The Anals of Stock Proctology

Published 5 times per week by the American Academy of Stock Proctology and 
the American Society of Shortsellers
Dr. Stepan N. Stool, A.S.S. Chair

Available by annual subscription for $1929 or free

Welcome to the The Anals of Stock Proctology, the scholarly journal of the American Academy of Stock Proctology. As always, the Anals' Editor will be none other than the world famous founder of the study of Stock Proctology, Dr. Stepan N. Stool PHandD. 

The Anals will be replacing the nightly and weekend updates of the major stock indexes.  In the future, you'll be able to get your nightly stock proctology report in one convenient, uncluttered page, right here on Capitalstool.com.  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
Chairman of the Department of Stock Proctology
A.S.S. Endowed Chair
American Society of Shortsellers Endowment
American Academy of Stock Proctology

December 30, 2001

Nasty, Sphincters, Take a Snooze (12/30/01)

The Nasdaq was up 10.84 Friday, on a day about as exciting as watching paint dry. The FEED was jamming as usual adding $8 bil in 6 day and weekend repos, bringing the total for the week to an astounding $43.75 bil.
Seems it was an effort to prop up the credit markets. Not that much of it found its way into stocks. Considering it was a light volume week, it could have been much worse for bears.

Nasdaq Cycle Conditions as of 12/28/01

*SWD= Sideways Down Phase- Trading Range
  SWU=Sideways Up
  p: preliminary

The worrisome part of the above view is the fact that a low is either near or under way in the 10-13 week cycle. That's normally not a problem with the 6 month cycle rolling over. It is similar to the conditions which existed last June, when the 10-1 week cycle up phase resulted only in short rallies that kept running out of gas as the intermediate and longer cycles were weak. Investors and traders were in no mood to stick around in those rallies. The same thing should happen here, so long as all the Fed's largesse is "gainfully employed" elsewhere, as Doc suspects. The imploding credit markets should suck up all that liquidity.

The linear regression chart show the Nas locked in a less severe downtrend than earlier in the year. (grey channel.) This is a result of the 12-18 month cycle up phase that's been under way since April. (See weekly chart). Unless that upper trendline is decisively broken, nothing has changed, and you can expect the lower channel boundary to be tested, and probably broken in the months ahead.

The picture is similar for the Sphincters Index. In fact it looked like most portfolio sphincters took the day off Friday, things were so quiet. The index rose 3.88, finishing in the middle of a narrow range.

The big pictures are the same as for the Nas. Sentiment, in this case represented by the VIX as inverted continues to grow more bullish and complacent, and is now outside of the Stoolband. It is the considered opinion of the stock proctologists here at the Academy, that this is a reliable top indicator. Not to mention the fact that 99.9% of the poodits and anal cysts we see on Crapvision are wildly bullish. 

I have also added a Greeen Line Cycle Indicator to the chat. This indicator was developed by the stock proctologists here at the Academy to show the condition of the major intermediate cycle phase. This is normally 10-13 weeks in duration, but just as with the five English vowels, sometimes there's "y".  This occurs when we have no idea y the market is behaving as it is. A double top in the green line is just one of those things. The 10-13 week cycle "should" have topped in November, but it didn't, and we bears were, therefore, screwed. The market has been known to do this to both sides, bear and bull alike.

In spite of the fact that we are not quite sure where we are in the 10-13 week cycle scheme of things, the 27 day rate of change indicator is diverging from the index, suggesting that intermediate momentum continues to weaken. This is probably the influence of the 6 month cycle rolling over. If the 10-13 week cycle is heading up, the upside should be limited by the longer term trend forces. In other words, a gradually growing tide of investors, either deciding to put their money elsewhere, or who no longer have excess cash to invest. Remember, it doesn't take selling, just a few less buyers. And we may yet get some selling. With short term cycles due to top out imminently, could be there are "sellers waiting." 

SPX Cycle Conditions as of 12/28/01

*Sideways Down
  p: prelim