Market Pulse
Author: Created: 3/10/2010 11:54 AM
Market Pulse
By Walter Murphy on 2/24/2011 7:40 PM
On Wednesday the S&P 500 followed Tuesday’s 2.1% decline with an additional 0.6% loss.  This marks the first time since January 19-20 that the index has posted back-to-back losses.  Declining stocks exceeded winners by a bit more than 7:2 while the up/down volume ratio was negative by less than 2:1.  Total volume increased by 4%.  The daily Coppock Curve has a bearish bias for 22 of the 24 groups.  The oscillator is negative for 23 of the 30 DJIA stocks.

Yesterday’s blog (Bent, but Not Broken – Yet) we pointed out that, despite Tuesday’s sharp sell-off, the S&P was still above both its 21-day ema and its post-November support trend line.  Moreover, there were no P&F sell signals – even on our hourly chart.  A day later, all of those benchmarks have been breached.  As pointed out in today’s Quick Comment, our hourly P&F has given a “sell.”  In addition, the S&P spent most of the day – and closed – below its 21-day ema and the post-November trend line (and is resting on a longer uptrend line from August’s...
By Walter Murphy on 2/10/2011 4:53 PM
On Wednesday, the S&P 500 broke a four day winning streak with a loss of 0.2%.  (However, the DJIA – which gained a bit less that 0.1% – is on an eight day winning streak.)  Declining stocks outstripped losers by a bit less than 2:1, while the up/down volume ratio was negative by a more modest 5:3.  Total volume was essentially unchanged and remains below its 21-day ma.  The daily Coppock Curve has a bullish bias for 15 of the 24 S&P industry groups and for 20 of the 30 stocks in the DJIA.

Wednesday’s decline by the S&P did not damage to the current uptrend, so our support and resistance levels remain unchanged.  Our immediate focus is on 1349-1353.  While nearby support is indicated at 1309-1302, the more important short term support range is 1295-1294; a decline through the latter range would be sufficient to reverse the uptrend from the January 7 low.

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By Walter Murphy on 2/9/2011 8:25 PM
On Tuesday, the S&P 500 recorded its fourth straight gain with a rally of 0.4%.  Advancing stocks exceeded losers by a bit less than 2:1, while the up/down volume ratio was positive by a more modest 3:2.  Total volume, which has now declined for three straight days, is below its 21-day ma.  The daily Coppock Curve has a bullish bias for 21 of the 24 S&P industry groups and for 19 of the 30 stocks in the DJIA.

The uptrends from both the January 7 and January 28 lows are still intact.  The overlapping structure of the larger trend speaks to the counter-trend nature of the rally.  With that in mind, today’s action had no impact on the observations made in yesterday’s comment.  Our immediate focus is on 1349-1353.  While nearby support is indicated at 1309-1302, the more important short term support range is 1295-1294; a decline through the latter range would be sufficient to reverse the uptrend from the January 7 low.

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By Walter Murphy on 2/8/2011 4:01 PM
On Monday, the S&P 500 recorded its third straight gain (and 10th in the past 12 days) with a rally of 0.6%.  Advancing stocks exceeded losers by over 3:1, and the up/down volume ratio was positive by a more robust 15:4.  These gains were dampened a bit by the fact that total volume declined modestly.  The daily Coppock Curve now has a bullish bias for 16 of the 24 S&P industry groups and for 18 of the 30 stocks in the DJIA.

The title for last Tuesday’s blog – which discussed the evidence for a rally through resistance at 1313 – is the same as today’s but ended with a question mark.  Today’s title is a declarative statement, reflecting the fact that S&P has decisively penetrated the 1313 benchmark.  The breakout was buttressed by solid breadth, constructive momentum, and the fact that it can be counted as a small degree third wave from the January 28 low.  Thus, higher highs are likely.

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By Walter Murphy on 2/3/2011 4:33 PM
On Wednesday, the S&P 500 followed Tuesday’s sharp gain with a loss of 0.3%.  Declining stocks outdistanced winners by 5:3, and the up/down volume ratio was negative by a more robust 2:1.  These pressures were mitigated somewhat by the fact that total volume declined by 15%.  The daily Coppock Curve has a bearish bias for 16 of the 24 S&P industry groups, but is constructive for 16 of the 30 stocks in the DJIA.

The S&P traded within a two point range and posted an inside day.  Thus, there is not much we can add to yesterday’s comment.  Meanwhile, the dollar has been under pressure and we are in the throes of writing our monthly (which should be released tomorrow).  So this seems like a good opportunity to share a sneak peak from that comment.

