Market Pulse
Author: Created: 3/10/2010 11:54 AM
Market Pulse
By Walter Murphy on 10/29/2014 6:15 AM
On Tuesday the NASDAQ rallied 1.8% the S&P 500 gained 1.2%, and the DJIA increased by 1.1%. NYSE advancing stocks exceeded losers by better than 10:1 while the up/down volume ratio was bullish by a much more modest 5:1 margin. The daily Coppock Curve has a bullish bias for all of the S&P’s 24 industry groups, for 27 of 30 DJIA stocks, and for 97 of the stocks in the NASDAQ 100.

As noted above, momentum is solidly positive for a majority of the groups/indexes within the major indexes. Moreover, by some measures, breadth is stronger than at any time since February’s breakaway rally. This is typically not the stuff of a counter-trend “B”-wave rally. Moreover, the rally through 1981 appears to be enough of a breakout to suggest that the “500” is positioned for a challenge of September’s 2019 high.

We have previously made the case that the September-October decline was enough to qualify as our anticipated post-2009 wave-six correction. Our sense was that such a correction should be one of the most important...
By Walter Murphy on 10/28/2014 10:03 AM
“Plain English”

US Equities: The current (b-wave) rally likely has further to run. We expect this wave to be a lower degree ABC structure. So far, it is likely still in the lower degree “A”-wave. In addition, breadth has been strong; the NYSE composite daily cumulative a-d line is on the verge of a Zweig “breadth thrust.” Such thrusts are typically followed by higher highs.

Global Equities: The recovery rally for the Dow Jones Global (ex US) World Index has been paltry compared to that for the S&P 500. While the S&P has retraced almost 73% of its September-October decline, the global index has recovered less than one-third.

Interest Rates: On any number of occasions we have noted that the S&P 500 has historically been correlated with the yields (along with the euro and select commodities). Indeed, over the past seven years there have only been two brief periods when the long term 12-month correlation between yields and stocks was negative – the second half of 2012 and the second half of this...
By Walter Murphy on 10/23/2014 3:32 PM
On Wednesday the DJIA fell 0.9%, the NASDAQ lost 0.8%, and the S&P 500 declined 0.7%. NYSE declining stocks exceeded winners by 4:1 while the up/down volume ratio was bearish by a slightly more modest margin. The daily Coppock Curve has a bullish bias for all of the S&P’s 24 industry groups, for 25 of 30 DJIA stocks, and for 89 of the stocks in the NASDAQ 100.

The S&P’s September-October decline to 1821, from 2019, just missed our minimum objective. In addition, the pattern was clearly an Elliott Wave three-wave structure, which is a counter-trend move. Thus, even though the decline easily qualifies as the anticipated post-2009 wave-six correction, we can also make the case that the minimum requirements for a complete wave-six have been satisfied. If so, then we need to respect the possibility that the rally of recent days marks the resumption of the 2009-2014 uptrend (i.e., wave-seven).

That said, we are hard-pressed to believe that a four-week decline is sufficient to correct the gains of a three-year...
By Walter Murphy on 10/21/2014 3:38 PM
US Equities: Wave-six is viewed as a reversal of the S&P’s 2011-2014 rally. As such, this decline will be expected to be a Fibonacci retracement of that 946 point rally. These retracement levels will take on added importance if they are reasonably close to the Elliott Wave fourth wave of lesser degree. We typically expect a minimum 38.2% retracement but in this case we will also pay attention to a 23.6% retracement out of respect to the underlying power that was consistently exhibited by the three-year rally. These retracements allow for a decline to at least the 1796 area and arguably toward 1658.

Global Equities: From the perspective of the weekly Coppock Curve, the overall post-July intermediate pressures are positioned to maintain a bearish bias into December. Importantly, these continuing pressures will likely be broad-based – impacting developed and developing markets across all regions.

Interest Rates: Last week’s yield decline has put increased pressure on momentum indicators, including the...
By Walter Murphy on 10/16/2014 2:46 PM
On Wednesday the S&P 500 fell 0.8%, the DJIA lost 1.1%, and the NASDAQ declined 0.3%. NYSE declining stocks exceeded winners by only 60 issues while the up/down volume ratio was bearish by a 7:5 margin. The daily Coppock Curve has a bearish bias for 22 of the S&P’s 24 industry groups, for 29 of 30 DJIA stocks, and for 82 of the stocks in the NASDAQ 100.

Back in the day, a friend used to pay attention to what he called "nit-fips" – the New York Times Front Page Signal (NYTFPS).  While not as compelling as the cover of Time magazine, NYTFPS is triggered when there is a story about the market on the front page of the paper.  It is better if the story is above the fold and especially if there is a chart.  For what it is worth, the signal has been triggered. Today's headline above the fold is "Steep Sell-Off Spreads Fear to Wall Street." The opening line in the story is: "The party is over." And, yes there is a chart.

