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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 markets put in another stellar performance in response to strong economic news. Bulls must be scratching their heads at this point. This news is what they've been waiting for all along. Recovery! Dr. Stool however, started speculating over a year ago that when the news finally got good, the market would get bad, because investors would wake up to the fact that earnings weren't going to recover, or at least they weren't going to recover enough to justify the level of stock prices. That process is getting under way. The Dow oozed out again on the strong GDP news, forming a perfect finger formation in the first half hour after the open. Why couldn't it stay there? Because, in spite of what all the portfolio sphincters and poodits say, we are still in a bear market, boys and girls. It's exactly the kind of bear market we saw in the early 1970's when institutions poured into a handful of "safe" stocks, while the rest of the market just churned inexorably lower. Then it was the Nifty Fifty. Now it's the Dow, the Turdy Thirty. The divergence between the Dow, and its big cap brother the Portfolio Sphincters Index (SPX) is stunning. As all stoolies know, that's because it's much easier to manipulate an arithmetically weighted average than a 500 stock average weighted by capitalization.. So the Dow goes it merry way, lulling the sheeple to sleep, as clearly evidenced by the ridiculous complacency reflected in poodit comments, and sentiment indicators. But the repeated failures of the Dow to pierce resistance are going to take their toll. Portfolio sphincters have now spent the last few dollars of your 401K money that they have left in their month end shenanigans to dress up those statements that go out in the mail in a week. The party's over boys. You're going down.
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 ``Investors are fairly confident that there could be some recovery certainly in the blue chip stocks and the traditional economy,'' said Rick Meckler, president of investment firm LibertyView. ``What is less certain to them is what it means for technology because the valley in technology seems much deeper.'' [No less certain than a funeral] ``It's hard to see where earnings increases are going to come from to sustain any kind of rally,'' said Wendell Perkins, Johnson Asset Management in Racine, Wisconsin. ``We've got growth, but it's not going to be enough to drive technology companies' growth high enough to justify their stock prices,'' Perkins said. [Oops, they snuck in one of us!] ``People are gravitating to companies in businesses they can get their arms around,'' said Jack Ablin, chief investment officer at Harris Trust & Savings Bank in Chicago. He favors Tricon Global Restaurants Inc., which owns Pizza Hut, KFC and Taco Bell. ``Who doesn't understand that stuff?'' [Lemme see, where can I hide?] "The GDP data is just a confirmation of a fairly positive trend for the U.S. economy and for the stock market," said Patrizio Merciai, chief strategist at Lombard Odier. [Ayyy, Pat, the economy is not the market, it's the other way around. Wait till next month.] Sell Side Poodits Strat-ego-ists ``The market has had so much swing, it can be called a Benny Goodman market,'' said Fahnestock & Co. market strategist Alan Ackerman. ``While economic news is improving, once again the lack of visibility on earnings ahead has kept a great deal of money on the sidelines. Traders and investors feel more comfortable with the value sector of the market. What we're seeing is a two-tiered market." [Just like the 70's. Not good.] Technical Analcysts Richard Dickson, technical analyst at Hilliard Lyons - said higher prices are likely over the near term, adding that the risk of another correction during the next four to five weeks is high. A close above the January highs, Dickson said, would signal that the correction is over and that the market had entered a second leg higher in the rally that began last September. "Until that happens, the market remains in its corrective phase."[That's it in a nutshell. They all think it's just a correction, not a bear market.] Gail Dudack, chief investment strategist at SunGuard Institutional Brokerage, expects more challenges ahead. "Profits are going to rebound, but much slower than people hope for." She expects the major indexes to retest the three-year lows hit on Sept. 21, the first week after market opened following the terrorist attacks."[Dudack is a hero. In case you don't know, she was fired by UBS Whoreburg]. Her crime? Telling the truth. As we all know, Wall Street can't handle the truth.] Traders ``There was a story that someone on the terrorist list was on a plane headed to the United States,'' said Bob Harrington, head of listed trading at UBS Warburg. ``The market saw that and it might have caused some concern.'' [WHAT a BUNCH of crap. Any possible excuse.] This market may not break out of that range," Brian Finnerty, head of Nasdaq trading at C.E. Unterberg Towbin. [The principle of permanent extrapolation of the recent past.] Analcysts ``There are no indications of a recovery'' in spending on technology, said Ashok Kumar, an analyst who follows chip and computer makers for U.S. Bancorp Piper Jaffray. ``The semiconductor index could retrace all of its gains,'' Kumar said. [ A month ago, where was he?] Others Robert Gay, global head of fixed-income research at Commerzbank Securities, doesn't believe a broad-based economic recovery is imminent. He doesn't feel the consumer will have the wherewithal to carry the economy because of the glut of capacity sloshing around. [He's a bond guy. To be bearish is to be bullish.] Summary Denial is the watchword of the day. The worst anyone expects is a correction, except of course for Gai Dudack, whose record is outstanding, and who has the distinct honor of having been canned by one of the world's largest borkers because she wouldn't play along with the boyz. 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 23.13. Complacency remains sky high in spite of Wednesday's and Thursday's late air pockets. Momentum is remains terrible, and has room to get a LOT worse, especially since it has turned weakly upward in the past 3 weeks of the 6-7 and 10-13 week cycle up phases. 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 looks like August again, and a collapse similar to the one that began then should begin today (Friday).
Like last July-August, the 10-13 week cycle is up and has reached the moment of truth as it bumps into the descending upper wave band projection of the 6-10 month wave. It will either break through that band, or it will begin to break down. Everything that you and I see in the cycle pictures, and in the market's sentiment and valuation measures, tells us that the market will break down, and it is likely to do it in dramatic fashion. The SPX has been in an up phase for 4 weeks, but the trend direction has manifested 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, as it was at the beginning of August. Two days ago time counts indicated the downturn was due in zero to 4 days. Now it's zero to 2 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 2/28/02
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. With intermediate and long term cycles as weak as they are, the downturn in the short cycles that is about to begin will result in collapsing prices.
The stark similarities between this cycle and the last intermediate wave are uncanny, except for one thing. The market is weaker now.
Nasdaq Cycle Conditions as of 2/28/02
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 cycles 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.
Dollar Death Watch Not much to say. It's over. Kaput.
MyBM is sitting at a level which would normally be indicative of a bottom. It's on the lower long term cycle channel boundary. The 4 week cycle is trying to turn up. The 10-13 week cycle has been rising. If this stock can't get up off its ass here, and yo9u know it's not going to, the bottom is going to drop out. And if MyBM drops out the bottom, the Dow goes with it. Remember, the Dow is an arithmetically weighted average. And When MyBM moves, you're going to have a Dow movement.
See you in Intraday Stool. Let us know what you think on the Stool Pigeons Wire. Archive |
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