Market Pulse
Author: Created: 3/10/2010 11:54 AM
Market Pulse
By Walter Murphy on 10/29/2010 12:57 PM
On Thursday, the S&P 500 posted its sixth gain in five day with a rally of 0.1%.  Nonetheless, losers outpaced winners by 8:7 and the up/down volume ratio was negative by a 7:6 margin.  Total volume fell by 3% and remains below its 21-day ma.  The daily Coppock Curve is bearish for 19 of the 24 S&P industry groups and 22 of the 30 stocks in the DJIA.

Since October 13, the “500” has been locked in a tight range.  How tight?  Using hourly closing data as a basis, the S&P has spent most of its time since October 13 trading between 1187 and 1166.  In those 12 trading days (84 trading hours), the index has managed only nine hours outside of the range; seven hours were above, and two were below.

S&P Hourly

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By Walter Murphy on 10/28/2010 2:56 PM
On Wednesday, the S&P 500 broke a five-day winning streak with a loss of 0.3%.  Winners outpaced losers by almost 5:2 while the up/down volume ratio was negative by a more modest 8:5 margin.  Total volume increased by 3% but is below its 21-day ma.  The daily Coppock Curve is bearish for 19 of the 24 S&P industry groups and 21 of the 30 stocks in the DJIA.

The daily Coppock Curves for both the S&P and DJIA hit new reaction lows on Wednesday.  Both peaked in late September, which suggests that the rally from the October 4 low is an extension of the older uptrend from the late August low.  An extension, plus the fact that the deteriorating Coppocks are still in overbought territory, suggests that the short term technical condition is increasingly fragile.  The deteriorating McClellan Summation Index, an overdue 20-week cycle top, and increasingly overbought sentiment attest to that fragility.

30-Year Yields

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By Walter Murphy on 10/27/2010 9:02 AM
On Tuesday, the S&P 500 was virtually unchanged (up by 0.002%).  Breadth was negative by 7:5, but the up/down volume ratio was negative by a more modest 9:8 margin.  Total volume was little changed (down by 2%) from Monday’s total.  The daily Coppock Curve is bearish for 16 of the 24 S&P industry groups and 16 of the 30 stocks in the DJIA.

According to the glossary in our website, a “dark cross” occurs when the 50-day moving average crosses below the 200-day moving average.  This is considered a confirmation that the underlying trend has turned down.  That last happened on July 2, which was one day after the 2010 intra-day low to date at 1011.  By contrast, a “golden cross” occurs when the 50-day moving average crosses above the 200-day moving average.  That happened last Friday.  It seems unlikely that signal from this golden cross will be as poor as July’s dark cross, but it would be ironic if Tuesday’s intra-day high marked the end of the post-July uptrend.  With that in mind, we would note that the...
By Walter Murphy on 10/26/2010 6:09 AM

Yesterday, I did an interview on Canada’s Business News Network (BNN).  The link to that spot is below.

http://watch.bnn.ca/#clip365541

 

By Walter Murphy on 10/15/2010 7:53 AM
On Thursday, the S&P 500 broke a four-day winning streak with a loss of 0.4%.  Breadth was negative by 3:1 while up/down volume was bearish by a more robust 11:4 ratio.  Total volume was little changed from Wednesday’s level.  The daily Coppock Curve is bullish for 13 of the 24 S&P industry groups, but is negative for 17 of the 30 stocks in the DJIA.

Over the past 10 days, the S&P reversed an initial rally from the late August low and then rapidly began a new, second upleg that has carried the index to resistance defined by last April’s top formation.  At about the same time, the overbought daily Coppock Curve stopped going down and began to stabilize.  This combination indicated that the overall post-August rally is an orderly linear uptrend (aided by a still constructive medium term background).  As such, we need to keep an eye on the support trend line from August’s high.  That trend line, which is currently just above 1167, could be the canary in the coal mine.

S&P 500

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By Walter Murphy on 10/14/2010 10:05 AM
On Wednesday, the S&P recorded its fourth straight gain with a rally of 0.7%.  Breadth was positive by better than 5:1 but the up/down volume ratio was bullish by less than 3:1.  Total volume increased (by 25%) to its highest level since mid July.  Meanwhile, the daily Coppock Curve is bullish for 19 of the 24 S&P industry groups and 21 of the 30 stocks in the DJIA.

