Market Pulse
Author: Created: 3/10/2010 11:54 AM
Market Pulse
By Walter Murphy on 2/8/2016 4:27 PM
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US Equities: The NYSE a-d line has not made a new high in 41 weeks. In addition, the NASDAQ has broken down to a 52-week low. The equal-weighted Value Line Geometric Index has already decline by almost 28% from last April’s high and has decisively penetrated its 2009-2015 uptrend line. All of this has occurred even as the S&P (and the DJIA) is still only in the early stages of its primary {E}-wave downtrend.

Global Equities: In recent weeks, most of the attention has been on China. Indeed, the Shanghai Composite finished last week 46.5% below its 52-week high. However, this focus hides the fact that European markets may be facing potentially significant damage of their own in the months ahead.

Interest Rates: Last week US 10-year yields dipped to levels not seen in a year. As a result, they recorded a lower low on their monthly chart for the first time since January 2015. In so doing, the entire rally from the January 2015 low has been locked in as a complete pattern. Given...
By Walter Murphy on 2/2/2016 4:06 PM
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US Equities: Elliott Wave patterns tend to alternate in complexity. The 2000-2002 primary {A}-wave decline was complex with numerous overlaps in its structure. By contrast, the 2007-2009 primary {C}-wave downtrend was fairly straight-forward. To clarify the difference, the 2000-2002 decline had 13 inflection points in its monthly chart while the 2007-2009 downtrend only had seven. Given the tendency toward alternation, we will expect this post-2015 decline to be closer to the 2000-2002 pattern than to 2007-2009. Thus, if the current {E}-wave decline proves to be composed of two separate ABC downtrends in a manner similar to the 2000-2002 pattern, then we can make a case that the S&P is still in the relatively early stages of the initial ABC. Specifically, it is not a stretch to label January’s 1812 low as “a of minor A of intermediate (A) of primary {E}.”

Sectors: Utilities and Consumer Staples are showing the best relative strength. The materials sector is showing the weakest relative...
By Walter Murphy on 1/25/2016 5:03 PM
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US Equities: In last week’s comment we noted that, while we would not be surprised to see the S&P’s daily Coppock Curve bottom in a matter of days, the deteriorating weekly oscillator should be able to shrug off any resulting near term strength. The daily indicator did bottom last week and did so after making a confirming 52-week low. Indeed, the daily oscillators for the DJIA and NASDAQ also hit 52-week lows. However, the weekly Coppock remains positioned to stay under pressure into March. The bottom line is that, even with this oversold rally, the weekly, monthly, and quarterly oscillators will remain weak.

Global Equities: Earlier this month the MSCI All Country World (ex US) Index came within about 5% of its 2011 reaction low of 203.37. Although the index has already violated its post-2009 support trend line, a break of 203 will effectively lock in the 2009-2014(5) rally as an Elliott Wave three-wave structure. Such a development would confirm the post-2009 uptrend as a bear market...
By Walter Murphy on 1/20/2016 4:17 PM
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US Equities: Last week’s intra-day breach of 1867 by the S&P was a significant development. But there is some unfinished business. Neither the DJIA nor the NASDAQ has violated their August low on an intra-day basis, although the latter did so on a closing basis. (For the record, we are watching 15370 on the DJIA.) While we typically use intra-day values for support, resistance, and Fibonacci calculations, most traditional technical indicators are based on closing data. So it is important that the S&P follow up its tactical intra-day breakdown with a close below 1867; the lowest daily closing low last week was 1880.

Global Equities: Our long-standing count is that China’s Shanghai Composite has been tracing out a large degree ABC correction since 2007. Within that count, this past June’s high completed the primary {B}-wave rally. The decline since then is the {C}-wave; as such it should have a Fibonacci relationship to the 2007-2008 {A}-wave. So it appears that, despite the damage...
By Walter Murphy on 1/8/2016 3:31 PM
On Thursday, the S&P 500 fell 2.37%, the DJIA lost 2.32 %, and the NASDAQ declined by 3.03%. NYSE declining stocks exceeded winners by almost 10:1 while the up/down volume ratio was bearish by less than 8:1.

The last time we wrote a blog (December 19) we concluded by suggesting that in early 2016, the market could be in its most fragile condition since 2007. Whether that proves to be true or not remains to be seen. But the opening fireworks are not promising. Many commentators have pointed out that this is the worst four-day start to a year in the DJIA’s history. In addition, the S&P 1500 finished today with 1206 (80.4%) of its components at least 10% below their 52-week high; half (749) of the components have declined by at least 20%. Meanwhile, the S&P 600 (small cap) index has already hit a 63-week low, which makes us think that its 2009-2015 bull market may be in the history books. Finally – and not to be outdone – the MSCI All-Country (ex US) Index fell to a 40-month low today. So it appears that neither...
By Walter Murphy on 1/5/2016 5:19 PM
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US Equities: 2016 may well mark the end of the post-2009 “bull market.” A break of 1867 will raise a red flag as to the health of the uptrend. It is important to note that such a break will also violate the dominant 2009-2015(6) support trend line. So 1867 can be considered tactical support from the perspective of both price and trend.

