Market Pulse
Author: Created: 3/10/2010 11:54 AM
Market Pulse
By Walter Murphy on 6/28/2012 1:23 PM
On Wednesday, the S&P 500 rallied 0.9%. This was its second straight gain, and its third in the past four days. Advancing stocks exceeded losers by 4:1; the up/down volume ratio was bullish by a similar margin. Turnover fell by 4%. The daily Coppock Curve has a bearish bias for 21 of the 24 S&P industry groups and for 25 of the 30 DJIA stocks.

The MSCI All-Country Index also rallied 0.9%. The Coppock Curve has a bearish bias for 22 of the 35 non-US markets that we follow on a daily basis.

We have been making the case that the next short term low will likely have bullish intermediate implications. That remains a valid scenario as the currently weak daily and weekly Coppock Curves are both positioned for a July bottom. This projected momentum low should also coincide with a 20-week cycle low. Thus, the prospects for a decent summer rally are good.

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By Walter Murphy on 6/27/2012 2:54 PM
The Case-Shiller Home Price Indexes for April were released earlier today. The 20-city index gained 1.0%, which was its best performance in 10 months. Internally, 19 of the 20 cities posted a monthly gain; Detroit was the exception.

As a result, the Coppock Curve posted its first meaningful uptick since September 2010. While the oscillator is still below its five-month exponential average, its uptick suggests stable to higher prices in the months ahead.

I also took a stab at combining the efforts of professors Case and Shiller with the work of Ralph Nelson Elliott. The result is the nearby chart. This count suggests that the secular downtrend is still in force and that the low in 2009 was only an “A” wave within a larger ABC decline. Accordingly, the volatility since 2009 is an apparently incomplete “B” wave. Once the “B” wave is complete, a “C” decline to new lows will be anticipated.

On a log scale chart, the decline from the 2006 secular peak has yet to retrace 38.2% of the 1987-2006 uptrend....
By Walter Murphy on 6/27/2012 2:50 PM
“Plain English”

Stocks: In recent comments we have highlighted our belief that various asset classes are positioned for an intermediate-to-cyclical trend change during the summer months. With regard to the stock indexes, our focus has been on July. It still is.

The Rest of the World: A review of 35 Dow Jones country and regional indexes reveals that nine different countries are at least 20% below their respective 52-week highs. Seven of those are in Europe; the other two are China and Hong Kong. That said, we think that China will participate in an anticipated global intermediate rally.

Interest Rates: Both the weekly and monthly Coppock Curves for 10-year yields are bottoming. Therefore, it is not a stretch to suggest that yields are on the cusp of reversing their cyclical downtrend into a new cyclical uptrend. Inter-market analysis suggests that such a reversal will coincide with potentially important rallies for stocks.

Commodities: Commodities have been in a cyclical downtrend since...
By Walter Murphy on 6/22/2012 12:41 PM
On Thursday, the S&P 500 fell 2.2%. Declining stocks overwhelmed winners by more that 17:1 while the up/down volume ratio was bearish by a slightly more modest 13:1 margin. This resulted in the third 90% down day of the month that, when combined with a 7% increase in turnover, generated only the third distribution day of the month. Meanwhile, the daily Coppock Curve still has a bullish bias for 16 of the 24 S&P industry groups and for 23 of the 30 DJIA stocks.

The MSCI All-Country Index fell 1.8%, breaking a five-day winning streak. The Coppock Curve has a bullish bias for 32 of the 35 markets that we follow on a daily basis.

In addition to the S&P’s decisive reversal, WTI crude oil fell 4.8%. This was the biggest decline of the year and carried oil to levels not seen since October. As indicated in yesterday’s comment, it is now important for the “500” to hold 1307-1306 in order to avoid a more serious decline toward the June 1 low (1267). With that in mind, lower lows are likely in the weeks ahead....
By Walter Murphy on 6/21/2012 3:33 PM
On Wednesday, the S&P 500 broke a four session winning streak with a loss of 0.2%. Declining stocks exceeded winners by 4:3. However, the up/down volume ratio was bullish by a small margin and turnover fell by 3%. Thus, volume figures did not confirm the “red numbers” shown in the major indexes. The daily Coppock Curve still has a bullish bias for 22 of the 24 S&P industry groups and for 26 of the 30 DJIA stocks.

Meanwhile, the MSCI All-Country Index posted its fifth straight gain with a rally of rallied by 1.2%. The Coppock Curve has a bullish bias for all 35 markets that we follow on a daily basis.

