Market Pulse
Author: Created: 3/10/2010 11:54 AM
Market Pulse
By Walter Murphy on 5/4/2015 6:03 PM
“Plain English”

US Equities: The market is contending with underlying “stealth” deterioration even with the recent new highs. To place this in a larger context, the 40% of the stocks in the broad S&P 1500 that were at least 10% below their 52-week closing high at the end of April compares unfavorably with 34% at the end of 2014 and only 23% at the end of 2013. Corrections are usually preceded by deterioration in the market’s internals. This, plus our mature Elliott Wave count along with deteriorating momentum, overbought sentiment, and time/seasonal considerations suggests that the 2011-2015 uptrend is increasingly fragile.

The Rest of the World: The Dow Jones Global (ex US) Index’s weekly oscillator is peaking and the same can be said for the Europe and Asia-Pacific regional indexes. By contrast, the currently constructive weekly indicator for Latin America may not peak until late June or July; internally. However, the deterioration in individual markets suggests that the internal weakness is more...
By Walter Murphy on 4/30/2015 2:18 PM
On Wednesday, the S&P 500 fell 0.37%, the DJIA lost 0.41%, and the NASDAQ declined 0.63%. NYSE declining stocks exceeded winners by 9:4 while the up/down volume ratio was bullish by a more modest 5:4 margin. The daily Coppock Curve has a bearish bias for 329 of the S&P’s 500 stocks, 19 of the 30 DJIA stocks, and 65 of the stocks in the NASDAQ 100.

Also on Wednesday the US Dollar Index fell 0.94% to 95.19. This was the index’s sixth consecutive daily decline, which is tied for the longest losing streak since May 2011. The decline could have been worse but for a dollar rally against the Japanese yen, which is the index’s second most-heavily weighted component. Even so, the current weakness has been enough to reverse the uptrend from last July’s 79.74 low.

We have been counting the post-July uptrend as the third wave within a larger five-wave rally from last May’s 78.91 low. If so, then it stands to reason that the recent weakness marks the beginning of the fourth wave. This fourth wave could retrace...
By Walter Murphy on 4/29/2015 6:26 AM
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US Equities: The NASDAQ, which finished last week at a record 5092, is pulling away from its long-standing resistance trend line, which is now at 4935. This 3.19% spread is the largest in the 63-month existence of the line and suggests that may prove to be a support line in the weeks ahead. With that last point in mind, the line will be cutting through 4937-4964 between now and mid-May.

Global Equities: The recent strength in our Latin America cumulative daily a-d line is reflected in the Dow Jones Latin America Index. This index has rallied over 16% since mid-March to its current 517 and is on the verge of completing a base. Further strength through 524 will complete the base and allow for a challenge of at least 545.

Interest Rates: The weekly Coppock Curves for both 10- and 30-year yields have been in a downtrend since 2013 and have been below the neutral zero line since 2014’s first quarter. Both oscillators have a bullish bias, but this is expected to dissipate next month...
By Walter Murphy on 4/23/2015 2:14 PM
On Wednesday, the S&P 500 gained 0.51%, the DJIA rallied 0.49%, and the NASDAQ added 0.42%. NYSE advancing stocks exceeded losers by 8:5 while the up/down volume ratio was bullish by a more robust 12:5 margin. The daily Coppock Curve has a bullish bias for 277 of the S&P’s 500 stocks, 22 of the 30 DJIA stocks, and 74 of the stocks in the NASDAQ 100.

In a recent comment we noted that the path of least resistance for the S&P 500 appeared to be down. This reflected the fact that the indexes were struggling to mount a sustained rally, but declined with relative ease. One way we examine this is to monitor the number of up days by the S&P over a running 21-day period. Uptrends regularly see surges where the index periodically is up 15-17 times over a 21-day span. (By contrast, downtrends rarely exceed 15 declines over the same span.)

So far this year we have yet to see as many as 15/21 up days. The highest reading so far (13/21) occurred along with February’s rally. By contrast, last year’s October-December...
By Walter Murphy on 4/10/2015 3:00 PM
On Thursday, the DJIA gained 0.31%, the S&P 500 rallied 0.45%, and the NASDAQ added 0.48%. However, NYSE declining stocks exceeded winners by 9:8 while the up/down volume ratio was bullish by a 4:3 margin. The daily Coppock Curve has a bearish bias for a majority (258) of the S&P’s 500 stocks but has a bullish bias for 16 of the 30 DJIA stocks and for 55 of the stocks in the NASDAQ 100.

In recent comments, we have highlighted both the post-October support trend lines and the 130-day moving average as important indicators of the S&P’s intermediate uptrend. (For reference, the trend line is currently at 2081 and the moving average is at 2038.) Our sense has been that, as long as the S&P does not decisively penetrate these dynamic support indicators, the post-October uptrend deserves the continued benefit of the doubt.