On a number of occasions we suggested that, if the S&P broke out through 1158, then the “hard work” in preparation for a test of the April high would have been done.  The rally of the past three days has driven that point home.  On Monday and Tuesday, the index satisfied our requirements for a “decisive” breakout and, in the process, challenged important resistance at 1173.  Then, today, the “500” continued on into April’s 1182-1220 top formation.  Moreover, 297 NYSE common stocks recorded a new 52-week, which confirmed the new post-July recovery high.

S&P 500 with New NYSE 52-week Highs (All Issues)

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By Walter Murphy on 10/13/2010 10:34 AM
On Tuesday, the S&P recorded its third straight gain with a rally of 0.4%.  Breadth was positive by a bit less than 4:3 and up volume outpaced down volume by a more robust 12:5 ratio.  Total volume increased sharply from Monday's semi-holiday turnover.  Meanwhile, the daily Coppock Curve has taken of a bullish bias for 13 of the 24 S&P industry groups but is in a 15 to 15 standoff among the 30 stocks in the DJIA.

To say that Tuesday was an outside day does not do it justice.  The index got off to a rocky start in sympathy with global markets, most of which were under pressure.  However, the S&P recovered most of those losses by the time that the minutes from Fed’s September meeting were released.  While the release was a catalyst for a brief surge to new summer rally highs, the index quickly returned to negative territory.  That sell-off was also short-lived, and the index regained its footing in the final 90 minutes and challenged the important 1173 area before settling back a bit at the close.  In short,...
By Walter Murphy on 10/9/2010 5:42 AM
On Thursday, the S&P recorded its ninth loss in 13 sessions with a decline of 0.2%.  Breadth was negative by 8:5 while down volume outpaced up volume by a more modest 6:5 ratio.  Total volume fell by 4%.  The daily Coppock Curve remained in a downtrend for 13 of the 24 S&P industry groups and 19 of the 30 stocks in the DJIA.

One of the sentiment indicators that we monitor is the weekly AAII (American Association of Individual Investors) Investor Sentiment Survey.  Four weeks ago, 50.9% of the members were bullish.  This week, 49% were bullish.  Overall, a five-week average of the bull/bear ratio is at its most overbought level since the May 2008 bear market rally high.

Against that background, near term momentum still has a bearish bias for a majority of the 24 industry groups and the 20-week cycle is overdue for a downside reversal.  As a result, the S&P’s continued inability to decisively break out through 1158-1161 could prove to be a growing problem.

S&P 500 with Five-Week AAII Bull/Bear...
By Walter Murphy on 10/7/2010 4:49 PM
On Wednesday, the S&P recorded its eighth loss in 12 sessions with a decline of 0.1%.  Breadth was negative by a bit less than 6:5 while down volume outpaced up volume by a more robust 4:3 ratio.  Total volume fell by 16%.  Meanwhile, the daily Coppock Curve remained in a downtrend for 13 of the 24 S&P industry groups and 17 of the 30 stocks in the DJIA.

Wednesday was an inside day for the S&P 500 and most of the popular indexes.  Often such a day (a lower high and a higher low than the prior day) is a sign of indecision.  However, this time, it may have simply been a case of the market needing a bit of a rest.  This would not be surprising following Tuesday’s challenge of important resistance.  As a result, we cannot describe the rally above 1158 as a “decisive” breakout.  As mentioned in yesterday’s post, we normally like to see a breakout point exceeded by at least 1%.  In addition, we also like to see an entire day’s trading to occur above the breakout.  So far, neither has happened.

In addition,...
By Walter Murphy on 10/6/2010 2:52 PM
On Tuesday, the S&P rallied to new recovery (summer rally) highs with a gain of 2.1%.  Tuesday was also a 90% up day since breadth was positive by 16:1 and the up/down volume ratio was bullish by almost 14:1.  Moreover, total volume increased by 21%.  However, the daily Coppock Curve remained in a downtrend for 19 of the 24 S&P industry groups and 21 of the 30 stocks in the DJIA.

The biggest apparent development on Tuesday was the S&P’s ability to edge above 1158. For some time, we pointed to 1129-1158 as an important resistance area. Our focus has been – and still is – on the idea that, if the S&P was going to challenge its April high, then a rally decisively through that range would be a sign that most of the hard work had been done.

For us, however, an even more important development is the fact that the S&P rallied to new recovery highs on Tuesday, a day after having made its first lower lower since the August 27 bottom just below 1040. From our perspective that defines the rally from August...
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