The above statistics suggest that June’s rally may still have some life. In that vein, we note with more than passing interest that, while the S&P 500 has rallied nicely since June 4, WTI crude arrested its multi-week downtrend on that same day and has been in a tight range since then. We view this behavior as important given that we have regularly made the case that oil and stocks have a fairly high...
By Walter Murphy on 6/20/2012 2:27 PM
On Tuesday, the S&P 500 posted its fourth consecutive gain with a rally of 1.0%. Advancing stocks exceeded losers by almost 7:1 while the up/down volume ratio was bullish by a more modest 5:1 margin. Turnover increased by 18%, confirming the day’s constructive underpinnings. The daily Coppock Curve has a bullish bias for every one of the 24 S&P industry groups and for 28 of the 30 DJIA stocks.

Globally, the MSCI All-Country Index rallied by 1.2%. The Coppock Curve has a bullish bias for all 35 markets that we follow on a daily basis.

Wednesday should be an interesting day. For most observers, the focus will be on the Fed. We have a slightly different take. In our recent STR, we presented two scenarios that would set the S&P up for a July/August low. One suggested a simple ABC counter trend rally from the June 1 low; the other allowed for a five-wave rally. At this juncture, it is quite easy to count a five-wave June 4-7 rally followed by a second five-wave June 11-19 rally. Thus, the minimum requirements...
By Walter Murphy on 6/18/2012 12:04 PM
“Plain English”

Stocks: Intermediate trend changes for yields, oil, and the dollar are anticipated in July. And so it is with stocks. The weekly Coppock Curve is positioned to bottom by late July (and arguably sooner) for the S&P 500, 400, and 600 indexes. Moreover, the 20-week cycle is also scheduled to bottom in that same timeframe.

The Rest of the World: Beginning in late June or early July, both near and medium term trends for the MSCI All Country Index are likely to be under pressure. This implies a continuation or extension of the post-March downtrend. However, the next short term low is likely to also have bullish intermediate implications.

Interest Rates: The current downtrend in yields has likely entered its latter stages. The weekly Coppock is positioned to bottom within the next 5-7 weeks while the monthly guide is likely to bottom in the July-August timeframe. This potential for an important July-August low is bolstered by sentiment and cycles.

Commodities: We can make a...
By Walter Murphy on 6/15/2012 12:47 PM
For the past seven sessions, the S&P 500 has been alternating down days with up days. Thursday was the turn for an up day and the index gained 1.1%. Advancing stocks exceeded losers by better than 7:2; the up/down volume ratio was bullish by a similar margin. Turnover increased by 9.0, confirming the day’s constructive underpinnings. The daily Coppock Curve has a bullish bias for 21 of the 24 S&P industry groups and for 28 of the 30 DJIA stocks.

Globally, the MSCI All-Country Index rallied by 0.4%. The Coppock Curve has a bullish bias for 26 of the 35 markets that we follow on a daily basis.

There is a case to be made that the dollar index is closing in on at least an intermediate top. There are several reasons why we are on alert. We have repeatedly made the case that the January-May consolidation was a triangle. Triangles are continuation patterns, but they also occur in the penultimate position within a larger trend. This means in this case that the breakout rally from the triangle is a final,...
By Walter Murphy on 6/13/2012 7:29 PM
On Tuesday, the S&P 500 gained 1.1%. Advancing stocks exceeded losers by 11:2 while the up/down volume ratio was bullish by a more robust 6:1 margin. Turnover was essentially unchanged. The daily Coppock Curve still has a bullish bias for 20 of the 24 S&P industry groups and for 27 of the 30 DJIA stocks.

Globally, the MSCI All-Country Index rallied by 0.6%. The Coppock Curve has a bullish bias for 31 of the 35 markets that we follow on a daily basis.

For the first hour or so of trading on Tuesday, the “500” held its own in positive territory. However, this firmness gave way to a bout of weakness that resulted in a slight undercut of Monday’s low. From there, the index went on offense and closed at the highs of the day. There is a case to be made that the undercut low was a successful test that completed a base. This could, therefore, be a launching pad in preparation for a second rally leg within an unfolding short term rally trend from the early June low.

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By Walter Murphy on 6/12/2012 3:22 PM
On Monday, the S&P 500 fell 1.3%. Declining stocks overwhelmed winners by 9:1 while the up/down volume ratio was bearish by an even more robust 11:1 margin. This resulted in the third 90% down day in the past nine sessions. Moreover, a slight increase in turnover confirmed another distribution day. However, the daily Coppock Curve still has a bullish bias for 20 of the 24 S&P industry groups and for 24 of the 30 DJIA stocks.

Globally, the MSCI All-Country Index fell 0.2%.

In yesterday’s blog, we suggested that an S&P rally through 1329 and especially through 1335 would mean that the June 4-7 rally could be counted as the first leg of a larger uptrend. As it happened, the index rallied through 1335 in the first minute of trading and then spent the rest of the day in full retreat. Nonetheless, that minute of strength was enough to effectively lock in the entire downtrend from the April 2 high as a complete pattern. A similar observation can be made with regard to the DJIA’s decline from its May high.

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