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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
No Worries for Wall Street (2/27/02) It was another wild and crazy day on Carefree
Street. As usual, the FBI* Director said nothing on Capitol Hill, and
financial infomercial media gave inadequate coverage to the Senate Enron
Hearings, where four top analcysts who had strong buys on Enron all the
way down, were grilled by the Senators. The market looked like it would
stage a reversal day, but the window washers stepped in at the end to jam
the tape back to the plus side. Short sellers, having been burned over and
over, played a role with panicked short covering, both in the early rally,
and the late uptick. They were spooked by the early strong durable goods
report, and they looked at the afertnoon selloff as a gift horse. Even
diehard bears were doubters this morning. But not Dr. Stool. He was just
mad as hell. As the intraday charts show, the size and speed of the afternoon selloff was impressive, and it was enough to turn 8 day cycle indicators down after the sell signal late on Tuesday whipsawed on the open. The Dow Inflatables again ran through the Bulloney Bullhorn, and again, they couldn't hold it. The Dow pierced its 6-7 week cycle centered moving average projection of 10,200. That cycle is now nearly 4 weeks along, and it has been the most visible trading cycle. It is also apparently the fourth week of the 10-13 week cycle up phase. Portfolio Sphincters and the market's stage managers continue to squeeze as much as they can into the 30 Dow stocks, but air pockets are developing, as the their tank is running out of the liquid fuels known as cash. They are in the process of failing at a retest of the January high.
Looking at the real market averages below, the cycle indicators show that at most, the churning at the top has 3 days left, if that. It may be over already. Upside projections have been met. Sentiment is insanely complacent, and momentum is poor. It looks just like early August immediately before the market collapsed. 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're coming out of this recession, but at a very slow pace, and tech is lagging the rest of the economy,'' said James Lyon, a portfolio manager at Oakwood Capital Management, who bought Cisco shares today when they fell below $15. [It's your money, not his.] ``Everyone is so skeptical that this economy is indeed improving,'' said Joseph Williams, Commerce Bank Investment Management Group. Williams is optimistic that the economy has started to recover and companies may beat profit forecasts this year. [Irrational exuberance is back.] He favors retailers including Wal-Mart Stores Inc. and Best Buy Inc., as well as semiconductors, because they will benefit the most from an economic rebound. [Hasn't figured out yet that the market is the economy, not the other way around.] ``People are realizing the recovery will not be that fast,'' said Howard Kornblue, portfolio manager at ING Pilgrim, which manages $18 billion. ``Maybe they were a little bit more optimistic, thinking Greenspan was going to make it appear the recovery was going to be sooner rather than later. But as they digested the comments, they realized it will take more time.'' [Hey no big deal, so it'll take another quarter. We can wait.] ``The consumer has been remarkably robust through all this. A lot of the purchasing that was going to take place has already taken place,'' said James Gribbell, who helps manage $70 billion at David L. Babson & Co. He has been selling telecom shares. [Contradictory gibberish. He's selling telecom now that it's down 90%? What was he doing last year?] Traders"It's been happening all month where the market rallies to the top of the range and then falls off," David Briggs, head trader at Federated Investors. "There's a lot of bi-polar disorder out there. There's one camp that says we're going to have another leg down; there's another camp that says the economy's improving." [Moonlights as a shrink] "We are going to see some recovery in the economy, but maybe not as much as some people expected," Andrew Wallace, managing director of R.J. O'Brien. [He expects to sit here for awhile.] Sell Side Poodits Ego-nomists "The recovery in corporate profits may not be as strong as expected," William Sullivan, chief economist at Morgan Stanley [A little worried, but not too.] Strat-ego-ists Peter Cardillo, chief investment strategist with Global Partners Securities - "What's encouraging is that the market appears to be disassociating itself from the Enron problem and focusing more on the economy." [This guy can read the market's mind.] "We have seen increasing evidence, both from our own work and that of our economists, that the predicted U.S. economic recovery is under way" - John Manley of SSB. [And????] Technical Analcysts ``But the market is very segmented and if you are