Market Pulse
Author: Created: 3/10/2010 11:54 AM
Market Pulse
By Walter Murphy on 7/27/2015 4:23 PM
“Plain English”

US Equities: The broadest measure of price is the daily cumulative advance-decline line. The NYSE common-stock a-d line is on the verge of making a year-to-date low and the all-issue a-d line is not far from doing the same. This, plus the fact that over half of the stocks in the broad S&P 1500 are 10% below their 52-week high, suggests that price has cast its vote (with indicators) that the market’s post-October uptrend has been reversed despite the S&P 500’s ability (so far) to hold support.

Global Equities: The Dow Jones Global (ex US) Index has regularly been testing its weekly 2009-2015 support trend line and our fatigued global daily cumulative a-d line is completing an Elliott Wave five-wave pattern that began in 2012. This combination suggests that both the index and the a-d line are increasingly at risk of the largest decline in months – and perhaps years. A late-summer rally will be viewed with that risk in mind.

Interest Rates: The weekly Coppock Curve for 10-year...
By Walter Murphy on 7/23/2015 12:26 PM
On Wednesday, the S&P 500 fell 0.24%, the DJIA lost 0.38%, and the NASDAQ retreated 0.70%. NYSE declining stocks exceeded winners by 62 issues while the up/down volume ratio was bearish by a 4:3 margin. The daily Coppock Curve has a bullish bias for 305 of the S&P’s 500 stocks, 19 of the 30 DJIA stocks, and 71 of the stocks in the NASDAQ 100.

AAPL, AAPL, AAPL. In recent days it seems that all we hear and read about is Apple. Much of the heat came today as the stock lost as much as 6.7% before recovering. These difficulties, plus those from Microsoft and IBM, are attributed to disappointing earnings reports and are used as reasons for recent declines in the popular averages.

To put that last point into perspective, the respective DJIA weightings for AAPL, IBM, and MSFT are 5, 3, and 25. At the end of June, AAPL and MSFT were the two most heavily weighted components in the S&P (IBM did not make the top 10). Those two are also the heaviest weights in the NASDAQ 100. So it makes sense that, when AAPL...
By Walter Murphy on 7/21/2015 3:02 PM
“Plain English”

US Equities: As a group indicators are oversold. This exists even as the prospects for a 20-week cycle low appear high. As a result, the potential exists that the rally of the past two weeks is the opening salvo in a larger uptrend. However, given that the indicators have achieved levels not seen in years, there is a case to be made that the recent indicator oversold levels represent a confirming bad oversold condition. If so, then this new rally may well result in an increase in bearish divergences (in terms of both quality and quantity) and be followed by an S&P decline that should carry back through the recent 2044 low.

Global Equities: The April-July decline by the Dow Jones Global (ex US) index is easily counted as an overlapping five-wave pattern, which indicates that it is an Elliott Wave diagonal triangle. A diagonal is an ending pattern, so this would suggest that the three-month decline is a final “C” wave. The “C” wave potential is buttressed by the fact that the decline...
By Walter Murphy on 7/16/2015 3:00 PM
On Wednesday, the S&P 500 fell 0.07%, the DJIA lost 0.02%, and the NASDAQ retreated 1.12%. NYSE declining stocks exceeded winners by 5.3 while the up/down volume ratio was bearish by a more modest 15:8 margin. The daily Coppock Curve has a bullish bias for 414 of the S&P’s 500 stocks, all 30 DJIA stocks, and 85 of the stocks in the NASDAQ 100.

As noted in recent comments, many indicators have deteriorated to a degree not seen since October. By contrast, the indexes have held up relatively well. This prompted us to wonder if we could quantify the significance of this negative divergence. We examined monthly data since the 2000 peak and compared the S&P 500 with its 12-month RSI. We chose the RSI rather than the Coppock Curve because we wanted an indicator that always has a value in excess of zero.

The study calculates the percentage spread between the S&P’s monthly close and its 12-month high as well as the percentage spread between the RSI and its own 12-month high. We then subtracted the RSI spread...
By Walter Murphy on 7/14/2015 12:07 PM
“Plain English”

US Equities: The weekly Coppock Curve for the S&P 500 is positioned to break below its zero line by as early as next week. Since and including the 2009 low, the weekly oscillator has turned up from below its neutral zero line six times. Each of those was followed by a rally by the oscillator back above “zero” and by the “500” to new highs. The last such bullish momentum reversal occurred in October. Thus, a Coppock breach of zero has the potential to be the first step in an important bottoming process.

