Published 5 times
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the American Society of Shortsellers
Dr. Stepan N. Stool, A.S.S. Chair
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Welcome to the The Anals of Stock Proctology, the
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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
Monday morning, with the futures beginning to
come unraveled, we got word through Wall Street's infomercials networks
that a couple of the biggest borkers were instituting another borking,
this time in guess what, semiconductors, and semiconductor equipment
stocks. These sectors are the most popular borking targets because they
are the most heavily traded momentum engines. In the right environment
they have the potential to ignite the entire market. They also present the
biggest problems for the borkers, when the public loses patience with
these stocks and dump them.
Regular readers know that a borker is a firm,
also known as a borkerage, that is in the business of borkering. Borkering,
or borkiong for short, is the selling stocks out of the firm's own
inventory to the suckers, er, ah, I mean, its customers, on the
recommendation of its shills, also known as analcysts and market
strat-ego-ists. The borker's market making arm, which may be a NYSE
Specialist operation, or a Nasdaq market maker, has either wittingly, or
unwillingly been forced, to overload with a certain type of inventory. In
this case it was the semiconductor equipment stocks which the public has
been dumping in size in recent weeks. In order to get rid of this unwanted
inventory, Goldman Sucks put the bork on AMAT, KLAC, TER, ATMI, and NVLS.
Normally a borking like this gives the firm's market makers several days
to feed the stock off on the borkerees, generally the portfolio sphincters
in charge of shrinking your formerly swollen retirement funds. The
borkerees are usually quite willing to buy enough stock to give the borker
a handsome profit.
Last week, however, we saw a major borking by Mohel
Lynch (Oy do we got tips for you) in Untel. Borkers love heavily traded
stocks, and especially those with giant market cap because it enables them
to more easily disguise the age old practice of pump and dump. Somehow, if
it's Dow stock, it seems more respectable. But last weeks borking of Untel
did not last long enough to fool enough people. Everybody that got borked
on Thrusday is now sitting with a loss.
This did not bode well for Monday's borking of
the Semiconductor Equipment stocks by Golden Sacks, and the borking of a
group of semiconductor stocks CSFB, ( Kiss-and-Fib). This was either very
stupid timing, or a sign of exterme desperation by the borkers. Indeed,
the borking could only be successfully supported for about 4 hours. By the
end of the day most of the stocks were below Friday's level, or well on
their way. If the borkers miscalculated, and they are now stuck with
inventory they could not unload, this will only add to the market's
downside illiquidity in the days ahead. Should be fun to watch.
The Dowager spent the day basically falling
apart, with the exception of a brief bounce around mid-day. The index
closed down 220, at 9687, just a tick above its low of the day. The Dow is
the index the Street insiders want the public to see. It is the most
easily manipulated, since 3 specialist firms control all 20 stocks. The
index remains in its Bulloney Bullhorn formations. Followers of Dr. Stool
will also recognize the developing Hunchback formation with the weak right
shoulder that is now near completion. The shoulder line of the formation
is downsloping, and now lies just above 9500. When this level breaks, the
Hunchback will fall down.
The Portfolio Sphincters
measure their performance against the benchmark Portfolio Sphincters'
Index. The index dropped 27.76 to 1094 breaking a key level formerly known
as support. (No such thing as support in a bear market.) This is where the
swan dive phase begins. The VIX shows only a minor move into neutral
ground. The behavior of investors remains remarkably similar to last
summer. We are now in the late August part of the cycle. The slope of the
decline ahead may or not be as severe as last September's, but should last
a good deal longer. This will not be just a 15 day selloff followed by an
immediate recovery.
This is very early in the 6 month cycle down
phase. That cycle is 6 months in name only. It can be as long as 10
months. Prices are heading for the lower long term channel boundaries. The
dark blue channel is the 12-18 month cycle. That cycle's slope
should now become more negative. The short cycle is just now turning down,
meaning that the next 10-15 days should be marked by severe weakness. The
10-13 week cycle just made a second peak. It is in a position
similar to late August, but appears to be even weaker now.
The next fiber nacho retracement level is
around 1050, where the central trend tendency also lies. That won't hold.
Nor will the 61.8% level. This baby's going all the way back and then
some.
L-Low,
H-High
*SWD=
Sideways Down Phase- Trading Range
SWU=Sideways Up
p: preliminary
Too Early: Too soon to project
Nasdaq
Charts
The
Nas lost 55.71, closing at 1855, after a very minor bounce at the bell.
There was an hour long bounce around mid day, but other than that and the
bounce at the bell, it was all downhill. The Nas's position is also similar
to late August in cyclical terms, so here again there doesn't seem to be a
reason to expect anything other than the same outcome. 1400 here we come,
doodah, doodah.
Here's another
clear picture of the Hunchback Formation. The market will probably gap the
shoulder line, causing the I've Fallen and I Can't Get Up pattern.
WhoLit
Packdog has been doing well of late, and Moanday morning the company
raised guidance for the first quarter. Helluva lot of good that did.
Consider it a sell signal. This stock's cycles are topping out a little
behind the market. There are some funny things going on, on this chart,
having to do with the proposed Compaq merger. Beware.
JP Moogan
continues to implode. The cycles are breaking down, and cycle channels
should begin to slope down more sharply. There are other major bank stock
charts that look almost this bad. As go the banks, so goes the stock
market, especially in these days where they are so directly involved in
stock trading. Troubled banks liquidate all kinds of trading vehicles,
including stocks.
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