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10 Minute Bar Charts 6/6/02 Dow Jokes Inflatables
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The Anals of Stock ProctologyPublished 5 times
per week by the American Academy of Stock Proctology and PM Update 6/10/02 12:50 PM Terms and methodology No real surprises in the AM action, (Will wonders never cease?) except the expected low in the 1-2 PM time frame came early. The 1 day cycle should be topping put around 2:30, with low due close/open. The 5 hour cycle high may be in process here at 12:50 At this point the 5 day wave is still weakly higher. The upside will be capped by overhead supply and bigger cycle trends. But there won't be anything dramatic on the downside until the 5, 8, and 13 day cycles get back in gear to the downside. There's still no sign of that. The 5 day projections are very preliminary and subject to change.
AM Update 6/10/02 8:45 AM Terms and methodology The fucutures are starting to flash sell signals on the 1 day cycle all sessions charts, after holding small gains all night. A 1 day cycle low is due around 10 AM. However, the dominant intraday cycle is not clear at this point. A five hour cycle low is due around 1-2PM. Friday, the market was cycling every 3 hours. The low on that wave would coincide with the 5 hour low due between 1 and 2 PM. The guess from here is a mild decline in the first few minutes, a recovery until 11 AM +/-, then more weakness into mid day. Ranges look narrow at this point. There are no intraday price projections. Downside cmaps were hit for the 5 day cycle, and the 5 day cycle is in an up phase, but there are no upside projections, suggesting that the highs should not exceed Friday's highs. The market is in a no mans land trading range for the time being. Trading should be confined to Friday's range. Update around 1 PM, unless there's a substantial change.
True Meaning of Capitulation (6/8/02) That word keeps cropping up in the financial infomercial media. Everyone's looking for it again, like it's some kind of magic bullet. But this is a bastardization of the term. Rhoiders said on Saturday, "The market could finally be reaching the so-called capitulation point, professional stock pickers say. Capitulation is characterized by violent selling on strong volume, after which so many investors have dumped stocks that there is nowhere to go but up." To today's Wall Streeters, "capitulation" is some kind of magic elixir that will cure all of the market's ills. The Street thinks capitulation is what happened in April and September 2001, a "V" bottom, where everyone is made whole again within a few weeks. Unfortunately, that's not capitulation. Those are selling climaxes. But here's what the American Heritage Dictionary says: "The act of surrendering or giving up." Capitulation is complete, abject surrender. Big difference from what Wall Street wants you to think. This generation of investors is now going through the process of capitulation. It's when people throw up their hands in disgust, walk away, and never come back. They are lost to Wall Street forever. The Street must now await not only the end of this capitulation phase, but they must wait for the next generation of uninitiated gamblers to come along. They must await a generation which has no memory of this debacle. So yes, we are entering the capitulation phase. But it's going to last at least a couple of months, and perhaps another year, or two, or four. These constant waves of dip buying we see are strong evidence that final capitulation is a long, long way off. The process will carry stock prices to levels no one on Wall Street can imagine. And once stocks get truly cheap, they will stay cheap for years. Until the next generation of sheep comes along.
The Feed, continuing a weeklong trend,
drained the cesspool again on Friday. No Feed, no jam. Friday they gave us
$2.1 billion in weekend repos, leaving $1.65 billion of Wednesday's $3.75
billion in 2 day repos to die unmourned. True, the market staged a
comeback of sorts Friday, but it certainly had nothing to do with the
Feed. Al has put the market back on a forced starvation diet. Has he
finally decided that it's time to pay the piper? The total Feed Index is
back to its lower channel line, and the Feedometer is back to the level
which has generated pumping over the past year. It's going to be
interesting to see whether they pump again next week. Or will Al, with one
eye on Uncle Buck and the other on the potential Long Bong Hit, decide to
sit on his hands, and let the stock market fend for itself.? The lagging Slow Feedometer, is
showing some growth, but Doc thinks this is a meaningless blip. It's a
byproduct of the excess Feed they pumped in two weeks ago to ensure
successful absorption of the Two Year Note auction, which actually did
absorb most of that Feed. Unless the SloFeedo breaks out above the March
high, it will be of no help to stocks.
