The Anals of Stock Proctology

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Big Fine Print Doc does not make trading recommendations. This update reports time cycle estimates and centered moving average projections based on the Hurst cycle analysis method, and other techniques. This publication is for entertainment and educational purposes only. Doc assumes no responsibility for the accuracy or inaccuracy of the estimates and projections presented. The market may or may not meet the projections. Stoolies should thoroughly familiarize themselves with the methodology before trading based on this method. Those who do not have the time or inclination to develop a trading strategy based on testing and research should not trade. Trade at your own risk. Yadda yadda. How's your motha? More disclaimers at the bottom of the page.

Doc welcomes the many new junior stock proctologists who have joined the American Society of Shortsellers in the past week. If you are not an experienced chartist or trader, ok, even if you are, you may find the Anals just a bit confusing for a little while. But Fear Not! You will get it after a few days, at most a couple of weeks. Questions can always be posted on the Stool Pigeons Wire message boards, where Doc and/or your fellow stoolies will respond. Explanations of abbreviations and terms are at the bottom of the page. The complete list of links to the entire archive is in the left column menu. Now it's time to sit back, relax, and enjoy the show.

Many tanks!

Doc

Intraday Friday - After exploding out of the gate on the phonied up employment data, in the "news is noise" syndrome, things settled back to their cyclical norm. The 1 day cycle low came in around 10:30, followed by a swup lasting until about 1 PM. A slow shallow grind lower followed until a 5 hour cycle low at 3:30. After that came the obligatory short covering pop. Doc is expecting a 1 day cycle low Monday morning within the first hour, followed by another swup until mid-day, then down again. 3 day cycle cmaps are only slightly below current levels. That could happen in the morning, with lower lows in the PM. As always, much depends on the overnight faking and juking, requiring the usual revisitation of the outlook Monday morning. Chart below. Get regular updates throughout the day in Stooltrading.

Pre Market Update at 9:15 AM NY time.

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The cycle map below is en estimate of how the market might behave over the next few hours. Should the pattern be broken, the map should be redrawn to fit the actual. Cmaps and times shown are guidelines only. Cycles vary in wavelength and amplitude. Directional changes within an hour of the expected turn and a few points of the cmap should be respected. The indicators rule. Times and prices are the projected cycle highs and lows with cmaps.

5-8 Day Cycle______ 2-3 Day Cycle_______ 5 Hr-1 Day Cycle

Friday's Markets

2/7/03 Weak End Anals

In this early edition of your Weak End Anals, Doc covers the basics. The complete Weak End edition will be posted later Saturday with long term outlooks and expanded commentary. Doc will also be interviewed by Ike later Saturday on Marketviews.tv. Don't miss it!

Fed Releases Turdsday

Doc's Pooper Scooper.

Be a Johnny Applestool! Help spread the Stool! Feel free to repost snippets from the Anals on message boards around the web. Just give a link back! Many tanks - Doc

The Feed astounded everybody with $2.5 billion in weekend reverse repos, on top of $8.25 billion in expiring repos, for a net drain of $10.75 billion. The $2.5 billion will be added back Monday. There are no repo rollovers Monday.

Total feed crashed below its 6% growth channel. Feed is now down sharply over the last 6 weeks and lower over the last 3 months. Al may have gotten snookered today. Seeing the bonds crash and stock futures explode on the employment data announcement, he panicked. I can here him now. "Holy crap, the bond market is crashing. We have to do something. Drain!! Drain!!" The absolute last thing he can afford is a bond market meltdown. So Al sent the market a signal that he is serious about keeping inflation in check. Al games the tape just like all the sphincters out there, and always, he over reacted.

Two trends are evident on the Feed Index, which is the total Fed holdings of loans and securities. One is the 10% growth trend beginning in May of 2001. The blue channel going back to last December suggests a 5% growth rate. Look at the 4 week moving average (brown line) and compare it with the slope of the tow larger channels for an indication for whether the slope of short term growth is slower or faster than the 2 longer term trends.

Given the stock market's response Friday and the bond rally, the de-feeding is sure to be reversed Monday. The Feed Index and Feedometer are at the bottom of their channels. That always triggers a burst of Feeding. The bond market late rally gave him a little breathing room as well. More Feeding will have no impact in the stock market. All the king's liquidity can't put the Humpty Dumpty market together again.

The Feedometer theoretically measures excess Feed available for bond or stock market jamming. Al selects a trend level he feels is needed to reflatulate the economy. The Feedometer measures the difference between the apparent trend target, and actual day to day Feeding (Fastow Feedometer), as well as a four week moving average (Slowmo Feedometer). A break above the orange trendline might indicate a more aggressive jamming policy.

Bonds rallied again after a sharp selloff on the open, with yield dropping to 3.92 at the close. While they may dip to 3.85-75 over the next week, that should be as far as it goes. There's no sign of significant change in the flat trend, part of the long term bottoming process.

