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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 rally fizzled Tuesday after hitting upside cycle projections. The upper line of the Dow's bulloney bullhorn held. Looking at the intradays, all of the averages closed smack in the middle of their trading rages, moving lower in the last 40 minutes, as the pendulum prepares to swing back down. Hourly 8 day cycle oscillators were poised to signal a downturn as trading ended. All cycles up to 6-7 weeks are topping out. The 10-13 week cycle remains in a weak sideways up phase that could fall apart at virtually any time. I Although the poodits are expressing uncertainty, there's no hint of fear whatsoever. They are not expecting much upside, but they sure as heck aren't expecting much downside. They are simply waiting anxiously for the good times to start rolling again. Will they ever be surprised when they see what's in store. 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 Eric Gustafson, portfolio manager at Stein, Roe & Farnham. ``People are just very fearful of volatility and being on the wrong side of a trade.'' [Eric couldn't think of anything to say.] ``The economy is sluggish,'' said John Kornitzer, at Kornitzer Capital Management. ``Consumers are holding back because of high debt levels. It's going to take a while for the economy to recover.''[Wait a minute, this must be opposite day.] Sell Side Poodits Strat-ego-ists "While the market has shown some resilience Tuesday but I remain skeptical. Volume is not encouraging and hedge fund activity has been dominating. It's a very frustrating market," said Bryan Piskorowski, market commentator at Prudential. [Yeah, for bears too.] ``The magnitude of the decline (in confidence) was very surprising,'' said Hugh Johnson, chief investment officer at First Albany Corp. ``That's really worrisome. It's hard to imagine a recovery in the economy and earnings if consumers are not confident and spending money.'' [Surprising? Consumers follow the stock market. He should know that. Somebody give that Huge Johnson a good shake!] Technical Analcysts " Nasdaq's rally on Monday must be described simply as a bounce as activity remains well within our negative short-term guidelines. Initial resistance is at 1,828 followed by 1,880. The 1,880 level needs to be cleared to consider a short-term upgrade," claimed Terry Danish, technical strategist at Investec Ernst & Co. [Talk about wishful thinking. Got to clear 1780 first.] Attempting to call the movements in the major averages recently has been challenging. While we should pay a certain degree of attention to the major averages, making decisions based purely upon the appearance of the averages can many times mask many opportunities that may be found just below the surface." [Yeah, yeah, it's a market of stocks, not a stock market, blah blah.] These hearings have an impact on investor psychology, they make people nervous, and that's why we're having a rally at the close," Ken Tower, technical analyst at CyberTrader [WHAT?] Traders ``There was a rumor that we have special forces in Iraq,'' said John O'Donoghue, co-head of listed stock trading for Credit Suisse First Boston. ``That got the jitters going.'' [Yeah, we saw that last week in Debka File. Next old rumor.] ``There was disappointment with the consumer confidence number,'' said Peter Coolidge, managing director of equity trading at Brean Murray & Co. ``The market ... is directionless. It looks like the sell-off created a reason for buyers to snap up stocks late in the day but it's certainly not a convincing comeback.'' [Try snapping shorts.] ``The bottom line is the consumer confidence number came out worse than expected,'' said Scott Lynch, co-head of listed trading at Credit Suisse First Boston. ``The whole economy was sustained during the recession by the consumer.'' [OK, lemmee 'splain. The sheeple follow the market. The market is the economy. You can tell what the sheeple will do from the market. You can tell what the economy will do from the market. You cannot tell what the market will do from the economy. End of lesson.] Others While Conference Board data triggered selling of stock futures by some institutional investors, Merrill Lynch & Co. bought S&P 500 and Nasdaq 100 Index futures following the report, said Eugene Connelly, a Chicago Mercantile Exchange trader. ``When S&P (futures) were below 1104, they started grabbing them even though local (traders) were hitting them, and they seem to have won the battle,'' said Connelly. S&P 500 futures rose to 1110. ``They started buying Nasdaq at about 1385 and 1392.'' Those contracts rose to 1417. [AHA! A futures trader explains how the world really works! Mohel was supporting the market. tomorrow they'll have to bail.] Summary This little exercise tells us that occasionally the media does talk to honest people who know what they're talking about. It's rare but it happens. Most of them are morons, or criminals, or both. They either ignore, or are incapable of understanding, or misrepresent the most basis concepts. But they are players, and we need to know what they are saying, and read between the lines. Overall, they remain cautious, confused and concerned. They are still fully invested. They have not yet begun to sell. The above quotes have been culled from Boomberg, SeeBS.Markethype, Rhoiders, and that outfit with national media names whose stock is going down the drain. |
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SPX Charts The VIX, a sentiment indicator based on options volatility, closed at 23.57. Complacency is high 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. I'll settle for late July. Three is absolutely no sign of a change in the intermediate trend.
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. This, ladies and gentlemen, is a classic sideways up phase, the same kind that preceded the collapse last August. And time is again running out.
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 2/26/02
PTT - Periods Till Turn Nasdaq Charts The Nas is still trending. As a result it's 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 were 1785, just below Tuesdays' high. The rally is over.
The pattern in this cycle is remarkably similar to the last intermediate wave, although there are similarities with late July early August. The pattern will unfold somewhat differently but the result should be the same.
Nasdaq Cycle Conditions as of 2/26/02
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. They now appear to be coming off a 4 week cycle low. But with the intermediate cycle negative the short term up phase will be limited. The next big move is due in April. If it starts now, I won't complain. It would simply emphasize the strength of the trend.
Long Bong Hit There are early signs that bond yields could be ready to move higher again. If they get over 5.0, there is no reason they won't get to 5.5 relatively quickly.
Stoolwethers What WalMart did Tuesday is not a "breakout". In stock proctology, it is referred to as an "ooze out". The ooze out occurs when a large gelatinous mass overflows its confines, which is what happens when, say, too may people try to stuff themselves into a Volkswagen. Lately Walmart has been in an ooze out. Of course when portfolio sphincters see a stock oozing like that, they can't resist squeezing it, sort of like a big pimple on your cheek. What happens is when they squeeze too hard, the pimple pops, and that yellow stuff squirts out all over the mirror. That's what happened with WalMart today. I wouldn't worry about it. Put some hot compresses on it, and keep your hands away from the area, and it will subside. Discuss the merits of this scientifc explanation here.
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