Market Pulse
Author: Created: 3/10/2010 11:54 AM
Market Pulse
By Walter Murphy on 4/15/2014 2:39 PM
On Thursday, the S&P 500 fell 2.1%. This was its largest decline since the February 3 low and the third biggest set-back of the year. Declining stocks overwhelmed winners by better than 11:1 while the up/down volume ratio was negative by a more modest 15:2 margin. Turnover increased by 13%. The daily Coppock Curve has a bearish bias for 21 of the 24 S&P industry groups and for 24 of 30 DJIA stocks.

The “500” violated 1834 during the course of Thursday’s decline. As noted in Monday’s comment, such a break means that we can now count the uptrend from February’s low as a complete pattern. More importantly, a complete post-February structure will be best viewed as a corrective/counter-trend pattern.

The last point is important for several reasons. The rally of the past two months can be counted as the fifth and final wave from the October 2011 low. However, since it is a corrective structure, it should be counted as an Elliott Wave diagonal triangle. Diagonals are a sign of weakness and are often fully...
By Walter Murphy on 4/2/2014 9:31 AM
“Plain English”

US Equities: Seasonal, cycle, momentum, and sentiment conditions suggest that the market is increasingly at risk of an important correction and that any strength in April (and perhaps into May) could be short-lived. That said, March closed with the NYSE all-issue and S&P cumulative daily advance-decline lines at all-time highs. As long as breadth confirms the market’s underlying uptrend, the potential for a major correction is low.

The Rest of the World: In the US, we regularly note that, as long as breadth confirms an uptrend, the market is usually not at risk of a significant decline. This is also often true globally but, over the years, we have found that a 26-week change in breadth is often more telling. Thus, the current rate-of-change divergence is worrisome.

Yields: The February-March range can be viewed as either a continuation pattern within a larger downtrend or as a potential base in preparation for a near-to-intermediate rally. A bottoming weekly Coppock Curve and...
By Walter Murphy on 3/28/2014 4:34 PM
On Thursday, the S&P 500 fell 0.2% while the DJIA’s loss was shy of 0.1%. However, both the advance/decline and up/down volume ratios were modestly positive. Turnover increased by 7%. The daily Coppock Curve has a bearish bias for 19 of the 24 S&P industry groups but has a bullish bias for 17 of 30 DJIA stocks.

The Dow Jones Global (ex US) Index rallied for the third straight day with a gain of 0.1%. However, 19 of the 35 non-US markets that we most regularly monitor were lower for the day. The daily Coppock Curve has a bullish bias for 28 of the 35 markets.

Over the past nine days, gold has declined by 6.1% and indications are that further weakness is likely. The sell-off has reversed the December-March uptrend and has done so on five waves. Near term momentum is deteriorating and the weekly oscillator is peaking. Sentiment is overbought.

By contrast, the monthly Coppock indicator is improving and remains positioned to continue its bullish bias for the balance of the year. Moreover, the...
By Walter Murphy on 3/28/2014 4:32 PM
On Wednesday, the S&P 500 fell 0.7% and the DJIA lost 0.7%. Declining stocks exceeded winners by better than 4:1 while the up/down volume ratio was bearish by a more modest 7:2 margin. Turnover increased by 9%. The daily Coppock Curve has a bearish bias for 19 of the 24 S&P industry groups but has a bullish bias for 17 of 30 DJIA stocks.

Globally, the Dow Jones Global (ex US) Index rallied 0.8%. Internally, 28 of the 35 non-US markets that we most regularly monitor were higher. The daily Coppock Curve has a bullish bias for 24 of the 35 markets.

Today’s S&P weakness relative to global markets could be a sign of things still to come, at least on a short term basis. The S&P peaked relative to the Dow Jones World index late last week. In recent days, the index has broken the short term uptrend from February’s low and appears to be on the verge of violating the post-October uptrend.

As mentioned, the daily Coppock Curves have a bearish bias for a majority of the S&P’s groups and a bullish bias...
By Walter Murphy on 3/20/2014 5:53 PM
On Wednesday, the S&P 500 fell 0.6% and the DJIA declined by 0.7%. Internally, declining stocks edged winners by 7:2 while the up/down volume ratio was bearish by less than 5:2. Turnover increased by 12%. The daily Coppock Curve has a bearish bias for 21 of the 24 S&P industry groups and for 24 of 30 DJIA stocks.

Globally, the Dow Jones Global (ex US) Index declined by 0.2%. Internally, 23 of the 35 non-US markets that we most regularly monitor were lower. The daily Coppock Curve has a bearish bias for 25 of the 35 markets.

The S&P 500 fell almost 13 points in the final two hours of trading today. As it happens, this was the sharpest two-hour decline since the recent February 3 low. We mention this because most of the headlines attribute today’s market weakness to the Fed’s statement. This brings to the fore one of our favorite maxims – if it’s obvious, it’s obviously wrong.

