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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
We bears, all three of us, experienced quite an emotional wringer last week. The bulls did their best to ram us and jam us, but in the end, considering the effort expended, we held our own. The Dowager was up 68 on the week, at 9840, but off from Friday's high of 9898. The Portfolio Sphincters Index (SPX) closed the week up 5.70 at 1133.28, but off Thursday's high of 1139.50. The Nasty ended with a weekly gain of 7.36 at 1937.70 after hitting 1960 on Thursday.
The FEED was aggressive last week, adding $38 billion through repurchase agreements of varying maturities, from overnight to 28 days. The result was an an increase in repos held by the Fed, of $2.958 billion over the previous week. They sat tight on Friday. The Fed continues to have a problem keeping the bubble inflated, a problem that began appearing about a month back. Both M1 and M3 are below levels of a month ago. The Fed, playing Santa Claus, was adding reserves at a fever pitch in December, holding $50 billion in repurchase agreements in the week ended January 3. They drained some of that after the holidays, with holdings dropping to $32.9 billion the week ended January 17. Last week they began adding again. Surprise, surprise, the reduction in FEED repo holdings coincided with the selloff in the stock market that began January 9. After adding last week, the market rebounded a bit. Again, what a surprise! But does the FEED really have control of what happens next? The answer is no. Who does? The boys in the bond pits, who represent all of the really big money, and really smart money. The big, smart money, is watching the Fed, and watching every little portent of economic recovery. What the smart money's been seeing has it worried about inflation. Last week the ECRI reported another slight increase in the weekly leading economic indicator index, the third in a row, in a recovery trend that began in mid-October. Bond yields marched steadily higher all week and gold stocks continued to exhibit bullish chart patterns. The Fed is in a box. Aggressive expansion of the money supply, or further signs of economic strength, are going to spook the bond market. But without that expansion of money feeding directly into the stock market, stocks are dead meat. The portfolio sphincters, by themselves, are no longer able to support stock prices at these insane levels. The sheeple no longer believe. The public won't follow the instructions it hears on Crapvision day after day after day. People are taking their money and sticking it somewhere else, somewhere "safe." They simply refuse to cooperate. They hear the desperate shilling and spewing of the poodits and analcycsts for what it is, a self serving pack of lies. SPX Charts There's been no disruption of the long term downtrend. The 12-18 month cycle remains in a top. Will it form a weak right shoulder, or just break down immediately?
The short cycle (13 days to 4 weeks) is heading up, eating up the Dover Sole. This would be a logical place for a bounce, but intraday indicators on Friday suggested that the up cycle was on its last legs. The 10-13 week cycle is going to be no help, as it is due to turn down hard any day now. Investors will start giving up on some of that optimism they've exhibited, very soon.
Complacency still reigns. The VIX is in the low 20's, consistent with a top. The minor uptick in momentum is nowhere near enough to signal even a short term up turn. Without aggressive Fed pumping, the gas tank is empty.
Nasdaq Charts On the weekly chart, the long cycle indicator remains at the same level it reached in March 2000. The secular trend channel in pink will begin turning lower as the down phase ahead of us picks up steam. Might we get a crash like April 2000? By all means.
The short cycle is in an up phase. It is like to manifest as a trading range, the "dreaded sideways up phase." Then the bottom will fall out.
Time series analysis says that time is running out for the bulls. This 10-13 week cycle up phase was even weaker than the one in July and August.
Sucktor Watch Bonds refuse to cooperate with the Fed's efforts to keep interest rates low. Will they consolidate before moving higher, or just blow the roof off. Stay tuned this week. A move above 5.10 would signal a breakout to 5.50. They might pull back to 4.90 first, but that would change nothing.
Is this the last hurrah for the dollar? 121 is the number. It certainly looks like the final curtain call.
Gold pulled back last week, but gold stocks held their own. The stocks tend to lead. The chart says they're due to take a breather, but the uptrend is extremely powerful. Look for the HUI to form a high base in the mid 70's, then break out to new highs in March.
We still want to keep an eye on the amazin' AMZN and King Walmart. The amazin's had a bit of a breakout here. I still suspect a Whopsaw, based on the 6 month cycle indicator saying this is a top. But the shorts may not be through squeezing themselves yet. I don't know why they do that. Do you? Must be something to do with masochistic tendencies. Of course market makers delight in adding to the pain, being primarily motivated by their sadistic tendencies. One of the stoolies likes to refer to the stock market as the S&M. Now I understand why.
On the other hand, WMT has the makings of a major Whopsaw, although they may not be finished messin' with it yet. I've heard traders refer to this as a distribution spike. If it comes right back down, we stoolies call it the Finger formation. It's what the portfolio sphincters get when they buy at the top on a false breakout. This week we'll find out whether Walmart gives the sphincters the Finger.
Nasdaq Cycle Conditions as of 1/25/02
L-Low,
H-High SPX Cycle Conditions as of 1/25/02
See you in Intraday Stool. Let us know what you think on the Stool Pigeons Wire. Archive
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The
Dow staged a bit of a Whopsaw Friday, as the Harding Administration
proposed a limit on asbestos liability suits. Supposedly this will help
protect the earnings of America's biggest old line manufacturers, many of
whom are facing enormous asbestos related liability. The index rocketed
through the baseline of a reverse head and shoulders, ran up to a round
number, then ran out of gas, and closed back below the baseline. The financial
media only said that the Dow had a pretty good day. That, shorts
fans, remains to be seen. The failure to hold that breakout should not be
ignored. 
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