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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. (Just kidding, details to follow.) 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. Some time between now and March 15, 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 for a 3 month trial and $74 per year thereafter, in honor of the great bear markets of the 20th century. As always I thank you for your support, and I look forward to many prosperous years working together with you. Dr. Stepan N. Stool February 19, 2002
The Dow is what the market's stage managers want you to see. The pictures at left tell the story of what they did Wednesday. They ran the Dow up the flag pole, and eventually the army saluted, but the Nas brought up the rear grudgingly. The Dow isn't reality, but it does let you know what the stage managers are trying to accomplish, which is to fool the public into thinking everything is fine, and getting better all the time. They did it by making a perfect double bottom intraday, which none of the other averages did, then the three managers, Goldman, Fleet, and LaBranche, started goosing those 30 stocks. They had help from another big Feed. The chartheads took notice, then shorts, of whom there are too many, got scared and it was off to the races. They are making a push for the top of the bulloney bullhorn formation on the daily. The indicators say that if they get there, it will be a gift for getting short.
I've been likening this period to last summer, vacillating as to whether the current cycle phasing was most like July's or August's. After yesterday, the cycle picture seems to show that we may see a couple more weeks of this "slot rattling." Slot rattling occurs when the market runs helter skelter back and forth across a range that has been cleaned of bids and offers. The only thing to do is watch the indicators closely for signs that the breakdown is imminent. One thing is certain. there is no sign whatsoever that Friday's rally was anything more than a short covering panic in a downtrend. Wisdom of the Poodits In our ongoing exercise of reviewing daily poodit commentary in one big pile, where it belongs, here is today's poodit wisdom. Pay attention to the subtle difference between remarks coming from the buy side of the Street, and the sell side. [Dr. Stool's comments in brackets] Buy Side Poodits Saying that this is a volatile and uncertain market is an understatement. We're praying a lot. - Portfolio Sphincter [Dear God- Please make my stocks go up] Any company that is tainted by credit problems or accounting problems is being looked on with suspicion. But any company with some kind of purity to it seems to be acting very well. Portfolio Sphincter. [like a virgin] On the other side of this accounting imbroglio, we should have better disclosure, and that's a good thing for stocks. If a man from Mars came down and wanted to know when was a good time to buy stocks, you'd say now. You've got a recovering economy, low interest rates, low inflation - Portfolio Sphincter [sure tell that to the man from Mars!] Positive first-quarter GDP forecasts, should spur an earnings recovery in the second half of the year. We expect these earnings improvements to come through over the next six to 12 months and to continue two years out. This gives us a basis for modest optimism, allowing us to invest with a view beyond the short-term volatility.- Portfolio Sphincter [Nothing like a forecast to spur earnings] Hopefully the rally today [Wednesday] means we're breaking through some of the skepticism about accounting- Portfolio Sphincter [Hope, hope hope] Sell Side Poodits While the energy-led slowdown in the overall retail inflation index is unlikely to continue, the core CPI should drift lower throughout the year. Borker Chief Ego-nomist [What do you expect these shills to say?] Inflation is not a concern for the (Federal Open Market Committee) or for us. Not only was there no evidence of inflation from the CPI report, but there is no evidence from any price report. [Yeah, and real estate doesn't count, and insurance, and healthcare don't count.] Borker Ego-nomist In the end, the equity market's performance will depend on the economic performance because that will be the main driver for earnings. Because the economy is firming, that should mean lower Treasury prices and higher equities. Everywhere you look there's another sign of improvement somewhere in the economy. - Bond Borker Chief Strat-ego-ist Shill [OK, let me get this straight, Higher bond yields are good for the stock market. Sheesh.] There are still some land mines out there and it's a tough market to navigate. Borker Equity Trader [And he's a market maker!] I don't think the buyers are coming in with reckless abandon saying, 'I've got to own them (stocks), but this represents great value at this point.' - Borker Head Trader [If that wasn't reckless abandon, what is?] Investors have been very negative and the market got sold out. Rallies can gain momentum quickly with so many shorts out there. But Wall Street is still nervous and I wouldn't read too much into Wednesday's gains. The market remains extremely temperamental.- Borker Head Trader [Finally, someone who knows what he's talking about. He's a market maker, he should know.] The market has done a good job, considering all it's had to take in over the last few days. There's skepticism across the board right now, but no fear, no panic. I like the action today. Long-term these investigations [into accounting] will be positive, as we'll have cleaner accounting and more visibility, but short-term we're going to see a lot of bumps [Wednesday]. Borker Head Trader [I hope he doesn't break his arm patting himself on the back.] Others I don't think what we saw today [Wednesday] has any kind of legs in the long term. Although I do think you've seen the worst of the market.- NYSE Floor Trader [There's that old consensus again] Summary Tuesday, the portfolio sphincters were worried but not terrified. By Wednesday, they were hoping and praying, looking for virgins and men from Mars, and predicting earnings would increase because forecasts are better! Unbelievable. These are the people managing your retirement funds, ladies and germs. They are still out there buying with what little of your cash they have left. Take some of it back, while you still can. On the sell side, the market makers are saying they are still having a hard time keeping the market under control, while the head shills, the ego-nomists and strat-ego-ists are still lying their asses off, and making stuff up that sounds good but is really stupid, in order to better pick your pocket. But when you look at it all together you see it for what it is. A pile of crap. |
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SPX Charts The VIX, a sentiment indicator based on options volatility is back to indicating extreme complacenc, typical of a top and early stages of a downtrend. Mo still stinks. But it did come off a double bottom after a bit of a down-up whopsaw that cleaned out a lot of sell stops. The boys just picked them off in preparation for the little PM jam they had up their sleeves. Some of the short cycle centered moving average projections suggest a possible high of 1120. I don't believe it, but that's what they say, and they are right more often than not, so I'll respect that.
The cycle chart is more suggestive of a July-like picture, which means we may see a few weeks of these maddening bounces before the bottom drops out. Short cycles appear to be within a day or three of a downturn, and but the 10-13 week is early in a sideways up phase that could result in more churn. The overall bias should remain to the downside under the influence of longer cycles.
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 2/20/02
PTT - Periods Till Turn Nasdaq Charts Intermediate cycles on the Nas are an extremely difficult read. I believe current activity is analogous to last July and August, but is it July or is it August. Do we get one more big bounce? I'm leaning toward saying no. The 10-13 week cycle is either still down, or in the early stages of a week up phase. The 4 and 6-7 week cycles appear to have been in an extremely weak up phase which has a week or so to run. There may be enough juice to keep things churning through the end of the month, before it breaks down.
The rally came nicely off the lower trendline. Depending on how much short covering there is, they may be able to push it back up to 1825 or so.
Nasdaq Cycle Conditions as of 2/20/02
PTT
- Periods Till Turn Golden Stool The pullback in the Gold Bugs Index can go to 77-78 without damaging the intermediate uptrend.
They brought old JP back from the abyss. It's temporary. This shows no signs of recovery. But the chartheads will pounce on the double bottom for an hour or two.
See you in Intraday Stool. Let us know what you think on the Stool Pigeons Wire. Archive |
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