Market Pulse
Author: Created: 3/10/2010 11:54 AM
Market Pulse
By Walter Murphy on 7/28/2011 6:57 PM
Wednesday was a nasty day.  The S&P 500 recorded its third straight loss – and third straight distribution day – with a decline of 2.0%, which was its worst performance since May.  Declining stocks overwhelmed winners by better than 15:1 while the up/down volume ratio was negative by an even more robust 16:1 margin.  The resulting 9:1 down day was exacerbated by a 25% increase in turnover.  The daily Coppock Curve has a bearish bias for 23 of the 24 S&P industry groups and for 29 of the 30 stocks in the DJIA.

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In addition to the fact that the S&P is on a three day losing streak, it is important to note that both volume and declining...
By Walter Murphy on 7/27/2011 8:04 PM
On Tuesday, the S&P 500 recorded its second straight loss – and second straight distribution day – with a decline of 0.4%.  Declining stocks exceeded winners by 2:1 while the up/down volume ratio was negative by a more modest 7:5 margin.  Turnover increased by 13% and moved back above its 21-dma.  The daily Coppock Curve has a bearish bias for 19 of the 24 S&P industry groups and for 23 of the 30 stocks in the DJIA.

Despite the pullback of the past few days, the uptrend from the late June low is still intact from the perspective of both the hourly and daily point-and-figure charts.  Moreover, bearish momentum pressures are positioned to abate later this week.  As mentioned in the recent STR, July’s previous resistance near1331 is now regarded as first support (while the index traded to as low as 1329.59 on Tuesday, it actually spent less than 15 minutes below 1331).  A decisive break of this support area would increase the potential for further weakness...
By Walter Murphy on 7/26/2011 12:27 PM
Stocks: Since volume often leads price, the currently poor volume conditions are viewed as a negative. We will need to see positive divergences and/or bullish confirmations in order to think that the selling pressure of recent months is abating. That said, we may not have to wait too long.

The Rest of the World: There are signs of improvement (especially in the major markets) and the daily (short term) oscillator for the All-Country index is bottoming. Thus, a rally through 347-348 could set the stage for further strength to new recovery highs above 356-357.

10-Year Yields: The late June, early July rally by 10-year yields was enough to lock in the February-June downtrend as a complete pattern. This, plus the fact that the downtrend was an almost exact 61.8% retracement of the October 2010 to February 2011 rally, suggests that yields could be on the verge of an important intermediate – or longer – rally.

Commodities: The DJ-UBS composite...
By Walter Murphy on 7/21/2011 10:54 AM
Since July 12 the S&P 500 has been alternating wins and losses.  Wednesday was the market’s turn for a loss and the S&P 500 obliged with a 0.1% decline.  Nonetheless, advancing stocks exceeded losers by five issues and the up/down volume ratio was bullish by a 3:2 margin.  However, turnover fell by 10% and broke back below its 21-dma.  The daily Coppock Curve has a bearish bias for all 24 S&P industry groups and for 28 of the 30 stocks in the DJIA.

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Wednesday’s early strength was not high enough to lock in the July 7-18 decline as a three-wave pattern.  However, the day’s overall sideways pattern can be counted as a continuation...
By Walter Murphy on 7/18/2011 5:01 AM
Stocks: If the S&P 500 and the other major indexes manage to rally through their July high, there is the very real risk of creating a significant negative divergence. Since there are already divergences between the February and May highs, another set of divergences would likely increase the potential for a deeper decline. Thus, the risk is still for a deeper test of the March-June double-bottom.

The Rest of the World: The MSCI All-Country Index has broken an important support trend line from last July’s low. Moreover, the weekly Coppock Curve still has a bearish bias for 19 of the 20 major markets in our universe and for 13 of the 17 developing markets. These momentum pressures are expected to continue into August. This condition, coupled with the fact that the Bullish Percent Index for global markets remains below 50%, suggests that a broad-based rally may still be some weeks away.

10-Year Yields: Our focus has been on the idea that 10-year yields were in the process of forming an important bottom...

3-1

By Walter Murphy on 7/14/2011 3:21 PM


The US women beat France in the World Cup semi-final. They face Japan in the finals on Sunday.  Y’all can guess what I’ll be watching. Sorry British Open.

