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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. On or before April 1, 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. 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. 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 Anals will be accessible by subscription only beginning April 1. The subscription form will be posted a few days earlier, but there is no mechanism for pro rating if you subscribe early. To receive the full term, do not subscribe until April 1. When you subscribe through Paypal, you will immediately receive a user name and password which will allow you to access this page. If you have previously sent a donation through Paypal, and you would like a complimentary subscription equivalent to the amount of your contribution, send an email to [email protected]. Include your name, your email address, and if possible the date of your contribution(s) through Paypal. Upon confirming your information, I will send you a user name and password. Allow 1 week for processing. By requesting and accepting a complimentary subscription, you are agreeing that you have read and agreed to the Terms and Conditions, which basically says that you can't sue Dr. Stool, or Capitalstool.com, or its owner, no matter what! (If you emailed me this week, Thank you! I will send your user name and password this weekend. Restricted access begins April 1.) Finally, for you luddites who refuse to use on-line payment, you can subscribe by mail. The annual subscription rate for payment by check is $99.00. Print the subscription form at the bottom of the Terms and Conditions and mail it in to the address on the form, with your check, of course. I will email you a user name and password. Allow 2 weeks for processing for payments by mail. Thank you for your support! Doc
Stoolies- See Subscription Information Above! The big news today wasn't the fact that the market got out of bed on the wrong side and promptly fell and couldn't get up. It wasn't that housing starts were up. It was the a combination of the facts that mortgage apps were down sharply again this week, interest rates were up sharply again today, and lo and behold, stock prices fell right along with bond prices. This is a momentous change, one that Doc has been looking for, and one whose importance cannot be overemphasized. It is the opposite of the way the market has generally acted for several years, when portfolio sphincters sold bonds and bought stocks. Today, they sold both. It is a sign that inflation psychology is taking hold. Here are some excerpts from the Mortgage Bonkers press release today: The market composite index of mortgage loan applications for the week ending March 15 decreased 11.0 percent to 471.6 on a seasonally adjusted basis from 530.0 the previous week... On an unadjusted basis, the application index decreased 10.6 percent and was down 14.3 percent compared to the same week a year earlier...The MBA seasonally adjusted Purchase Index decreased to 310.9 from 314.6 the previous week. The seasonally adjusted Refinance Index decreased to 1406.3 from 1783.0 the previous week...Refinancing activity represented 40.8 percent of total applications, decreasing from 46.3 percent the previous week... The refinance index, at 1406.3, is the lowest [full week] since the week ended July 13, 2001. The percent of the number of refinance applications, at 40.8, is the lowest since the week ended July 6, 2001. Phil Colling, an Economist with the Mortgage Bankers Association of America, stated "When the 30-year rate is above about 7.30 percent, refinance activity tends to be relatively low. Last week, the average 30-year rate was 7.11 percent, which is within the ‘gray zone’ between 7.00 and 7.30 percent." With the 10 year Treasury Bond Yield closing at 5.40, the highest level since July, and with yields early in a solid looking uptrend, it won't be long before refi activity goes from the gray zone to the dead zone. As that process unfolds, the mortgage bubble will collapse, and liquidity will dry up across all markets, including the stock market. Because the mortge bubble has been the liquefaction machine of the US financial system. Without that liquidity, the system will be starved and die. The interest rate rise and liquidity squeeze become a self reinforcing cycle.
Portfolio Sphincters Index (SPX) Charts The VIX, a sentiment indicator based on options volatility, closed at 20.70, up from 20.35, which was the lowest level since June 30, 2001. This continues to indicate extreme complacency, and was a number that when last reached, preceded a devastating decline. However, churning persisted for weeks before the real drop began. Doc does not give much weight to sentiment indicators for short term timing purposes because it's impossible to know what is the ultimate "extreme", and how long the "extreme" will last. But over the past four years, when the VIX has dropped below 20, a devastating decline has always followed within a couple of weeks. We got very close to that threshold. The question is how close is close enough, and can we rely on that precedent? Price, and price based indicators are always the final arbiter. We see major negative divergences on the charts, going back months. If this thing turns down before the divergences are resolved, these rallies have been nothing more distribution. That is Wall Street's business, and they are masters of it. The resistance at 1175 looks like it held, and the 17 day rate of change turned down, signaling a probable reversal. When the 28 day rate of change follows, a downturn in the 10-13 week cycle will be confirmed, and the rout will officially be on. |
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Intermediate cycle indicators are still headed up, but short term cycles have turned lower. The 1 year cycle up phase has been under way since the September 2001 lows, and is now making a second top. This is not a new up cycle. It is a mature one, and the recent rally acted more like a blowoff than a new bull leg. The top building process usually takes weeks. This one has been under way for 11 days. Time is now on the side of the bears.
The next fiber nacho reflux is at 1150. That should be history relatively quickly if Wednesday's action has any shock value. Then 1135 and 1123.
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 3/20/02
PTT - Periods Till Turn Nasgap Charts The six month cycle oscillator turned up in the Nas but it remains weak and in negative territory, and precariously close to a sell signal. This indicates an extremely weak up phase, and it could be a precursor to complete collapse if the indicator turns down from such weak levels. Short term cycles have turned down, and centered moving average projections around 1950-75 held. The short term down phase which looked like it would manifest as a range has begun to deteriorate rapidly. It is possible that all cycles could get in gear to the downside soon.
The next fiber nacho reflux is at 1820, then 1790.
Nasdaq Cycle Conditions as of 3/20/02
PTT
- Periods Till Turn Stoolwethers- The Vote, Day 2 Everybody's waiting for the vote to come in. But the market jury has rendered its verdict. Guilty! The chart shows a breakdown from the rare, but not unusual two headed hunchback with weak right shoulder. Golden Stool They don't make uptrends any "purtier" than this one.
The 10 year yield is in a sideways short term down phase, and the intermediate cycle has turned up. Bond yields are headed higher, regardless of what the Fed does. They may mark time for a few days, but the next upside move will be explosive. Should be interesting to see how the stock market likes that. This reminds me of 87. Bond yields bottomed and started rising sharply in May. The stock market crashed in October, five months after the turn in the bond market. It's been four and a half months now since bond yields bottomed.
Say goodbye to Uncle Buck. He's on the verge of a breakdown. Talk about the Dollar on the Stool Pigeons Wire.
See you in Intraday Stool. Let us know what you think on the Stool Pigeons Wire. |
![[Most Recent XAU from www.kitco.com]](http://www.weblinks247.com/indexes/idx24_nasdaq_en_2.gif)
![[Most Recent XAU from www.kitco.com]](http://www.weblinks247.com/indexes/idx24_sp500_en_2.gif)
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