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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 or free 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. Soon, 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 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 quarterly or $74 per year, in honor of the great bear markets of the 20th century. Actually, 1937 was pretty bad too, so the Academy may offer a half year subscription for $37. Latecomers will be able to get a one time, one month trial for, what else? $6.66. As always I thank you for your support, and I look forward to many prosperous years working together with you. Happy New Year to you and to Bears the world over! Dr. Stepan N. Stool December 30, 2001
Enrongate (1/10/02) Do I hear echoes of 1973? The tentacles of the Enron scandal are reaching deeper and deeper into the bowels of the Harding Hoover administration, a government bought and paid for, lock, "stock", and barrel by Enron's money and influence. Evasive answers to reporters' questions, stonewalling, and a gradual descent into outright coverup, and obstruction of justice, lie ahead. With Democrats, we get sex scandals. With Republicans we get abuse of power. The stock market will be dealing with these issues day in and day out for the remainder of the Harding Hoover presidency. We have been through this before. The same kind of backdrop was part and parcel of the last great bear market. The only difference is that this time the economic and financial underpinnings are in even worse shape than they were at the beginning of 1973. And make no mistake, they were a mess then. So here we are on Day 1 of Enrongate. Why do I call it Day 1? Because it's the first day that President Harding Hoover bothered to answer any press questions. And of course, the President never talked to anyone at Enron about their problems. Well. What the hell'd you expect? A smoking gun? No, this will grind on and on. The press will keep asking questions, and every week there will be another damning revelation. Vice President Walking Heart Attack had 6 meeting with Enron bigwigs. No big deal. But of course no one ever talked to President Harding Hoover about it. What's that you say? The auditors destroyed documents? Well, doesn't everybody? President's top advisor sold all his Enron stock in June? Gosh, what a lucky guy So it was Day 1 and what did the markets do? Nothing, absolutely nothing. A complete yawner. The Nas was up 2, the Sphincters Index up a buck and a half, and the old Dowager lost 26. The trading ranges were so narrow, it's not worth talking about. But under the surface, the deterioration, the diseased rot, spreads. And the poisonous stench is beginning to seep out into the open air. SPX Charts The VIX index closed at 23.13. No fear there. The index remains in a two month old top zone. The SPX remains on the edge of dropping back inside long term downtrend channels. Momentum continues in a huge negative divergence. This market high wire act is gonna go splat one of these days. We just don't know which day.
The 6 month cycle oscillator is still in a top configuration. The short cycle is headed down, and the 10-13 week cycle is in a 4 week old, weak up phase. Again, it's just a matter of days, until things begin to unravel.
Nasdaq Charts There are many different ways to try and filter the cycles so that they are visible on a chart. The one below shows the Nas to be outside its long term cycle downtrend. No big deal. It always does that at extremes. This is the essence of an overbought condition. Sometime in the next week or so, the Nas will be back inside that channel, and still be grossly overbought. The portfolio sphincters are tapped out. They've been listening to the market strat-ego-ists, who are recommending the highest level of stock allocation in the history of the world. The sphincters know it, but they think the market will correct by just continuing sideways for a few months until the economy catches up. We know better.
Here's another way of depicting it. The long term cycle in the blue channel is of 12 to 18 months duration. It has flattened, but is still descending. Long term cycle indicators, not shown here, indicate that this softening in the downtrend slope was actually an up phase in the 12-18 month cycle dating back to April. The down leg is just ahead of us, and it will accelerate down.
Here's Dr. Stool's favorite Stoolwether, IBM, not because he likes the stock. Because of the name, silly! If you look at the price portion of the graph you think, nice uptrend, right? Wrong! Since the last week in October this stock has been under distribution. Rising price trend, declining momentum. Yes, everyone knows that BM can float, and stocks can levitate, but they can only do it for so long. IBM is about to start sinking, just like all those other overpriced big BM's out there. Those rumors you heard about today? That was the specialist inventing an excuse. They are short up the kazoo, and it's time to start dropping this turd.
More Golden Stool Every night in this space Dr. Stool features a market sector of particular interest. Last night it was the gold stocks. Tonight, this chart is so pretty he couldn't resist repeating this sector. Here it is, the Golden Stool, in its pure form.
Nasdaq Cycle Conditions as of 1/10/02
L-Low,
H-High SPX Cycle Conditions as of 1/10/02
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