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The Anals of Stock ProctologyPublished 5 times
per week by the American Academy of Stock Proctology and Available by annual subscription for $1929 or free Welcome to the The Anals of Stock Proctology, the new scholarly journal of the American Academy of Stock Proctology, edited by the world famous founder of the study of Stock Proctology, Dr. Stepan N. Stool PHandD. The Anals replaces Capitalstool's nightly and weekend updates of the major stock indexes. Now you can get your nightly stock proctology report in one convenient, uncluttered page, right here. The Anals will be available for free, for the immediate future. Soon, however, all advertising and solicitation will be removed from the Anals, and access to the Anals will be restricted to subscribers. As a result of the clean format, the Anals will be readily printable for reading in locations more appropriate to such endeavors, such as, uh, the kitchen table. Yes. The remainder of the site, including The Stool Pigeons Wire, IntradayStool, Stoolhoo, and Stoolchat, will continue to be free. You will never have to pay for access to these pages. Previous contributors to Capitalstool will receive a free subscription period. Prior to going to a subscription format, the voluntary pay buttons will remain. So feel free to contribute now. Your contribution will result in a full credit toward your future subscription. Several of you have already contributed in excess of $500, and you will receive a free lifetime subscription. Contributors of written content or illustrations used on the Capitalstool front page will also receive free subscriptions. That includes all who achieve the level of Professor of Stock Proctology on the Stool Pigeons Wire. Initial subscription rates will be $19.29 quarterly or $74 per year, in honor of the great bear markets of the 20th century. Actually, 1937 was pretty bad too, so the Academy may offer a half year subscription for $37. Latecomers will be able to get a one time, one month trial for, what else? $6.66. As always I thank you for your support, and I look forward to many prosperous years working together with you. Happy New Year to you and to Bears the world over! Dr. Stepan N. Stool December 30, 2001
The market gave us quite a thrill ride Tuesday. No surprise here. All the wild gyrations led to where we thought, a down day with a close on the lows. The news in the morning included CIEN warning of a big earnings miss. The stock continued its collapse. Giant Whopsaws in two of the most important Stoolwethers WalMart and Amazon, are looking complete, AMZN definitely so. WMT needs to drop another little bit. These stocks broke out above key long term resistance levels last week, sucked in all the portfolio sphincters who weren't already 100% invested, and then reversed after a couple of days. Once they are back below the point of the breakout, the Whopsaw is complete. Upside Whopsaws are notoriously bearish. Some traders like to refer to them as "distribution spikes." Whatever. GE touted itself, reaffirming earnings guidance. This was a big relief to the stock's specialist, the boys over at FleetEnemaBoston (See chart) who have been getting this baby stuffed down their throat lately. The chart shows a stock that looks poised for a humongous breakdown one of these days. Let's face it, ladies and germs, GE is the market's 700 pound gorilla, and it has been sitting on the Specialist's face and unloading lately. You have to feel sorry for those guys over at Fleet. First Enron, now a triple whammy of JPM, Williams, and GE. Aside from those problems, Fleet is also the specialist for the market's other 700 pound gorilla, WalMart. God forbid if that baby starts to sag. Actually, not "if" but when. When it does, you can kiss Fleet goodbye. And you can kiss the market goodbye. Why? Because Fleet is the specialist for 1/3 of the Dow, and 500 stocks on the Big Board. These poundings they are taking are wiping out their capital. The semiconductor equipment stocks which were borked on Monday held their own. IS that bullish? No. When the stocks fell apart too quickly Monday, the borkers began stabilization operations. They do that for a two fold purpose. One is to try and protect the value of their bloated inventory. And two, hoping to attract additional buying interest by putting on a show of relative strength, in the hope that when the market does bounce they can complete the borking. This double borking shows up on the charts as a double top. The Dow ended flat after a day of wild swings, closing down 1.66 at 9676. The index bounced between a low of 9604 and a high of 9774. The high was around 2:45 PM, following a spirited rally that began at mid day. After that it was straight down until the last 10 minutes, when the bulls fought a rear guard action to try and hold the market near unchanged. Since the Dow is only 30 stocks, and it is controlled by 3 firms, they were successful at doing that. So the picture the the public sees, that the Dow is flat, ain't too bad. The reality is a little different, as the market managers could not support the broader averages, and they closed significantly weaker. Make no mistake, the Generals will ultimately fall back with the fleeing troops. With the 4, 6-7 and 10-13 week cycles on the verge of a simultaneous downturn, the Dow is headed for a devastating break to the downside. |
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SPX Charts The portfolio sphincters yardstick is the SPX. This is their market. The SPX lost 4.42 trading in the same pattern as the Dow. It came off an early low of 1082 to top out late in the day at 1101, only to fall back to close at 1090. The VIX remains in neutral ground, much closer to a top than a bottom. The market continues to follow the pattern of last summer, and is now in a cycle phase similar to where it was in late August. Assuming the pattern continues, as appears likely, the market is in the early days of a massive breakdown.
