Market Pulse
Author: Created: 3/10/2010 11:54 AM
Market Pulse
By Walter Murphy on 7/30/2012 1:55 PM
“Plain English”

Stocks: While the expected trend change for the S&P seems to have occurred pretty much on schedule, the underpinnings of the trend change have been more difficult to grasp than has been the case for the other asset classes.

Interest Rates: Food commodities were weaker than they have been in some time. As a result, DBA (PowerShares DB Agriculture Fund) recorded its first decline in six weeks. This may be the start of a short term correction since near term momentum is deteriorating and the index appears to be at or near the end of a five wave rally.

Commodities: The weekly Coppock has a bullish bias for both the CCI and most of the 12 individual commodities that we regularly monitor. Moreover, the recent rally by the CCI was enough to reverse the decline from this past February’s high.

US Dollar: Last week the euro gained 1.3% versus the US dollar. We highlight this for two reasons. First it was the euro’s best performance in five month’s. Second, this rally could be...
By Walter Murphy on 7/27/2012 4:43 PM
On Thursday, the S&P 500 had its best day in almost two weeks with a rally of 1.6%. In the process, the index broke a four-day losing streak. Advancing stocks exceeded losers by 10:3 while the up/down volume ratio was bullish by a slightly more robust margin. Turnover increased by 20%. The daily Coppock Curve still has a bearish bias for 14 of the 24 S&P industry groups. However, the oscillator has a bullish bias for 18 of the 30 DJIA stocks.

The MSCI All-Country Index had its best day since late June with a rally of 2.1%. The Coppock Curve has a bearish bias for 25 of the 35 non-US markets that we follow on a daily basis.

If nothing else, the action of the past several days has confirmed the importance of support for the S&P at 1325. The just-completed four-day decline tested 1325 (coming as close as 1329), but was not able to violate the benchmark. As a result, the series of higher lows since the early June reversal remains intact.

The same cannot be said of momentum. The daily Coppock Curve...
By Walter Murphy on 7/26/2012 1:12 PM
On Wednesday, the S&P 500 recorded a miniscule loss of 0.03%. Nonetheless, that was enough to run the current losing streak to four. While advancing stocks exceeded losers by 11:10, the up/down volume ratio was bearish by a small margin. Turnover fell by 4%. The daily Coppock Curve has a bearish bias for 22 of the 24 S&P industry groups and for 22 of the 30 DJIA stocks.

The MSCI All-Country Index also suffered its fourth straight loss with a decline of 0.1%. The Coppock Curve has a bearish bias for 34 of the 35 non-US markets that we follow on a daily basis.

The NYSE daily cumulative advance-decline line is in danger of breaking down. Such a reversal would nomincall complete a five wave rally from last October’s low.

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By Walter Murphy on 7/25/2012 4:01 PM
On Tuesday, the S&P 500 suffered its third straight decline with a loss of 0.90%. This was also the third day in a row that the index lost at least 0.89% (that last happened in January 2010 as a kickoff to a three-week correction). Declining stocks exceeded winners by a bit less than 5:1 while the up/down volume ratio was bearish by a more modest 14:4 margin. Turnover increased by 7%. The daily Coppock Curve has a bearish bias for 23 of the 24 S&P industry groups and for 24 of the 30 DJIA stocks.

The MSCI All-Country Index also suffered its third straight loss with a decline of 0.7%. The Coppock Curve has a bearish bias for 33 of the 35 non-US markets that we follow on a daily basis.

The weight of the evidence suggests that the S&P has begun a potentially important post-April “C” wave decline. All of the uptrend lines from the early June “B” wave low have been breached and it is fairly easy to count the decline from Thursday’s high as an impulse wave. These developments are also a good indication...
By Walter Murphy on 7/24/2012 3:47 PM
Stocks: We can make the case that the weekly oscillator has bottomed for nine of the 10 S&P economic sectors. At the same time, the daily indicator currently has a bearish bias for both the index and a majority of the sectors. Thus, the next short term low will put the S&P in position to benefit from constructive near and medium term underpinnings.

The Rest of the World: The weekly momentum oscillator has bottomed for both the MSCI All Country Index and a majority of the individual markets. Any weakness in the days ahead should be reasonably well contained.

Interest Rates: The potential is that a breakdown from the current continuation pattern will prove to be the final leg of the larger 31-month downtrend. If so, then a subsequent rally in yields should have a Fibonacci relationship to that entire cyclical downtrend.

Commodities: Our proprietary sentiment index for a group composed of corn, soybeans, and wheat is at an overbought extreme. We view this as a confirming, “good overbought” reading.

