Market Pulse
Author: Created: 3/10/2010 11:54 AM
Market Pulse
By Walter Murphy on 5/9/2016 6:28 PM
“Plain English”

US Equities: We have previously noted that we would not rule out the possibility that narrow, large cap indexes could rally through last year’s high while broader indexes might fail to do the same. Some of that is currently evident as both the S&P 500 and DJIA recently came within a relatively few basis points of their 2015 high even as over half of the stocks in the broad S&P 1500 were still at least 10% below their own high. Given that we expect more noticeable momentum deterioration in coming weeks, it seems important to note that, at the end of last week, 59% of the stocks remain 10% or more under their high. Anticipated late spring, summer weakness suggests that this number will expand.

Global Equities: In any number of recent comments we have mentioned that a great majority of the 37 markets we follow are at least 10% below last year’s high while a significant number has declined at least 20%. That is still the case as 29 of the 37 markets remain 10% or more below their 2015-2016...
By Walter Murphy on 5/2/2016 3:09 PM
US Equities: Since 2012 – when the post-2009 uptrend finally carried the S&P 500 to all-time highs – every market peak has typically been marked by no more that 35% of stocks being 10% or more below their own high. Very often, it was closer to 20%. Then, in recent months as the major indexes came within a relatively few basis points of challenging last year’s high, very few individual stocks were able to do the same. Most recently, on April 7, the broad S&P 1500 came within 1.6% of another new closing high. Yet, fewer than 13% of the stocks in the index could make the same claim. By contrast, just shy of 60% were languishing at least 10% below their 52-week high.

Sectors: No sector is showing significant relative strength patterns, but Utilities is first among equals. Technology is the weakest (and largest) sector.

The Rest of the World: The US dollar-based MSCI World (ex US) Index has been in an uptrend since February and has broken through downtrend lines from both its post-October and its post-May...
By Walter Murphy on 4/26/2016 4:09 PM
US Equities: We continue to view February’s lows as an important multi-year benchmark. It marked the first lower low for the S&P since 2009 on the yearly chart. On the quarterly chart, February’s low was the first lower since 2009 for both the S&P and the DJIA. These are signs that the rally pattern from at least the 2011 low – and arguably from the 2009 benchmark low – should be viewed as complete. The break of all relevant trend lines bolsters this observation.

Global Equities: Earlier this month, the MSCI index made a multi-decade low in US dollar terms against the S&P 500. However, there are positive momentum divergences. This puts us on alert for a potentially important bullish relative strength reversal in coming weeks.

Rates: We continue to count the 2013-2015 downtrend in US 10-year yields as an intermediate (A)-wave. In turn, last June’s recovery high marked the end of an intervening (B)-wave. Thus, the overall weakness since June does much to confirm that yields are engaged in an intermediate...
By Walter Murphy on 4/19/2016 2:33 PM
“Plain English”

US Equities: While most of the evidence in the daily charts suggests that this rally has a corrective structure, we still need to see a pullback on the weekly charts that is sufficiently deep to reverse the rally and lock in a countable pattern. Given that the S&P and DJIA have both posted higher lows on their weekly charts for nine straight weeks, definition to the Elliott Wave structure is still lacking. A decline nicely through S&P 2040 and/or DJIA 17554 during the coming week will break the string of higher lows and lock in the February-March rally as a complete pattern.

Global Equities: At the end of last week the weekly Coppock oscillator was constructive for 36 of the 37 markets. The exception is Indonesia. However, 24 of the 35 markets that we follow on a daily basis are still at least 10% below their 52-week high. Nonetheless, the intermediate majority bullish momentum condition is positioned to continue into late May.

Rates: The March-April decline by US 10-year yields...
By Walter Murphy on 4/5/2016 3:34 PM
“Plain English”

US Equities: We have heard an increased number of opinions that a new bull market has begun. If so, it would likely be the most well-recognized beginning to a bull market in history. Our sense is that, without a proper base and a well-defined wave structure, much damage still needs to be repaired. If so, then the market is at risk of unpleasant surprises. In the meantime, our long term counts remain unchanged.

