Market Pulse
Author: Created: 3/10/2010 11:54 AM
Market Pulse
By Walter Murphy on 5/27/2010 11:38 AM
In a sense, Wednesday was the mirror image of Tuesday. The S&P 500 fell by 0.6%, but this was after a strong opening that fizzled after little more than an hour. However, breadth remained positive (by a 7:6 margin), as did the up/down volume ratio (by 4:3). Total volume declined by 4%.  The daily Coppock Curve is negative for 15 of the 24 S&P industry groups.

For what is arguable the fourth time in about a week, the 1090 area has repelled an attempt by the S&P to stage a short term breakout. It is not unreasonable, therefore, to suggest that, if the index finally does pierce this barrier it would be considered a bullish development. We are inclined to think that the chances of such a breakout may be pretty good. There are potentially three reasons for this opinion. First, we can count Wednesday’s rally as a fourth wave; this would allow for an undercut test of Tuesday’s low and then a reversal. Second, the daily Coppock Curve has a bullish bias for 37% of the 24 industry groups; we typically begin to look...
By Walter Murphy on 5/19/2010 8:22 PM
On Wednesday, the S&P 500 fell 0.5%.  Breadth was negative by almost 4:1 while the up/down volume ratio was negative by a more modest 4:3.  However, total volume increased by 9%; this is the third straight time that the volume has increased on a down day for the S&P.  The daily Coppock Curve is negative for 17 of the 24 S&P industry groups.

In the past two weeks, it was reported that two of the better known names in this business were predicting major declines in coming months for two of the world’s stock markets.  One suggested that China may “crash” within a year.  The other highlighted the risk of a “major crash” in the US stock market.  To these comments, we can add the consensus Elliott Wave count, which suggests that we are in the early stages of a decline that will correct the 78-year uptrend from the 1932 lows.

We highlight these comments for one reason.  We think that there is a case to be made that a “crash” scenario is becoming something of a consensus opinion.  For our part, we are not...
By Walter Murphy on 5/13/2010 8:50 PM
Since last week’s low, the S&P 500 has been alternating up and down days and Thursday’s 1.2% decline continued that pattern.    Breadth was negative by almost 3:1 and the up/down volume ratio was negative by a bit better than 7:2.  Total volume, which fell 8%, has declined for five straight days and is below its declining 21-day ma.  The daily Coppock Curve is negative for 15 of the 24 S&P industry groups.

Although much of Thursday’s decline occurred in the final hour, the index was unable to meaningfully build on its recent gains.  Indeed, Thursday’s hourlies fell short of Wednesday’s high and, as a result, remained below indicated chart and Fibonacci resistance in the 1175-1185 area.  Indeed, the late-day sell-off resulted in a violation of the week-long uptrend line and a breakdown in several hourly momentum indicators. Thus, it would seem that further weakness into first support at 1153-1145 is quite possible.  If so, Friday may break the string of alternating days.  Second support is indicated at last...
By Walter Murphy on 5/6/2010 8:17 PM
On Thursday the The S&P 500 fell 3.2%.  Breadth was negative by better than an 18:1 margin and the up/down volume ratio was negative by more than 20:1.  The result was the second 90% day in three sessions (and the third in the last eight).  Total volume increased by over 43% and crossed 10 billion shares for the first time since October 2008.  The daily Coppock Curve has a bearish bias all of the 24 S&P industry groups.

Thursday was the third consecutive loss for the S&P.  That is the first time since January that the index had at least three straight losses.  That 71-day span was the longest since early 1972 – and the fourth longest ever.

In our recent 15 page monthly we italicized only one paragraph (on page 5), to wit: The bottom line to all of this is that the S&P 500 appears positioned for its most important correction since at least the February low. It could prove to be the most important correction since the March 2009 low. Wave form and the index’s ability – or inability – to hold Fibonacci...
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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