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By Walter Murphy on 1/27/2011 5:26 PM
On Wednesday, the S&P posted its fourth straight gain with a rally of 0.4%.  Advancing stocks exceeded losers by a bit less than 3:1, while the up/down volume ratio was positive by a more modest 6:5.  Total volume increased by 2%.  The daily Coppock Curve has a bullish bias for 17 of the 24 S&P industry groups and for 18 of the 30 DJIA stocks.

During the first hour of Wednesday’s trading, the S&P gapped through the 1291-1292 breakout point mentioned in yesterday’s comment and followed through to a new recovery high just below 1300.  This rally fell a bit short of the 1301 objective implied by that breakout, but hourly momentum is oversold and, with a majority of industry groups benefitting from a constructive Coppock Curve, we will allow for continued follow-through in the days immediately ahead.  A rally through 1301-1302 would allow for further strength to the top end of the 1289-1313 range that we have mentioned in recent comments.

Prior resistance in the 1291-1296 area is likely important nearby...
By Walter Murphy on 1/26/2011 5:56 PM
On Tuesday, the S&P was under water for virtually the entire day but, thanks to a final hour rally, managed to eke out a 0.03% gain.  Similarly, advancing stocks marginally exceeded losers by a mere 28 issues (1.02:1); by contrast, the up/down volume ratio was negative by almost 2:1.  Total volume increased by 14%.  The daily Coppock Curve has a bullish bias for 15 of the 24 S&P industry groups and for 16 of the 30 DJIA stocks.

In recent comments we have pointed to 1271 as an important support point.  So we noted, with more than passing interest, that Tuesday’s weakness was enough to breach a trend line from the 1271 low.  That breach was temporary (a bear trap?) and the index is still in what is now a three-day trading range. It seems, therefore, that the post-November uptrend bent, but did not break.

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By Walter Murphy on 1/24/2011 8:30 AM
On Wednesday, the S&P fell 1.01%; that was the first time since late November (38 trading days) that the index lost more than 1.0%.  Declining stocks exceeded losers by more than 7:1 while the up/down volume ratio was bearish by more than 10:1.  Total volume fell by 12%.  The daily Coppock Curve now has a bearish bias for 16 of the 24 S&P industry groups.

An old proverb states that “a journey of a thousand miles begins with a single step.” So, given the overbought condition of the market, it is possible the Wednesday’s decline marks the beginning of an important intermediate decline.  However, Wednesday’s sell-off did little, if any, damage to the November-January uptrend.  At this point – and at the risk of mixing proverbs with idioms – it is a case of “no harm, no foul.”  The decline did not result in a lower low below the January 7 low.  It did not break any meaningful trend line.  And it did not seem to engender much concern if we can take the 0.84 CBOE put/call ratio an accurate measure of the day’s...
By Walter Murphy on 1/19/2011 3:26 PM
On Tuesday, the S&P recorded its fourth rally in five days with a gain of 0.1%.  Advancing stocks exceeded losers by almost 5:4.  However, the up/down volume ratio was bearish by almost 2:1 thanks to Citigroup.  Total volume increased 13%.  The daily Coppock Curve has a bullish bias for 18 of the 24 S&P industry groups and 16 of the 30 stocks in the DJIA.

Both the July-August and August-November rallies were corrective structures.  However, the current rally from the late November low has much more of an impulsive look to it.  Since the first two are corrective, the current rally will almost certainly end up being corrective as well.  With that in mind, the most straight-forward count is that a five-wave “A” ended on December 29 and the “C” wave began two days later.  This “C” will be 0.618 of the “A” at 1310, which is within the 1289-1313 first support range mentioned in the recent STR.  Nearby support is at 1262-1254.

S&P 500

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By Walter Murphy on 1/13/2011 8:38 PM
On Wednesday, the S&P gained 0.9%.  Advancing stocks exceeded losers by almost 7:2.  Indeed, this was the second straight day will more than 1000 winners; that has not happened since December 22.  The up/down volume ratio was bullish by a more robust 11:2.  Total volume increased by 4%. The daily Coppock Curve has a bearish bias for 14of the 24 S&P industry groups and 16 of the 30 stocks in the DJIA.

On a very short term basis, the S&P has declined on six of the past 10 days.  However, a look back at the rally from the late November low reveals that, for all intents and purposes, short term declines have been unable to record even a false breakdown.  Thus, the post-November uptrend to date is an uninterrupted series of higher highs and higher lows.  The August-November rally was also an orderly uptrend.  As a result, the entire post-August uptrend represents the longest period of time since June 2006 to February that a rally has not been interrupted by even a relatively benign 5% correction.

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