With that in mind, it is very easy to count five waves up from last Friday’s low into this morning’s high on the S&P’s...
By Walter Murphy on 3/19/2014 8:00 AM
“Plain English”

US Equities: The S&P’s 1738 February low is just above a 1687-1730 band of potential support created by the successive May, August, and September peaks. This range is a classic example of previous resistance becoming new support. In turn, this band implies that, even if February’s low is breached, it should not be the prelude to downside acceleration.

Global Equities: Most of last week’s focus was on Russia, Ukraine and – to a lesser degree – Germany. It appears that the Ukrainian Equities Index was attempting to breakout from a base prior to the recent turmoil. Germany’s DAX appears to be on the verge of reversing its rally from at least last April and possibly from September 2011. Russia’s RTSI has broken down through its post-2011 trading range and appears to be at risk of testing its 2009 low.

Interest Rates: The weekly and monthly Coppock Curves for 10-year yields are under pressure and sentiment is still working off its early 2014 overbought condition. This combination...
By Walter Murphy on 3/13/2014 3:26 PM
On Wednesday, the S&P 500 gained 0.6% but the DJIA fell by a bit less than 0.1%. Internally, advancing stocks edged losers by 11:10 and the up/down volume ratio was bullish by a similar margin. Turnover fell by 3%. The daily Coppock Curve still has a bearish bias for 18 of the 24 S&P industry groups and for 20 of 30 DJIA stocks.

Globally, the Dow Jones Global (ex US) Index declined by 1.0%. Internally, 31 of the 35 non-US markets that we most regularly monitor were lower. The daily Coppock Curve has a bearish bias for 31 of the 35 markets.

What a difference a year makes! Over the course of this year’s first 48 sessions, the S&P has been up 26 times for a win rate of 53%, which is in line with the index’s long term average. By contrast, during 2013’s first 48 trading days, the index rallied 31 times, or 65% of the time. Long-time readers may remember that 2013’s early success relative to the historical norm prompted us to comment on the probability of a reversion to the mean.

As it happened,...
By Walter Murphy on 3/11/2014 2:09 PM
“Plain English”

US Equities: The indexes are positioned for a lower degree third wave rally within the developing larger fifth wave. In addition, there are signs that the Coppock indicators are stabilizing and could take on a more bullish bias by the end of this month. We are also looking for signs of a cycle bottom; the early days of March represent the ideal timeframe for a 20-week cycle low, although the window will nominally be open into April. Thus, it seems likely that a coming 20-week cycle will fit fairly nicely with bottoming/improving weekly Coppock Curves.

Global Equities: Russia’s RTS index has been under pressure lately, but this current downtrend has actually been developing since October. In turn, the post-October decline appears to be part of a larger degree (C)-wave that has been in force since 2011.

Interest Rates: The uptrends from July 2012 and from last May have maintained a series of higher highs and higher lows on our monthly chart and are, therefore, still intact. In...
By Walter Murphy on 3/5/2014 10:56 AM
On Wednesday, both the S&P 500 and the DJIA more than offset the prior day’s sharp losses with their best gains of the year. The S&P rallied 1.5% and DJIA gained 1.4%. The S&P finished at an all-time high, but the DJIA did not. Internally, advancing stocks exceeded losers by more than 10:1 while the up/down volume ratio was bullish by a more modest 7:1 margin. Turnover increased by 9%. Despite the day’s overall strength, the daily Coppock Curve has a bearish bias for 20 of the 24 S&P industry groups and for 26 of 30 DJIA stocks.

Globally, the Dow Jones Global (ex US) Index gained 1.1%. Internally, 29 of the 33 open markets in our regular daily survey of 35 non-US markets were higher. Nonetheless, the daily Coppock Curve continues to have a bearish bias for the majority (32) of the 35 markets.

In an article in today’s New York Times about Neil deGrasse Tyson, who is the director of the Hayden Planetarium, he gave what he calls our long address: earth in the solar system in the Milky Way galaxy in...
By Walter Murphy on 3/3/2014 4:58 PM
“Plain English”

US Equities: We regular remind readers that, as long as market breadth continues to confirm uptrends in the popular averages, the risk of a major decline is small. Historically, a new high in the daily cumulative advance-decline line indicates that a significant top is at least 3-6 months away. Thus, it is important to note that all of the important advance-decline lines achieved new highs in February. Even the a-d line for the DJIA – which remains below its December peak – finished February at an all-time high.

The Rest of the World: The weekly Coppock Curve has a bullish bias for 26 of the 37 markets. However, we do not expect this new bullish condition to continue beyond April, which is a shorter time-frame than usual. This potential brevity will likely be influenced by weak monthly oscillators which have a bearish bias for 24 of the 37 markets

Yields: Both the daily and weekly Coppock Curves are overbought and deteriorating. This, plus the fact that the monthly oscillator...
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