Market Pulse
Author: Created: 3/10/2010 11:54 AM
Market Pulse
By Walter Murphy on 9/25/2014 3:32 PM
Tomorrow may give us a good sense as to whether the S&P is poised to rally directly to new highs or is positioned to accelerate to the downside. We say this because the decline of recent days from 2019 to 1978 can be counted as either the “C”-wave of a larger ABC from the 2011 high on September 4 or the first leg of a larger decline.

In the first scenario, today’s rally could be the kick-off to a new breakout move. Under the second scenario, today’s rally is only part (or all) of counter-trend move prior to renewed weakness.

Short term indicators favor the first alternative. For example, and as mentioned in the recent STR, the 35-day cycle is probing for a bottom. In addition, the 10-day put/call ratio is oversold and the daily Coppock Curve is bottoming. Obviously, this scenario will be fully confirmed by a breakout through 2019.

With this in mind, key support is the September 15-24 double-bottom at 1978. If this is decisively broken, probabilities will increase that wave-six is developing.

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By Walter Murphy on 9/12/2014 1:21 PM
On Thursday the S&P 500 gained 0.09% to 1997 and the DJIA lost 0.12% to 17049. However, the NASDAQ Composite rallied 0.12% to 4592. NYSE advancing stocks exceeded losers by 8:5 while the up/down volume ratio was bullish by almost 2:1. Turnover increased by 2%. Even so, the daily Coppock Curve has a bearish bias for 23 of the 24 S&P industry groups, for 26 of the 30 DJIA stocks, and for 78 of the stocks in the NASDAQ 100.

Also on Thursday, oil rallied 1.4% one day after breaking its January low. In addition, the equal-weighted Continuous Commodity Index (CCI) fell 0.7% to a multi-year low. We are hard-pressed to decide which breakdown is more important.

Importantly, short term momentum indicators for the CCI confirmed the new low by making multi-year lows of their own. This suggests that a coming low will only represent the first phase of a larger decline. That said, we have been counting April’s high as the completion first leg (the “A”-wave) of a larger counter trend rally (a larger degree “B”-wave)...
By Walter Murphy on 9/10/2014 2:17 PM
On Tuesday the S&P 500 recorded its fifth loss in six sessions with a 0.65% decline to 1988. The DJIA lost a more modest 0.57% to 17014 while the NASDAQ Composite dropped by a larger 0.87% to 4552. NYSE declining stocks exceeded winners by 5:1 while the up/down volume ratio was bearish by a bit less than 7:2. Turnover increased by 3%. The daily Coppock Curve has a bearish bias for 23 of the 24 S&P industry groups, for 27 of the 30 DJIA stocks, and for 84 of the stocks in the NASDAQ 100.

In our most recent STR we noted that, while last Friday’s weakness was deep enough to lock in the S&P’s August-September uptrend as a complete pattern, the reversal was not confirmed by broader indexes such as the S&P 1500, the NYSE Composite, or the Wilshire 5000. That is no longer the case; as a result of Tuesday’s weakness, all three of those indexes have reversed their respective August-September uptrends.

As subscribers are aware, we view the S&P’s post-August rally from 1905 as an Elliott Wave final fifth wave...
By Walter Murphy on 9/8/2014 6:33 PM
“Plain English”

US Equities: Friday’s reversal of the S&P’s August-September uptrend has not been confirmed by broad indexes such as the S&P 1500, the NYSE Composite, or the Wilshire 5000. Moreover, Friday’s pullback did not even come close to a normal 38.2%-61.8% retracement to 1971-1945. Thus, until more confirmations develop, we will need to respect the possibility that the 1905-2011 rally will prove to be the first phase of a larger, still developing fifth wave.

Global Equities: Our global daily cumulative advance-decline has broken out to new all-time highs. The breakout reflects strength in all regions. The Pac Rim’s a-d line recorded an all-time high while Latin America’s line broke out to a 16-month high. Europe’s a-d line came within a whisker of a new high. As noted in previous comments, such a breakout has bullish longer term implications.

Interest Rates: Yields move in large three-wave patterns, but it is easy to count the current post-December downtrend in 30-year yields as a...
By Walter Murphy on 9/5/2014 4:02 PM
On Thursday the S&P 500 suffered its third straight loss with a decline of 0.15%. The DJIA lost a more modest 0.05% while the NASDAQ Composite dropped by a larger 0.22%. NYSE declining stocks exceeded winners by 8:5. The daily Coppock Curve has a bearish bias for 22 of the 24 S&P industry groups, for 25 of the 30 DJIA stocks, and for 77 of the stocks in the NASDAQ 100.

