Market Pulse
Author: Created: 3/10/2010 11:54 AM
Market Pulse
By Walter Murphy on 2/25/2015 9:04 AM
Price: Last week, the dollar index broke a two-week losing streak with a 0.05% gain to 94.25. Internally, the dollar rallied against four of the index’s six currency components, including both the euro and Japanese yen.

The broad trade-weighted US dollar index based on 27 currencies remains in an uptrend. The latest available price has the index at 113.92. Earlier this month it traded to as high as 114.90, which is just below 2009’s 114.99 high. We continue to believe that the potential exists for an eventual test of 2002’s all-time high above 130. Chart and Fibonacci support exists at 112.60-111.60.

Last week, the dollar gained ground against nine of the 14 emerging market currencies in our regular survey. Overall, the Wisdom Tree Emerging Currency Strategy Fund (CEW) fell 0.4% to 18.34. There was no near-to-medium term chart support for CEW below 19.33 so the late 2014 (into 2015) completed a long term top formation. The result was a December penetration of 2010’s 18.23 all-time low with a move...
By Walter Murphy on 2/24/2015 9:05 AM
Price: Last week, the S&P 500 rallied 0.63% to 2110, the DJIA added 0.67% to 18140, and the NASDAQ gained 1.27% to 4956. During the week, the S&P and DJIA hit all-time highs while the NASDAQ recorded its third-highest weekly close ever. Both the NYSE all-issue and the common stock cumulative daily advance-declines lines finished the week at record highs.

Momentum: A review of the broad S&P 1500 shows that the daily oscillator has a bullish bias for 997 index’s stocks. By contrast, the weekly Coppock Curve has a bearish bias for 874 of 1500 components.

Sentiment: Our proprietary sentiment index (which is based on a scale of 0-100) has been above 50 since September 2013. More recently, the indicator had been below the overbought 70 level for the first time since early November. However, the last week’s rally helped carry the index back above 70. More importantly, our sentiment index is still within its post-2009 uptrend. Trend support is last October’s 53.6 low.

Time: The S&P’s February 2 low...
By Walter Murphy on 2/19/2015 3:08 PM
On Wednesday, the NASDAQ gained 0.14% but the DJIA fell 0.1% and the S&P 500 declined by 0.03%.. NYSE advancing stocks exceeded losers by 7:5 but the up/down volume ratio was bearish by a small margin. Turnover was flat. The daily Coppock Curve has a bullish bias for 383 of the S&P’s 500 stocks, for 28 of the 30 DJIA stocks, and for 77 of the stocks in the NASDAQ 100.

We have regularly made the case that, as long as breadth continues to confirm the underlying uptrend in the market, the risk of a major bearish reversal is typically small. Thus it is important that, in the past two days, both the NYSE all-issue and common-stock cumulative daily a-d line have made all-time highs.

Similarly, AAPTA colleague Tom McClellan has pointed out that when the ratio-adjusted McClellan Summation Index, falls to a “nice oversold level,” it is important whether or not the index rallies well above the 500 level. Thus, the index’s rally through 500 over the past two days may be important. We say “may be” because the...
By Walter Murphy on 2/17/2015 4:28 PM
“Plain English”

US Equities: Our preferred count for both the DJIA and the NYSE Composite is that last year’s September-October decline is best counted as the fourth wave within a larger five wave rally pattern from the 2011 low for those indexes. Thus, the rally since October’s low is the final fifth wave of the 2011-2015 uptrend. A new 20-week cycle will position the market for an extension of the DJIA’s post-2011 fifth wave and the S&P’s post-2009 seventh wave.

Global Equities: Our global daily cumulative advance-decline line recorded an all-time high, as did our European and Pac Rim (ex Japan) regional a-d lines. As a result, our global point-and-figure bullish percent index (BPI) has surged to 23-month high. All of this suggests higher highs.

Interest Rates: The weekly Coppock Curves for both 10- and 30-year yields have been in a downtrend since 2013 and have been below the neutral zero line since 2014’s first quarter. However, both oscillators appear to have bottomed, suggesting that...
By Walter Murphy on 2/12/2015 3:21 PM
On Tuesday, the NASDAQ gained 0.28%, the S&P 500 declined by less than 0.01% and the DJIA fell 0.04%. NYSE declining stocks exceeded winners by 5:4 while the up/down volume ratio was bearish by a more robust 4:3 margin. Turnover was flat. The daily Coppock Curve has a bullish bias for 267 of the S&P’s 500 stocks, for 21 of the 30 DJIA stocks, and for 62 of the stocks in the NASDAQ 100.

