Market Pulse
Author: Created: 3/10/2010 11:54 AM
Market Pulse
By Walter Murphy on 6/24/2010 8:40 AM
On Wednesday, the S&P 500 recorded its third straight decline with a loss of 0.3%.  Breadth was negative by a bit less than 4:3 and the up/down volume ratio was negative by almost 7:5. Total volume was little changed from the prior day and remains below its 21-day ma.  However, the daily Coppock Curve now has a bearish bias for 16 of the 24 S&P industry groups.

After hitting important Fibonacci resistance during the day, Monday proved to be a reversal day and, as it turns out, began what is now a three-day losing streak.  Those pressures have violated the uptrend line from the early June lows.  More importantly, the daily Coppock Curve is beginning to feel the heat.  Indeed, that indicator is positioned to peak relative to the S&P on Thursday or Friday.  Moreover, two-thirds of the 24 S&P industry groups have already recorded downticks in their respective Coppock Curves.  All of this suggests that Monday’s peak marked the end of the May-June rally.  This is important because, as mentioned in the recent...
By Walter Murphy on 6/16/2010 6:39 PM
Although the S&P 500 fell by less than 0.1% on Wednesday, breadth was solidly negative (by 8:5), as was the up/down volume ratio (by 7:4). Total volume increased by 8% but remains well below its 21-day ma.

There are initial signs of fatigue in some of the near term momentum indicators that we monitor, but these oscillators still have a bullish bias.  Perhaps the best example of this is the fact that the daily Coppock Curve is positive for all 24 S&P industry groups.  This has been a large factor – along with our Elliott Wave analysis – in our view that the current rally will have a Fibonacci retracement of the entire April-May decline.

Now, the trends of individual stocks have begun to take a more obvious bullish tone.  This is perhaps best exemplified by the Bullish Percentage Index (BPI).  The BPI measures the percentage of stocks in a specific index that are on a point-and-figure buy signal.  In addition to monitoring the BPI itself, we also compare it to its 21-day ma.  For both the S&P 500 and...
By Walter Murphy on 6/8/2010 6:10 AM
Monday, the S&P 500 rallied 1.4%.  Breadth was negative by 11:2 and the up/down volume ratio was negative by more than 6:1.  Total volume fell 12% and remains  below its 21-day ma.  The daily Coppock Curve is constructive for 14 of the 24 S&P industry groups.

Here we go again.  During the S&P’s 2007-2009 decline, we repeatedly said that the pattern was not impulsive. It was – and remains – corrective.  As a result, we took strong exception to those who referred to that decline as the first wave of a larger five-wave downtrend.  The same thing is happening now.  There are comments that the decline from April’s high is impulsive (a nesting series of first and second waves) and that the market is ready for a downside acceleration.  But again, the pattern is clearly corrective.  So, while the market could/should move lower in the weeks and months ahead, the corrective structure fits well with our post-2000 fourth wave triangle scenario.  We do expect a substantial, if not full, retracement of the 2009-2010...
By Walter Murphy on 6/2/2010 8:57 PM
In a sense, Wednesday’s rally nullified Tuesday’s sell-off.  The S&P 500 rallied 2.6%.  Breadth was positive by more than 12:1 and the up/down volume ratio was positive by 22:1.  The result was the second 90% up day in four days and offsetting Tuesday’s 90% down day.  However, these constructive numbers are mitigated somewhat by the fact that total volume fell 4% and remains well below its 21-day ma.  The daily Coppock Curve is constructive for 21 of the 24 S&P industry groups.

In yesterday’s post we pointed to 1065 as an important support area.  We suggested that, if that benchmark was violated, the door would be open for further weakness through May’s low despite the fact that both near term momentum and the put/call ratio are oversold.  Perhaps those oversold conditions were too much to overlook as the S&P spent most of Wednesday in rally mode.  As a result, both hourly and daily momentum indicators took on a bullish bias and the “500” rallied through first resistance.  Thus, the index appears to have...
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...
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