S&P 500: Today’s all-time high early in the morning can be counted as the end of the fifth wave from the early August 1905 low. The afternoon sell-off was such that every uptrend line from 1905 has been violated. Moreover, the daily, weekly, and monthly Coppock Curves all have a bearish bias. The missing ingredient is a break of 1990; such a breach tomorrow will lock in the 1905-2011 rally as a complete pattern. Since the August-September rally is itself counted as the final leg from February’s 1737 low – and possibly the final leg from the October 2011 low at 1075 – a complete pattern will necessarily put us on alert for signs of a significant...
By Walter Murphy on 9/3/2014 2:55 PM
“Plain English”

US Equities: It has been 732 trading days since the S&P 500’s last 10% correction. This is within 47 days of being the third-longest such span since the 1974 bottom. Thus, even as the divergences suggest that the market is at risk of an important correction, history indicates that just such a correction is overdue.

The Rest of the World: At the end of August the monthly Coppock Curve had a bullish bias for 20 of the 37 non-US markets in our universe. However, there is a clear distinction between developed and developing markets. The oscillator has a bearish bias for 17 of the 20 developed markets (ex US) but has a bullish bias for 12 of the 17 developing markets. Both momentum and price patterns suggest continued large-market underperformance.

Yields: The monthly Coppock oscillators for both 10- and 30-year yields peaked 7-8 months ago but are still well within the overbought side of neutral. We do not expect the indicators to trend down through their respective zero lines...
By Walter Murphy on 8/24/2014 6:46 AM
On Thursday the DJIA was the best performer among the three major indexes with a gain of 0.4%. The S&P 500 rallied 0.3% while the NASDAQ Composite added a relatively paltry 0.1%. However, both the S&P and NASDAQ recorded new bull market highs while the DJIA failed to do the same. NYSE advancing stocks exceeded losers by 8:5 while the up/down volume ratio was bullish by a slightly more modest 3:2 margin. The daily Coppock Curve has a bullish bias for all 24 S&P industry groups, for all 30 DJIA stocks, and for 89 of the stocks in the NASDAQ 100.

Today’s rally was not as broad-based as others have been since the 1905 low in early August. However, it was enough to carry the NYSE all-issue daily cumulative advance-decline line to an all-time high. This confirmed a similar breakout by the S&P 500’s daily a-d line and came two days after the first Zweig “breadth thrust” since last October. (Indeed, by our reckoning, there have only been three other breadth thrusts since the 2009...
By Walter Murphy on 8/15/2014 10:31 AM
On Thursday the three major indexes all gained 0.4%. NYSE advancing stocks exceeded losers by 2:1 while the up/down volume ratio was bullish by a slightly more modest margin. The daily Coppock Curve has a bullish bias for 17 of the S&P’s 24 industry groups, for 21 of 30 DJIA stocks, and for 70 of the stocks in the NASDAQ 100.

We have been making the case that the recent 1904 low was important support for the S&P 500. Our preferred count is that this low was the fourth wave of a five wave rally from February’s low. In turn, the larger rally from February’s low is arguably the final fifth wave from the late 2011 bottom.

That said, the rally from the 1904 is now challenging important resistance. At 1958, the rally from the August 7 low will be a 61.8% retrace of the decline from July’s 1991 record high. Meanwhile, this week’s gain from 1928 will be 61.8% of the earlier August 7-11 rally near 1953. With these levels in mind, the index has already breached the downtrend line from the July 24 low even...
By Walter Murphy on 8/12/2014 5:11 PM
“Plain English”

US Equities: A coming rally to new highs is likely to be followed by the deepest correction in months. To put that into perspective, there have been six progressively smaller corrections since the 2011 low ranging from 10.9% to 4.4%. We would not be surprised to see a coming correction (following anticipated new highs) exceed all of these.

Global Equities: Most markets are in the early stages of what could prove to be a multi-quarter correction. While the currently weak weekly oscillator may well bottom in the fourth quarter, the deteriorating larger degree monthly indicator is positioned to be weak for most major markets into the second half of 2015. If so, then a late 2014 low will likely only mark the completion of the first leg within a larger downtrend.

Interest Rates: Ten-year yields are at the upper end of chart and Fibonacci support in the 2.44%-2.38% range. At the same time, there are short term bullish divergences and the weekly Coppock Curve is stabilizing. This...
By Walter Murphy on 8/8/2014 8:48 AM
On Thursday the S&P 500 fell 0.6% while both the DJIA and NASDAQ lost 0.5%. NYSE declining stocks exceeded winners by 2:1 while the up/down volume ratio was bearish by a more robust 9:8 margin. Turnover decreased by 8%. The daily Coppock Curve has a bearish bias for 23 of the S&P’s 24 industry groups, for 25 of 30 DJIA stocks, and for 75 of the stocks in the NASDAQ 100.

The “500” appears to be approaching at least a short term bottom. The daily Coppock Curve is at its most oversold level since February. Similarly, our default eight-day RSI has been probing the oversold “30” area for the first time in six months.

From an hourly perspective, neither the Coppock oscillator nor the eight-hour RSI has confirmed recent weakness. For all practical purposes, the RSI has only been above “50” once since the July 24 high at 1991. Finally, we can count the weakness of recent days as the final fifth wave from that same July 24 benchmark. This combination also indicates that at least a short term rally is close...
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