On Thursday, the S&P 500 fell 1.5%. This was the ninth decline in May’s 13 sessions to date. Declining stocks exceeded winners by more than 15:2; the up/down volume ratio was bearish by a similar margin. Turnover increased by 9.0% to its highest level in over five weeks. The daily Coppock Curve has a bearish bias for 22 of the 24 S&P industry groups and for 28 of the 30 DJIA stocks.

Globally, the MSCI All-Country Index recorded its fifth straight decline (and 11th in 12 sessions) with a decline of 1.0%. The Coppock Curve has a bearish bias for every one of the 35 markets that we follow on a daily basis.

We regularly point out that once a trend is reversed, our minimum expectation is for a 38.2% retracement. Thus, when the S&P 500 declined through 1357 earlier this month, we made two points: 1) that violation locked in the October-April rally as a complete pattern and 2) the index was positioned for a 38.2% retracement of that rally to 1290. This, plus the fact that the decline was cutting through...

“Plain English”

Stocks: In addition to the relative proximity of S&P 500 support, the overall structure of the current decline is corrective, there are positive momentum divergences in the hourly charts, and the daily Coppock Curve is positioned to bottom within the next 5-7 days. All of this suggests that a bottoming process has begun.

The Rest of the World: The daily Coppock Curve for the MSCI All Country Index is already at its most oversold reading of the year. Along with this confirming “bad oversold” condition, the weekly oscillator is not likely to bottom for either the index or a majority of the 10-economic sectors much before mid year.

Interest Rates: Yields were engaged in a well-defined November-March trading range that provided the foundation for the surge to March’s rally high. Such a trading range typically provides support during a subsequent correction. In this case, however, the March-May decline has cut through support like the proverbial hot knife through butter.

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On Monday, the S&P 500 posted its fourth decline in five days with a loss of 1.1%, Declining stocks exceeded winners by more than 7:1 while the up/down volume ratio was bearish by a bit less than 7:1. The 5.0% decline in turnover marked the third distribution day of the month. The daily Coppock Curve has a bearish bias for 23 of the 24 S&P industry groups and for 27 of the 30 DJIA stocks.

Globally, the MSCI All-Country Index recorded its ninth loss in 11 sessions with a decline of 1.5%. The Coppock Curve has a bearish bias for 90% of the 35 markets that we follow on a daily basis.

The S&P 500 traded to as low as 1338 on Monday. Thus, the index is in the upper end of the 1340-1321 “intervening support” range that we mentioned in Sunday night’s comment. Moreover, there is currently an array of positive divergence in the hourly charts. It would seem, therefore, that the market is ready to rally. Indeed, we can make a case that the minimum requirements for a complete April-May ABC correction have been...

Last week, the S&P 500 lost 1.2%. Declining stocks exceeded winners by 3:2 while the up/down volume ratio was bearish by a similar margin. Turnover increased by 2.9%, making it the second consecutive distribution week. The weekly Coppock Curve has a bearish bias for 23 of the 24 S&P industry groups and for 25 of the 30 DJIA stocks.

Globally, the MSCI All-Country Index fell 2.1% last week. The Coppock Curve has a bearish bias for 36 of the 37 markets that we follow on a weekly basis.

We has previously pointed out that the 2nd, 3rd, and 4th weeks of May are an historically weak period. Last week’s decline fits that bill and weak momentum suggests that further May pressures are likely. Moreover, sentiment remains on the overbought side of neutral despite recent signs of improvement.



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On Thursday, the S&P 500 gained 0.3%. This was only the third time in nine sessions that the index was able to finish in the black. Advancing stocks exceeded losers by 5:3 while the up/down volume ratio was bullish by a bit more than 3:2. Turnover fell by 16% and moved back below its 21-day ma. The daily Coppock Curve has a bearish bias for all 24 S&P industry groups and for 27 of the 30 DJIA stocks.

Globally, the MSCI All-Country Index rallied 0.3%. The Coppock Curve has a bearish bias for 30 of the 35 markets that we follow on a daily basis.

At this juncture, all degrees of momentum trend (daily, weekly, monthly) are down, the 20-week cycle appears to have a bearish bias, and the attempted rally of recent days was both weak and structurally corrective. All of this suggests lower lows ahead.

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“Plain English”

Stocks: By January 2013 we likely will have seen a market low that marks the confluence of four cycles: 10-years, 40 months, 13 months, and 20(2) weeks. Thus, within a relatively few months, the US stock market could experience a low that might be as important as the 2002 and 2009 lows.

The Rest of the World: A survey of 35 country/regional ETFs revealed that 15 were at least 20% below their 52-week highs. Two markets – Italy and Spain – are below their respective 2009 lows while a third – France – is in relative hailing distance.

Yields: We doubt that the current decline will result in the final low of the post-1981 downtrend. The annual, quarterly, and monthly Coppock Curves all have a bearish bias. The annual oscillator may not bottom until the second half of the decade while the quarterly and monthly indicators are probing confirming secular momentum lows.

US Dollar: Given the dollar’s medium to longer term bullish underpinnings, any pressures will likely only be...

On Tuesday, the S&P 500 posted its fifth gain in six days with a rally of 0.6%. Advancing stocks exceeded losers by 3:2 while the up/down volume ratio was bullish by a bit less than 3:1. Turnover increased by 12%; this makes Tuesday only the second accumulation day since March 26. The daily Coppock Curve has a bullish bias for 22 of the 24 S&P industry groups and for 26 of the 27 DJIA stocks.

Globally, the MSCI All-Country Index rallied 0.2% (28 of the 35 non-US markets that we monitor were closed Tuesday in observance of May Day). The Coppock Curve has a bullish bias for 33 of those 35 markets.



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Plain English

Stocks: We have consistently – made the case that the S&P 500’s initial rally from last October’s low was clearly a corrective pattern. Thus, if the very first leg in a larger uptrend cannot be counted as an impulse wave, then the larger October-April uptrend cannot be counted as either a developing or a completed five wave pattern.

The Rest of the World: The recent weakness in developing markets has sparked some debate as to whether the larger developed markets are “emerging” into a period of sustained relative strength compared to the smaller bourses. We doubt it.

Interest Rates: There has also been increased comment regarding a coming end to the end of the bond bull market and an accompanying surge in relative strength for stocks over bonds. Here, too, we think such talk is premature.

Commodities: Early last week, the CCI came within 0.4% of recording an 18-month low before rebounding. While that rebound was sufficient to lock in the February-April decline as...

On Thursday, the S&P 500 posted its third straight gain – and fourth in five days – with a rally of 0.7%. Advancing stocks exceeded losers by 7:3 while the up/down volume ratio was bullish by a more modest 2:1 margin. However, turnover fell for the 11th time in the past 15 days. The daily Coppock Curve has a bullish bias for all 24 S&P industry groups and for 26 of the 30 DJIA stocks.

Globally, the MSCI All-Country Index rallied 0.6%. The Coppock Curve has a bullish bias for 31 of the 35 markets that we follow on a daily basis.

We have been making the case that the S&P’s April 2-10 decline is most likely the “A” wave of a larger ABC decline. That would suggest that the rally since then is a “B” wave. On the surface, today’s apparent strength might suggest that it represents a reversal, not just a counter trend rally. However, several items suggest that the rally of recent days could still give way to a decline that carries to new reaction lows below the recent 1357-1359 double-bottom. Under the surface,...

For arguably the 4th time since the October low, the DJIA has tested its dominant point-and-figure support line.  This successful test has been followed by the first P&F “buy” since March.

The support line is at 12900, but we would prefer to see a break of 12800 in order to decisively violate the line and reverse six-month uptrend.