Portfolio Sphincters Index (SPX) and Sentiment The portfolio sphincters came to the rescue of their index at mid morning, with heavy buying in Microprice, General Custer, and Crisco. It closed with a minor loss of 1.62 and NYSE breadth was positive, which will give the stealth bull market proponents more grist for the mill as their portfolios continue to shrivel. The 17 day rate of change, which represents the 6-7 week cycle, fell. The 6-7 week cycle oscillator superimposed on the chart (red line with purple smoother) also dropped sharply again. The 10-13 week cycle oscillator (teal) still did not complete its top. This is a lagging, confirming indicator. The 29 day rate of change is also still on the negative side of a topping pattern. If this indicator does not start heading lower, the market could trend like this indefinitely. The VIX fell to 26.65. On the inverted scale chart, VIX bounced from the inner Stool Band. The breakdown of the last couple of chart lows indicates that the bigger trend toward complacency has been broken, and the market is now moving back toward "concern" in it's ultimate journey to outright panic. The Stool Band is trending down, and what was "extreme" enough in the last couple of cycles to indicate a turning point will no longer be, although a temporary short term low, consistent with the 4 week cycle, can't be ruled out. The big low won't come until the VIX is well above 35, and breaks the lower Stool Band in its final panic stage. The blue channel lines are the extension of a linear
regression channel from the February and May 2001 highs. The 6 month cycle oscillator is still flat in negative territory. There are two elements to consider when reading any kind of smoothed momentum indicator. One is direction. The other is absolute level. If the direction is flat, but the level is less than zero, the market will trend lower at the same rate. If the line begins to descend, the downtrend is accelerating. The trading stoolicator is starting to turn down. Same interpretation here. Shorter trends are somewhat negative, and beginning to accelerate down. The short cycle oscillator is sitting on the trampoline with the broken springs. There is zero upside impetus off what should have been a short cycle low. The 10-13 week cycle oscillator is only starting to roll over to the downside. The SPX broke a clearly recognizable level formerly
known as support. Looking at this chart, there's a lot of open territory
below. We are looking at three digits, sometime this month The spooky stuff continues. The double 161.8%
fibo retracement level was the bottom of the selloff, to the nickel. Below
that is a lot of air. Weird. But it works. If you are a serious trader,
you simply can't afford to ignore this stuff. And before you enter your
orders, be sure to consult your Ouija Board. 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. SPX Cycle Conditions as of 6/7/02
PTT - Periods Till Turn Here's a long term view of the Sphincters Index with the inverted VIX. Doc thinks this speaks for itself. The market made a major top in March, and won't bottom until the VIX is back to 40+. By that time the index will be off the bottom of the chart.
The symmetry of the market and the linearity of
the downtrend are remarkable. Doc suspects that the secular trend channel
(hot pink) is actually more negatively sloped than shown, and that the 4
year cycle channel (light green) will drive the price action. The bottom
won't come until price has extended through the bottom of the channel by
50 to 100 points. At that point, all shorts should be covered, and long positions
established for a trade. By then we'll be looking at a number that starts
with an "8". Nasgap Charts The Nasty took a horrendous pounding on the open, thanks to Intel's reality check, enough to take care of a lot of sellers. It finished down 19, with credit due to dipsters and short covering, mostly the latter. It's hard to imagine anyone actually buying this crap. You'd think the number 1535 sounds low. But it doesn't. Bears won't be happy until the Nas gets to zero. Which it won't. Which means that bears will never be happy. Which is as it should be. Otherwise we wouldn't be bears. Don't Worry Be Happy? That's for bulls. Worry and be miserable. That's us. When you're feeling really good and really happy about all your profitable positions... Cover. The 6 month cycle time series spread is still stalled. Flat below zero is still negative, no matter how much it looks like a positive divergence. They are worthless indicators in a declining trend, signifying only a slowing in the downtrend. The 10-13 week cycle oscillator and the trading stoolicator are flashing initial sell signals. That suggests that the decline hasn't even begun yet. Which is consistent with the fact that everybody on the Street is looking for a bottom. Just like last summer. The short
cycle oscillator is fibrillating in negative territory. The 1550-90 area
is now resistance. The
picture is even worse in the Nascrap 100 capital vacuum, where money goes
to disappear forever. It's gonna try to bounce from the September low,
being the first to get there. The attempt should be short lived and
futile. The 1545
fib level acted like a magnet Friday, but it wasn't powerful enough to
hold the crowd. . The next level is 1450. Nasdaq Cycle Conditions as of 6/7/02
PTT
- Periods Till Turn The weekly chart shows the real reason the market bounced Friday. Price reached a 12 year long trendline. 1500 is more than just a round number. When it's broken, we may be looking at a 100 point gap. The day is coming. As with the SPX chart, the secular trend channel projection is lagging. The downslope is probably much sharper than shown. Either that, or this is a bottom. NOT. The Nas is going off the bottom of the chart.
The long term bond yield
chart still indicates a slow turning of the secular trend to the upside.
