Market Pulse
Author: Created: 3/10/2010 11:54 AM
Market Pulse
By Walter Murphy on 11/24/2014 7:38 PM
“Plain English”

US Equities: While the evidence is not yet entirely conclusive, the current rally’s underpinnings are typically not characteristic of a counter-trend “B”-wave within a still-developing wave-six correction. Rather, these underpinnings are a better fit for an impulsive wave-seven rally. Further strength that allows the all-issue a-d line to achieve new highs, the breadth-thrust ratio to remain above 50, and the Summation Index to carry nicely above “500” will help make the underpinnings that much more conclusive. A breakout through 2095 will seal the deal.

Global Equities: Since October’s low the Dow Jones index has retraced well less than 50% of the July-October decline while our global daily cumulative a-d line has retraced significantly more than 61.8% of its September-October correction. This suggests that the rally of recent weeks has a broader base than the index suggests.

Interest Rates: The improving weekly oscillator for 30-year yields has the potential to have at least...
By Walter Murphy on 11/20/2014 6:35 PM
On Wednesday, the S&P experienced only its second down day in the past 11 sessions with a 0.15% loss. The DJIA was virtually unchanged and the NASDAQ lost 0.57%. NYSE declining stocks exceeded winners by 2:1 while the up/down volume ratio was bearish by a more modest 8:5 margin. The daily Coppock Curve has a bearish bias for 19 of the S&P’s 24 industry groups, for 23 of 30 DJIA stocks, and for 82 of the stocks in the NASDAQ 100.

For many weeks prior to the September-October sell-off we maintained that 2057-2074 was a strong – even a best case – band of Fibonacci resistance. That sell-off did not change things by much in that a possible post-October “B”-wave rally expands this range by only 1% to 2095.

One of our favorite “Murphy’s Law” is that the most important tools in the analyst’s toolbox are a pencil and a ruler. Thus, it is with more than passing interest that we note that the dominant resistance uptrend line from 2009 is currently at 2058 and rising at the rate of 3.61 points per week. At...
By Walter Murphy on 11/17/2014 4:22 PM
“Plain English”

US Equities: The rally from October’s low is a five-wave structure for the S&P. This, plus the constructive weekly momentum underpinnings, signals that the trend remains up and higher highs are still to come. While such a larger rally pattern could still prove to be a “B”-wave with upside potential to as high as 2095, the risk is that it is the kick-off for wave-seven from the 2009 low.

Global Equities: The weekly Coppock indicator is currently below the neutral zero line for 13 of the 20 non-US major markets and for 10 of the 17 developing indexes. This indicates that the trend for a significant majority of global market indexes remains down.

Interest Rates: We continue to believe that the next primary low (most likely early next year) has the potential to mark the transition from a multi-decade (since 1981) bear market in yields to what should be a multi-decade bull market. More immediately, the improving weekly oscillator for 30-year yields has the potential to have at least...
By Walter Murphy on 11/13/2014 12:00 PM
On Wednesday both the S&P 500 and DJIA fell by less than 0.1% but the NASDAQ gained 0.3%. NYSE advancing stocks exceeded losers by 5:4, but the daily cumulative a-d line remains below its August high. The daily Coppock Curve now has a bearish bias for 22 of the S&P’s 24 industry groups, for 23 of 30 DJIA stocks, and for 83 of the stocks in the NASDAQ 100.

Earlier today Investors Intelligence reported that the percentage of bears in their weekly sentiment survey had dropped back below 15%. This is a rather rare occurrence – readings below 15% have happened less than 5% of the time in the past 45 years. On a more near term basis, this is the fourth time this year – and only the ninth time since the 2009 low – that the bears were below 15%. Indeed, there are fewer bears now than there were during the week of the recent September market peak. This prompted us to take a look at how extreme these readings are from a big picture perspective.

...
By Walter Murphy on 11/10/2014 5:56 PM
“Plain English”

US Equities: The S&P 400 (mid cap), the S&P 600 (small cap), and the broad NYSE Composite indexes all failed to confirm the new highs by the large cap S&P and DJIA indexes with new highs of their own. Moreover, the NYSE daily cumulative advance-decline line remains below its August high while the NYSE bullish percent index is well below its high. Continued strength could erase these divergences so it is incumbent on the market to continue its rally from the October low.

Global Equities: A review of global markets reveals that many European indexes recently broke uptrend lines that had been in force since at least 2012 and some as far back as 2009. Moreover, the volatility of recent weeks increases the possibility top formations are developing. Thus, October’s low is regionally – if not globally – important support.