Global Equities: We have been counting China’s recently reversed multi-month rally as a “C”-wave, so it could be expected to end badly. Last week, the SSE Composite index tested the important 3400-3100. However, the daily Coppock Curve is lower than at any time in the 15 years we examined (including the 2007-2008 bear market). This momentum extreme suggests that a coming oversold rally will prove to be a counter-trend event in the context of an even larger downtrend. Relief rally resistance...
By Walter Murphy on 7/8/2015 9:20 AM
On Tuesday, the S&P 500 gained 0.61%, the DJIA rallied 0.53%, and the NASDAQ added 0.11%. NYSE advancing stocks exceeded losers by almost 7:4 while the up/down volume ratio was bullish by a more robust 8:5 margin. The daily Coppock Curve currently has a bearish bias for 320 of the S&P’s 500 stocks, 19 of the 30 DJIA stocks, and 72 of the stocks in the NASDAQ 100.

On a short term basis, there appears to be more plusses than minuses. For example, there are positive momentum divergences on both our hourly and daily charts, the overall decline from May’s high is corrective, and a 20-week cycle low appears imminent (or already in place). All of this implies that the indexes are positioned for a tradable short term rally.

That said, long term damage has already been done. The weakness of recent days appears to have been enough to lock in the post-October rallies for both the S&P and DJIA as a complete pattern. Given the corrective nature of that seven-month uptrend, the potential exists for a deep – if...
By Walter Murphy on 7/4/2015 8:15 AM
“Plain English”

US Equities: For some time we have maintained that 1992-1972 is key support for the S&P 500. We are inclined to raise that “key support” label to 2049-2039. A decline into that range will be enough to lock in the entire uptrend from last October’s low as a complete pattern while a violation of the full range will represent a breakdown from a post-March top formation. Such a break will be the final confirmation of a post-October trend reversal. Our Tech Tab indicator (a weekly tabulation of seven technical indicators) has historically had a reasonably strong correlation with our Elliott Wave count. The indicator’s recent breakdown through its neutral zero line is the first since October. The McClellan Summation Index’s violation of its own neutral zero line has similar implications as do the recent breakdowns through post-October support trend lines by both the major averages and the NYSE all-issue daily cumulative advance-decline line. A break of 2049 will be the final arbiter (as price...
By Walter Murphy on 6/30/2015 11:36 AM
On Monday, the S&P 500 fell 2.09%, the DJIA lost 1.95%, and the NASDAQ retreated 2.40%. NYSE declining stocks exceeded winners by almost 20:1, and the up/down volume ratio was bearish by more 18:1. The result was the first 90% down day since December. The daily Coppock Curve currently has a bearish bias for 389 of the S&P’s 500 stocks, 23 of the 30 DJIA stocks, and 87 of the stocks in the NASDAQ 100.

In recent comments we have noted that our immediate focus is on 2135-2163 resistance and 2040 support. So in that sense, today’s decline to as low as 2058 still allows the S&P 500 some wiggle room for further weakness. Even so – and as noted in Thursday’s blog – the S&P 500 has violated every important support trend line from the October low even as both the McClellan (Ratio Adjusted) Summation Index and our own Tech Tab indicator have moved below their respective “zero” lines for the first time since October. With these mounting pressures in mind, an S&P 500 break of 2040 support will effectively lock in the...
By Walter Murphy on 6/27/2015 8:54 AM
The daily Coppock Curve currently has a bullish bias for 296 of the S&P’s 500 stocks, 23 of the 30 DJIA stocks, and 62 of the stocks in the NASDAQ 100. Moving up one degree of trend, the weekly oscillator is in a downtrend against 345 of the S&P 500 stocks, 20 of the DJIA components, and 67 of the NASDAQ 100 members

We can make a case that the uptrend from last October’s low is on the ropes. There are several reasons for this observation. For example, the S&P 500 has violated every important support trend line from the October low. Similar trend line breaks are also evident against most other indexes as well as against both the NYSE all-issue and common stock daily cumulative advance-decline lines. In addition, both the McClellan (Ratio Adjusted) Summation Index and our own Tech Tab indicator have moved below their respective “zero” lines for the first time since October. All of these – and others – indicate that the eight-month uptrend is in trouble. Further weakness resulting in a decline by the weekly...
By Walter Murphy on 6/18/2015 2:58 PM
On Wednesday, the S&P 500 gained 0.20%, the DJIA rallied 0.17%, and the NASDAQ rose 0.18%. NYSE advancing stocks exceeded losers by 6:5 while the up/down volume ratio was bullish by a more robust 3:2 margin. The daily Coppock Curve has a bullish bias for 342 of the S&P’s 500 stocks, 20 of the 30 DJIA stocks, and 54 of the stocks in the NASDAQ 100.

In our recent STR, we noted that, during the past month, over 64% of the stocks in the S&P 1500 were, at one time or another, at least 10% below their 52-week high even as the index itself has been well-contained within a narrow trading range. As a result, we reiterated a point that we have been making, i.e., the market may be experiencing a rotational (“stealth”) correction.

Ratcheting that observation down to just the S&P 500, we find that “only” 270 (54%) of its components were more than 10% below their 52-week high at least once over the past month. On the surface, this indicates that the big cap stocks have not suffered as much as their smaller cap...
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