Market Pulse
Author: Created: 3/10/2010 11:54 AM
Market Pulse
By Walter Murphy on 10/30/2015 8:41 AM
On Wednesday, the S&P 500 gained 1.18%, the DJIA rallied 1.13%, and the NASDAQ added 1.30%. NYSE advancing stocks exceeded losers by 5:1 while the up/down volume ratio was bullish by a more modest 3:1 margin.

On a closing basis, the S&P 500 has rallied 11.9% from its August low 45 days ago. The rally has been broad-based – 425 of the 500 components are higher now than they were on August 25. Of those, 211 have outperformed the “500.” Not surprisingly, momentum has been generally constructive.

In recent days, however, we have noted some deterioration in short term momentum indicators. For example, the daily Coppock Curve peaked early last week and, even after today’s strong rally, the oscillator is in a downtrend for well more than half of the 500 stocks. It will likely take sustained trade for the “500”above 2102-2116 in coming days to reverse these pressures. Failure to do so could keep the bearish pressures in place until well into November.

By contrast, the weekly oscillator is solidly...
By Walter Murphy on 10/28/2015 7:40 AM
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US Equities: Higher recovery highs seem likely. In that regard, the S&P has already taken an important step. In last week’s STR we noted that broken support often proves to be important resistance. This suggested that 2039-2044, which provided support from March until August, should be considered important resistance. As it happened, last week’s rally broke through this range rather easily.

Global Equities: The MSCI All Country World (ex US) Index has been recording multi-year lows versus the S&P 500. However, these lows have not been confirmed by momentum, which is uptrending on both a weekly and monthly basis. Thus, global markets appear positioned to gain sustainable relative strength versus the US market for the first time in many months.

Interest Rates: More often than not over the years commodities have been well-correlated with yields. In recent weeks we have been making the case that commodity weakness should be relatively short-lived within a building primary uptrend....
By Walter Murphy on 10/19/2015 3:14 PM
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US Equities: The S&P’s average daily price declined in September for the fourth month in a row. This could prove to be significant because four-month losing streaks have historically tended to occur during important corrections or bear markets, e.g., 2008-2009, 2000-2002, 1990, and 1987.

Global Equities: Both the monthly and quarterly Coppock oscillators have had a bearish condition for most markets. The former is positioned to remain the case through the first half of 2016 and the latter through 2017. This combination, along with the fact that 71% of the non-US markets that we follow on a daily are at least 10% below their highs, suggests that intermediate rallies will have limited success.

Interest Rates: Our proprietary bullish sentiment index for US yields, which is based on a scale of 0-100, stood at 39.3 last week. The index has satisfied our expectation that it would break below 45% during the current yield decline but a challenge of oversold levels below 30% remains...
By Walter Murphy on 10/15/2015 2:53 PM
On Wednesday, the S&P 500 fell 0.47%, the DJIA dropped 0.92%, and the NASDAQ lost 0.29%. NYSE declining stocks exceeded winners by 15:8 while the up/down volume ratio was bearish by a more modest 13:12 margin. The daily Coppock Curve has a bullish bias for 457 of the S&P’s 500 stocks, all of the 30 DJIA stocks, and 98 of the stocks in the NASDAQ 100.

We regard the S&P 500’s September 29 low at 1872 as a successful test of the August 24 low at 1867. With that in mind, today’s weakness effectively locked in the September 29 – October 13 rally as a complete pattern. That said, it is a bit too early to clearly define the importance of that rally.

The rally can be counted as an Elliott Wave five-wave structure. The bearish interpretation is that it is a final ”C”-wave within an ABC rally that has been developing since August 24. The bullish count is that the two-week rally is the initial surge (wave A/1) in a larger rally pattern.

These alternatives basically tell us that, if the market does not...
By Walter Murphy on 10/12/2015 3:38 PM
US Equities: The US equity market has recently recorded several achievements that typically have bullish implications. For example, there was a NYSE breadth thrust, the new 52-week highs ratio was near oversold levels that are often associated with a cyclical low, and our proprietary sentiment indicator is at oversold levels not seen since just after the 2009 low. All of this helped the S&P rally from the September 29 low surge in a manner not seen since the late 2011 breakaway.

Global Equities: For the first time since April the weekly Coppock Curve now has a bullish bias for a majority of the 37 non-US markets that we monitor. This constructive condition is evident for a majority of the 21 developed and the 16 developing markets. These majority bullish underpinnings are positioned to continue through the remainder of 2015.

Interest Rates: The weekly Coppock Curves for US 10- and 30-year yields are in a downtrend but are expected to bottom within the next two weeks. However, a new bullish bias may...
By Walter Murphy on 10/5/2015 4:29 PM
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US Equities: In any number of previous comments we have suggested that the downside risk outweighed the upside potential. There is a strong case to be made that this is still the case, despite the S&P’s July-August 12.46% decline.

