Market Pulse
Author: Created: 3/10/2010 11:54 AM
Market Pulse
By Walter Murphy on 4/28/2014 4:56 PM
US Equities: Although the daily chart suggests that it is possible to count the S&P’s February-April rally as a trending impulse wave, its weekly chart indicates that a counter-trend pattern is the better interpretation. The DJIA supports this view; its February-April rally is corrective in both the daily and weekly charts. This is important, because April’s decline locked in the February-April rally as a complete pattern for both indexes.

Global Equities: The Dow Jones Global (ex US) Index’s June-October rally can easily be counted as a five-wave pattern, but the current uptrend from February’s low cannot be. This suggests that recent strength is a “C”-wave in the form of a bearish wedge (i.e., a diagonal triangle).

Interest Rates: The weekly Coppock Curve has bottomed for 10-year yields and is bottoming for a majority of the components in our six-country 10-year global index. This combination suggests that any breakdown in US 10-year yields in the weeks immediately ahead will not be decisive. In...
By Walter Murphy on 4/25/2014 3:44 PM
On Thursday, the S&P 500 recorded its seventh gain in eight days with a rally of 0.2%. However, declining stocks exceeded winners by 9:8; the up/down volume ratio was also bearish by a small margin. Meanwhile, the daily Coppock Curve has a bullish bias for 19 of the 24 S&P industry groups and for 18 of 30 DJIA stocks.

Globally, the Dow Jones Global (ex US) Index rallied by less than 0.1%. Internally, 17 of the 34 open markets in our 35-market non-US universe were higher and 17 retreated. The daily Coppock Curve has a bearish bias for 18 of the 35 markets.

There are trading ranges to the right of us and trading rangers to the left of us. The S&P 500 has spent most of its time since late February contained in an 1840-1890 range. Ten-year yields have been in a 2.58%-2.82% range since early February. The US dollar index has spent most of its time since October trading between 79.60 and 81.50. And gold may be engaged in its fourth round trip between 1210 and 1383 since mid-2013.

By definition,...
By Walter Murphy on 4/23/2014 4:26 PM
“Plain English”

US Equities: Since November 2012, the three most oversold daily Coppock Curve readings occurred in June 2013, August 2013, and February 2014. Of those, the S&P’s June 2013 and February 2014 lows were each a lower low and locked in the preceding rally as a complete pattern. It makes sense, therefore, that each of those two lows represented a 20-week cycle bottom. Based on this, the next 20-week low may not occur before July, which would put the cycle in harmony with the expected momentum pressures beginning in May.

Global Equities: If our expectation that momentum pressures will build in coming weeks comes about, we should see more markets experience 10% and 20% declines from the respective 52-week highs. By definition, few if any will be able to record new highs.

Interest Rates: Since 30-year yields have been in a downtrend since at least early March – and arguably since late December – it is entirely possible that a coming yield rally will be enough to allow 10-year yields...
By Walter Murphy on 4/16/2014 8:39 AM
“Plain English”

US Equities: Despite the palpable technical deterioration, a review of the 1%x3 point-and-figure charts for the S&P’s 10 economic sectors revealed that seven – including the two largest – are still on a P&F buy signal and all 10 are still above their long-term P&F support trend lines. This is a reflection of the rotational nature of the recent decline. However, we anticipate that, once the post-2009 wave-6 pullback takes hold, more notable sector/stock deterioration will become evident.

Global Equities: Our global cumulative daily advance-decline line reached an all-time high earlier this month but has been under some pressure in recent days. Not surprisingly, the a-d line’s weekly Coppock oscillator is similar to that of the Dow Jones global index. This combination suggest that a coming intermediate correction will be a broad-based global event.

Interest Rates: Given the longevity of the current trading range for 10-year yield, a breach in either direction will be viewed as...
By Walter Murphy on 4/15/2014 2:39 PM
On Thursday, the S&P 500 fell 2.1%. This was its largest decline since the February 3 low and the third biggest set-back of the year. Declining stocks overwhelmed winners by better than 11:1 while the up/down volume ratio was negative by a more modest 15:2 margin. Turnover increased by 13%. The daily Coppock Curve has a bearish bias for 21 of the 24 S&P industry groups and for 24 of 30 DJIA stocks.

The “500” violated 1834 during the course of Thursday’s decline. As noted in Monday’s comment, such a break means that we can now count the uptrend from February’s low as a complete pattern. More importantly, a complete post-February structure will be best viewed as a corrective/counter-trend pattern.

