Market Pulse
Author: Created: 3/10/2010 11:54 AM
Market Pulse
By Walter Murphy on 2/27/2013 9:41 AM
“Plain English”

US Equities: Monday’s break of 1495 raises the prospect that we should apply Fibonacci retracements to the entire November-February rally. That would indicate further weakness to at least 1459, which – in turn – would be a penetration of October’s peak. Such a penetration would be yet another overlap in the 2011-2013 uptrend – which has been characterized by overlapping corrections. Overlaps are characteristic of a counter-trend pattern.

Global Equities: There are some short term divergences associated with the rally by Japan’s Nikkei and the index has gained 30% since October, which is overbought by any measure. So, a pullback is likely at any time. Such a pullback will probably be an interruption of, but not an ending to, the rally.

Interest Rates: A yield decline in coming weeks will likely be a short-to-medium term counter-trend event within the larger primary trend.

Commodities: The CCI’s weekly Coppock Curve has been under pressure in recent weeks, but we believe...
By Walter Murphy on 2/21/2013 4:26 PM
On Wednesday, the S&P 500 fell 1.2%, which was its largest decline in more than three months. Declining stocks exceeded winners by more than 7:1, while the up/down volume ratio was bearish by an even more robust 10:1 margin. Turnover increased by more than 12% and came within a hair’s breadth of the highest level of the year. The daily Coppock Curve has a bearish bias for 17 of the 24 S&P industry groups and for 21 of the 30 DJIA stocks.

Gold fell 1.2% on Wednesday. Over the past nine days the metal has declined by 5.1%. By that measure, this is the steepest decline since May. More importantly, the decline violated 1645, which – as noted in the recent STR – was an important breakdown point.

That said, more significant support exists at 1540-1531. A decisive break of that range would be the first time since the 1999 secular low that gold broke the prior year’s low. Such a breach will complete the minimum requirements for a complete pattern from that 1999 low. Put another way, a decisive break of 1531...
By Walter Murphy on 2/20/2013 3:31 PM
On Tuesday, the S&P 500 had its best gain in nine days with a rally of 0.7%. Advancing stocks exceeded losers by 13:5 while the up/down volume ratio was bullish by a more modest 2:1 margin. Turnover was little changed from Friday’s level. The daily Coppock Curve still has a bearish bias for 13 of the 24 S&P industry groups and for 20 of the 30 DJIA stocks.

The MSCI World (ex US) Index gained 0.9%. The daily Coppock Curve now has a bullish bias for 21 of the 35 non-US markets in our regular survey.

Tuesday’s rally may have given us some clarity. The rally to new recovery highs was confirmed by similar new highs in the daily cumulative advance-decline line. Moreover, we can count the rally from Friday’s low as the third wave from the February 4 low.

If this count is correct, it increases the probability that 1) the February 4 low was a trading cycle low and 2) that 1551 will be violated.

In our recent STR, we noted that there has only been one trading cycle since the 2009 low that was...
By Walter Murphy on 2/19/2013 9:48 AM
“Plain English”

US Equities: A decline back below 1495 would do much to lock in the rally from the November low as a complete pattern and indicate a peak in the 20-week cycle.

Global Equities: The MSCI World (ex US) Index has been out-performing the MSCI Emerging Markets Index for a year. However, the relative weekly Coppock oscillator is likely to take on a bearish bias by mid-to-late March. This suggests that, as global markets move into position for an intermediate correction, the larger developed markets may underperform emerging markets.

Interest Rates: Sentiment is near overbought levels and the weekly Coppock oscillator is positioned to take on a bearish bias over the course of the next 4-5 weeks. This combination suggests that yields are at risk of an intermediate top. The resulting correction could prove to be a substantial retracement of the entire post-July uptrend.

Commodities: Without a doubt, most of the commodity attention last week was on gold’s breakdown. This necessitates...
By Walter Murphy on 2/14/2013 4:27 PM
On Wednesday, the S&P 500 eked out a 0.06% gain. Advancing stocks exceeded losers by 3:2 but the up/down volume ratio was bearish by a small margin. Turnover was virtually unchanged from Tuesday’s level. The daily Coppock Curve has a bearish bias for 19 of the 24 S&P industry groups and for 22 of the 30 DJIA stocks.

The MSCI World (ex US) Index fell by less than 0.1%. The daily Coppock Curve has a bearish bias for 22 of the 35 non-US markets in our regular survey.

There is an old saying that traders should not short a dull market. This comes to mind because the S&P has recently been in a tight trading range. Indeed, within the past week, the spread between the five-day high and the five day low was at its narrowest level since last April (based on hourly closing data). This prompted us to review the past few years (back to the 2009 low) to discover how many other times the five-day range was less than one point.

