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Archives 12/30/01, 1/1/02, 1/2/02, 1/3/02, 1/4/02, 1/7/02, 1/8/02, 1/09/02, 1/10/02, 1/11/02, 1/14/02, 1/15/02, 1/16/02, 1/17/02, 1/18/02, 1/22/02, 1/23/02, 1/24/02, 1/25/02, 1/28/02, 1/29/02, 1/30/02, 1/31/02, 2/1/02, 2/4/02, 2/5/02, 2/06/02, 2/7/02, 2/9/02, 2/11/02, 2/12/02, 2/13/02, 2/14/02, 2/16/02, 2/19/02, 2/20/02, 2/21/02, 2/23/02, 2/25/02, 2/26/02, 2/27/02, 2/28/02, 3/1/02, 3/04/02, 3/05/02, 3/06/02, 3/7/02, 3/10/02,3/11/02, 3/12/02, 3/13/02, 3/14/02, 3/15/02, 3/18/02, 3/19/02, 3/20/02, 3/21/02, 3/22/02, 3/25/02, 3/26/02, 3/28/02, 3/30/02 4/1/02, 4/2/02, 4/3/02, 4/4/02, 4/6/02, 4/8/02, 4/9/02, 4/10/02, 4/11/02, 4/13/02, 4/15/02, 4/16/02, 4/17/02, 4/18/02, 4/20/02, 4/22/02, 4/23/02,4/24/02,4/25/02, 4/26/02, 4/27/02, 4/29/02, 4/30/02 5/01/02, 5/2/02, 5/4/02, 5/6/02, 5/07/02, 5/8/02, 5/09/02, 5/10/02, 5/13/02, 5/14/02, 5/15/02, 5/16/02, 5/17/02, 5/20/02, 5/21/02, 5/22/02, 5/23/02, 5/24/02, 5/28/02, 5/29/02, 5/30/02 6/01/02, 6/3/02, 6/4/02, 6/5/02, 6/6/02, 6/7/02, 6/10/02, 6/11/02, 6/12/02, 6/13/02, 6/14/02, 6/17/02, 6/18/02, 6/19/02, 6/20/02, 6/22/02, 6/24/02, 6/25/02, 6/26/02, 6/27/02, 6/30/02 7/1/02, 7/4/02, 7/5/02, 7/11/02, 7/14/02, 7/15/02, 7/16/02, 7/17/02, 7/18/02, 7/19/02, 7/22/02, 7/23/02, 7/24/02, 7/25/02, 7/27/02, 7/29/02, 7/30/02
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The Anals of Stock ProctologyPublished weeknights by
8:30PM Happy Acres, Florida Time The American Academy of Stock Proctology and Is your subscription up for renewal? If you want to renew, do nothing, unless your credit card has expired. Please be sure your credit card info is current. If your credit card has expired, you must enter the new expiration date in your Paypal account in order for your subscription to be processed. If you subscribed via Paypal, your subscription will be renewed for one year on the 90 day anniversary of your sign-up and your credit card will be charged. If you want to cancel, use the button at the bottom of the page. This applies only if you subscribed through Paypal. Mailed-in subscriptions are for 1 year. If you subscribed by prior contribution, I will send you a notice before your subscription expires. If you have any questions, see the subscription page and FAQ's. If you can't find the answer, email me. PM Update 8/5/02 1:45 PM Terms and methodology One day cycle lows came in on schedule and on budget. Now looking at 1 day cycle up phase which should be uninspired if the down phase of the 13 day cycle still governs. The 5 hour and 1 day cycle highs are due at 2:30 and at the close. It's too soon to be able to make any upside projections. They should be minimal. The 8 day cycle low is overdue. The market may be trending. The 13 day cycle low is due toward the end of the week, with much lower cmaps estimated on the daily and weekly cycle tables below. Doc does not make trading recommendations. This update reports intraday time cycle estimates and centered moving average projections based on the Hurst cycle analysis method. Doc assumes no responsibility for the accuracy or inaccuracy of these estimates and projections. The market may or may not meet these projections. New stoolies should thoroughly familiarize themselves with the methodology before trading based on this method. There is no free lunch. Those who do not have the time or inclination to develop a trading strategy based on testing and research should not trade. Trade at your own risk. On the other hand, if you made any extra this week on account of The Stool, send it in!
AM Update 8/5/02 11:50 AM Terms and methodology Revised cmaps.