That said, our count is not complete. There is obviously no doubt that the S&P is in...
By Walter Murphy on 10/13/2014 1:51 PM
“Plain English”

US Equities: We have regularly indicated that a decline by the S&P 500 through 1905 would be the final confirmation that the anticipated post-2009 wave-six decline was under way. Indeed, in recent comments we pointed out that many other indexes and indicators had already breached their equivalent of 1905. In addition, the dominant intermediate uptrend line from the November 2012 low has been violated. Thus, for all practical purposes, it seems that an actual break of 1905 will be a moot point.

Global Equities: The fact that the post-July decline by the Dow Jones Global (ex US) index has already retraced a substantial portion of the rally from February’s low, increases the likelihood that Fibonacci relationships may ultimately have to be applied to the 2011-2014 rally from 170 to 252.

Interest Rates: The recent August-September rally for both 10- and 30-year yields qualifies (barely) as a wave 6/B in terms of magnitude but arguably not in terms of time. Thus, we are alert to...
By Walter Murphy on 10/9/2014 12:49 PM
On Wednesday the S&P 500 gained 1.8%, the DJIA added 1.6%, and the NASDAQ rallied 1.9%. NYSE advancing stocks exceeded losers by 15:2 while the up/down volume ratio was bullish by less than 4:1. The daily Coppock Curve still has a bearish bias for 14 of the S&P’s 24 industry groups and for 19 of 30 DJIA stocks but has a bullish bias for 57 of the stocks in the NASDAQ 100.

The day’s performance raises the question as to whether it is the start of a return to or through September’s 2019 high, or whether it is simply another counter-trend rally within a still-developing downtrend. We lean to the latter but we will, as usual, let the market tell its story. Our focus in coming days will be on 1977-1986 for the S&P 500. This range represents a significant amount of chart resistance and important Fibonacci resistance. The inability to break this benchmark will indicate that the downtrend is still in force and that bears are in control. Conversely, a decisive breakout will open the door for at least a temporary...
By Walter Murphy on 10/6/2014 4:47 PM
“Plain English”

US Equities: The S&P’s intermediate and primary degree uptrend lines that began in November 2012 and October 2011 (respectively) remain intact. At the end of September the long term uptrend line connecting the October 2011 and November 2012 lows was crossing above 1791 and the intermediate uptrend line connecting the November 2012 and February 2014 lows stood at 1950. A wave-six correction should decisively violate the intermediate trend line and should at least test the primary line.

The Rest of the World: At the end of September the monthly Coppock Curve had a bearish bias for 23 of the 37 markets in our universe. Most of these pressures can be traced to the developed markets. At this point, the monthly pressures are positioned to remain in place for a majority of the developed markets until well into (and perhaps all of) 2015. By contrast the current majority bullish condition for developing markets may dissipate in the early months of next year. This combination suggests that...
By Walter Murphy on 10/2/2014 1:26 PM
On Wednesday the S&P 500 fell 1.3% while the DJIA lost 1.4% and the NASDAQ declined by 1.5%. NYSE declining stocks exceeded winners by 5:1 while the up/down volume ratio was bearish by a more robust 11:2 margin. The daily Coppock Curve has a bearish bias for 22 of the S&P’s 24 industry groups, for 28 of 30 DJIA stocks, and for 84 of the stocks in the NASDAQ 100.

In recent comments, we thought that last week’s breach of the 1978 double-bottom was a warning for lower lows. The importance of that breakdown was brought home today for at least four reasons. First, the S&P closed below what has been the dominant intermediate uptrend line from the November 2012 low. Second, the percentage of NYSE stocks below their 200-dma is below 45% for the 1st time since November 2012. Third, the decline has an impulsive look to it. Finally, intermediate to longer term Coppock oscillators are deteriorating for a majority of indexes and stocks.

We have recently been noting that 1971-1945 is important support in that...
By Walter Murphy on 9/25/2014 3:32 PM
Tomorrow may give us a good sense as to whether the S&P is poised to rally directly to new highs or is positioned to accelerate to the downside. We say this because the decline of recent days from 2019 to 1978 can be counted as either the “C”-wave of a larger ABC from the 2011 high on September 4 or the first leg of a larger decline.

In the first scenario, today’s rally could be the kick-off to a new breakout move. Under the second scenario, today’s rally is only part (or all) of counter-trend move prior to renewed weakness.

Short term indicators favor the first alternative. For example, and as mentioned in the recent STR, the 35-day cycle is probing for a bottom. In addition, the 10-day put/call ratio is oversold and the daily Coppock Curve is bottoming. Obviously, this scenario will be fully confirmed by a breakout through 2019.

With this in mind, key support is the September 15-24 double-bottom at 1978. If this is decisively broken, probabilities will increase that wave-six is developing.

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