Market Pulse
Author: Created: 3/10/2010 11:54 AM
Market Pulse
By Walter Murphy on 5/29/2012 2:39 PM
The US market was closed on Monday in observance of Memorial Day. In addition, five of the 35 non-US markets that we follow on a daily basis were also closed. Of the remaining 30 markets, 23 rallied and seven retreated. As a result, the MSCI All-Country Index gained 0.2%. The daily Coppock Curve has a bullish bias for both the index and for 29 of the 35 markets. Overall, we believe this majority bullish momentum condition should remain in place into the middle of June.

Could Monday’s global rally be a sign of things to come for the S&P 500? We think it can. The daily Coppock Curve also has a bullish bias for the US Indexes. Moreover, the oscillator is at a level that is typically oversold enough to fuel a short term reversal. This, together with the fact that the CBOE 10-day put/call ratio is oversold even as we can count an ABC pattern from the May 1 high, suggests that the “500” is positioned for a relief rally. A rally through 1328.49 would bolster that expectation and suggest a Fibonacci retracement...
By Walter Murphy on 5/25/2012 1:35 PM
On Thursday, the S&P 500 posted its fourth consecutive gain with a rally of 0.1%. Advancing stocks exceeded losers by 4:3 while the up/down volume ratio was bullish by a more modest 8:7 margin. Turnover fell by 9.0% and new 52-week lows exceeded new highs for the ninth consecutive day. However, the daily Coppock Curve now has a bullish bias for a majority (21) of the 24 S&P industry groups and for 19 of the 30 DJIA stocks.

Globally, the MSCI All-Country Index rallied 0.4% as 24 of the 35 markets that we follow on a daily basis gained ground. However, the Coppock Curve has a bearish (yes. bearish) bias for 22 of the 35 markets.

Every Wednesday I review the daily point-and-figure charts of the Bullish Percentage Index (BPI) for each of the 10 S&P 500 economic sectors. The review determines if an individual BPI is in overbought or oversold territory and whether or not an individual chart is on a P&F “buy” or “sell.” From there I construct a composite “sector summation” chart that ranges between +10...
By Walter Murphy on 5/24/2012 5:44 AM
On Tuesday, the S&P 500 did something it hasn’t done since late April – it rallied for a second consecutive day. Unfortunately, the gain was marginal (0.05%) and declining stocks exceeded winners by 4:3. The up/down volume ratio was also bearish but by a much more modest 21:20 margin. Turnover increased by 9.0%. The daily Coppock Curve still has a bearish bias for a majority (17) of the 24 S&P industry groups and for 24 of the 30 DJIA stocks.

Globally, the MSCI All-Country Index rallied 0.7% as 30 of the 35 markets that we follow on a daily basis gained ground. However, the Coppock Curve has a bearish bias for 25 of the 35 markets.

On the S&P’s daily chart, yesterday’s action can easily be counted as a fourth wave rally within a larger five wave decline from the May 1 high. We are inclined to count this larger overall decline as a “C” wave from the early April high. If this count is correct, then the good news is that renewed weakness to below last Friday’s 1292 low would satisfy the minimum requirements...
By Walter Murphy on 5/21/2012 2:07 PM
“Plain English”

Stocks: Last week’s decline achieved our minimum objective of a 38.2% retracement of the October-April rally. Even so, still lower lows are likely in the weeks ahead. There are a number of reasons for that expectation.

The Rest of the World: The MSCI All Country Index is challenging a 61.8% retracement of the entire October-April rally. The fact that the decline easily sliced through the 38.2% and 50% retracement levels suggests that 61.8% support (296.93) will be breached. If so, we will need to be prepared for a full test of last year’s low.

Interest Rates: Both the weekly and monthly Coppock Curves for both 10- and 30-year yields are in a confirmed downtrend. This, plus the fact that the weekly oscillators in particular are still well above oversold levels, suggests that still lower yield lows are in the offing.

Commodities: Our sense is that a coming oil rally will be short-lived. Larger degree Coppock oscillators are weak and sentiment is complacent. The conditions...
By Walter Murphy on 5/19/2012 7:42 AM
On Thursday, the S&P 500 fell 1.5%. This was the ninth decline in May’s 13 sessions to date. Declining stocks exceeded winners by more than 15:2; the up/down volume ratio was bearish by a similar margin. Turnover increased by 9.0% to its highest level in over five weeks. The daily Coppock Curve has a bearish bias for 22 of the 24 S&P industry groups and for 28 of the 30 DJIA stocks.

Globally, the MSCI All-Country Index recorded its fifth straight decline (and 11th in 12 sessions) with a decline of 1.0%. The Coppock Curve has a bearish bias for every one of the 35 markets that we follow on a daily basis.