AM Update 8/5/02 9:00 AM Terms and methodology The fucutures were attempting a rally just before 8 AM but got smacked down. It doesn't look like they'll have much impact. Friday, the 1 day cycle appeared to have peaked at the bell. They may try to attack that again early today, but the 5 hour and 1 day cycles should be weak until approximately 11:30 AM and/or 1 PM. On the other hand, an 8 day cycle low was due Friday, so the downside should be limited. Of course, on the other other hand, the 13 day cycle may be back, in which case we should see 4-5 more days of weakness. OK, so the picture in the stock proctoscope is cloudy, and cmaps are in a tight range, suggesting the market will move in a tight range. Not exactly an ideal trading environment, but not bad for a round of golf. I might dip my toe in the water and short the open, looking for the 8 day cycle lows around mid-day, but I would not make a major commitment, and would follow Dad's advice to always use protection! And if you do play golf, watch out for those afternoon thunderstorms. We don't want any fried stoolies out there. Next update at 12:30 PM unless conditions dictate otherwise.
Al Says Screw It and A Look in The Wayback Viewer (8/3/02) In an absolutely shocking development this week, Al has taken the Total Feed under the lower limit of the 10% growth channel. Unless they flipflop this week, there is no question that, contrary to poopular belief among Wall Street poodits, the Feed is tightening up on the money supply. There is now a widespread consensus that Al will cut one again soon. However, the Feed's actions in Open market Operations suggest otherwise. They can always reverse course gain, of course, but Feeding and jamming hasn't worked for months, serving only to send yields lower and reigniting yet another massive mortgage bubble and explosion of growth in broader measures of money. Meanwhile the economy is suffocating under the weight of that ever expanding debt load represented by the ballooning of MZM and M3. Indeed, the
Feed appears to be reversing course! Friday they did a $1.25
billion weekend matched sale purchase, which drains reserves because the
Feed sold the paper, taking in cash from the Gang of 22. This will get
added back on Monday unless repeated. In the last couple of days they also
reduced the size of the 28 day repo rollover, the second time we've
seen this in the last few weeks. Looking at the total Feed Index, it does
appear that Al is actually tightening, all the Street BS of a
rate cut to come notwithstanding. The Feedometer theoretically
measures the excess Feed available to the Gang of 22 to jam the markets.
The Feed was pumping through July, but again, it is clear they have
reversed course. This is real bad news for the stock market. Without
jamming from the Gang, the market will be unable to sustain a rally for
more than a day or two since the portfolio sphincters are tapped out, and
furriners want out. The Mortgage Bonkers Ass. reported
another surge in mortgage applications in the week ended July 26. (If
you think stock borkers are corrupt, they are like altar boys compared to
mortgage borkers.) This is probably the reason for the apparent
tightening. Low interest rates have finally reignited the mortgage bubble.
The uptick in applications began in mid-June. Those apps are now beginning
to fund, and the new funding will grow the M's over the next month. It's already beginning to cause
explosive growth in broader monetary measures. The chart below is though
July 22. If the thesis is correct, MZM and M3 growth will explode in the
weeks ahead. That may be what is concerning the Fed. They may be trying to
counterbalance the inflationary implications of this. Most of the mortgage growth is in
refi's, which were over 2/3 of total apps in the last week reported. But
purchase applications have begun to falter from their recent torrid pace.
Volume is the key to answering when the housing bubble will collapse. If
the blue line (purchase apps) drops below the recent lows around 350,
(left scale) pah-tay ovah! Meanwhile M1 and checkable
deposits have been flat. The recent weak economic data comes as no
surprise to those following this measure of business. Total deposits
in particular have been reflecting zero growth since mid-March. Industrial metals prices have been another timely economic indicator. They were flat from March to July, correlating well with the M1 data, and the soft second quarter GDP data just released. Now this index has begun to drop sharply just as the Feed is beginning to pull in on the reins.
Unless Al reverses course again, the pace of the implosion in the markets and the economy may begin to accelerate. The mortgage bubble is the wild card. The next couple of weeks could be a period of historic instability in the financial markets.
