Market Pulse
Author: Created: 3/10/2010 11:54 AM
Market Pulse
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...
By Walter Murphy on 8/6/2014 12:11 PM
US Equities: It appears that the DJ Transports, the NYSE Composite, the NASDAQ Composite, the Russell 2000, Germany’s DAX, and France’s CAC 40 have all already satisfied the minimum requirements for a complete pattern from at least November 2012 if not October 2011. Moreover, a number of these indexes have also violated – or are at least seriously testing – dominant multi-month support trend lines. Thus, a coming S&P/DJIA rally will probably not be confirmed.

The Rest of the World: The monthly Coppock Curve has a bearish bias for 19 of the 37 non-US markets in our universe. Regionally, the oscillator is in a downtrend for 12 of 13 European markets, but is in an uptrend for eight of nine markets in Asia (ex Japan) and for all four Latin America markets in our survey. We expect these relative strength relationships to continue through the remainder of the year. This breakdown suggests that developing markets are likely to out-perform developed markets in the months ahead and that Europe is susceptible to...
By Walter Murphy on 8/3/2014 8:03 AM
On Thursday the S&P 500 fell 2.0%, the DJIA fell 1.9%, and the NASDAQ fell 2.1%. NYSE declining stocks exceeded winners by almost 12:1 while the up/down volume ratio was bearish by a bit less than 8:1. Turnover increased by more than 23%. The daily Coppock Curve has a bearish bias for 23 of the S&P’s 24 industry groups, for 27 of 30 DJIA stocks, and for 67 of the stocks in the NASDAQ 100.

Our initial review of today’s behavior suggests that, while the decline from April’s low has been reversed, longer term trends remain intact. Put another way, we have regularly been pointing out that the S&P’s short, intermediate, and primary degree trends were defined by the respective trend lines from the April, November 2012, and October 2011 lows. The post-April trend line has clearly been breached, but the others are intact. So, from that perspective, the short term pattern is in a confirmed downtrend, but the larger trends remain up.

Our preferred Elliott Wave count is that this correction is a fourth wave...
By Walter Murphy on 7/28/2014 6:32 AM
“Plain English”

US Equities: Various daily cumulative advance-decline lines have recently failed to make new highs along with the most recent highs in some of the major averages. However, it is important to note that the NYSE a-d line did make an all-time high earlier this month, as did the various S&P a-d lines (for the 500, 400, 600, and 1500 indexes). Typically, a-d lines lead market peaks by 3-6 months, if not longer. This was the case in 2007; a more extreme divergence occurred at the 2000 secular peak. Thus, since the current NYSE breadth divergence can be measured in days rather than months, it is regarded as a short term divergence.

Global Equities: The weekly Coppock Curve has a bearish bias in absolute terms for 23 of the 37 non-US markets in our universe and for 26 markets relative to the S&P 500. The absolute momentum pressures are positioned to maintain a majority bearish condition through the third quarter. By contrast, the relative pressures are positioned to begin improving in late...
By Walter Murphy on 6/23/2014 12:27 PM
“Plain English”

US Equities: We regularly point out that price is the final arbiter. So, as long as the indexes maintain their uptrends confirmed by new advance-decline line highs, the risk of a major bearish reversal is considered to be low. That said, the absolute level of certain indicators can also have bullish implications even if there are bearish divergences.

Global Equities: The Dow Jones Global (ex US) Index has been in a downtrend relative to the S&P 500 since 2009. The weekly relative Coppock appears to be peaking but, if subsequent weakness results in a positive divergence and is then followed by a breakout through the dominant downtrend lines, the Dow Jones index would then be positioned for a multi-month uptrend relative to the S&P.

Interest Rates: Sentiment is oversold and the weekly Coppock Curve is bottoming. Thus, our inclination is to count the decline from December’s 3.04% high to the recent 2.40% low as a complete ABC pattern. However, even if May’s low completed an ABC...
By Walter Murphy on 6/19/2014 2:25 PM
On Wednesday the S&P 500 posted its fourth straight gain with a 0.8% rally to 1956.98 to another all-time high. Both the DJIA and NASDAQ underperformed with 0.6% gains. NYSE advancing stocks exceeded losers by almost 7:2 while the up/down volume ratio was bullish by a more modest 4:1 margin. Turnover improved for the third straight day. The daily Coppock Curve has a bearish bias for 17 of the S&P’s 24 industry groups, for 19 of 30 DJIA stocks, and for 63 of the stocks in the NASDAQ 100.

In today’s Breakfast with Dave, friend and former Merrill Lynch colleague Dave Rosenberg noted that “if the S&P 500 were to peak here, it would be at a point where average retail buying in the cycle is still relatively muted… .” Dave noted that at the 2000 peak the five-year average of equity mutual fund and ETF inflows was almost $20 billion and the 2007 peak was over $15 billion, while the current flows are closer to $8 billion. Based on these numbers, Dave anticipates a “final melt-up.”

On the surface, this is...
By Walter Murphy on 6/17/2014 7:21 PM
“Plain English”

US Equities: The intermediate trend is becoming increasingly fatigued. At the same time, the monthly oscillator is overbought and deteriorating for the S&P, DJIA, and NASDAQ. Thus, the next short term peak could have bearish implication for both the intermediate and primary trends.

Global Equities: Last week the Dow Jones Global (ex US) Index finished at 247.40, eking out a 0.01 point gain from the prior week’s 247.39 close. Nonetheless, this was enough for the index to post its fifth consecutive weekly gain, which is its longest winning streak since August. However, the weight of the evidence continues to suggest that the post-February momentum uptrend is in its latter stages.

Interest Rates: While sentiment is oversold and the rally from May’s 2.40% low is challenging important resistance downtrend lines, the daily Coppock is peaking and the still-overbought monthly oscillator is in a confirmed downtrend. Moreover, the weekly indicator – which is bottoming – has yet to record...
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