We regularly point out that once a trend is reversed, our minimum expectation is for a 38.2% retracement. Thus, when the S&P 500 declined through 1357 earlier this month, we made two points: 1) that violation locked in the October-April rally as a complete pattern and 2) the index was positioned for a 38.2% retracement of that rally to 1290. This, plus the fact that the decline was cutting through...
By Walter Murphy on 5/16/2012 3:59 PM
“Plain English”

Stocks: In addition to the relative proximity of S&P 500 support, the overall structure of the current decline is corrective, there are positive momentum divergences in the hourly charts, and the daily Coppock Curve is positioned to bottom within the next 5-7 days. All of this suggests that a bottoming process has begun.

The Rest of the World: The daily Coppock Curve for the MSCI All Country Index is already at its most oversold reading of the year. Along with this confirming “bad oversold” condition, the weekly oscillator is not likely to bottom for either the index or a majority of the 10-economic sectors much before mid year.

Interest Rates: Yields were engaged in a well-defined November-March trading range that provided the foundation for the surge to March’s rally high. Such a trading range typically provides support during a subsequent correction. In this case, however, the March-May decline has cut through support like the proverbial hot knife through butter.

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By Walter Murphy on 5/15/2012 4:27 PM
On Monday, the S&P 500 posted its fourth decline in five days with a loss of 1.1%, Declining stocks exceeded winners by more than 7:1 while the up/down volume ratio was bearish by a bit less than 7:1. The 5.0% decline in turnover marked the third distribution day of the month. The daily Coppock Curve has a bearish bias for 23 of the 24 S&P industry groups and for 27 of the 30 DJIA stocks.

Globally, the MSCI All-Country Index recorded its ninth loss in 11 sessions with a decline of 1.5%. The Coppock Curve has a bearish bias for 90% of the 35 markets that we follow on a daily basis.

The S&P 500 traded to as low as 1338 on Monday. Thus, the index is in the upper end of the 1340-1321 “intervening support” range that we mentioned in Sunday night’s comment. Moreover, there is currently an array of positive divergence in the hourly charts. It would seem, therefore, that the market is ready to rally. Indeed, we can make a case that the minimum requirements for a complete April-May ABC correction have been...
By Walter Murphy on 5/14/2012 1:13 PM
Last week, the S&P 500 lost 1.2%. Declining stocks exceeded winners by 3:2 while the up/down volume ratio was bearish by a similar margin. Turnover increased by 2.9%, making it the second consecutive distribution week. The weekly Coppock Curve has a bearish bias for 23 of the 24 S&P industry groups and for 25 of the 30 DJIA stocks.

Globally, the MSCI All-Country Index fell 2.1% last week. The Coppock Curve has a bearish bias for 36 of the 37 markets that we follow on a weekly basis.

We has previously pointed out that the 2nd, 3rd, and 4th weeks of May are an historically weak period. Last week’s decline fits that bill and weak momentum suggests that further May pressures are likely. Moreover, sentiment remains on the overbought side of neutral despite recent signs of improvement.

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By Walter Murphy on 5/11/2012 12:36 PM
On Thursday, the S&P 500 gained 0.3%. This was only the third time in nine sessions that the index was able to finish in the black. Advancing stocks exceeded losers by 5:3 while the up/down volume ratio was bullish by a bit more than 3:2. Turnover fell by 16% and moved back below its 21-day ma. The daily Coppock Curve has a bearish bias for all 24 S&P industry groups and for 27 of the 30 DJIA stocks.

Globally, the MSCI All-Country Index rallied 0.3%. The Coppock Curve has a bearish bias for 30 of the 35 markets that we follow on a daily basis.

At this juncture, all degrees of momentum trend (daily, weekly, monthly) are down, the 20-week cycle appears to have a bearish bias, and the attempted rally of recent days was both weak and structurally corrective. All of this suggests lower lows ahead.

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By Walter Murphy on 5/10/2012 6:15 AM
“Plain English”

Stocks: By January 2013 we likely will have seen a market low that marks the confluence of four cycles: 10-years, 40 months, 13 months, and 20(2) weeks. Thus, within a relatively few months, the US stock market could experience a low that might be as important as the 2002 and 2009 lows.

The Rest of the World: A survey of 35 country/regional ETFs revealed that 15 were at least 20% below their 52-week highs. Two markets – Italy and Spain – are below their respective 2009 lows while a third – France – is in relative hailing distance.

Yields: We doubt that the current decline will result in the final low of the post-1981 downtrend. The annual, quarterly, and monthly Coppock Curves all have a bearish bias. The annual oscillator may not bottom until the second half of the decade while the quarterly and monthly indicators are probing confirming secular momentum lows.

US Dollar: Given the dollar’s medium to longer term bullish underpinnings, any pressures will likely only be...
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