Market Pulse
Author: Created: 3/10/2010 11:54 AM
Market Pulse
By Walter Murphy on 3/30/2011 2:42 PM
On Tuesday, the S&P 500 posted its seventh gain in nine days with a rally of 0.7%.  Advancing stocks beat out losers by 13:4, but the up/down volume ratio was positive by less than 2:1.  Total volume increased by 8%, but remains well below its 21-day ma.  The daily Coppock Curve has a bullish bias for 22 of the 24 S&P industry groups and for 29 of the 30 DJIA stocks.

The door remains open for a challenge of 1332-1344. Support is apparent at 1301-1284, then 1249.

Two fairly important surveys were released Tuesday morning.  The S&P/Case-Shiller 20-city index of house prices fell 3.1% over the past 12-months.  Later in the morning, the Conference Board’s Consumer Confidence Index broke a five-month winning streak by falling to 63.4, from 72 (which was the highest reading since March 2008).

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By Walter Murphy on 3/28/2011 12:23 PM
On Thursday, the S&P 500 posted its fifth gain in six days with a rally of 0.9%.  Advancing stocks beat out losers by almost 8:3 while the up/down volume ratio was positive by a more robust 11:3.  Total volume increased by 1%, but remains below its 21-day ma.  The daily Coppock Curve has a bullish bias for 19 of the 24 S&P industry groups and for 26 of the 30 DJIA stocks.

The S&P easily rallied through 1301 thereby locking in the decline from February 18 to March 16 as a complete three-wave pattern.   By definition, that is a counter-trend structure, which means that a larger uptrend is still intact.  This tends to bolster the point made in prior comments that, since the a-d line confirmed the February high, it is likely that the February high was a peak, but not the peak.

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By Walter Murphy on 3/25/2011 9:09 AM
On Wednesday, the S&P 500 recovered from an early slump to post its fourth advance in five days with gain of 0.3%.  Advancing stocks edged out losers by 53 issues out of 1852 traded; however, the up/down volume ratio was negative by a small margin.  Total volume increased by 5%, but failed to crack four billion shares and remains below its 21-day ma.  The daily Coppock Curve has a bearish bias for 14 of the 24 S&P industry groups; however, the oscillator has a bullish bias for 19 of the 30 DJIA stocks.

In last weekend’s STR, we highlighted 1291-1301 as important resistance.  We suggested that, within this range, a rally through 1294 would indicate that the February-March decline was a corrective pattern; a rally through 1301 would confirm the corrective structure.  Earlier this week, the index easily achieved 1294, but has yet to breach 1301 (actually, 1301.19).  However, the DJIA, along with both the S&P 400 and 600 indexes, broke above its equivalent of 1301.  In each of those cases, therefore, we can...
By Walter Murphy on 3/18/2011 9:18 AM
On Wednesday the S&P 500 fell 2.0%.  That was the second straight loss in excess of 1.0%; we had to go back to June to find the last time that happened.  Declining stocks overwhelmed winners by 6:1 while up/down volume ratio was negative by a more robust 11:1; both indicators were more bearish than those seen on the prior two days.  These pressures were again exacerbated by the fact that total volume increased for the third straight day (this time by 8%).  The daily Coppock Curve has a bearish bias for 19 of the 24 S&P industry groups and for 24 of the 30 DJIA stocks.  (The weekly oscillator is currently negative for every one of the 24 S&P groups and 28 of the 30 stocks.)

Global breadth was negative of the sixth straight day.

In earlier comments we pointed out that the S&P had gone an abnormally long time without a 5% correction.  Since the index has now declined 6.4% from its February 18 high, that string has been broken.  (The 121 day run was the fifth longest span without a 5% correction since...
By Walter Murphy on 3/16/2011 3:09 PM
On Tuesday the S&P 500 followed Monday’s loss with an additional decline of 1.1%.  Declining stocks outpaced winners by 9:2 and up/down volume ratio was negative by a more robust 5:1; both indicators were more bearish than those seen on the prior day.  These pressures were compounded by the fact that total volume increased 27% to its highest level in almost three weeks.  The daily Coppock Curve has a bearish bias for 15 of the 24 S&P industry groups and for 22 of the 30 DJIA stocks.

