Market Pulse
Author: Created: 3/10/2010 11:54 AM
Market Pulse
By Walter Murphy on 3/29/2012 3:27 PM
On Wednesday, the S&P 500 recorded its second straight decline – and fifth in seven days – with a loss of 0.5%. Declining stocks exceeded winners by 5:2 while the up/down volume ratio was bearish by a more modest 7:3 margin. Turnover remains in a tight range near its 21-dma. The daily Coppock Curve has taken on a bullish bias for 23 of the 24 S&P industry groups and for 20 of the 30 DJIA stocks.

Globally, the MSCI All-Country Index fell by 0.8%. The Coppock Curve has a bearish bias for 26 of the 35 non-US markets that we monitor on a daily basis.

On numerous occasions, we pointed out that the rally from the November low has been an impulsive structure. Since every other significant move since the 2000 peak was corrective, the post-November pattern has been out of character. Thus, the downside reversal from the March 19 peak (1414) satisfied the minimum requirements for a full post-November five-wave sequence. However, we preferred to allow for the possibility that the March 6-19 rally (1340-1414)...
By Walter Murphy on 3/26/2012 9:44 AM
Stocks: As the S&P 500 approaches its post November fifth wave peak, momentum is increasingly fatigued. Indeed, a coming short term peak could well have both negative medium term and negative longer term implications.

The Rest of the World: A review of the 10 MSCI economic sectors for China shows that momentum is taking on a bearish bias for most. This suggests that a coming intermediate correction will be a broad-based global event.

Interest Rates: The post-September medium term uptrend exists within a still incomplete cyclical downtrend that has been evident since early 2010. As a result, the current “C” wave rally should be followed by a decline that will put the finishing touches on the 2010-2012 downtrend. A test of last year’s 1.72% low should, therefore, be successful.

Commodities: Oil’s109.49-104.70 trading range of recent weeks appears to be a lower degree fourth wave within the post-October uptrend. If so, a fifth wave breakout should be close at hand. Under that scenario, the trading...
By Walter Murphy on 3/21/2012 2:54 PM
Tuesday was the first day of spring, a change in season, the vernal equinox. It was also the Persian New Year and a national holiday in Japan.

Tuesday also witnessed a 0.3% decline by the S&P 500, which was only the second setback in 10 days. Declining stocks exceeded winners by 10:3 while the up/down volume ratio was bearish by a much more modest 7:5 margin. However, these pressures were mitigated by a 6% decline in turnover, which has slipped below its 21-dma. Nonetheless, the daily Coppock Curve still has a bullish bias for 19 of the 24 S&P industry groups and for 22 of the 30 DJIA stocks.

Globally, the MSCI All-Country Index retreated by 0.7%. The Coppock Curve has a bullish bias for 26 of the 35 non-US markets that we monitor on a daily basis.

Tuesday’s setback was enough to allow us to consider the very real possibility that the rally from the March 6 low is a complete five-wave pattern. Since we have been counting the (nine-day) rally as the fifth and final wave of the larger uptrend...
By Walter Murphy on 3/19/2012 8:51 AM
Stocks: Elliott Wave patterns and the daily Coppock Curve both have us on alert to the potential for an S&P extension to still higher rally highs.

The Rest of the World: Japan’s Nikkei 225 appears to be on the verge of an important breakout. Its November-January bottoming process proved to be a successful test of the March 2011 benchmark (post-earthquake) low and the rally of recent weeks is challenging a resistance downtrend line that has its origins at the April 2010 high.

Fundamentals: The “real” S&P in CPI terms would have to rally to 1957 in order to challenge the 2000 all-time high. That is almost 40% above current levels. If past is prologue, we may still have to wait another decade or more before stock prices catch up to their 2000 peak in real terms.

Interest Rates: Last week’s breakout has raised questions as to whether the bond bull market has ended. We have regularly suggested that the secular decline in yields is increasingly positioned – even overdue – for a decisive reversal....
By Walter Murphy on 3/15/2012 1:13 PM
On Wednesday, the S&P 500 suffered a modest 0.1% loss. Nonetheless, that was enough to break a five-day winning streak. Declining stocks exceeded winners by almost 3:1 while the up/down volume ratio was bearish by a more modest 4:3 margin. Turnover increased by 4%, qualifying Wednesday as a distribution day. The daily Coppock Curve still has a bullish bias for 21 of the 24 S&P industry groups and for 24 of the 30 DJIA stocks.

Globally, the MSCI All-Country Index fell 0.2%. The Coppock Curve has a bullish bias for 30 of the 35 non-US markets that we monitor on a daily basis.