The last point is important for several reasons. The rally of the past two months can be counted as the fifth and final wave from the October 2011 low. However, since it is a corrective structure, it should be counted as an Elliott Wave diagonal triangle. Diagonals are a sign of weakness and are often fully...
By Walter Murphy on 4/2/2014 9:31 AM
“Plain English”

US Equities: Seasonal, cycle, momentum, and sentiment conditions suggest that the market is increasingly at risk of an important correction and that any strength in April (and perhaps into May) could be short-lived. That said, March closed with the NYSE all-issue and S&P cumulative daily advance-decline lines at all-time highs. As long as breadth confirms the market’s underlying uptrend, the potential for a major correction is low.

The Rest of the World: In the US, we regularly note that, as long as breadth confirms an uptrend, the market is usually not at risk of a significant decline. This is also often true globally but, over the years, we have found that a 26-week change in breadth is often more telling. Thus, the current rate-of-change divergence is worrisome.

Yields: The February-March range can be viewed as either a continuation pattern within a larger downtrend or as a potential base in preparation for a near-to-intermediate rally. A bottoming weekly Coppock Curve and...
By Walter Murphy on 3/28/2014 4:34 PM
On Thursday, the S&P 500 fell 0.2% while the DJIA’s loss was shy of 0.1%. However, both the advance/decline and up/down volume ratios were modestly positive. Turnover increased by 7%. The daily Coppock Curve has a bearish bias for 19 of the 24 S&P industry groups but has a bullish bias for 17 of 30 DJIA stocks.

The Dow Jones Global (ex US) Index rallied for the third straight day with a gain of 0.1%. However, 19 of the 35 non-US markets that we most regularly monitor were lower for the day. The daily Coppock Curve has a bullish bias for 28 of the 35 markets.

Over the past nine days, gold has declined by 6.1% and indications are that further weakness is likely. The sell-off has reversed the December-March uptrend and has done so on five waves. Near term momentum is deteriorating and the weekly oscillator is peaking. Sentiment is overbought.

By contrast, the monthly Coppock indicator is improving and remains positioned to continue its bullish bias for the balance of the year. Moreover, the...
By Walter Murphy on 3/28/2014 4:32 PM
On Wednesday, the S&P 500 fell 0.7% and the DJIA lost 0.7%. Declining stocks exceeded winners by better than 4:1 while the up/down volume ratio was bearish by a more modest 7:2 margin. Turnover increased by 9%. The daily Coppock Curve has a bearish bias for 19 of the 24 S&P industry groups but has a bullish bias for 17 of 30 DJIA stocks.

Globally, the Dow Jones Global (ex US) Index rallied 0.8%. Internally, 28 of the 35 non-US markets that we most regularly monitor were higher. The daily Coppock Curve has a bullish bias for 24 of the 35 markets.

Today’s S&P weakness relative to global markets could be a sign of things still to come, at least on a short term basis. The S&P peaked relative to the Dow Jones World index late last week. In recent days, the index has broken the short term uptrend from February’s low and appears to be on the verge of violating the post-October uptrend.

As mentioned, the daily Coppock Curves have a bearish bias for a majority of the S&P’s groups and a bullish bias...
By Walter Murphy on 3/20/2014 5:53 PM
On Wednesday, the S&P 500 fell 0.6% and the DJIA declined by 0.7%. Internally, declining stocks edged winners by 7:2 while the up/down volume ratio was bearish by less than 5:2. Turnover increased by 12%. The daily Coppock Curve has a bearish bias for 21 of the 24 S&P industry groups and for 24 of 30 DJIA stocks.

Globally, the Dow Jones Global (ex US) Index declined by 0.2%. Internally, 23 of the 35 non-US markets that we most regularly monitor were lower. The daily Coppock Curve has a bearish bias for 25 of the 35 markets.

The S&P 500 fell almost 13 points in the final two hours of trading today. As it happens, this was the sharpest two-hour decline since the recent February 3 low. We mention this because most of the headlines attribute today’s market weakness to the Fed’s statement. This brings to the fore one of our favorite maxims – if it’s obvious, it’s obviously wrong.

With that in mind, it is very easy to count five waves up from last Friday’s low into this morning’s high on the S&P’s...
By Walter Murphy on 3/19/2014 8:00 AM
“Plain English”

US Equities: The S&P’s 1738 February low is just above a 1687-1730 band of potential support created by the successive May, August, and September peaks. This range is a classic example of previous resistance becoming new support. In turn, this band implies that, even if February’s low is breached, it should not be the prelude to downside acceleration.

Global Equities: Most of last week’s focus was on Russia, Ukraine and – to a lesser degree – Germany. It appears that the Ukrainian Equities Index was attempting to breakout from a base prior to the recent turmoil. Germany’s DAX appears to be on the verge of reversing its rally from at least last April and possibly from September 2011. Russia’s RTSI has broken down through its post-2011 trading range and appears to be at risk of testing its 2009 low.

Interest Rates: The weekly and monthly Coppock Curves for 10-year yields are under pressure and sentiment is still working off its early 2014 overbought condition. This combination...
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