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[paid/menu.htm] 10 Minute Bar Charts 3/28/02 Dow Jokes Inflatables
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The Anals of Stock ProctologyPublished 5 times
per week by the American Academy of Stock Proctology and Free trial access to the Anals will end on March 31, 2002. To access the Anals on or after April 1, you must subscribe. When you subscribe through Paypal, you will immediately receive a user name and password which will allow you to access the current issue. 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.) Finally, if you prefer not 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 payments by mail. Thank you for your support! Doc Stoolies- See Subscription Information Above! Money Spigot Only Drips( 3/30/02) The market drifted higher for most of the day Thursday before falling at the bell. The Dow and other indicators have met both upside and downside centered moving average projections for all shorter cycles in recent days. Short cycles are now juxtaposed, with the 4 week trying to turn up, the 6-7 gliding into a low, and the 10-13 starting to top out. Momentum indicators are neutral or weakening. This may be a case of we won't know when the market will break out of its range until it does, but in the meantime it behooves us to continue looking for advance indications. One of them may have been the sharp drop in S&P futures after the bell Friday, and possibly the swoon in the Nikkei as well. Over the next few trading days, intraday indicators are hinting that the lows of this week may be retested, but the shortest cycle alignments do not appear favorable for a breakdown. It will be interesting to see how traders react to external events. The 10-3 week cycle is in a precarious configuration, and possible positive phases in cycles shorter than that might become a non-issue.
Money Spigot Only Dripping Again last week, the Feed did not have it's foot on the gas, adding only $16.5 billion in temporary reserves through repurchase agreements of varying lengths, and making no additions to permanent reserves. This was not enough to roll over existing paper. According to data on the maturity of Fed holdings, last week the Fed needed to add approximately $23 billion per week just to maintain the status quo. Over the next 15 days $23.5 billion in government securities held by the Fed will mature along with $21 billion in repo agreements. Again, approximately 22 billion per week will need to be rolled over, just to maintain the status quo. Last week the Fed's total factors supplying reserve funds were $681.8 billion, a drop of $2.1 billion from the previous week Over the entire first quarter, this figure grew by only $1.6 billion. That's 0.2%, or an annual rate of less than 1%, a far cry from last years double digit growth. It seems that the Fed's inclination now is to drain money from the system to try and pre-empt the inflation that has already reared it's ugly head in housing, energy, commodities, and services, and of course, rising bond yields.
Lets take a look at the monetary picture graphically. Keep in mind that the data in these pictures lags that discussed above by a week or more. Next week, the images should be even more definitive, showing the Fed tapping the brakes.
This
has shown up as a dead stop in the growth of M1. Meanwhile, the mortgage market is responding negatively to rising mortgage rates, and that in turn is beginning to slow the credit bubble machine. Here's what the Mortgage Bonkers Association reported last week.
That was for the week ended March
22, a week in which rates spike mid-week, possibly causing a rush of
activity. The overall index is now down from 535.2 three months ago. The
purchase index was at 302.9 (pre-holiday week) and the refi index was at
an astronomical 1886.5.While purchases have risen, stoking housing
inflation, in what is now clearly an out of control buying stampede
buying, refi's have begun to rapidly dry up. Refi's were 59% of total
activity three months ago. Clearly the mortgage boom, and especially the
refi boom which has driven this bubble are subsiding, and gauges of the
broad money supply are beginning to reflect that. Without that engine of
money creation, the stock market will be the second financial sector to go
south. Bonds are already well on the way. Portfolio Sphincters Index (SPX) and Sentiment The VIX, a sentiment indicator based on options volatility, closed at 19.03, yet another new low and again at the lowest level since August 31, 2000. The SPX dropped 15% in the 6 weeks following that reading. However, that was after it had stayed below 20 with the market churning for 2 weeks. The index has been at or below 20 w eek now. The question is, can we rely on the precedent? The indicator has only "worked" for four years. Four years is not much history. But the level of animal spirits seems to match what's going in with this indicator. Price, and price based indicators are always the final arbiter. We see negative divergences on the charts going back months. If the market 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 17 day rate of change, a proxy for the 6-7 week cycle, is headed down, but there's no thrust to the downside. The 29 day rate of change, representing the 10-13 week cycle, remains on the cusp of confirming an early downturn in that all important cycle. Wall Street thinks that the market is in a bull market correction or consolidation. Looking at the linear regression channel going back to the January 2001 high gives a different impression. By any standard of technical analysis, the broadest of the most widely followed market averages has never passed the test of being in a bull market. Do not be taken in by Wall Street's Big Lie, especially when it is a near unanimous consensus. When the Street is unanimous about something, it's at the end of the trend, not the beginning.
This is a critical juncture on the cycle chart. Intermediate cycle indicators have begun to turn down at relatively low levels. A downturn from these levels normally indicates severe weakness ahead. The 1 year cycle up phase has been under way since the September 2001 lows, and is now completing a second top. The top building process usually takes weeks. This one has been under way for 3 weeks, and with all the cycle juxtaposition, it may stay here for another 3 weeks.. Time is on the side of the bears, but based on the position of the short cycle oscillators, a short cycle up phase, lasting one to three weeks, looks likely to intervene before the top is complete.
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 3/28/02
PTT - Periods Till Turn Nasgap Charts Short cycles are at a
low. The market will bounce or continue in a range before the intermediate
top is complete and the 6 month cycle oscillator turns down. The
six month cycle oscillator remains weak in
negative territory, and precariously close to a sell signal. This indicates an extremely weak up phase,
and it will be a precursor to complete collapse if the indicator turns
down without further improvement from here. The next fib level on the
rally is 1860. Prices on the weekly chart
are outside the channel projection. That's either the kind of extreme that
signals a top, or confirmation of reversal. Nasdaq Cycle Conditions as of 3/28/02
PTT
- Periods Till Turn Golden Stool The gold stocks paused Thursday. Measures of the 10-13 week cycle are early in the up phase. Short cycles are toppy and need to consolidate however. That could be just a sideways move. This still looks like a very powerful intermediate up phase, in the early stages of a long term secular bull market in gold.
The weekly chart of the metal looks like it's getting ready to launch. But there are some caveats. The intermediate cycle oscillator needs to complete its upturn, and a price breakout above 310 needs to happen. Otherwise we could see several months of consolidation. But the trend looks like it may assert itself. We'll just have to wait and see.
Bond yields may be ready to break out again. The short cycle is coming into a low over the next few days, and the intermediate wave is solidly up. It's not a given, but a move coming out of this configuration has the potential to be explosive.
Uncle Buck's Illness Uncle Buck limped out of his sickbed, but he won't get far in this condition. The relatives are beginning to gather at the bedside, hoping buck can stand up straight one more time.
See you in Intraday Stool. Dr. Stepan N. Stool Let me 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)
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Chart Powered by METASTOCK (Sorry about the bull.)
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