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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.) Warning - If you are not an experienced, independent, investor/trader, capable of forming your own opinions, and making your own decisions, PLEASE LEAVE THIS WEBSITE NOW! Like all poodits, Dr. Stepan N. Stool, the stock proctologist, takes no responsibility for anything, especially if you happen to agree with him when he's wrong! Please See Disclaimer 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 Problemo, Just Buy Micron! (3/5/02) "You don't have to be in Procter & Gamble anymore. You can buy Micron." That was the attitude expressed by one portfolio sphincter which epitomizes what this market is all about. The Wall Street strat-ego-ists, ego-nomists, portfolio sphincters, poodits, analcysts, and assorted other Wall Street eck spurts have cast their verdict. No way to go but up. It's nuts. The Dow Jokes dropped 153 points Tuesday. But since "everybody expected" that, the level of concern was ZERO. No surprise there, that's for sure. The pros on the Street never worry. After all, it's not their money!
Doc, ever the skeptic, thinks this Dow rally, far from just getting started, is just about over. The Nas, though, may have some upside, given the enormous short interest and margin calls which are pressuring the shorts into buying. It never ceases to amaze me that the poodits scream long and loud about the shorts when prices are dropping, but nobody ever stops to say ,"Hey, thanks, you guys!", when the all the crappy worthless stocks on which the shorts have loaded up, explodes to the upside. Once those margin calls are finished, and the shorts are wiped clean, the demand driving the surge in these worthless tech stocks will disappear. The process is beginning. Doc thinks the Dow and Sphincters Index have made their highs, although they may be retested. The projections on the Nasdaq range from 1860 to 1925, so it has a chance of making another new high as the last of the die hard bears crapitulates. Absolutely no one expects the market to turn on a dime. Not even Doc is that insane. There's still plenty of roll left from this snap hook out of the rough. But, as you know if you've ever hit a snap hook out of the rough, or seen someone else hit one, the roll isn't going to add anything in terms of distance. As for whether the intermediate trend has turned up, the consensus on the Street is not only that, but that this is a bull market. They think that shot they hit is headed for the fairway. Uh uh. It just clipped its first tree on the left. Intermediate cycle indicators and long term cycle trends are turning, but so far, only turning flat, not enough to confirm an up trending market for more than the short run. And the rally hasn't quite carried outside the boundaries of the long term downtrend enough to confirm a change in direction. Admittedly all of this may just be the normal 4 or 5 day lag that comes before intermediate indicators confirm a turn. And it may not seem that way, but at upturns in cycles of 5 months or more, the first four days off the lows normally give off far more decisive signals. The Dow's reversal today is a crack in the facade. The fact that NO ONE on Wall Street is worried about it, is a good reason to take it seriously. The Dow, after all, led this rally. Is the Nasdaq suddenly going to take over leadership? Not once the shorts are done covering. When they're through, the Nas will collapse like a house of cards and take the market with it again.. SPX Charts The VIX, a sentiment indicator based on options volatility, closed at 21.81, a new low for this cycle, and the lowest level since the beginning of July. While it is worrisome is that this indicator has been trending for six months, and it's no longer a certain judgment that a VIX in the low 20s is extreme, the odds are that it is. These are certainly not levels from which major upturns are launched. The extreme complacency reflects the fact that institutions are fully invested. The effective demand necessary to drive prices much higher is not going to be there. The boys have already placed their bets. The SPX has apparently broken through major resistance. But stoolies know that market managers always do that as a means of sucking in the last chartist's dollar before reversing. The next few days are critical. If prices can hold above the downtrend line, the bubble is back, alive and well, but if they fall back below that line within a few days, as Doc expects they will, the bear will reassert itself. |
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This 10-13 week cycle up phase, which 2 days ago looked like it was going to be a sideways up, leading to a sharp down, has changed its stripes. It broke the upper bands of descending long term channels. That is exactly what happens at a selling climax at the lower bands, and has happened during upside blowoffs. Is that what this is? We'll know shortly. The short cycle oscillator has reached a level consistent with a short term high, but that's not enough. If the gains are consolidated, rather than immediately reversed, the only cycle fit would be a rising long term cycle channel in the direction of the dotted lines on the chart. The 10-13 week cycle high is due at any time over the next 2 weeks. The centered moving average projection for that cycle is now 1160. That was nearly reached. For the bear case to remain alive the rally needs to be reversed probably no later than Thursday.
This chart shows there's actually another major resistance area that has not been penetrated, and the long term downtrend, while moderating, is still intact. As strong as the rally has been, the intermediate indicator has not turned up. It's acting like it did in the summer of 2000.
Here's a measure of the Fiber Nacho regurgitation ratio relative to the last decline. Hmmmm.
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 3/5/02
PTT - Periods Till Turn Nasdaq Charts The six month cycle oscillator has turned up. Will the up phase head sideways or up? Short term cycles are near a high. If the short term down phase is not down in real terms, they could blow this sky high. But Doc thinks that when the short squeeze has exhausted itself, it will fall apart.
Time series analysis confirms that the 6-7 week cycle phase is up, but the 10-13 and intermediate waves remain no better than flat. The Nas is weaker than the rest of the market. A flat up phase is possible, but if the longer term oscillator (navy) turns higher from above the zero line the move could be explosive to the upside. So a great deal rides on what happens Wednesday and Thursday. A reversal day is an outcome devoutly to be desired by bears. Otherwise, it's going to be a long, cold, dark, and lonely spring here at the Stool.
The Nas Fibver Nacho regurgitation chart is on the basis of closing prices. 1890 would be a 50% retracement.
Nasdaq Cycle Conditions as of 3/5/02
PTT
- Periods Till Turn Bork Attack! Tuesday's strength in tech was helped along by another major borking. The borkers just love to bork Intel because they know they can get a lot of mileage out of it. They make an absolute killing on these. The borkees never seem to catch on. Or maybe they do, but they don't care because, why? All together now, "It ain't their money!" It's yours.
Golden Stool The gold stocks remain in consolidation, preparing for the next move up in preparation for the coming hyperinflation. There now appears to be some risk that the end stage of the short term down phase will get a selloff down into the high 70s.
Long Bong Hit The 6-7 and 10-13 week cycles in bond yields are turning up. The 6 month cycle has been in a down phase for three months. That resulted in a trading range and it is ending. Bond yields may be ready to stage a powerful move up which could send 10 year Treasury yields rocketing above 5.5%. But watch the 28 day rate of change closely. If that turns down bond yields will head down. If investors start buying bonds, it means they are selling stocks.
Dollar Death Watch The dollar has topped out. How do you say Smoot Hawley?
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