 500 experienced only its third loss of the month with a decline of 0.3%. Declining stocks exceeded winners by 5:3 while the up/down volume ratio was bearish by a more robust 9:5 margin. However, these pressures were mitigated somewhat by an 18% decline in turnover. The daily Coppock Curve has a bullish bias for all 24 S&P industry groups and for all 30 stocks in the DJIA.

In recent comments, we have presented evidence supporting an intermediate rally by the S&P 500. This evidence runs the gamut from momentum (a bottoming weekly Coppock), excessively bearish sentiment (via our proprietary sentiment index), and time (favorable seasonals and what appears to be a bottoming 20-week cycle). So, while the market is overbought on a short term basis, it has seemed prudent to suggest that the next short term low is likely to also have bullish intermediate implications.

image...
By Walter Murphy on 10/13/2011 7:10 PM
On Wednesday, the S&P 500 posted its sixth gain in seven days with a rally of 1.0%. Advancing stocks exceeded losers by 11:2 while the up/down volume ratio was positive by a more modest 5:1 margin. The day’s rally was bolstered by a 23% increase in turnover. The daily Coppock Curve still has a bullish bias for all 24 S&P industry groups and for 29 of the 30 stocks in the DJIA.

With apologies to Harry Dacre, we could not resist spinning off of the old classic, A Bicycle Built for Two, in order to highlight the idea that the 20-week cycle looks as though it may have bottomed. As noted in the monthly, the market was overdue for a cycle low. Initially, it appeared as though the S&P’s August bottom qualified, but September’s breakdown dealt a body blow to that scenario. With the index now well on its way to recording both a higher weekly high and a higher weekly low even as the weekly Coppock is bottoming, it would seem that the “500” is moving into the early stages of an intermediate, year-end rally. Since...
By Walter Murphy on 10/12/2011 2:25 PM
On Tuesday, the S&P 500 was little changed (up by 0.05%). Advancing stocks edged out losers by 6:5 while the up/down volume ratio was positive by a more robust 8:5 margin. Turnover recorded a modest (0.2%) increase over Monday’s holiday total and is well below its 21-day ma. The daily Coppock Curve has a bullish bias for all 24 S&P industry groups and for 29 of the 30 stocks in the DJIA.

In our recent monthly, we mentioned that initial support for TLT (the iShares Barclays 20+ Year Bond ETF) was at 116-114. Today, it entered that zone, with an intra-day low of 115.90. More importantly, the ETF closed below an important uptrend line (that had been in force since July) even as short term momentum is overbought and deteriorating. With this as a backdrop, it is important to note that further weakness through 115.37 on a 1%x3 point-and figure chart would generate the first P&F sell since the February lows.

image...
By Walter Murphy on 10/11/2011 6:36 PM
On Monday, the S&P 500 posted its fourth gain in five days – and the best since August – with a rally of 3.4%. Advancing stocks overwhelmed losers by 37:1 and the up/down volume ratio was positive by a much more modest 10:1 margin. However, the resulting 90% up day was mitigated somewhat by an 18% decline in turnover. The daily Coppock Curve has a bullish bias for all 24 S&P industry groups and for 28 of the 30 stocks in the DJIA.

Despite the strength of recent days, the “500” is only now within sight of important resistance beginning at 1196. Moreover, as the nearby chart shows, no important post-May downtrend has been reversed. While the S&P 500’s five-day ema did cross above its 21-day ema on Monday, there was no crossover for the broader NYSE Composite and Value Line Arithmetic indexes (or for a majority of NYSE stocks).

As a result, recent gains have failed to result in any meaningful changes. The basic trend is still down – for now.

image...
By Walter Murphy on 10/10/2011 3:14 PM
Last week, the S&P 500 gained 2.1%, reversing a two-week losing streak. While composite NYSE breadth was flat for the week, the up/down volume ratio was positive by a 4:3 margin. The rally was aided by a 21% increase in week-over-week turnover.

However, the weekly Coppock Curve has a bearish bias for 21 of the 24 S&P industry groups and for 21 of the 30 stocks in the DJIA. The Coppock condition brings to mind an observation that we have made on more than one occasion, i.e., the market as a whole is weaker than the popular indexes would lead us to believe. For example, during last week both daily on-balance volume and the cumulative advance-decline line recorded new post-May lows.

Perhaps most importantly, the on-balance volume line broke below its July 2010 low before recovering in the latter part of the week. We consider this important because volume has a tendency to lead price. Thus, with on-balance volume having moved to its July 2010 low, it seems reasonable to anticipate a similar move by the...
Market Pulse
Copyright 2010-2014 by Walter Murphy Global Advisors, LLC Privacy Statement Terms Of Use