Market Pulse
Author: Created: 3/10/2010 11:54 AM
Market Pulse
By Walter Murphy on 11/16/2015 4:18 PM
“Plain English”

US Equities: We are counting the S&P’s early November high at 2116 as a lower degree a-wave and the current decline as the subsequent b-wave. A coming c-wave rally should carry the index to new recovery – and arguably all-time – highs.

Global Equities: In late September, the MSCI All Country World (ex US) Index fell to 231, its lowest level since reversing down from its 2009-2014 “bull market.” At that low, the index violated every support trend line since both the 2009 and 2011 low. The subsequent September-October recovery did not decisively break the dominant intermediate downtrend line and the weakness of recent weeks has reversed that 3-4 week uptrend. However – and as is the case with most of the individual markets that we monitor – the index’s weekly Coppock oscillator is positioned to maintain its current uptrend through the rest of 2015.

Interest Rates: Our global 10-year yield index finished last week at 1.39%. There is already a double-bottom near 1.02% so that is...
By Walter Murphy on 11/9/2015 4:31 PM
“Plain English”

US Equities: Against a constructive intermediate backdrop, the daily Coppock oscillator has a bearish bias against most of the stocks in the S&P 500, as well as for seven of the nine sector SPDRs (energy is the exception). Our sense is that these short term pressures will ease by early December. As is the case with global markets (see below) this combination suggests that continued pressures in the days ahead will prove to be a pause within the still developing post-August intermediate uptrend.

Global Equities: The short term Coppock indicator has a bearish bias for 26 of the 35 non-US markets that we follow on a daily basis. This suggests a pause in the intermediate rally for global markets.

Interest Rates: The early September rally by 30-year yields briefly broke resistance at 3.01% to 3.09% before reversing. Last week’s rally carried yields back to 3.09%, so further strength will be a breakout and provide the set-up for a challenge of the June-July double-top at 3.24%-3.26%....
By Walter Murphy on 11/5/2015 1:28 PM
On Wednesday, the S&P 500 fell 0.35%, the DJIA lost 0.28%, and the NASDAQ declined 0.05%. NYSE declining stocks exceeded winners by 8:5 while the up/down volume ratio was bearish by a more modest 7:3 margin.

We have noted in recent comments that intermediate momentum for the S&P 500 – as measured by the weekly Coppock Curve – has the potential to maintain its current bullish bias through most, if not all, of the rest of this year. Drilling down a bit, we took a look at the two largest sectors in the index, Technology and Financials. As measured by the sector SPDRs (XLK and XLF) these two sectors represent almost 40% of the market. And they, like the “500” are positioned to maintain their current bullish bias for the rest of this year.

Drilling down a bit more, we examined the weekly Coppock Curve for the components in XLK and XLF. Among the 169 components we looked at, the Coppock oscillator is in an uptrend for 142 (more than 89%). Of those, 89 were still on the oversold side of neutral. We characterize...
By Walter Murphy on 11/4/2015 11:16 AM
“Plain English”

US Equities: In recent weeks the market has provided something for everyone, and we have attempted to highlight these in recent comments. From a bullish perspective, the market experienced a Zweig breadth thrust as the indexes were establishing their respective bottoms in August and September, the new high/new low ratio was near oversold levels that often accompany cyclical market lows, sentiment was at extreme bearish conditions not seen since 2009, and intermediate momentum indicators were oversold and improving. From a more bearish perspective, many individual stocks were – and are – underperforming the major averages, many multi-year support trend lines have been violated, the S&P/DJIA rally from October 2014 to May 2015 was clearly corrective, and long term momentum indicators were deteriorating and positioned to diverge from rally attempts for months to come. From our perspective, the best way to combine these conflicting pieces of evidence has been to anticipate an intermediate rally...
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
“Plain English”

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
“Plain English”

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
“Plain English”

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...
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