talking about technology stocks, it's very hard to be bullish,'' said Ken Tower, chief technical analyst at CyberTrader Inc. ``There are few names in the semiconductor area that have attractive trends, but most of the stocks there, you are just looking for an opportunity to sell them on a rally.'' [Uh, oh, suddenly lots of tech bears out there.] Analcysts Wachovia Securities Inc. analyst Stephen Koffler said Cisco may report lower-than-expected profit this year because many large customers are reluctant to approve information technology projects that include networking. [He's a lit-tle late. Where was he a month ago when the stock was 20?] Others "The equity market was comforted by the numerous reasons Greenspan cited as reasons for optimism on the economic outlook and the bond market was comforted by Greenspan's notes of caution, which hint at a neutral policy stance and therefore no threat of interest rate increases," maintained Tony Crescenzi, chief bond strategist at Miller Tabak & Co. {Bullish.] "Greenspan still clearly believes the recovery is not yet sufficiently well established to risk spooking the markets," echoed Ian Shepherdson, chief U.S. economy at High Frequency Economics. "Inflation will remain low so there is no pressing need to act while markets are still fragile. On balance, the recovery story told by the chairman is now a bit more forceful." [He's bullish.] Summary Once again, a sense that while things are going nowhere fast, no one is the least bit worried that things may get a lot worse. Most are are at least mildly bullish. Almost everyone is bearish on tech however. That's ok, because it's new, but it does suggest that the final phase of tech liquidation is getting under way. We have a ways to go before they hit bottom. The fact that Goldman is dropping coverage of chip stocks (see Stoolwethers) tells us that they have finished liquidating out of tech. If you consider them the smart money, in that they are the smartest crooks, you have to figure there are still plenty of sellers out there. The above quotes culled from Boomberg, SeeBS.Markethype, Rhoiders, and that outfit with half a dozen 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 23.09. Complacency remains sky high in spite of the selloff Wednesday afternoon. Momentum is terrible, and has room to get a LOT worse. The picture remains remarkably like last summer. No two periods are exactly alike, but from a cyclic perspective the market looks like it looked then, with sentiment and momentum at virtually identical levels. It's beginning to look more like August again.
Like last July-August, the 10-13 week cycle is up. It has been in an up phase for 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. The market is in almost the same position and condition, in terms of cycles and psychology, that it was at the beginning of August. Yesterday, centered moving average projections forecast a high of 1120.Time counts indicated the downturn was due in zero to 4 days. Now it's zero to 3 days and counting.
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 2/27/02
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, but cyclicality should be the same across all markets. The shorter cycles 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. That was surpassed by just a bit on Wednesday morning.. The rally is over.
Have you had your fiber nachos today. While the SPX was stuck at a 38.2% retracement of the January February decline, the Nas ran up to 23.6%, and stopped dead right there.
Nasdaq Cycle Conditions as of 2/27/02
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 Bond yields flip-flopped again. The early buying in stocks coincided with a big selloff in bonds, and the selling in stocks accompanied buying in bonds. Evidence suggests there's still no new money coming into the markets. The sideways down phase in bond yields continues.
Back on February 6, this space featured the borking of Untel by Mohel Lynch (Oy do we got tips for you!) While Congress is focused on the incestuous relationship between analcysts and investment banking, the real story is how the analcysts are merely shills for the trading departments and market making operations of their firms. The analcyst's buy recommendation enabled Mohel's traders to unload a couple gazillion shares on the portfolio sphincters (the ones ruining your retirement accounts), and the general public, at the top. One of the worst offenders in this obscene practice has always been Golden Sacks, which happens to make markets in about 900 Nasdaq stocks and is the NYSE Specialist making exclusive markets in over 500 NYSE stocks. Today they announced they were ending coverage of Intel and a bunch of chip stocks. I guess they must have unloaded all their inventory.
See you in Intraday Stool. Let us know what you think on the Stool Pigeons Wire. Archive |
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