For some time we have been making the case that a coming intermediate decline would be global in scope.  While there have been pockets of weakness and the weekly Coppock Curves remained weak for most markets, it was difficult to say that there was a broad-based decline – until the past several days.  On Tuesday, 35 of the 36 country indexes that we monitor were down (Chile was the exception).  This indicator of global breadth is now on a five-day losing streak.  Perhaps more importantly, the resulting daily a-d line has broken...
By Walter Murphy on 3/10/2011 3:38 PM
On Wednesday the S&P 500 suffered its third decline in four days with a loss of 0.1%.  Declining stocks edged out winners by 8:7 while the up/down volume was negative by a more modest 11:10 margin.  Total volume fell 14% to its second lowest level of the year.  The daily Coppock Curve has a bullish bias for 15 of the 24 S&P industry groups.

It is generally accepted by most technicians that volume tends to lead price.  In that regard, we have pointed out on a number of occasions that, since 2009, volume has tended to decline during uptrends and increase during corrections.  That is not a good thing.  But the focus of this blog is on what could be an important divergence between the S&P 500 and volume.

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By Walter Murphy on 3/9/2011 7:52 PM
On Tuesday the S&P 500 broke a two-day losing streak with a gain of 0.9% (which was more than enough to offset Monday’s decline).  Both the advance-decline ratio and up/down volume were positive by a 4:1 margin.  Total volume increased by 5% but is still (marginally) below its 21-day ma.  The daily Coppock Curve has a bearish bias for 15 of the 24 S&P industry groups and for 15 of the 30 DJIA stocks.

By now, most readers are probably aware that we are fans of point & figure charts.  Renko charts are similar.  Renko charts were developed in Japan and we like to think of them as similar to P&F charts but with some sensitivity to time.  Instead of the boxes in a P&F chart, renko charts use “bricks.”  In a P&F chart, boxes are added to a column; in a renko chart, a new brick is placed in the next column.  Finally, in a P&F chart, it takes three boxes to reverse a column, but in a renko chart only one brick is required.

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By Walter Murphy on 3/8/2011 8:40 PM
On Monday the S&P 500 posted its second straight decline with a loss of 0.2%.  Declining stocks exceeded gainers by almost 5:1.  Total volume eased by 13% and is below its 21-day ma.  The daily Coppock Curve has a bearish bias for 23 of the 24 S&P industry groups and for 25 of the 30 DJIA stocks.

On March 6, 2009 the S&P 500 hit its 2007-2009 bear market intra-day low; the closing low occurred one trading day later on March 9.  Exactly two years later, the index is doing battle with an important support trend line.  That line – from last August’s low – is currently just below 1314 and rising at the rate of 2.12 points per day.  Since momentum – both on a daily and weekly basis – is weak for a majority of the S&P’s 24 industry groups, it seems likely that the post-August support line will be decisively breached in the days ahead.  That potential for such a violation was bolstered earlier today when the hourly P&F chart generated only its third “sell” since November and violated a smaller support trend line...
By Walter Murphy on 3/4/2011 2:22 PM
On Wednesday the S&P 500 posted its third gain in four days with a rally of 0.2%.  Advancing stocks edged out losers by a bit more than 3:2 while the up/down volume ratio was positive by a more robust 5:3.  However, total volume eased by 13% and is below its 21-day ma.  The daily Coppock Curve has a bearish bias for 23 of the 24 S&P industry groups and for 23 of the 30 DJIA stocks.

We often say that our most important tool is the pencil and ruler.  With that in mind, we have found that when the daily (short term) Coppock Curve breaks below its dominant trend line (especially on our point and figure chart), the weekly (medium term) oscillator is at risk of recording its own bearish reversal.  So we note with more than passing interest that the daily indicator is challenging an uptrend line that has been in force since October 2008.

At the same time, the S&P 500 is currently testing an uptrend line that has been in force since the August low.

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By Walter Murphy on 3/2/2011 7:11 PM
On Tuesday the S&P 500 fell 1.6%, which virtually wiped out the gains recorded during the previous two days.  Declining stocks overwhelmed winners by almost 7:1 while the up/down volume ratio was bearish by an even more robust 9:1.  Total volume increased by 13%.  The daily Coppock Curve has a bearish bias for all 24 S&P industry groups and for 26 of the 30 DJIA stocks.

In yesterday’s blog we suggested that the short term condition of the market lacked clarity.  Today’s action provided some of that clarity.  We had thought that a rally from last week’s low could last 1-3 days and would be best counted as either “B” or “2” from the recent highs.  Although the two-day rally was a bit more than a 61.8% retracement of last week’s three-day decline, it was clearly corrective.  This, together with Tuesday’s sell-off is good evidence that the downtrend from last week’s high has reasserted itself; that will obviously be confirmed by a decline back below last week’s low.

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