Interest Rates: Our proprietary sentiment index remains on the oversold side of neutral. The index, which is based on a scale of 0-100, is currently at 19.9 (up...
By Walter Murphy on 11/7/2014 11:46 AM
On Wednesday both the S&P 500 and DJIA gained 0.6% but the NASDAQ fell 0.1%. NYSE advancing stocks exceeded losers by 7:4; the up/down volume ratio was bullish by a similar margin. The daily Coppock Curve has a bullish bias for 21 of the S&P’s 24 industry groups, for 25 of 30 DJIA stocks, and for 80 of the stocks in the NASDAQ 100.

In our monthly, we suggested that a short term key is whether the rally from 1821 can develop into a five-wave pattern. If it does, still higher highs will be indicated almost regardless of our larger count. Our guideline was to look for a fourth wave correction to within the 2013-1975 range and then a fifth wave rally to new highs. The action of the past three days appears to be satisfying that script. Thus, we are alert to confirmations that the post-1821 rally is the first leg of a larger still-developing uptrend. The indexes are overbought (the S&P’s daily Coppock Curves is positioned to take on a bearish bias within the next three days) but a coming correction will be viewed...
By Walter Murphy on 11/4/2014 6:23 PM
“Plain English”

US Equities: The September-October decline did something that had not been previously done in three years. It carried the S&P back below the low of the immediately preceding correction. The same can also be said for the NYSE Composite, the Wilshire 5000, and the Value Line Arithmetic indexes. We can also make a similar case for the NYSE all-issue cumulative advance-decline line – which, by the way, has not confirmed the S&P’s new high with new highs of its own. So something has changed.

The Rest of the World: Much attention was focused on Japan last week as Friday’s 5.3% gain was the best day for the Nikkei 225 since late 2008. Further gains through 16800-17000 will confirm a multi-year breakout, indicate potentially significantly higher highs, and increase the importance of support in the 14500-13900 area.

Yields: The monthly Coppock Curve for the 10-30 spread is overbought and deteriorating. While the spread has been choppy this year, it has not broken trend. With that in...
By Walter Murphy on 10/29/2014 6:15 AM
On Tuesday the NASDAQ rallied 1.8% the S&P 500 gained 1.2%, and the DJIA increased by 1.1%. NYSE advancing stocks exceeded losers by better than 10:1 while the up/down volume ratio was bullish by a much more modest 5:1 margin. The daily Coppock Curve has a bullish bias for all of the S&P’s 24 industry groups, for 27 of 30 DJIA stocks, and for 97 of the stocks in the NASDAQ 100.

As noted above, momentum is solidly positive for a majority of the groups/indexes within the major indexes. Moreover, by some measures, breadth is stronger than at any time since February’s breakaway rally. This is typically not the stuff of a counter-trend “B”-wave rally. Moreover, the rally through 1981 appears to be enough of a breakout to suggest that the “500” is positioned for a challenge of September’s 2019 high.

We have previously made the case that the September-October decline was enough to qualify as our anticipated post-2009 wave-six correction. Our sense was that such a correction should be one of the most important...
By Walter Murphy on 10/28/2014 10:03 AM
“Plain English”

US Equities: The current (b-wave) rally likely has further to run. We expect this wave to be a lower degree ABC structure. So far, it is likely still in the lower degree “A”-wave. In addition, breadth has been strong; the NYSE composite daily cumulative a-d line is on the verge of a Zweig “breadth thrust.” Such thrusts are typically followed by higher highs.

Global Equities: The recovery rally for the Dow Jones Global (ex US) World Index has been paltry compared to that for the S&P 500. While the S&P has retraced almost 73% of its September-October decline, the global index has recovered less than one-third.

Interest Rates: On any number of occasions we have noted that the S&P 500 has historically been correlated with the yields (along with the euro and select commodities). Indeed, over the past seven years there have only been two brief periods when the long term 12-month correlation between yields and stocks was negative – the second half of 2012 and the second half of this...
By Walter Murphy on 10/23/2014 3:32 PM
On Wednesday the DJIA fell 0.9%, the NASDAQ lost 0.8%, and the S&P 500 declined 0.7%. NYSE declining stocks exceeded winners by 4:1 while the up/down volume ratio was bearish by a slightly more modest margin. The daily Coppock Curve has a bullish bias for all of the S&P’s 24 industry groups, for 25 of 30 DJIA stocks, and for 89 of the stocks in the NASDAQ 100.

The S&P’s September-October decline to 1821, from 2019, just missed our minimum objective. In addition, the pattern was clearly an Elliott Wave three-wave structure, which is a counter-trend move. Thus, even though the decline easily qualifies as the anticipated post-2009 wave-six correction, we can also make the case that the minimum requirements for a complete wave-six have been satisfied. If so, then we need to respect the possibility that the rally of recent days marks the resumption of the 2009-2014 uptrend (i.e., wave-seven).

That said, we are hard-pressed to believe that a four-week decline is sufficient to correct the gains of a three-year...
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