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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
I'll open tonight's comments with the quote from SEC Chairman Harvey Pitt to which the above headline refers. Pitt was talking about necessary regulatory changes. "It's very important for me to see that change. It's a simple notion of taking money that you haven't earned, and that's not the American way." Let's see, there's Las Vegas, Atlantic City, government, and politicians in general, not to mention the obscene compensation packages corporate chieftains and Congressmen pay themselves, and oh yes, there's Wall Street. Looking at The Principle of Tallness in Monday's intraday charts, we see they are all pretty much equal, which indicates the buying was in big caps across the board, and mindless. The Dow came up to the top of its bulloney bullhorn, ran through, and surprise surprise, closed on the upper line. The Dow is now 18 days into a 6-7 week cycle up phase, and the stage managers have finally been successful in pulling the rest of the market along. The 6-7 week cycle has been quite visible over the past few months, and historically, is frequently the Dow's dominant trading cycle. The centered moving average projection for that cycle is 10,225. So it's 80 points and a day to go. Of course, it is the end of the month, for which purpose the portfolio sphincters always keep a little powder dry, therewith to inflate things and make them look good. They will need to raise cash again real soon, however, since they have already invested beyond their means. But like they say on the evening news, "It's your money, so who gives a crap?" By now, you've read and heard all the excuses and lies behind today's action, the housing starts, all the loud farting noises coming out of a couple of tech stocks. Allow me to bring up one thing I heard from John Rydings, Bear Stearns chief ego-nomist. The housing starts which were reportedly so strong and really gave the market its kick start, were actually DOWN 16% on a non- seasonally adjusted basis. Now, tell me again, what was the average temperature across the northern tier of the US in January? Finally, I happened to catch Sue Herass and the rest of the cheerleaders on Crapvision tonight. They were positively giddy over the fact that the Dow was over 10,000, and now up on the year. All that excitement over 30 stocks. The Dow should be outlawed. Wisdom of the Poodits In the 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 Portfolio Sphincters We've had good economic numbers, but good company reports had been missing,'' said Richard Sichel, chief investment officer for Philadelphia Trust Co. ``This is a change in the right direction.'' "The GM news is an additional sign that the economy is recovering,'' said Timothy Stevenson, manager of $500 million Evergreen Special Equity Fund. The worst is over,'' said Eric McKissack, manager of Ariel Appreciation Fund. ``The market is getting more confident.'' [How many times have we heard that?] "We don't see much upside potential in the market near-term, but we don't see substantial downside risk either. The economy is turning for the better, but it will be a gradual recovery process. We expect the market to continue to bounce around without breaking any major support levels or blasting through resistance levels," commented Louis Navellier, portfolio manager of the Navellier Performance Funds. [Principle of extrapolating the last two weeks indefinitely.] Ned Riley, chief investment strategist at State Street Global Advisors, expects ongoing worries about the accuracy of corporate financial reports to keep stocks from any meaningful advance in the months ahead. "The Enron fallout is going to continue. We haven't seen the end of it." [Ned, Ned, what happened? Musta got tired of saying buy Intel, Buy Cisco, But Intel, buy Cisco.] Sell Side Poodits Strat-ego-ists "The market's concern about corporate accounting is subsiding. [Here we go again.] Once it fades, the focus will be on economic data, and the data continues to suggest we are in recovery and the recession is behind us,'' said Peter Cardillo, chief strategist at Global Partners Securities Inc. "The housing market continues to stay strong despite the weak jobs market and that's really good news." [Bubble.] The fact that General Motors is giving a more positive outlook is also very positive for the market.] [This guy memorized the Wall Street Book of Shibboleths right before the interview.] Edward Kerschner, global investment strategist at UBS Warburg, said. "The earnings quality issue is not a new one and that the recent deterioration has been overstated by many observers. In the 1970s, earnings quality was poor because of high inflation. But with inflation low, earnings quality is now better than the historical norm based on an earnings quality index derived from the GDP accounts. By this measure, earnings quality has been excellent. [This guy is full of crap. One of the worst track records out there, right up there with Abby Justa Colon.] It was a very gratifying day," said Larry Wachtel, market analyst at Prudential Financial. "But I'd like to see some follow-through tomorrow (Tuesday)." [Ah, a skeptical old timer.] Analcysts "What you're seeing is an oversold rally. The tech sector was stretched on the downside and is being pulled higher by the Dow and S&P," remarked John Hughes, analyst at Shields & Co. "Strength in both of the mentioned indexes, he said, has been a function of firmness in the cyclical sector." [See there are a few honest ones. I'm impressed.] Technical Analcysts A close over those levels should create the potential for a further move to test the recovery highs around 10,300 on the DJI (Dow), and resistance levels around 1,130 on the S&P and 1,850 to 1,875 on Nasdaq,'' said Richard Dickson, technical analyst at Hilliard Lyons. Traders "There are positives out there that you just haven't seen recently,'' said Barry Berman, head of equity trading for Robert W. Baird & Co. ``The existing home sales data bodes well for other economic reports coming out later this week.'' [Code for "Buy the rumor. Sell the news. He'll be selling Thursday and Friday."] "There seems to be a sense down here that there is a flight to quality,"- Ted Weisberg, trader at Seaport Securities. [Or flight to quantity, as Fleck would say.] Summary As always, we can count on the borker chief shills, the strat-ego-ists to continue spewing the biggest lies. Other than that there's not an abundance of wild exuberance. What I read into these comments for the most part is complacency, a sense that nothing terrible is going to go wrong, and the sphincters think they can safely stay fully invested. That squares with the low readings we're seeing on the VIX. But things can go wrong, and with the instability in the credit markets, they will go wrong. There's nothing in the charts to suggest that this rally will last beyond mid-week, and the fact that the consensus has returned so quickly to a lack of concern supports that. Finally, I'd like to pass along to you this email I just received. It requires no explanation. Dear LinkShare Affiliate: |
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SPX Charts The VIX, a sentiment indicator based on options volatility, closed at 23.28. Complacency is again on the increase as the SPX rallied off an all too obvious double bottom. The picture remains remarkably like last summer. Momentum is terrible, and has room to get a LOT worse. No two periods are exactly alike, but from a cyclic perspective the market looks like it looked then, with sentiment and momentum are at virtually identical levels. The problem I have had is deciding whether it was July or August. Now it looks like July, but my gut still says August.
Like last July, the 10-13 week cycle is up. It has apparently been in an up phase for 3-4 weeks, but the trend direction manifests as a trading range. Prices could move toward the top of the major channel. I assume The 6-10 month cycle remains down, based on all the other evidence, including sentiment and cyclic indicators. It looks as though this churning could go on for a few more weeks. On the other hand, the 6-7 week cycle has been well defined in recent months, and it is due to top out now.
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 of the market. SPX Cycle Conditions as of 2/25/02
PTT - Periods Till Turn Nasdaq Charts The Nas is still trending. It's extremely difficult to get a read on the 10-13 week cycle. The shorter cycles may actually have been in up phases for the last several weeks, although you wouldn't be able to tell that without extremely sensitive filters. Short term upside centered moving average projections appear no higher than 1785.
Nasdaq Cycle Conditions as of 2/25/02
PTT
- Periods Till Turn Golden Stool The gold stocks are in a short and intermediate cycle down phase that should continue to manifest as a trading range consolidating a bull trend. A short term cycle low is due imminently. But with the intermediate cycle negative the short term up phase will be limited. The next big move is due in April.
Stoolwethers If My BM can get back above 105, all bets are off.
See you in Intraday Stool. Let us know what you think on the Stool Pigeons Wire. Archive |
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