For all practical purposes, the S&P 500 has been engaged in a 6.1% (2094-1973) trading range since November and has not recorded an all-time high since late December. However, the broad NYSE Composite index has not had an all-time high since September. And, while the NYSE all-issue cumulative advance-decline line made an all-time high only a few days ago, the common-stock-only a-d line last hit a record in December. Underneath this boring and diverging trading range, the weekly Coppock Curve has had a bearish bias for a majority of the 24 S&P industry groups and for most of the 30 DJIA stocks for the last several weeks. Similarly,...
By Walter Murphy on 2/9/2015 7:03 PM
“Plain English”

US Equities: If the S&P 500 rallies decisively through 2137 between now and the end of this month, two things will be accomplished. First, such a rally will be a decisive breakout through the December-February trading range. The trading range would then be viewed as a base of significant support. Second, such a rally will carry the “500” through its multi-year resistance trend line by a greater margin than at any time in the line’s existence. By definition, such a breakout would be a bullish development.

Global Equities: The weekly Coppock Curve finished the week with a bullish bias for 30 of the 37 non-US markets in our universe, with 18 of those coming from the 20 developed markets. At this pace, the oscillator for the Dow Jones World (ex US) Index is positioned to maintain a bullish bias into April-May.

Interest Rates: The current primary downtrend from the December 2013 high has moved into its latter stages. However, momentum, time, and sentiment are building toward a constructive...
By Walter Murphy on 2/4/2015 5:27 PM
“Plain English”

US Equities: From our perspective, the volatility of the post-December trading range raises the possibility for a number of small degree Elliott Wave counts, so we are not going to get hung up on that now. From a bigger picture perspective, however, there are only two key nearby price ranges – 2064-2095 resistance and 1981-1972.

The Rest of the World: Many European markets (with the glaring exception of Switzerland) posted solid returns last month. However, we can – and do – count Europe’s rally from October’s low as either a final fifth wave or a lower degree “C”-wave (depending on the index) from the 2011 low. Thus, the current strength may well prove to be a last gasp with in the longer term uptrend. Switzerland’s recent bearish reversal could, therefore, be the proverbial canary in the coal mine.

Yields: The monthly Coppock oscillators for both 10- and 30-year yields peaked 12-13 months ago. Both oscillators have finally moved to the oversold side of their neutral zero...
By Walter Murphy on 1/28/2015 3:36 PM
On Tuesday, the NASDAQ fell 1.89%, the DJIA lost 1.65%, and the S&P 500 declined 1.34%. NYSE declining stocks exceeded winners by almost 2:1 while the up/down volume ratio was bearish by a more modest 7:4 margin. Turnover fell by 3%. The daily Coppock Curve has a bullish bias for 399 of the S&P’s 500 stocks, for 15 of the 30 DJIA stocks, and for 82 of the stocks in the NASDAQ 100.

In coming days we will be keeping an eye on at least two reference points – the S&P’s 130-day moving average and that index’s chart support at 1988-1972. In the almost 38 years that we have followed the markets professionally, we have not been a huge fan of moving averages. However, a moving average can prove its mettle and the 130-day ma is one of those examples. This average, which approximates six months, has consistently provided support since late 2012. Indeed, since the important November 2012 low, this moving average has been tested 10 times and has repelled the market pullback nine times. The exception was last year’s...
By Walter Murphy on 1/22/2015 8:49 AM
“Plain English”

US Equities: We led off our recent Year Ahead piece with three charts, each of which highlighted important resistance trend lines. The charts ran the gamut from several years, to more than a decade, to more than a century. It each case, a major index is currently bumping up against an important trend line. These lines have obviously stood the test of time, deserve the benefit of the doubt, and could continue to be a barrier. Conversely, a rally decisively through any of these lines will have bullish implications. The shortest of these is the S&P’s 2009-2015 resistance trend line. During January, the line has been moving through 2072-2086 on its daily chart.

Global Equities: Switzerland’s 13.3% reversal last week may prove to be the canary in the coal mine for Europe. With the DJ STOXX Europe 600 Index arguably near an important top, Switzerland’s SMI’s decline appears to be serious enough to reverse its 2011-2015- uptrend. Most – if not all – important support trend lines have been...
By Walter Murphy on 1/16/2015 2:27 PM
On Wednesday, the DJIA fell 1.06%, the S&P lost 0.58%, and the NASDAQ declined 0.48%. NYSE declining stocks exceeded winners by 5:3 while the up/down volume ratio was bearish by a more robust 2:1 margin. Turnover increased by 7%. The daily Coppock Curve has a bearish bias for 443 of the S&P’s 500 stocks, for 28 of the 30 DJIA stocks, and for 89 of the stocks in the NASDAQ 100.

In recent days we have been focused on the early January low at 1992 as a potential lower degree second wave. Today’s intra-day decline to 1988 obviously means that this count was incorrect, but it does not rule the concept of a still-developing post-December second wave correction. What it does do is change the focus to December’s 1972 low as the next level of support. While a violation of even this level will not by itself rule out the post-December second wave count, it will be viewed as a potentially significant breakdown from a practical point of view. Such a breakdown will complete a top formation and violate conventional and...
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