The shortest cycles are just topping out. A concurrent downside acceleration by all cycles is imminent.
The SPX is resting on the 38.2% fiber nacho retracement of the September-December rally. Many people make their trading decisions based on fiber. The results can be messy. I suspect a similar pause at the 50% level and 61.8%, and especially 100%. Keep your eye on these fiber or fibbing nachos. Strange things happen around them. Some chartists start speaking in tongues, saying things like, "This is the A of the ABC before the abc, after the 4 of a 4 flat, but it could be a 1-2-3 B-C before an e equals mc hammer, of the bearish engulfing of the hanging man. Always followed by, "But it depends." That stuff is kind of fun, except I have absolutely no idea whatsoever what these folks are talking about. It's like John Bullinger and those dumbass wiggly waggly bands of his based on standard deviations of prices. Yo John! We are not measuring static populations here. We are measuring human emotion and movement. People make decisions in trends, and they tend to repeat themselves. It's not statistical analysis. It's trend and cycles. Straight lines and smooth curves. Let's face it, I just don't understand much about how professionals measure the market. Do you? To me it's all about Whopsaws and Fingers, Manhattan Skylines, Niagara Falls, who is doing what to whom, and most important, something which most analcysts ignore, the passage of time. Oh yeah, and how much moolah is burning a hole in people's pockets. More moolah, stocks go up. Less moolah, stocks go down. That I can understand. I know. Off topic.
SPX Cycle Conditions as of 2/5/02
L-Low,
H-High Nasdaq Charts The Nas was the weakest of the three branches of the Wall Street money tree, dropping 17 to close at 1838.52, off its low of 1828.67, and down from a high of 1868. Levels formerly known as support are breaking, one after another. The outlook is grim.
Cycle phasing and price levels are almost identical to last August. This is not coincidence. It will go down a LOT faster than it went up.
Nasdaq Cycle Conditions as of 2/5/02
L-Low,
H-High Golden Stool The thing you have to keep in mind about gold stocks is that the total float of every gold mining stock in the world is infinitesimal in relation to the potential demand. If gold comes to be seen as the only remaining safe haven, let alone a momo play, there is no way of forecasting how high these stocks can go. I've been bullish on gold since last spring when it became clear that gold and the gold stocks were basing with positive momentum patterns. This breakout is for real. Will HUI make a temporary top as it blows through the top of the long term channel projection, or will it just keep going? I have no idea, but I suspect it will just keep running for awhile given the potential supply demand imbalance.
Long Bong Hit What's the bond telling us. Have yields made an intermediate top. A further breakdown from here would signal impending economic collapse. A consolidation and renewal of the uptrend could mean either inflation, or credit market instability. Or both.
Stoolwethers This stock is incredibly important because of Fleet's role as a conduit for controlling the stock market. And they are in BIG trouble right now, for, among other things, the reasons discussed in the opening of this commentary.
Last week Amazon had this ferocious breakout. I suspected a Whopsaw, a killer of a false breakout. Well, here we are. Whopsaw complete. Next stop. Fi dollah.
See you in Intraday Stool. Let us know what you think on the Stool Pigeons Wire. Archive
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