Portfolio Sphincters Index (SPX) and Sentiment
The indications on the chart below suggest that the SPX is still in an up phase. The volatility is unprecedented however. The 6 week cycle oscillator has begun to turn down. The VIX is headed back toward the level of extreme fear that has marked recent lows, but will not confirm an upturn in stock prices unless it successfully retests the recent extremes around 50. There are no rules here. Those extremes could just as easily be broken. Read the chart as you would a price chart. The 17 and 29 day rate of
change indicators which represent the 6-7 and 10-13 week cycles are in weakly
positive configurations, but at weak absolute levels. Deterioration in the
indicators from here would signal a sharp decline in prices. Centered
moving average projections hold open the possibility of a move to 730 over
the next 3 weeks. If 850 does not hold, the next target for a low this
week is 770. The 6 month cycle oscillator
still has not confirmed a bottom. The trading stoolicator is still
extremely weak. The short cycle oscillator is topping out. The 10-13 week
cycle is in an up phase, but with longer term trends still down, that will
manifest as no more than the already established 800-900 trading
range 860 and 845-850 are Fiber
Nacho dump levels, then 829 and 800. 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 8/2/02
PTT - Periods Till Turn None of the downtrending cycle channels have
been violated on the weekly chart. The intermediate cycle oscillator is at
its weakest level since 1998, but until it turns up, the pressure will
remain on. This 22 year, monthly chart of the SPX shows a
4 year cycle cmap of 600 on an arithmetic basis. On a percentage basis the
projection is only 739. Measuring by conventional methods from the
neckline of the Hunchback to the head, is a drop of 540 points, which
suggests a low of 440 arithmetically, and 640 on a percentage basis. The
long term uptrend from the 87 low was broken. That was followed by a
classic return to the scene of the crime rally. Nasgap Charts In spite of the massive rally and pullback, there is still no upturn in the six month cycle oscillator. Downside risks remain. The upturn in the stoolicator was extremely weak, in spite of the huge price move. A downturn from here would signal a big drop that would almost certainly carry through the bottom edge band of the major cycle channel, i.e. below 1100. The 10-13 and 6-7 week cycles may have merged into a single 8-9 week wave. If so, the cycle low could have been in early July as indicated by the 10-13 week cycle oscillator. It's possible that a downturn lasting 6 or 7 weeks may still be ahead. Cows may be content thinking the lows are simply being retested. Given the current cyclical configuration, it looks like the lows will not hold, and that more severe weakness will be forthcoming.
If fiber nacho dump levels at 1250 and 1239 don't hold, it'll be clear
sailing to 1200. Below that, the air gets even rarer. Nasdaq Cycle Conditions as of 8/2/02
PTT
- Periods Till Turn The
long term chart shows that 1200-1250 is a key area from several different
viewpoints. An intermediate cycle low is due, but the last days of a phase
are always a time of extreme risk. If 1200 doesn't hold, the bottom of the
4 year cycle channel below 1000 looms large. The monthly chart now has a cmap of 500, measured arithmetically, but 950 on a percentage basis. Of course, if you measure from the neckline to the head of the Hunchback and subtract the difference from the neckline at 1400, you get a big negative number. So a big fat zero is not out of the question, especially if the Big Five move over to the Big Board. If you measure on a percentage basis it come to 400. That's probably more realistic.
AM Edition Features (Previous) These features are in morning edition, published around 9 AM ET US, or the Saturday Weak End Edition, published, uh, let's see, Saturday! Do they hold at 4.20, or is
this another Japanese Zero? Cyclically, the low is due, but the recent
decline has broken cyclical patterns. Something else is going on
underneath the surface. Bond yields are moving down in tandem with stock
prices. Doc put some suctors in the Stool Wayback Viewer and came up with these interesting pictures of a dead secular bull. What we lose in resolution in the Wayback Viewer, we gain in perspective. Bonks have
returned to the scene of the crime following another long term trend
break. An intermediate cycle low is due, but they could go lower. If
the 650 level doesn't hold, the banking system is in deep doo-doo. The
behavior of the secular trend stoolicator suggests that that is in fact
the case. The next few weeks should tell for sure. How goes the
real estate bubble? The uptrend in homebuilders is barely intact, with
secular trend indicators in a precarious position. Wall
Street's favorite bull market stocks, the Con-sue-me's, may be ready to
bounce. They should retest the low first. The Street
is again widely suggesting that you buy Drugs, because they are cheap. Doc
says, Just say no! This is just a return to the scene of the crime rally.
It will last a few months and then puke again. Retailers
are still a few weeks from an intermediate cycle low. The days of
healthcare companies having the freedom to rip people off freely are over.