We found that, prior to the past week, there were 14 such occurrences. Ten of...
By Walter Murphy on 2/13/2013 4:09 PM
On Tuesday, the S&P 500 gained 0.2%. Advancing stocks exceeded losers by 2:1; the up/down volume ratio was also bullish by a similar margin. Turnover increased by 27% over Monday’s ytd low. The daily Coppock Curve has a bearish bias for 17 of the 24 S&P industry groups and for 18 of the 30 DJIA stocks.

The MSCI World (ex US) Index rallied 1.1%, which was its best performance since the first day of the year. Nonetheless, the daily Coppock Curve has a bearish bias for 24 of the 35 non-US markets in our regular survey.

Both the S&P 500 and DJIA (though not the NASDAQ) recorded yet another new post-2009 recovery high on Tuesday. These highs have been confirmed by the NYSE daily cumulative advance-decline line. Such a confirmation usually means that a major bear market decline is still some way off.

However, such a confirmation does not rule the potential for an important correction. Indeed, there are a significant number of bearish divergences and these divergences suggest that the uptrend from...
By Walter Murphy on 2/11/2013 3:59 PM
“Plain English”

US Equities: Last week the S&P 500 posted its sixth straight weekly gain (and 11th in the past 12 weeks) with a rally of 0.3%. The weekly Coppock Curve has a bullish bias that is positioned to continue for the next 4-7 weeks.

Global Equities: The weekly Coppock Curve has a bullish bias for 21 of the 37 markets in our regular survey. This is the lowest margin since December. This relative deterioration helps confirm our observation in previous comments that the majority bullish condition will continue only into late February or early March.

Interest Rates: While last week’s yield decline was the largest since November, the week as a whole was an “inside” week. Inside weeks occur when the week records both a lower high and a higher low than those seen during the prior week. Such a development is often a sign of indecision.

Commodities: The PowerShares DB Agriculture Fund (DBA) was a casualty of last week’s broad-based commodity decline. The fund broke chart and Fibonacci...
By Walter Murphy on 2/7/2013 3:46 PM
On Wednesday, the S&P 500 rallied by less than 0.1%. Despite this miniscule gain, advancing stocks exceeded winners by a solid 5:3 ratio and the up/down volume ratio was bullish by a similar margin. Turnover was little changed. The daily Coppock Curve has a bearish bias for 18 of the 24 S&P industry groups and for 20 of the 30 DJIA stocks.

The MSCI World (ex US) Index rallied 0.4% on Wednesday. The daily Coppock Curve has a bearish bias for 24 of the 35 non-US markets in our regular survey.

In recent days, we have heard the opinion expressed that “this market just does not want to go down” on a number of occasions. Therein lies the rub. That opinion is reflected in what is now an excessively optimistic sentiment background. We discussed those sentiment excesses in our recent monthly.

More importantly, that exuberant opinion no doubt is the result of the market’s recent unsustainable performance. For example, if January’s gain is annualized, the S&P will effectively double this year, which...
By Walter Murphy on 2/5/2013 4:33 PM
“Plain English”

US Equities: The next weekly (intermediate degree) Coppock Curve peak should be followed reasonably closely with a bearish monthly (primary degree) reversal. Then, the primary reversal should be followed fairly closely by a larger degree bearish reversal by the quarterly (cycle degree) oscillator.

The Rest of the World: Over the past 12 month’s Japan’s Nikkei has had the best performance among the 20 non-US developed markets in our universe. The index has rallied through all the resistance trend lines from the 2007 high and is on the verge of breaking out through its post-2010 trading range/base.

Yields: January’s yield rally extended the uptrend from July’s low, completed a base, and broke through the dominant downtrend lines from the early 2011 high. This performance, together with constructive weekly and monthly Coppock Curves, implies higher yield highs in the weeks and months ahead.

US Dollar: The dollar index has been in a secular decline since 2001. However, our...
By Walter Murphy on 1/31/2013 3:46 PM
On Wednesday, the S&P 500 recorded its 2nd decline in 11 days with a loss of 0.4%. Declining stocks exceeded winners by 11:4 while the up/down volume ratio was bearish by a bit less than 2:1. Turnover fell 5%. The daily Coppock Curve has a bearish bias for 18 of the 24 S&P industry groups for 17 of the 30 DJIA stocks.

The MSCI World (ex US) Index posted its 4th gain in five days with a rally of 0.2%. The daily Coppock Curve has a bullish bias for 20 of the 35 non-US markets in our regular survey.

Both the US long bond – and the iShares Barclays 20+ Year Treasury Bond ETF – have broken down from a top formation that arguably goes back to last May. Not surprisingly, both 10- and 30-year yields have broken out to multi-month highs. All of this supports our count that yields are in the relatively early stages of at least a cyclical uptrend.

At this writing, the daily, weekly, and monthly Coppock all have a bearish bias for TLT and a bullish bias for 10- and 30-year yields. Moreover, sentiment...
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