Walter Murphy - link: "On Wednesday, the S&P 500 posted its...

Walter Murphy - link:

"On Wednesday, the S&P 500 posted its sixth gain in seven days with a rally of 1.0%. Advancing stocks exceeded losers by 11:2 while the up/down volume ratio was positive by a more modest 5:1 margin. The day’s rally was bolstered by a 23% increase in turnover. The daily Coppock Curve still has a bullish bias for all 24 S&P industry groups and for 29 of the 30 stocks in the DJIA.

With apologies to Harry Dacre, we could not resist spinning off of the old classic, A Bicycle Built for Two, in order to highlight the idea that the 20-week cycle looks as though it may have bottomed. As noted in the monthly, the market was overdue for a cycle low. Initially, it appeared as though the S&P’s August bottom qualified, but September’s breakdown dealt a body blow to that scenario. With the index now well on its way to recording both a higher weekly high and a higher weekly low even as the weekly Coppock is bottoming, it would seem that the “500” is moving into the early stages of an intermediate, year-end rally. Since even weak intermediate rallies can be expected to last for at least eight weeks, a confirmed bottom would imply the market is positioned for its best rally since May’s high.


http://www.wminsights.com/Commentary/PublicBlog/tabid/81/EntryId/461/A-Cycle-Built-for-Higher.aspx

As mentioned in the monthly, 1196-1231 is an important band of resistance. It encompasses the last three rally highs within the August-September trading range, as well as a 50% retracement of the post-May decline.

By definition, a rally through this range would be a breakout that, in turn, would allow for further strength toward 1249-1258. That nine-point band of resistance represents both the breakdown point from the January-July top formation and a 61.8% retracement of the post-May decline to date. As such, it could prove to be an important barrier.

Support exists at 1195-1182, then 1171 and below.

Changing gears, we noted in yesterday’s blog that TLT (the iShares Barclays 20+ Year Bond ETF) was on the verge of generating its first P&F sell since the February lows. That sell took place today. While that allows for a preliminary P&F price objective below 102, our current focus is on a 38.2% retracement at 112.14-110.95."