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By Walter Murphy on 7/19/2012 1:56 PM
On Wednesday, the S&P 500 recorded its third gain in four days with a rally of 0.7%. Advancing stocks exceeded losers by 7:4 while the up/down volume ratio was bullish by a more modest 7:5 margin. Turnover was little changed but is slightly above its 21 dma. The daily Coppock Curve has a bullish bias for 17 of the 24 S&P industry groups and for 20 of the 30 DJIA stocks.

The MSCI All-Country Index also recorded its third gain in four days with a rally of 0.7%. However, unlike the US indexes, the underpinnings are weak as the daily Coppock Curve has a bearish bias for 30 of the 35 markets that we follow on a daily basis.

We have consistently (and persistently) made the case that new highs in the cumulative advance-decline line is a good thing. Such a move typically means that a major top is unlikely. In that regard, the recent all time high by the NYSE all-issue line is a plus.

Similarly, the McClellan Summation Index has recently given...
By Walter Murphy on 7/17/2012 3:41 PM
“Plain English”

Stocks: Our preferred count is that the rally beginning at last October’s low is the equivalent of a “C” wave from the 2009 low. In that context, April’s peak completed a lower degree “A” wave. Thus, we still need a lower degree “C” in order to complete the post-October pattern and, in turn, the cyclical bull market from the 2009 low.

The Rest of the World: Near term momentum for the All Country index is weak and appears to be positioned to remain under pressure for at least another week (arguably 7-9 days). We have been regularly making the case that the next short term low will have bullish intermediate implications; that convergence is close at hand.

Interest Rates: Yields are approaching a potentially important reversal.

Commodities: Last week may have been a confirmation that the cyclical downtrend from the April 2011 high is ending as every one of the 12 commodities that we most regularly monitor rallied. We had to go back to late 2010 to find a similarly broad-based...
By Walter Murphy on 7/12/2012 7:52 PM
On Wednesday, the S&P 500 fell 0.02 points (less than 0.01%). Nonetheless, that was enough to lock in a fifth straight decline. Declining stocks edged out winners by 26 issues, but the up/down volume ratio was bullish by an 11:10 margin. Turnover fell by 1.0%. The daily Coppock Curve has a bearish bias for 16 of the 24 S&P industry groups and for 23 of the 30 DJIA stocks.

The MSCI All-Country Index suffered its sixth straight loss with a decline of 0.02%. The Coppock Curve has a bearish bias for 20 of the 35 non-US markets that we follow on a daily basis.

Snapshot: The daily, weekly, monthly, and annual Coppock Curves for the S&P 500 all currently have a bearish bias. Put another way, the short, medium, cyclical, and secular momentum trends are all down.

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By Walter Murphy on 7/11/2012 3:18 PM
On Tuesday, the S&P 500 fell 0.8%. This was the index’s fourth straight loss, which was its longest losing streak since April’s five-day skid. Declining stocks exceeded winners by more than 3:1 while the up/down volume ratio was bearish by a more robust 14:3 margin. The day’s distribution credentials were confirmed by a 23% increase in turnover to its highest level in six days. The daily Coppock Curve has a bearish bias for 20 of the 24 S&P industry groups and for 24 of the 30 DJIA stocks.

The MSCI All-Country Index suffered its fifth straight loss with a decline of 0.4%. The Coppock Curve has a bearish bias for 23 of the 35 non-US markets that we follow on a daily basis.

Our on-going short term count has been that the April-June was the first leg of a larger ABC correction. The more immediate question is whether the June-July “B” wave rally is complete or still has more life left in it. From an Elliott Wave perspective, the rally from the late June low can be counted as a five-wave sequence, suggesting...
By Walter Murphy on 7/10/2012 8:30 PM
On Monday, the S&P 500 fell for the third straight day with a loss of 0.2%. This is the longest losing streak since late May/early June. Declining stocks exceeded winners by 9:5 while the up/down volume ratio was bearish by a more robust 11:5 margin. Turnover increased only slightly from the prior week’s paltry holiday levels. The daily Coppock Curve has a bearish bias for 14 of the 24 S&P industry groups and for 19 of the 30 DJIA stocks.

The MSCI All-Country Index suffered its fourth straight loss with a decline of 0.5%. The Coppock Curve has a bearish bias for 30 of the 35 non-US markets that we follow on a daily basis.

As the above numbers suggest, global markets are under pressure. As a group, they are on their longest losing streak in weeks and momentum is broadly weak. However, we continue to believe that this weakness is something of a short term event. While we believe that the post-April correction may still have some life left in it, it seems that a coming short term low should have more...
Market Pulse
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