The recent improvement in near term momentum, coupled with an incomplete Elliott Wave count implies higher highs in the days ahead. Thus, our immediate focus remains on resistance at 1408-1409 then 1435+. Support is apparent at 1375-1366 then 1340.

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By Walter Murphy on 3/14/2012 3:56 PM
In Thursday’s blog we noted that the S&P 500 had its best day in almost three weeks. Yesterday, the index topped that with its best day in almost three months. Moreover, since advancing stocks overwhelmed losers by better than 11:1 while the up/down volume ratio was bullish by more than 12:1, yesterday was the first 9:1 up day of the year. These gains were aided by a 42% increase in turnover. The daily Coppock Curve has a bullish bias for 23 of the 24 S&P industry groups and for 25 of the 30 DJIA stocks.

In our most recent comments we made the case that last week’s sell-off was likely a fourth wave within a larger five-wave sequence from November’s low. Yesterday’s performance confirmed that observation and indicates that the post-November fifth wave has begun. Indeed, yesterday’s 1.8% gain smacked of being “3 of 5.” Thus, this rally has more life left in it.

That “more life” is buttressed by the fact that the S&P finally broke out through what had become persistent first resistance in the 1371-1382...
By Walter Murphy on 3/12/2012 8:50 AM
Stocks: The post-November uptrend is likely on its last legs. Last week’s sell-off (which was the second largest decline since November’s low) is best counted as a fourth wave. Thus, any near term highs will qualify as the fifth and final wave.

The Rest of the World: The weekly Coppock Curve is still constructive for a majority of the 37 markets in our universe, our measure of the global Bullish Percent Index stands at a solid 83%, and our 1%x3 point-and-figure chart remains on a “buy.”

Interest Rates: The currently constructive post-September medium term environment exists within a cyclical downtrend that has been evident since early 2010. As such, an April-May peak will also have bearish long term implications.

Commodities: We have been making the case that commodities as a group are engaged in a post-December intermediate rally within a larger cyclical decline. Last week’s pressures could be a sign that the intermediate uptrend has reversed or has at least passed peak momentum.

US...
By Walter Murphy on 3/6/2012 3:11 PM
Stocks: A coming correction could be relatively mild in the larger scheme of things. While the post-November rally can be counted as the “C” wave of a larger ABC from October’s low, it may prove to be only a post-October third wave. Thus, a coming pullback may only be a Fibonacci retracement of the rally from November’s low.

The Rest of the World: Higher highs still seem likely for the MSCI All Country Index. However, it has been up for nine of the past 11 weeks and we can make a case that the uptrend from mid December is in its fifth and final wave. These time and price considerations suggest that we should be alert for increased volatility in the weeks ahead.

Time: On April 8 the post 2009 “D” wave will have been in force for 1129 days, which is 61.8% of the time length for the 2002-2007 “B” wave. In addition, on December 17 the post-2000 secular triangle will be exactly 50% of the 9303 day, 1974-2000 secular bull market.

Yields: Medium term momentum for the Italy/Germany yield relative...
By Walter Murphy on 3/2/2012 9:51 AM
I just finished updating all my monthly data files. One of those is a chart of the S&P 500 back to inception where the monthly plot is the average daily price for that month. For reference, the actual index finished February at 1365.68 for a gain of 4.1%, while the average daily chart rallied 4.0% for the month to close at 1352.49.

We do this chart for three reasons: 1) it is an offshoot of data previously provided by the Foundation for the Study of Cycles going back to the 1700s, 2) the smoothed data eliminates some of the volatility (and sometimes helps with the Elliott Wave count), and 3) we often plot this data adjusted for inflation (usually either the CPI, PPI, or PCI. (We also plot similar weekly charts).

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By Walter Murphy on 3/1/2012 2:31 PM
On Wednesday, the S&P 500 broke a four-day winning streak with a 0.5% decline. Declining stocks exceeded winners by almost 3:1 and the up/down volume ratio was bearish a slightly more modest 8:3 margin. A 24% increase in turnover added to the selling pressures. The daily Coppock Curve has a bearish bias for 22 of the 24 S&P industry groups and for 19 of the 30 DJIA stocks.

As mentioned, yesterday’s decline broke a four-day winning streak. Indeed, yesterday’s loss was only the second in nine days over which time the S&P has gained 1.7%. However, over those same nine days, NYSE common stock breadth was negative six times, including six of the past seven days.

Bad breadth has not been an equal opportunity employer. An examination of the daily advance-decline data for the S&P 500 (large cap), 400 (mid cap), and 600 (small cap) indexes reveals that, while breadth for the “500” was positive for six of the past nine days, it was negative for the other two indexes for seven of the past nine days. Thus, it...
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