We have also been monitoring the new high / new low ratio. This indicator is derived by dividing the difference between NYSE new 52-week highs and new lows by the total number of issues...
By Walter Murphy on 4/7/2015 4:08 PM
“Plain English”

US Equities: The trend is up but showing signs of fatigue and struggling with resistance. Both weekly (intermediate) and monthly (primary) momentum indicators are deteriorating. Our primary near-to-intermediate cycles are deteriorating, but should bottom by mid-April. Finally, sentiment is at excessively optimistic levels.

The Rest of the World: For the second straight month, the monthly Coppock Curve had a bullish bias for a majority (24) of the 37 markets in March. This back-to-back performance has not happened since late 2013. However, the majority bullish condition may only be temporary; indications are that a majority bearish condition could take hold by May-June and persist for the balance of the year. As such, the primary uptrends will likely be increasingly at risk of a bearish reversal in the months immediately ahead.

Yields: We continue to think that the weekly Coppock indicators will be peaking in the late second quarter just as the monthlies are increasingly ready...
By Walter Murphy on 3/30/2015 12:21 PM
“Plain English”

US Equities: We are counting the post-October rally as a post-2011 C-wave in the S&P and as a post-2011 fifth wave in the DJIA. These are ending patterns so, when the post-October uptrends are reversed, the minimum requirements for a complete 2011-2015 rally will be satisfied. Further weakness though October’s low will confirm the importance of the reversal; this is why we have been referring to 1821 and 15855 as tactical support for the S&P and DJIA, respectively.

Global Equities: The weekly Coppock Curve finished the week with a bullish bias for 29 of the 37 non-US markets in our universe, including 19 of the 21 developed markets. Nonetheless, the oscillator for the Dow Jones World (ex US) Index – and most of the individual markets – remains positioned for an April bearish reversal.

Interest Rates: Although the primary downtrend in yields from the December 2013 high is in its latter stages, its technical underpinnings (momentum, time, and sentiment) suggest that February-March...
By Walter Murphy on 3/24/2015 4:25 PM
“Plain English”

US Equities: Our Elliott Wave count, the Coppock configuration, and our evaluation of the cycle environment all indicate that we should continue to give the post-October uptrends the benefit of the doubt and look for sustained breakouts. However, it is important to remember that the post-October uptrends are likely the final leg to at least the 2011-2015 rally pattern.

Global Equities: The weekly Coppock Curve finished the week with a bullish bias for 30 of the 37 non-US markets in our universe, including 20 of the 21 developed markets. The oscillator for the Dow Jones World (ex US) Index – and most of the individual markets – remains positioned to maintain a bullish bias into April.

Interest Rates: Our proprietary sentiment index for US yields, which is based on a scale of 0-100, is at a five-month high – but, at 28.0, is still in oversold territory. The index has been oversold since October and we continue to think that sentiment should recover to at least neutral (45-55)...
By Walter Murphy on 3/19/2015 3:18 PM
On Wednesday, the DJIA gained 1.27%, the S&P 500 added 1.22% and the NASDAQ rallied 0.92%. NYSE advancing stocks exceeded losers by a bit less than 5:1 while the up/down volume ratio was bullish by a bit more than 5:1. Turnover surged 29% to a six-week high. The daily Coppock Curve has a bullish bias for 362 of the S&P’s 500 stocks, for 18 of the 30 DJIA stocks, and for 58 of the stocks in the NASDAQ 100.

One would be hard-pressed to find today’s rally attributed to anything other than the Fed’s afternoon statement. Immediately before the statement, the S&P 500 was trading at the lows of the week. But by the final hour of the session, the index was at a nine-day high. For the day, NYSE all-issue winners hit a year-to-date high (2604) and, as noted, volume surged 29%. So the Fed was clearly the catalyst – the “reason”—for today’s rally.

But the technical set-up was already firmly in place. The Fed deserves only a piece of the credit.

For example, we have made the case in previous comments that...
By Walter Murphy on 3/16/2015 5:40 PM
“Plain English”

US Equities: The S&P, DJIA, and NASDAQ are all contending with multi-year resistance trend lines. Between now and the end of the month, the S&P’s trend line will be moving through 2109-2117, the DJIA’s line will be trending through 18617-18678, and the NASDAQ’s through 4880-4901. It may take a cycle low – and an Elliott Wave third wave – in order for these lines to be decisively breached.

Global Equities: The Dow Jones Global (ex US) World Index followed its October-January triple-bottom near 217 with a January-February rally that briefly broke through resistance near 235. The decline since then has reversed that rally, but the currently weak daily Coppock oscillator is positioned to bottom later this month even as the weekly indicator is still in an uptrend. However, the weekly Coppock guide is positioned to remain constructive only into April so it seems reasonable to suggest that the next short term peak will have bearish intermediate implications.

Interest Rates: Momentum,...
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