The demographic arguments for being bullish are widely disseminated. Those
arguments, of course, ignore the demographic arguments for being bearish,
i.e. the political clout of the growing senior cohort and more dimmycraps
in-Congruoss. A long term top is in place, according to this chart. This sector
has always been cyclical anyway. Wall Street is universally bullish, a
sell signal by definition. Whatever
happened to the energy crisis. It is still with us, for the stockholders
of energy stocks, at least. Good, energy companies all thieves too. Be
that as it may, a return to the scene of the crime rally is due over the
next several months and prices should attempt a return to the long term
uptrend line. First the lows will need to be retested. Perhaps the
Street's most transparent con was touting the small craps in the second
quarter. At this point they should mount a return to the scene of the
crime rally after retesting the low. The
Mid-craps were another Wall Street sales job. Should get a rally after a
retest of the sub 400 low. The Dirty
SOX made it to 300. Chartheads will see another low here, (AGAIN!!!???)
and generate yet another short squeeze. Boring as hell seeing this game
played over and over from the sidelines, but scary as you-know-what if
you're one of those shorts. Be sure to cover your butts! Always use
protection. The
Telecommunists keep dropping at an ever accelerating rate. First
Gorbachev, then Yeltsin, then Global Crossing and Worldcom. Looks like 225
is the line in the quicksand. Once through there, the target is Gulag Zee
Row. How is it
possible that the intermediate cycle oscillator can go up, and prices
still go lower? Doc wants you to stare long and hard at this. And when you
think of those charts where a low is due, you must remember this, a kiss
is but a kiss, and in a vicious long term downtrend, you won't even get
that. If that red line is crossed, I see dead companies. So, let's
put some stoolwethers in the Wayback Viewer. First on the line is Fannie.
There's a test of the major uptrend here. So far the indications are that
the secular trend is rolling over, but at a glacial pace. Ho hum. But now
that the return to the scene of the crime is complete, maybe we'll get a
low speed Bronco chase, or something. General
Custer's chart has another example of an intermediate cycle up phase, that
doesn't go up much, along with another return to the scene of the crime
rally, or in this case, rigor mortis rally. Look for another boring
trading range to develop between 24 and 32. Somebody call
channelingstocks.com. At one time,
not so long ago, GM was THE great bellwether, even having its own market
theory, the GM bellwether theory. Very clever indeed. Gimme, now a
consumer finance and mortgage bubble company, (whom Doc worked for at one
time- crooks and drug addicts) is still one of the biggest, most widely
held stocks in the world. If you bought it any time in the last 15 years,
you are sitting on a loss in real, inflation adjusted terms, and in
nominal terms far all years since mid-1995, and even if you bought it in
1989! There can be only one explanation for this. Wall Street is, and
always has been, a criminal enterprise, and that of course, PT Barnum was
right. IBM is
headed for 50, after an intermediate up phase that goes nowhere. The world's
largest criminal organization, and the Street's most widely recommended
stock, is awaiting sentencing. The market has already passed judgment.
Once the current intermediate sideways up phase is over, look for an
eventual low around 20, assuming the trendline holds. Of course, cash
value is $7, if they can hold on to that cash. Breakup value is probably
closer to zero, just like every other software company. Market Maker
Management (MMM) the primary tool of the Dow Jokes stage managers, is in
the last leg of its manipulated uptrend. Ditto for
this Pg. I mean, soap and potatoe (sic) chips, fergadsakes. How much
profit can there be in that. Generics are killing them. Wally is due
to bounce. We can judge the overall health of the market by the strength
of the bounce and whether it comes from above or below the September low.
The linear regression slopes are telling us that the long term trend is on
the verge of turning down in absolute terms. Of course, in the end, Wally
will own everything. Uncle Buck's Illness
Uncle Buck is trying to move into an up phase, but he hasn't quite
succeeded yet. At best, it will be a swup lasting a few months before the
next leg down as the secular top completes itself.. Golden Stool The 13 day
cycle cmap on HUI is 119. It's due, if not overdue. The 6 month cycle low
projection was 90-95. That's close enough ,although another test can't be
ruled out. The 10-13 week cycle ozzie is signaling that the low is in. The POG chart
actually looks pretty good, with a cycle low due, and the uptrend intact.
Doc refuses to anticpate beyond that, except that if 300 doesn't hold,
then the bottom of the channel will be tested at 287. On the HUI
weekly chart, this looks like a classic pullback to the base. No problem,
with a cycle low due. (Fingers crossed) See you in Intraday Stool. Dr. Stepan N. Stool Share your thoughts on the Stool Pigeons Wire.
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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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The
stage managers couldn't hold it together Friday. Finally, public short
covering came in late to save the day. I continue to believe the stage
managers are impaired, in particular FleetEnemaBank, which is the NYSE
Specialist for 9 Dow stocks, along with the portfolio sphincters, most of
whom have little or no cash available to support stocks. They are unable
to support the market, and they were unable to contain last Monday's derivatives
meltup in an orderly fashion because their capital is already strained
beyond the limit. The sway in this market is reaching unsustainable
levels. The market is out of control. A collapse cannot be ruled
out. 
. (Sorry about the bull.)
You've seen the software advertised on TV. 
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