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10 Minute Bar Charts 4/9/02 Dow Jokes Inflatables
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The Anals of Stock ProctologyPublished 5 times
per week by the American Academy of Stock Proctology and When the only buyers are nervous shorts, this is what you get the day after. Meltdown. It tells us, again, that underlying demand is non-existent, not even strong enough to keep a rally going for more than 7 hours. Up phases are dying early across all cycle lengths. A 6-7 week cycle low is due, but it's beginning to look like it may be suppressed by the rollover in the 10-13 week cycle. In the sentiment department, there's absolutely no fear. The VIX remains near the magic 20 level that's been reliable in presaging big drops, and the put call ratio remains relatively low. All this in spite of the fact that the Sphincters' Index is now down 50 points over the last month, and the Nasgaffe is down almost 200. But the really big news on Proctovision today wasn't the market, it was the fact that George Washington is coming to Proctovision. That's right, beginning Friday night head bull Uncle Lou and his merry band of Wall Street Week perpetual bulls will be hauling their act over to Proctovision. The Squonk Box crew was creaming all over themselves this morning while interviewing Uncle Bull, making me want to throw up even more than usual. Personally, I thought Maryland Pubic Broadcasting got it right and that maybe they'd put on a show that actually reports, rather than cheerleads. But that's probably too much to ask. Just listen to this. The old WSW will become "Wall Street Week with Fortune." That's right, AHoL is behind the new program. That sure as hell ain't the public. So much for public broadcasting. But Amrecians won't cough up the tax dollars for a truly public broadcasting network, so this is what we deserve, more of the same old crap, probably worse, from the same old Wall Street mouthpieces. AhOL fergodsakes. Wouldn't you just love to see, if not Bearmerica Now with David Tice and Bill Fleckenstein, at least some balanced financial news reporting, and not the same steady stream of bought and paid for garbage they heap on use day in and day out. Oh well, we can dream.
And as Uncle Lou would say, the Dow Jokes Inflatable Averages finally took the pipe Tuesday, after the stage managers were unsuccessful at running the usual shell game of hiding what was going on in the market behind the action in the Dow. It was up for most of the day, but at last couldn't ignore the fact that the market was in meltdown mode. The Dow ended down 40. Still that was a helluva lot better than the rest of the market, but it will be no solace to mutual fund holders looking at the evening papers and continuing to see their retirement dreams disappear into Wall Street's invisible hand. Remember, these are the guys who told you to buy Intel at 34 a month ago. Now the Heat is on the crooks, as the NY State Attorney General announced the first in what is likely to be a series of wide ranging legal actions against the Wall Street mob. Things are going to get very warm around the collar on the Street in the months ahead. In the meantime, in spite of attempted upturns in several timing oscillators, the market hasn't turned up. It has continued to sink in the up phase of the 4 week cycle and bottom phase of the 6-7 week cycle. Neither of those have been able to turn up, and the indicators remain squarely in negative territory. That tells us that the weakening 10-13 week cycle is in control, and the market is likely to drive lower in the weeks ahead. Portfolio Sphincters Index (SPX) and Sentiment The VIX closed at 21.05, down from 20.74 Monday. It remains in a top zone, just above the 20 level (inverted on chart) which has been the precursor to big declines over the past four years. Complacency remains extremely high in spite of the SPX now being down over 50 points in a month. There's no fear, and that means things have room to get much, much worse. The 17 day rate of change, a proxy for the 6-7 week cycle, is trying to find a low, but it hasn't yet. A 6-7 week cycle oscillator is superimposed on the chart. It appears to have signaled an upturn, but so far, nothing doing. The 29 day rate of change, representing the 10-13 week cycle, clearly looks like it has topped out. If the down phase is strong enough, the 6-7 week cycle up phase will be crushed, as it was in February-March of 2001. It's just not clear yet whether a stronger downtrend will be established or whether the drip-drip bounce water torture will continue. The blue channel lines are the extension of a linear regression channel from the February and May 2001 highs.
The 5-6 month and 10-13 week cycle indicators continue to weaken from low starting levels, and in the case of the 5-6 month indicator, very early. This normally suggests extended, severe weakness. If the short cycle oscillator is also turning down at low levels, that also often means a severe short term down. The 4 week cycle turned up in late March, and the 6-7 week cycle is turning up here. IS the downtrneding 10-13 strong enough to abort the 6-7 week up phase? There's trendline support here. Wednesday's market could go a long way to telling us how strong the 10-13 week and 5-6 month cycles will be. The SPX is poised for a breakaway gap. This time it may do it and not look back.
The next level down is 1111, a 61.8% retrace of the March rally. Below that is 1089, a 38.2% retrace of the Wall Street's self-proclaimed "Bull Market".
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 4/9/02
PTT - Periods Till Turn Nasgap Charts Following last week's break of the trendline connecting the September and February lows, and classic return to the scene of the crime Monday, the Nas now appears poised to begin breaking away from that line, a pending 6-7 week cycle low notwithstanding. The big question now is whether that low will materialize at all, or simply be overwhelmed by powerful longer term forces. The six month cycle oscillator remains weak in negative territory, and continues to flirt with a decisive sell signal breakdown which, coming from these levels, would signal extreme weakness. One more down day, and that signal will be unmistakable. The 10-13 week cycle is in a down phase which is projected to last 3 to 7 weeks. This will be pushing down, and may be enough to crush the 6-7 week cycle.
