Market Pulse
Author: Created: 3/10/2010 11:54 AM
Market Pulse
By Walter Murphy on 4/28/2010 8:42 PM
Wednesday, The S&P 500 rebounded from the prior day’s sell-off with a gain of 0.6%.  As a result, the index has not had a three-day losing streak since mid January.  That streak – 66 days – is the longest since early 1980 (that’s not a typo).  Breadth was positive by a 3:2 margin and the up/down volume ratio was positive by 11:4.  Total volume fell by 15%.  The daily Coppock Curve has a bearish bias for 23 of the 24 S&P industry groups.

On Tuesday, S&P downgraded Greece and Portugal.  On Wednesday, they added Spain.  That makes three of the so-called PIGS, which leaves Italy and or Ireland to fill in the “I.”  If we were to make a choice, we would think that Italy could be the next downgrade.  That is because Italy’s chart looks weaker than Ireland’s.  (Being a Murphy has nothing to do with it!)

All that said, the real casualty may be the euro.  We have made the case that November-March rally by the US dollar index was likely the first leg of a larger uptrend.  As it happens, the euro represents...
By Walter Murphy on 4/23/2010 6:11 AM
On Thursday, the S&P 500 rallied 0.2%.  Breadth was positive by a 7:3 margin, while the up/down volume ratio was positive by a more moderate 5:4 spread.  Total volume increased 5% from Wednesday’s level and is still well above its 21-day ma.  The daily Coppock Curve is positive for 15 of the 24 S&P industry groups.

In recent comments we have suggested that there is increased evidence that that post-February rally is increasingly fatigued.  Indeed, we have made the case – and still think – that the February-April rally is a complete “A” wave and that the S&P is now in the “B” wave correction of a larger ABC rally pattern.  If this is correct, then higher highs are likely to unfold once the correction runs its course.

One of the pieces of evidence for higher highs has to do with the cumulative hourly tick line for the S&P 500.  This is essentially an a-d line for the hourly movements of the S&P.  An up hour is given a value of +1 and a down hour is given a –1.  The cumulative total is the hour tick...
By Walter Murphy on 4/20/2010 2:37 PM
On Monday, the S&P 500 shrugged off early pressures and recovered to finish with a gain of 0.5%.  While breadth was negative by a 5:4 margin, the up/down volume ratio was positive by 3:2.  Total volume fell 19% from Friday’s surge, but is still well above its 21-day ma.  The daily Coppock Curve is negative for 16 of the 24 S&P industry groups.

As mentioned in yesterday’s comment, the market is in need of a correction to work off the wide-spread overbought condition.  Clearly, yesterday’s action did not begin to achieve that goal.  However, yesterday’s early decline was enough to carry the S&P below its prior week’s low (and more severely test the post-February uptrend line).  That is the first time this has happened since the February bottom and suggests that the rally from February’s low to last week’s high is a complete pattern.  As per prior comments, we have been counting the uptrend from the February low as the “A” wave of a larger structure.  So, we are now alert to the idea that a “B” wave correction...
By Walter Murphy on 4/8/2010 8:48 PM
On Thursday, the S&P 500 rallied 0.3%.  However, both the S&P 400 (Mid Cap) and S&P 600 (Small Cap) indexes lost ground.  As a result, breadth was negative (by a bit less than 11:10).  By contrast, the big cap stocks made their presence felt in the volume figures; the up/down volume ratio was positive by better than 2:1. Total volume fell 8% from Wednesday’s level but remained above its 21-day ma.  The daily Coppock Curve is negative for 17 of the 24 S&P industry groups.

As noted above, the daily Coppock Curve has a bearish bias for a solid majority of the 24 industry groups.  However, of possibly even greater significance, is the fact an even bigger majority (21) of the industry groups are benefitting from bullish weekly Coppock oscillators.  Moreover, we estimate that this bullish intermediate condition can persist for another month or so.  Thus, it would seem that, if the S&P can put a short term bottom in place, a resulting rally could catch a ride with the improving intermediate underpinnings.

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By Walter Murphy on 4/1/2010 7:20 AM
On Wednesday, the S&P 500 broke a three-day winning streak with a loss of 0.3%.  Breadth was negative by better than 2:1 while down volume exceeded up volume by a 9:4 margin. Total volume increased by 15% from Tuesday’s level and edged above its 21-day ma.  Finally, the daily Coppock Curve is negative for 23 of the 24 S&P industry groups.

Based on hourly closing data, the index has been locked in a tight (1180-1164) trading range since the 25th.  Whether this range proves to be a triangle or a flat or part of a larger more complex correction remains to be seen.  However there is a good case to be made that the range is a continuation pattern within the uptrend from the February lows.  As such, we will be on the alert for another run to new recovery highs above 1180, perhaps on the way to 1200 and above.

Daily Momentum (Blue, Deteriorating) vs. Weekly Momentum (Red, Improving)

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By Walter Murphy on 3/26/2010 12:29 PM
On Thursday, the S&P 500 experienced what might prove to be a reversal day.  The index opened strong and rallied to a new intra-day recovery high above 1180, but a poor final hour erased all of that and then some.  The index moved below Wednesday’s low and finished with a net loss of 0.2%.  Breadth was negative by a 9:5 margin and down volume outpaced up volume by a more modest 8:7 ratio.  However, total volume expanded by 20%, which adds further evidence to the potential reversal day.  Finally, the daily Coppock Curve is negative for 23 of the 24 S&P industry groups.



By itself, Thursday’s action was “no harm, no foul” (yes I will head for college basketball once this is sent out).  The uptrend line from the February low is still intact and a case can be made that potential objectives above 1200 are still out there.  Moreover, short term momentum (i.e., the daily Coppock Curve) has decisively turned down (finally!) from overbought conditions.  So it would seem that the index could be under pressure in the days and weeks ahead.

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By Walter Murphy on 3/17/2010 7:06 AM
In yesterday’s Breakfast with Dave, noted economist (and friend) David Rosenberg stated that we looked to be “throwing in the towel, acknowledging recently that the technical picture has improved and this is key for a market more driven by technicals than fundamentals, valuation, or fund flows.”  Our guess is that if Dave feels that way, so do others.  So let’s make one thing clear: the towel is still on the shelf.  We still regard the 2009-2010 uptrend as a bear market rally.  That said, several observations are warranted.

1. The market eventually trades to the fundamentals, but the technicals lead the fundamentals.  So, in that regard, the market is usually driven more by the technicals than by fundamentals or fund flows.  This is not new.  The Japanese were engaged in technical analysis before Keynes was a gleam in his parents’ eyes.  That said, the nearby chart is of interest.  The top half is the four-quarter rate of change for the GDP; the bottom half is the four-quarter rate of change for the S&P. ...
By Walter Murphy on 3/11/2010 8:20 PM
On Thursday, the S&P 500 rallied 0.4%.  It was the index’s third straight gain, and ninth in 10 days.  It was also a new closing high for the 12-month uptrend.  Breadth was positive by a 3:2 margin and up volume outpaced down volume by better than 3:1.  Total volume fell by 13%, but remains above its 21-day ma.  The daily Coppock Curve is negative for 15 of the 24 S&P industry groups.

The S&P exceeded January’s hourly and closing high by 0.01 points – a penny.  What does that mean?  Not much In the broad scheme of things.  Most of the popular averages have already exceeded their respective January highs.  The DJIA is the most notable exception and even the S&P itself is still below January’s intraday high (1150.45).  So, in a sense, the the “500” is catching up.

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