Sectors: Utilities, Consumer Staples, and Technology are showing some relative strength in a generally weak market. Materials and Energy continue to exhibit relative weakness.

The Rest of the World: The MSCI Emerging Markets Index, which finished September at 792, is on the edge of a significant breakdown. The index has spent most of its time since early 2010 – and especially since late 2011 – in a broad trading range. September’s weakness carried the index modestly below this range, so any further weakness will likely represent a decisive breakdown. In turn, this would increase the potential for a full test of 2009’s 607-484 base.

Yields: We have been making the case that the yield downtrend from the 2013 high has the potential to have constructive...
By Walter Murphy on 9/22/2015 8:15 AM
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US Equities: Historically, the daily Coppock Curve maintains its trend for at least two weeks although 18-20 days is the historical norm. The current oscillator is in its 12th day and is positioned to peak within the next 2-6 days. If so, then a new daily Coppock downtrend should last well into October. This is in harmony with our expectations for the weekly oscillator. Thus, it seems likely that an October short term low will have constructive intermediate momentum (and cycle) implications.

Global Equities: Earlier this month, the MSCI All Country World (ex US) Index fell to 239, the lowest level since reversing down from its 2009-2014 “bull market” high. At this low, the index was 19.26% below its July 2014 peak. Given the Coppock configuration, still lower lows are likely in the weeks ahead. With this in mind, the index is testing key support.

Interest Rates: We continue to count the 2013-2015 downtrend as an intermediate (A)-wave for 10-year yields. In turn, the recent...
By Walter Murphy on 9/15/2015 3:36 PM
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US Equities: When the major indexes (particularly the S&P 500 and the DJIA) make new highs and those highs are confirmed by the NYSE daily cumulative advance-decline line, the market is not likely at risk of a major decline. With the knowledge that no indicator is perfect, our sense is that this tendency will be put to the test in coming weeks and months. We say this for two reasons. First, we can make the case that there was no price/breadth bearish divergence at the highs earlier this year. Second, our Elliott Wave count for the DJIA indicates that it has completed its 2009-2015 counter-trend {D}-wave rally.

Global Equities: Earlier this month, the MSCI World (ex US) Index fell to 1663, the lowest level since reversing down from its 2009-2014 “bull market.” At this low, the index was 17.35% below its July 2014 peak. As a result, the index has violated every support trend line since both the 2009 and 2011 lows.

Interest Rates: We continue to count the 2013-2015 downtrend as...
By Walter Murphy on 9/11/2015 11:56 AM
On Wednesday, the S&P 500 fell 1.39%, the DJIA dropped 1.45%, and the NASDAQ lost 1.15%. NYSE declining stocks exceeded winners by 9:2 while the up/down volume ratio was bearish by a bit more than 5:1. The daily Coppock Curve has a bullish bias for 457 of the S&P’s 500 stocks, all of the 30 DJIA stocks, and 98 of the stocks in the NASDAQ 100.

However, the weekly Coppock Curve has a bearish bias for 387 of the S&P’s 500 stocks, 27 of the 30 DJIA stocks, and 77 of the stocks in the NASDAQ 100.

As can be seen from the above Coppock configuration, the weekly oscillator is broadly weak even as the daily indicator is broadly constructive. Viewed from another perspective, we estimate that the constructive daily oscillator for the S&P 500 will begin to run out of steam by mid-month while the deteriorating weekly oscillator is positioned to remain weak for another 7-9 weeks. Thus, we will likely have to wait for at least one more low in the daily oscillator before we begin to look for an intermediate bullish...
By Walter Murphy on 9/3/2015 7:00 PM
“Plain English”

US Equities: The DJIA’s quarterly Coppock oscillator measures the cycle degree trend and is a reflection of the expansion and contraction within the secular trend. It has been overbought and peaking since mid-2014 and is currently lower than it was last quarter. At the end of August, the quarterly oscillator was deteriorating against 28 of the 30 DJIA components and all 10 S&P sectors.

Sectors: The largest sector – Technology – was the only sector among the five largest to increase its weighting in August.

The Rest of the World: A review of 35 Dow Jones country and regional indexes showed that the three-month return was positive for only one – Ireland – at the end of August. This broad-based sell-off is reflected in the Dow Jones Global Index, which has broken down through a well-defined 2011-2015 trend channel that contained a five-wave Elliott Wave pattern. Similarly, the Dow Jones Global (ex US) Index decisively broke a key support range (218-216) and also violated its 2009-2015...
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