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Dr. Stepan N. Stool, A.S.S. Chair
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American Academy of Stock Proctology
The Feed gave the
markets $10 Billion today. Feeds that large are almost always followed by
a jam the next morning. If it comes, this time it will be gone in the bat
of an eye. If it doesn't, that should tell you something.
Personally, I don't think it matters any more.
The public trust in stocks is broken. The sheeple are walking away
from this market in disgust, and that movement is barely in its infancy.
It will only grow. I smell death about this market. The real crapitulation
phase, the one from which there is no recovery, is under way. It is likely
to grind on for months. The markets are headed much lower, and the decline
will last much longer than anyone ever thought possible. The unwinding of
the giant pyramid scheme that is the US economy and financial system has
begun in earnest now.
As the intraday charts show, the market managers
tried around mid-day to hold the Dow Jokes together, but they couldn't do
it. FleetEnemaBoston's problems with just about everything they touch
turning to crap, are going to have a major bearing on this market. If you
look at the track record of New England banks, you've gotta think that New
England bankers are some of the dumbest bastards on the face of the earth.
My mind always goes back to the Bank of New England (BONE) which the FDIC
took over back in the early nineties. Most of the guys at Fleet probably
came from BONE.
As the third largest NYSE specialist firm,
Fleet controls a third of the Dow, including JPM, and GE, which are coming
under increasing pressure. Then there's WalMart.
If that bad boy should start to come under pressure in a generalized
market decline, Fleet will be in no position to do its job for any
of the 500 stocks for which it acts as specialist, and the market
will crack badly. The potential for a 1000 point down day in the Dow at
any time is a real and present danger.
Looking at the daily chart, the Dow is headed for
the lower reaches of its bulloney bullhorn formation. It will get there
fast, pause, then collapse again from there..
Here's a sampling of Tuesday's poodit sentiment
along with a little Stool editorial comment. Pay attention to the subtle
difference between remarks coming from the buy side of the Street, and the
sell side.
Buy Side Poodits
Until the public
sees some evidence that these fears are inflated beyond reality, companies
will have a tough time benefiting from any possible positive news. We
expect the market to remain in a trading range for the next several weeks.
-Portfolio Sphincter
Positive news on
the economic front isn't sinking in as investors are preoccupied with
accounting fears and credit problems. There was a heck of a lot of debt
amassed in the telecommunications area. Portfolio Sphincter
Here's just one
more name; let's just add another log to the fire. One is starting to get
the impression that all (companies) are doing it and I think with that
comes the worry: 'Is this really where I want to have my money? -Portfolio
Sphincter
There are
increasing signs that the situation may actually be deteriorating for
phone-related companies - Portfolio Sphincter
Normally people
would cheer up and say 'It's great to have more disclosure' but the fact
that they feel that they (companies) need to disclose more, that they need
to explain their earnings, worries people a little bit- Mental
Institutional Head Trader
IBM is
foreshadowing what's to come with other companies. You have to expect a
contraction (in stock prices) as companies start to get revalued. -Mental
Institutional Head Trader
When I read these things in a big lump like that,
I don't know whether to laugh or cry. These people are running your
retirement funds into the ground. Is it any wonder? Reading this stuff,
you wouldn't think any of them got past the sixth grade. But more to the
point is the fact that while they are concerned, there is absolutely
no hint of fear or panic, no indication of prudent selling, nor is there
any recognition of the seriousness of the situation. What that all boils
down to is that sentiment has a long long way to go, and there's going to
be a steady trend of liquidation exceeding demand in the months to
come.
Now let's read the noises coming from the other
side of the Street, the sell side. Notice any difference?
Sell Side Poodits
The stars are
beginning to line up! Go long! Earnings predictability -- not valuation -
is critical for stocks to sustain gains and earnings revisions are turning
positive! - Borker Chief Strat-ego-ist.
Never
count out the U.S. consumer! The labor market is considered the key to the
consumer outlook and news on the jobs front is encouraging. Even the
manufacturing sector looks like it has bottomed out! Borker Chief
Economist
All these accounting
problems are part of the decline -- they represent a can of worms that
hasn't been opened yet, IBM is one of our catalysts today and telecom
stocks are a real concern -- you can worry about some of these companies
having a credit crunch.-Borker Analcyst
Others
I
don’t think we’re in a freefall situation. But there’s not a
lot of positives to really hang your hat on. NYSE Floor Trader
Well
there you have it, your nightly unscientific sampling of the wisdom
of the poodits. The mental institutions managing your money are concerned,
and the borkers are split between the top shills shilling and lying their
asses off as always, and the analcysts down the line a bit expressing mild
concern. This is definitely not the stuff that turns are made of.
SPX Charts
The VIX, a sentiment measure
based on options volatility, is beginning to move into neutral territory
from extreme complacency. This movement is similar to what took place in
late August. The result should be the same this time, only I suspect it
will last longer because there will be no catalyst for a turn this time.
Momentum is atrocious and just beginning to weaken again. The long term
trend channel is intact, with prices starting their trek toward the bottom
of the channels.
If the 10-13 week cycle low was as shown, this
decline could last for two months or more. The alternative is that the mid
December low was the 10-13 week cycle low, suggesting that the decline
could end in two to six weeks. There's no way of knowing which view is more
probable at this point. We'll have to be open to the market's message when
the time comes. The fact that the 10-13 week cycle oscillator is at a low
level is an indication of extreme weakness at this point. Note that the
short term cycle oscillator is just beginning to turn down.
The next fiber nacho reflux level is at 1061,
just below a downtrend support line. The way momentum is building it will
go through that like a knife through butter.
The
Cycle Conditions tables have a new feature, 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. Is Doc a wild and crazy guy, or just a glutton for
punishment? Actually, this is because I miscounted the last 13 day
cycle, and was a day late and a dollar short at the low, looking for it on
Monday, instead of Friday. That's no excuse, because 12 days is close
enough, but this will force all of us to be a little more vigilant. It
will still be wrong most of the time, but a little discipline can't
hurt.
SPX
Cycle Conditions as of 2/19/02
Cycle
Phase/PTT
Target
6-10
Month
Down/1-4M
925
10-13
Week
Top/7-10W
970p
6-7
Week
Top/23-28
1035p
20-25
Days
Down/10-15
1030p
8,13
Day
Down/2-5
1045
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
Nasdaq
Charts
This
looks even worse. The only question is how fast the Nas breaks below 1600.
And waht if that spike last week represents the top of the downtrending
intermediate cycle band?
Walfart is
so important because it is so gigantic, and has held up so well for so
long. It is the market's shining beacon on the hill. Unfortunately, the
stock is stage managed on the NYSE by the world's weakest, most incompetent,
specialist firm, Fleet. The stock broke through major resistance 4 weeks
ago and is now on its way back below, a WHOPsaw of mammoth proportions.
The signs are in place for the stock to now fall to the bottom of the long
term channel projection. Do you think the boyz and gulls at Fleet were
smart enough to get short on this one? Because if they weren't you and I
as taxpayers may end up owning a piece of a NYSE specialist firm one
of these years, courtesy of Fleet and the fine folks at the Fed and the
FDIC. Nah, they'll probably just combine with JPM. Now isn't that a
nightmare scenario.
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