Market Pulse
Author: Created: 3/10/2010 11:54 AM
Market Pulse
By Walter Murphy on 3/30/2015 12:21 PM
“Plain English”

US Equities: We are counting the post-October rally as a post-2011 C-wave in the S&P and as a post-2011 fifth wave in the DJIA. These are ending patterns so, when the post-October uptrends are reversed, the minimum requirements for a complete 2011-2015 rally will be satisfied. Further weakness though October’s low will confirm the importance of the reversal; this is why we have been referring to 1821 and 15855 as tactical support for the S&P and DJIA, respectively.

Global Equities: The weekly Coppock Curve finished the week with a bullish bias for 29 of the 37 non-US markets in our universe, including 19 of the 21 developed markets. Nonetheless, the oscillator for the Dow Jones World (ex US) Index – and most of the individual markets – remains positioned for an April bearish reversal.

Interest Rates: Although the primary downtrend in yields from the December 2013 high is in its latter stages, its technical underpinnings (momentum, time, and sentiment) suggest that February-March...
By Walter Murphy on 3/24/2015 4:25 PM
“Plain English”

US Equities: Our Elliott Wave count, the Coppock configuration, and our evaluation of the cycle environment all indicate that we should continue to give the post-October uptrends the benefit of the doubt and look for sustained breakouts. However, it is important to remember that the post-October uptrends are likely the final leg to at least the 2011-2015 rally pattern.

Global Equities: The weekly Coppock Curve finished the week with a bullish bias for 30 of the 37 non-US markets in our universe, including 20 of the 21 developed markets. The oscillator for the Dow Jones World (ex US) Index – and most of the individual markets – remains positioned to maintain a bullish bias into April.

Interest Rates: Our proprietary sentiment index for US yields, which is based on a scale of 0-100, is at a five-month high – but, at 28.0, is still in oversold territory. The index has been oversold since October and we continue to think that sentiment should recover to at least neutral (45-55)...
By Walter Murphy on 3/19/2015 3:18 PM
On Wednesday, the DJIA gained 1.27%, the S&P 500 added 1.22% and the NASDAQ rallied 0.92%. NYSE advancing stocks exceeded losers by a bit less than 5:1 while the up/down volume ratio was bullish by a bit more than 5:1. Turnover surged 29% to a six-week high. The daily Coppock Curve has a bullish bias for 362 of the S&P’s 500 stocks, for 18 of the 30 DJIA stocks, and for 58 of the stocks in the NASDAQ 100.

One would be hard-pressed to find today’s rally attributed to anything other than the Fed’s afternoon statement. Immediately before the statement, the S&P 500 was trading at the lows of the week. But by the final hour of the session, the index was at a nine-day high. For the day, NYSE all-issue winners hit a year-to-date high (2604) and, as noted, volume surged 29%. So the Fed was clearly the catalyst – the “reason”—for today’s rally.

But the technical set-up was already firmly in place. The Fed deserves only a piece of the credit.

For example, we have made the case in previous comments that...
By Walter Murphy on 3/16/2015 5:40 PM
“Plain English”

US Equities: The S&P, DJIA, and NASDAQ are all contending with multi-year resistance trend lines. Between now and the end of the month, the S&P’s trend line will be moving through 2109-2117, the DJIA’s line will be trending through 18617-18678, and the NASDAQ’s through 4880-4901. It may take a cycle low – and an Elliott Wave third wave – in order for these lines to be decisively breached.

Global Equities: The Dow Jones Global (ex US) World Index followed its October-January triple-bottom near 217 with a January-February rally that briefly broke through resistance near 235. The decline since then has reversed that rally, but the currently weak daily Coppock oscillator is positioned to bottom later this month even as the weekly indicator is still in an uptrend. However, the weekly Coppock guide is positioned to remain constructive only into April so it seems reasonable to suggest that the next short term peak will have bearish intermediate implications.

Interest Rates: Momentum,...
By Walter Murphy on 3/12/2015 3:17 PM
On Wednesday, the US Dollar Index rallied 1.11% to 99.71; the greenback was strong against all six currency components. This, coupled with Tuesday’s 1.06% gain is the first time since late 2011 that the index has recorded back-to-back gain in excess of 1%. (We needed to examine data back to 1993 before we found a three-day run.) Although the dollar’s daily Coppock Curve is overbought, it has a bullish bias versus all six currency components. However, the weekly oscillator is positioned to take on a majority bearish bias in the next few weeks.

With today’s rally, the dollar index has broken through the 98 resistance level that we have had on the table since last October. So now what? The bottom line is that the near, intermediate, and primary trends are all up. Thus, we need to come up with a next level of potential resistance. That 98 figure is the level at which the rally from last May’s 78.91 low is 1.618 times the earlier April 2011-July 2012 uptrend. Continuing that line of reasoning, the next objective...
By Walter Murphy on 3/6/2015 7:29 PM
“Plain English”

US Equities: The trend is up but showing signs of fatigue and struggling with resistance. Both weekly (intermediate) and monthly (primary) momentum indicators are deteriorating. Our primary near-to-intermediate cycles are deteriorating, but should bottom by mid-April. Finally, sentiment is at excessively optimistic levels.

The Rest of the World: DJ Global (ex US) Index experienced what proved to be an overall July-January decline that approached 14% and violated the 2012-2014 support trend line. However, the index was unable to break support at 218-217 and subsequently established a new uptrend. Moreover, it only briefly penetrated its larger post-2009 support line before rebounding; this is viewed at a successful test. Thus, 218-217 can be viewed as a tactical benchmark in that it represents both price and trend support.

Yields: We continue to believe that the end of the current primary downtrend from the late 2013 high will have constructive super-cycle/secular implications....
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...
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