The Rest of the World: During 2015, the S&P 500 achieved all-time highs relative to the MSCI World (ex US) index and posted its fifth year-over-year relative increase in six years. However, these highs were not confirmed by either the relative weekly or monthly Coppock Curve. Moreover, the weekly oscillator is peaking and the monthly indicator is already in a downtrend. The risk, therefore, is that the S&P will show some relative weakness in 2016 and might even do some damage to the post-2012 relative uptrend.

Yields: The monthly Coppock oscillator has a bullish bias for US 10-and 30-year yields, confirming the end of the previous multi-month...
By Walter Murphy on 12/21/2015 4:44 PM
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US Equities: Last week, the 20-week cycle entered its historical window for a low. An ideal low is not due until the latter half of January but with a normal window of +/- 5-6 weeks, we should be alert to the possibility that the cycle could stretch out into February. With that in mind, most 20-week cycles contain 3-4 35-day harmonics; the current 35-day cycle is the third since August. Thus, the low for this 35-day cycle may well coincide with a 20-week cycle low. It is important to note, therefore, that this 35-day harmonic is ideally due to bottom in early January and has a normal window of +/- 7-9 days, which suggests a late December into mid-January target area. All told, therefore, we would not be surprised if January experiences a potentially important cycle bottom.

Global Equities: Last week’s decline carried the MSCI All Country World (ex US) Index decisively through a 61.8% retracement of the September-October rally. This, plus the fact that we appear to be on the verge...
By Walter Murphy on 12/11/2015 4:21 PM
On Wednesday, the S&P 500 fell 0.77%, the DJIA lost 0.43%, and the NASDAQ declined by 1.48%. NYSE declining stocks exceeded winners by almost 2:1 while the up/down volume ratio was bullish by a small margin.

By our count today was the 25th day since the S&P 500 was last able to post consecutive gains. Perhaps not surprisingly, the NYSE common-stock daily cumulative a-d line has been unable to retrace little more than 50% of its May-September decline. As a result, more than 50% of the stocks in both the S&P 500 and S&P 1500 closed today more than 10% below their 52-week high.

Meanwhile, the “500” is currently on a three-week winning streak (and nine up weeks out the last 10). This is reflective of the weekly Coppock Curve, which has been in an uptrend since late September. That said, we have been projecting a late-December/early-January peak for the weekly oscillator and that still seems reasonable; it is positioned to peak within the next four weeks. When that happens, a deteriorating weekly indicator...
By Walter Murphy on 12/7/2015 2:51 PM
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US Equities: The downside risk outweighs the upside potential in our opinion. Indeed, the difference could be significant. For example, the most benign scenario is that the decline following the completion of a wave 5/C rally will be a 38.2% retracement of the 2011-2015 uptrend. This indicates an upcoming S&P 500 test of 1730. From current levels we would have to expect a rally through 2424 before the upside potential even begins to exceed the downside risk.

Sectors: Consumer Discretionary and Technology are showing the best relative strength. Energy continues to exhibit relative weakness.

The Rest of the World: The MSCI All Country World (ex US) Index has been recording multi-year lows versus the S&P 500. However, these relative lows have not been confirmed by momentum, which is uptrending on both a weekly and monthly basis. Thus, global markets appear positioned to gain sustainable relative strength versus the US market for the first time in many months.

Yields: The...
By Walter Murphy on 11/16/2015 4:18 PM
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US Equities: We are counting the S&P’s early November high at 2116 as a lower degree a-wave and the current decline as the subsequent b-wave. A coming c-wave rally should carry the index to new recovery – and arguably all-time – highs.

Global Equities: In late September, the MSCI All Country World (ex US) Index fell to 231, its lowest level since reversing down from its 2009-2014 “bull market.” At that low, the index violated every support trend line since both the 2009 and 2011 low. The subsequent September-October recovery did not decisively break the dominant intermediate downtrend line and the weakness of recent weeks has reversed that 3-4 week uptrend. However – and as is the case with most of the individual markets that we monitor – the index’s weekly Coppock oscillator is positioned to maintain its current uptrend through the rest of 2015.

Interest Rates: Our global 10-year yield index finished last week at 1.39%. There is already a double-bottom near 1.02% so that is...
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