Sectors: Utilities, Technology, and Consumer Staples are all showing solid relative strength patterns. Financials and Healthcare trail the field.

The Rest of the World: The US dollar-based MSCI World (ex US) Index has completed – and broken out from – a base. So far however, the relief rally has yet to reverse the downtrends from either its post-October or its post-May high. Indeed, the rally has retraced 61.8% of its October-February decline and 38.2% of its May-February downtrend. As a result, a rally decisively through 1655-1660 will be viewed as a potentially important...
By Walter Murphy on 3/21/2016 6:20 PM
US Equities: In previous comments we noted the unhealthy situation where the big cap stocks (the generals) were leading the smaller cap stocks (the troops) during last year’s rally. More recently we noted that, by some measures, this disparity had grown to historic proportions. This week’s data shows that the generals are still out in front. This highlights another concern. During virtually the entire 2009-2015 uptrend the very broad NASDAQ Composite continually outperformed the very narrow DJIA. However, since last September the NASDAQ has underperformed the DJIA by the greatest margin since the 2009 low. Moreover, there has been virtually no relative recovery since the market’s February low. This indicates that the leadership of the market has changed in an unhealthy way.

Global Equities: Developed markets have been lagging their developing market cousins. This is currently being evidenced by the fact that countries such as Brazil and Russia are showing relative strength. As a result, the MSCI Emerging...
By Walter Murphy on 2/29/2016 3:32 PM
Last week the S&P 500 large cap index gained 1.58%, the S&P 400 midcap index rallied 2.65%, and the S&P 600 smallcap index added 2.76%. As a result, the broad S&P 1500 advanced 1.69%. The “400” and “600” have now had their best two-week rally since October 2014 while the “500” had its strongest two week run since February 2015.

Nonetheless, the “500” is still 8.57% below its 52-week closing high even as the “400” and “600” are 13.50% and 14.11% below their respective 52-week benchmarks. Conventional wisdom has it that the latter two indexes are in “correction territory” while the “500” has rallied out of “correction territory.”

Unfortunately those numbers and labels hardly describe the damage that has been done and likely still needs to be repaired.

A review of the individual stocks in these indexes reveals much larger declines. Most readers are probably aware that we are big fans of the daily cumulative advance-decline line. It is essentially an unweighted index where an up or down day counts...
By Walter Murphy on 2/22/2016 4:57 PM
“Plain English”

US Equities: In October of last year, the difference between the Bullish Percent Index for the DJIA and the BPI for the NYSE Composite reached its highest spread in the 15 years of data at our disposal. While the spread has narrowed since October, it remains near historic highs. This suggests that the generals are further out in front of the troops than they were in 2007 or 2001.

Global Equities: Intermediate pressures are easing. The weekly Coppock Curve has bottomed for developing markets and we expect it to do the same for developed markets very soon. The resulting intermediate bullish bias should persist into May.

Rates: The weekly Coppock Curves for both US 10- and 30-year yields have a bearish bias but they are positioned to begin bottoming in April. Much the same can be said for yields in a majority of the six countries in our global index.

Commodities: Copper’s weekly Coppock oscillator is in an uptrend and has the potential to remain constructive into April....
By Walter Murphy on 2/16/2016 3:26 PM
“Plain English”

US Equities: The market appears increasingly ready to rally for more than a few days. We say this because there are already a number of bullish divergences. For example, despite repeated attempts, the DJIA has yet to pierce its August low on either a closing or intra-day basis even though most other indexes have done so. Daily Coppock Curves and RSIs for most indexes were noticeably higher last week than they were in January or last August. It is also important to note that the 60-day high-low ratio developed by the late Martin Zweig indicates that only seven other markets since 1982 were more oversold than the current decline.

Global Equities: In recent weeks, increased concern has been paid to European banks. That concern appears warranted. Last week the STOXX Europe 600 Bank Index hit a low (at 130.48) that represents more than a 42% decline just from its 52-week high. In recent years, the index was never able to retrace as much as 38.2% of its 2007-2009 bear market and now the...
By Walter Murphy on 2/8/2016 4:27 PM
“Plain English”

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...
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