Heading down, 1699 is a 100% retracement of the February March rally. The next level is 1660, which is 61.8% of the Big One.
Nasdaq Cycle Conditions as of 4/9/02
PTT
- Periods Till Turn Sucktor Watch- Energy You have to
wonder if the Feed's unwillingness or inability to continue growing the
money supply is beginning to choke off the economic non-recovery. Energy
stocks are now down over the last 30 days, coinciding with the leveling
off in gold prices, the pullback in long term bond yields, and similar
signs in industrial commodity prices. This coincides directly with the
period of slow growth in bank reserves and various money measures. The
idea that the price of oil or energy stocks has anything to do with the
trouble in the Middle East is nonsense. Just like everything else, it's a
function of the money in the system, and that has started to level off. Dirty Dirty SOX This looks
like the beginning of a very early downturn in the 6 month spin cycle for
the dirty dirty SOX. They've fooled us before but that chart sure as hell
looks like major distribution. Now where's that darn SOX 4 and 6 week
cycle low? Stool Request Line Stock O' The Day - NVR Today's winner is DRXR, sent in by stoolie "The end", who had nothing clever to say, except that he apologized for being long the stock. (Braaaack!). And what does Doc think? Let's put it this way. He wouldn't short it yet.
I still have a few Stock'O's in the queue, but if you have an idea for one, send it to [email protected]. Include some original reason for why you think the stock is deserving. Anything longer than 25 words- automatic disqualification! Stoolwether Bork Review As we all know, the act of borking is what happens when a borkerage firm analcyst shill pumps a stock after the borkerage's trading arm has accumulated a ton of it, either by design, or by accident. Invariably, the borking itself causes the stock to top out, because everybody who had even the slightest inkling to buy the stock, panics, and they all jump in all at once. Goodbye, pent up demand, if there even was any. The result is always the same. You get screwed, or borked, because the guy managing your retirement finds is either too stupid to know better, or he does and doesn't give a crap, because, after all, it ain't his money! Doc will check back on these borkings every so often to illustrate the aftermath. Remember, ladies and gentlemen, stock borking is what borkers do. It's their business. Accumulate inventory, mark it up and move it out, just like any other retailer or wholesaler. They make money the old fashioned way, advertising, PR, and salesmanship! Which brings up a thought, perhaps the greatest borking of all time was when the NYSE's third largest specialist firm, Meehan, managed to bork itself to the dumbasses at FleetBoston at the top of the bull market! The deal was negotiated in late 1999 early 2000, and closed in July 2000. Now that was a borking for the ages! Periodically, Doc likes to follow up on past stoolwether borkings. Once of our recent favorites is the double top borking by two of the world's biggest borkers. As observers of this business, you have to admire the professionalism with which the borkers manage to extract the public's money. Both upgrades managed to nail the tops, almost to the day. This is no accident, as all of the public buying generated by the bork exhausts potential demand for months to come. Looking at the chart it sure looks like the worst is yet to come. Wonder what Elliott Spitzer will have to say about it.
Golden Stool The short cycle down phase in the gold stocks continued and we're starting to see sell signals in short cycle oscillators. A further rollover from these levels on the 10-13 week cycle momentum indicator would be bearish for the intermediate term. For now, still betting on a shallow correction but watching closely.
Long term
bond yields are another key to telling us whether the non-recovery is about
to implode, or if inflation is going to go through the roof. This is
a critical juncture. The short
cycle on the 10 Year Treasury yield should be coming into a low, and the
intermediate wave is up. The negative divergences need to be watched. If
the intermediate momentum indicators turn down from these levels, yields
could head down back to the 5% area. On the other hand, the short term
down phase might still bottom with the intermediate uptrend intact. The
market hasn't tipped its hand yet. But if yields head lower, it will be
because of accompanying bad economic news, and that will be accompanied by
a sinking stock market as well. Uncle Buck's Illness Uncle
Buck (the dollar) is driving the family crazy, with these constant
reversals. First he's looking good enough to come home for the weekend,
then, it's call the funeral director. The end is nigh, as the sideways up
phase grinds on. See you in Intraday Stool. Dr. Stepan N. Stool Let me know what you think on the Stool Pigeons Wire. Welcome To New Subscribers Welcome, and thank you for subscribing to the Anals of Stock Proctology. You may note some subtle differences in style now that this is no longer a free service. The perspective is still bearish, but it will have a more balanced approach than my message board ravings. You' won't see me screaming "BUY" about anything except perhaps gold, but you will see stronger indications of areas and times when I think it might be a good idea to avoid being short. And I promise that I will lose my temper from time to time to keep you entertained! I'll also be adding a new feature, Doc's By Request Stock O' The Day. If you have a stock you're interested in, send an email to [email protected], naming the stock, and why you think I should look at it, in 25 words or less. 26 words, and you're disqualified! Those that look interesting, I'll try to feature here within the next day or two. If you have suggestions about other features you'd like to see, send them along to [email protected]. Again, thanks for subscribing. Now, let me get to work!
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