Long Term- Comments in the late Weak End edition later Saturday.

Dow Inflatables- The Dow is taking aim at the 6-7 week cycle cmap around 7550. It's due next week. Expect a bounce lasting a few days, then down again into a 10-13 week cycle low between late March and mid April

All of Doc's daily cycle charts are powered by METASTOCK. (Sorry about the bull.) Available at Doc's bookstore! Metastock is the industry pioneer in charting software. Doc has used it for over 20 years. If you have questions about purchasing Metastock from Doc's store, you can email Doc.

Portfolio Sphincters Index (SPX) and Sentiment

Cycle Chart
The red channel is the idealized 18 month-2 year cycle. Dark blue is the 10-12, or 6 month cycle. Teal is the 10-13 week cycle.

Short Term Cycles

The 4 week cycle has been in a swup. The short cycle oscillator is still tacking higher. Downturns from the 50% area on the oscillator usually associated with devastating declines, but we can't assume anything. Another down day is needed turn the indicator. There are only 2 to 7 days left in the down phase of the 6-7 week cycle. It's a tossup as to whether there's a sharp down move this week, or merely a continuation of the grind down. The 17 day rate of change (chart below) remains in a downtrend. The downside cmap on the 6-7 week cycle remains at 820. After the the 6-7 week cycle low, look for the market to go swup again for a week or so, then down into late March.

The 6-7 week cycle oscillator superimposed on the chart below upticked from a bottoming zone, but it may be the kind of pause the indicator made in September before moving down again. We will have to watch to see if this is just a tick or a turn. If its a turn, we'll get a brief pop. But before the market can stage a significant rally, a positive divergence, with a higher low, should form over a period of approximately a month.

10-13 Week Cycle

Roughly 5 to 8 weeks should remain in the 10-13 week cycle down phase. The cycle oscillators continue to move slowly lower. The one in the top chart is in the bottom zone, but it can bounce around down there for weeks, with the market trending lower. The flat movement below the zero line in the 29 day ROC also indicates mild trending which can go on for weeks. There will be no substantial rally, until all of these indicators turn up in concert.

The preliminary cmap for this cycle has been oscillating between 770 and 820. It will continue to shift day to day until the cycle is complete. So far the indication is of a grinding shallow decline. The market may worsen at any time, most likely following a 6-7 week cycle swup, but for now, there's no indication of anything dramatic.

Sentiment

VIX rose again. (down on the inverted scale chart). Doc has redrawn the channels based on his best guess following the recent action. The next significant intermediate cycle low should reach at least 50-60.

The 15 day rate of change is a proxy for the 4-7 week cycle. The 29 day rate of change is a proxy for the 10-13 week cycle. The dark blue overlaid line is the 10-13 week cycle oscillator, while the red line is the 6-7 week cycle oscillator. The VIX is a measure of implied options volatility reflecting relative fear or complacency. It is plotted below on an inverse scale to better show the relationship to the price chart. The "Stool Bands" may reflect either 6 month or 10-12 month cycles.

Long Term- Charts and Comments in the late Weak End Edition later Saturday.

The Cycle Conditions tables include cycle phase and a wild guess as to number of periods to the next turn, in days for the shortest cycles, weeks (W) or months (M) for the longer ones. This is a fluid exercise, in other words, the projections are likely to be wrong, but they force us to be vigilant for key turning points, and frequently work well enough to prevent costly misreadings.

SPX Cycle Conditions as of 2/7/03

Cycle	Phase/PTT	Target
10-12 Month	Top-Down/4-6 M	720p
6 Month	Down/0-8W	750
10-13 Week	Top-Down/25-40	820p
4-7 Week*	Down/2-7	820
8,13 Day	Down/0-3	800

PTT - Periods Till Turn
L-Low, H-High
SWD= Sideways Down Phase- Trading Range
SWU=Sideways Up
p: preliminary
Too Early: Too soon to project
No Factor: Low amplitude is dominated by larger cycles
* The 4 and 6-7 week cycles are distinct but usually overlap. The dominant cycle is reported.

Suctor Watch and Stoolwethers- Updated each morning between 8 AM and 9:00 AM NY time.

Nasgap Charts

The Nas is expected to behave more like the SPX with the continued de-weighting of tech. In the interest of publishing the Anals earlier in the evening Doc is presenting the charts and data without commentary, as it is largely redundant relative to the SPX commentary above.

Cycle Chart
The stoolicator is a proxy for the dominant trading cycle, either 6-7 or 10-13 weeks. The 17 day rate of change is a proxy for the 6-7 week cycle. The 29 day rate of change is a proxy for the 10-13 week cycle. The teal channel is the idealized 2 year cycle. The light green channel is the idealized 10-12 month cycle. The dark blue channel is the idealized 5-6 month cycle. The red channel is the 10-13 week cycle.