Unfortunately, over the last four days, the S&P is on the short side of its own 3-1 score.  On Wodensday, the S&P 500 broke a three-day losing streak with a rally of 0.3%.  Advancing stocks exceeded losers by 5:2 while the up/down volume ratio was positive by a more modest 11:5 margin.  Turnover fell by 4% and ducked back below its 21-dma. The daily Coppock Curve has a bearish bias for 21 of the 24 S&P industry groups and for 20 of the 30 stocks in the DJIA.

Nonetheless, nearby chart and Fibonacci support remains at 1299-1292 while resistance exists at 1331-1341, then 1356-1359.

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By Walter Murphy on 7/13/2011 12:51 PM
On Tuesday, the S&P 500 recorded its third consecutive lows with a decline of 1.8%.  Declining stocks exceeded winners by 7:5 while the up/down volume ratio was negative by a more bearish 7:3 margin.  Turnover increased by 9%, which allowed it to move above its 21-dma. The daily Coppock Curve has a bearish bias for 19 of the 24 S&P industry groups and for 18 of the 30 stocks in the DJIA.

Until the final hour, the S&P spent most of the day trading within the tight range (on either side of 1320) that it had been in since Monday morning.  As a result, there is not much to add to yesterday’s comments.  Nearby chart and Fibonacci support remains at 1299-1292 while resistance exists at 1331-1341, then 1356-1359.

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By Walter Murphy on 7/12/2011 7:43 PM
I hope most of our readers got to see the US women’s World Cup soccer game yesterday. Notwithstanding the fact that I had a rooting interest, it was one of the best athletic events I have ever witnessed. It was intense.

Speaking of intense, on Monday, the S&P 500 suffered its biggest loss since June 1 with a decline of 1.8%.  Internally, the damage was significant as declining stocks overwhelmed winners by better than 20:1 while the up/down volume ratio was negative by an even more bearish 27:1 margin.  The result was the third 9:1 down day in 28 trading sessions.  Of the three, this was the most intense.  To add insult to injury, turnover increased by 7% (although it remains below its 21-dma).  Moreover, the daily Coppock Curve now has a bearish bias for a majority (16) of the 24 S&P industry groups; however, the oscillator still has a bullish bias for 16 of the 30 stocks in the DJIA.

The depth of Monday’s decline effectively locked in the rally from June’s low as a complete five-wave pattern. ...
By Walter Murphy on 7/8/2011 12:15 PM
July’s monthly Insights has been released.  To purchase a copy, e-mail walter@wminsights.com.

The bullets points are:

Stocks: We have repeatedly said that, because the various advance-decline lines confirmed the May high, it was likely that any correction would be an interruption – but not a reversal – of the underlying cyclical uptrend. Thus, it is very important to note that last week’s rally carried both the NYSE all-stock and the S&P 500 a-d lines to new highs. This improvement is a very constructive development.

Yields: The rally of recent days was strong enough to lock in the post-February decline as a complete pattern. Since the rally of the past few days has already retraced 38.2% of the four-month decline, higher highs seem likely. The risk is that this rally will do much to confirm the beginning of a long term – even secular – uptrend.

US Dollar: Despite several fits and starts that appeared initially promising, the dollar index...
By Walter Murphy on 7/7/2011 7:42 PM
On Wednesday, the S&P 500 posted its sixth gain in seven days with a rally of 0.1%.  Advancing stocks exceeded losers by 5:4 but the up/down volume ratio was bearish by a miniscule margin.  Turnover was little changed and is below its 21-dma.  The daily Coppock Curve has a bullish bias for all 24 S&P industry groups and for all 30 stocks in the DJIA.

In yesterday’s comment, we mentioned that nearby support existed at 1335-1334.  That range was violated early in the day.  That was enough to reverse a “buy” on our hourly P&F chart that had been in force since June 27.  The breakdown also completed a small degree top formation.  We are not terribly concerned about this breakdown since underlying uptrends remain intact and momentum is still constructive.  But it does “bear” watching.  Below today’s 1330.92 low, support is indicated at 1321-1317.

Resistance exists at 1342-1348 then 1354-1360.

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Market Pulse
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