This intermediate cycle is mature, and should be bottoming any day now. Our favorite whipping boy,
the Dirty SOX, is headed for 320-350, where it will test the September low
and launch another one of those infuriating rallies. Wall Street says the small
craps are in a bull market. Doc doesn't see a bull market. Do you see a
bull market? At the end of 2000 when
tech's troubles had become obvious to everyone, the Street began piling
into drugs, because they are a "safe haven" and
"undervalued." There are no safe havens in a bear market, and
Wall Street either has no idea what "undervalued" is, or they're
a bunch of liars. Hmmmmm. The group has been among the market's worst
performers since the end of 2000. Look for dip buyers to come in at the
290-300 level to try and protect their portfolios. But let's face it
everyone. The drug companies are a bunch of crooks, and this is what
happens when you piss off the AARP. The next stop of INTC is a
retest of the September lows. The long term centered moving average
projection is for an ultimate low of $6 per share. No I didn't leave off a
digit. Here's one
of Wall Street's "bull market" stocks, GM. OK, so it was a good
trade. But it was just a bear market rally. It's over, and the primary
trend is reasserting itself. Should be a straight drop to the round
number, then a little bounce. Doc thinks
that Fannie May finally be ready for a good ass kicking. There will be a
furious effort to support the stock at 73-74. It's doomed to failure, but
it will be interesting. Thanks to stoolie RiffRaff
for suggesting Coach. Doc doesn't like this one yet, although it has
potential because the analcysts on crapvision every day, love the
stock. Doc thinks the distribution isn't finished and wouldn't short it
yet. If it gets to 57, stalls and starts to roll over, then maybe, but
he'd let the ozzies tell him when to go. Henceforth and forevermore, if you would like to request a "stocko", please post your request in Dear Dr. Stool. If you have not already registered for the message board, please do so. The only required info is user name and password which you choose yourself, and your email address, which you can keep private by selecting the keep private option. Doc looks forward to featuring your ideas. We've had some good ones! Uncle Buck's Illness Uncle Buck is moving into
acute intensive care in room 109. No doubt the doctors will be aided by
foreign specialists. If this is the beginning of the great dollar bear
market, which it is, the appearance of the market being Dover Sole is just
that, an illusion. Because, as we all know, there's no such thing as Dover
Sole in a bear market. Golden Stool The Golden Stool plopped
last week. There's a gargantuan, concerted effort to stop the metals rise
at these levels by those with a vested interest in preserving the illusion
that gold isn't money. They keep spewing this silly idiotic nonsense about
jewelry demand. I don't think this pullback will amount to a hill of beans
when all is said and done. But if you bought the gold stocks late in the
run-up, and you're highly leveraged, yes you have a problem in the short
run. Doc has been bullish on gold since April of 2001, which must be some
kind of record. He still thinks this bull market is just beginning,
and that the 330 level will be broken, sooner than most people
think. The gold stocks clearly have some short term trouble to contend with. Cousin HUI's immediate downside risk is to the 128 area. At this rate, the index will be short term oversold in another day or two, but it is likely to be 3-4 weeks before the next upleg begins.
See you in Intraday Stool. Dr. Stepan N. Stool Let me know what you think on the Stool Pigeons Wire. Previous complete issue with all features 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! There's also 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 Doc should look at it, in 25 words or less. 26 words, and you're disqualified! Those that look interesting, Doc will 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!
Explanation of Intraday Commentary-Build charts at http://www.livecharts.com. For custom time bars insert a comma after symbol and number of minutes, e.g. compx,90. This will give you a bar chart of the Nas with 90 minutes per bar. The one day cycle is usually most clear with 8 minute bars and 26/18 stochastics. It varies from day to day. Sometimes 6 minutes works best. Experiment to find the best fit for your trading style, and the market's dominant frequency at the time. The goal here is primarily to monitor the condition of the 8 and 13 day cycles. I typically use 90 minute bars with 26/18 stochastics for the 13 day cycle proxy on the indices during regular trading hours. Other cycles use 26/18 stochastics with the following: 8 days- 60 minute bars On the 24 hour futures charts, use a time per bar approximately 3 to 4 times the above number of minutes, to represent the cycles listed above. ABBREVIATIONS: cma: centered moving average |
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That
was quite a show Friday. The stage managers let the early panic selling
run for a few minutes, they bought some stock, held it together, and then
let nature take its course. The dipsters, and we shorts did the rest of
the heavy lifting to get the Dow back to unchanged, before it drifted
back to close down "only" 35. Bears were disappointed because
they all want 1987 again. 210 points down in two days doesn't get the old
bear blood racing like it used to.
. (Sorry about the bull.)
You've seen the software advertised on TV. 