Long Term- Charts and Comments in the late Weak End Edition later Saturday.

Nasdaq Cycle Conditions as of 2/7/03

Cycle	Phase/PTT	Target
10-12 Month	Top-Down/4-6M	1000p
6 Month	Down/0-8W	1175p
10-13 Week	Top-Down/25-40	1200p
4-7 Week*	Down/2-7	1200-1240
8,13 Day	Down/0-3	1240

PTT - Periods Till Turn
L-Low, H-High
SWD= Sideways Down Phase- Trading Range
SWUP=Sideways Up
p: preliminary
Too Early: Too soon to project
No Factor: Low amplitude, dominated by larger cycles
* The 4 and 6-7 week cycles appear to have merged into one.

Suctor Watch and Stoolwethers- Updated each morning between 8 AM and 9:00 AM NY time.

Long Bong Hit - See top of page.

Golden Stool 2/7/03 PM

The COMEX tightening margin requirements triggered a selloff Turdsday and the volatile action continued Friday with the pog closing slightly lower. The result of teh week's trading was a classic Finger formation and WHOPsaw. Prices broke out through a long term uptrending resistance line earlier in the week, then promptly reversed and fell back below the line.

Call it the Jimmy Jones Cramer Memorial Move. Cramer turned bullish on gold the day of the breakout. J. Jones has a habit of jonesing a sector in the last 10-15% of the move. Though this was not the final top, Gold bulls should start to pay attention. The Cramer kiss of death means that the end of this phase of the bull market can't be far off. But since he usually catches the end of a move, there's still time for a good pop.

A 4 month cycle low is due any day now. Now matter how powerful an uptrend, the final days of a cycle usually see a profit-taking slamdown. That's what this is. The move needs to consolidate for a a few weeks. It was way ahead of schedule, taking on the earmarks of a panic in the last couple of weeks. After the late arriving gold bugs get burned, and weak hands get shaken out, it will move up again.

Charts as of 2/7/03 Close

HUI's 4 month (or 13 week, take your pick) cycle has been in a sideways down phase for 6 weeks. The end of the down phase is due at any time within two weeks. Downside cmaps are in a range of 134 to 140. The selloff probably marks the final stage of the intermediate sideways down phase.

HUI Cycle Conditions as of 2/6/03

Cycle	Phase/PTT	Target
9 Month	Up/4-6M	215p
4 Month	SWD/0-2W	135-138
4-7 Week	SWD/2-17	134-138
8,13 Day	Bottom/0	134-140

Long Term- Comments in the late Weak End Edition later Saturday.

Uncle Buck's Illness Comments 2/7/03

Uncle Buck's swup continued. The upside cmap on the 8-13 day cycle remains 100.50. Longer term cmaps look like the low 90s by mid year. Uncle B and SPX (gray line on chart) usually move together because Uncle Buck's index measures the flow of capital into and out of US paper assets. The relative magnitude of the moves varies and wide divergences are followed by convergence. Central banks intervening to buy dollars are not going to help stock prices, and cannot drive sustainable advances in the dollar. The current divergence is therefore likely to be resolved by falling stock prices.

Chart as of 2/7/03 close

Long Term- Comments in the late Weak End Edition later Saturday.

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Suctor Watch and Stoolwethers- Now posted on separate page. Updated each morning between 8 AM and 9:00 AM NY time.

See you in Intraday Stool.

Dr. Stepan N. Stool
Chairman of the Department of Stock Proctology
A.S.S. Endowed Chair
American Society of Shortsellers Endowment
American Academy of Stock Proctology

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Explanation of Intraday Commentary-Build charts at http://www.livecharts.com. For custom time bars insert a comma after symbol and number of minutes, e.g. compx,90. This will give you a bar chart of the Nas with 90 minutes per bar. The one day cycle is usually most clear with 8 minute bars and 26/18 stochastics. It varies from day to day. Sometimes 6 minutes works best. Experiment to find the best fit for your trading style, and the market's dominant frequency at the time.

The goal here is primarily to monitor the condition of the 8 and 13 day cycles. I typically use 90 minute bars with 26/18 stochastics for the 13 day cycle proxy on the indices during regular trading hours. Other cycles use 26/18 stochastics with the following:

8 days- 60 minute bars
5 days- 40 minute bars
3 days- 24 minute bars
2 days- 16 minute bars
1 day- 6, 7, or 8 minute bars

On the 24 hour futures charts, use a time per bar approximately 3 to 4 times the above number of minutes, to represent the cycles listed above.

About centered moving average projections.

ABBREVIATIONS:

cma: centered moving average
cmap: centered moving average projection
os or ozzie: oscillator
sto: stochastic
swup: sideways up phase
swdp: sideways down phase