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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 8/1/02, 8/3/02, 8/5/02, 8/6/02, 8/7/02, 8/8/02, 8/10/02, 8/12/02, 8/13/02, 8/14/02, 8/15/02, 8/16/02, 8/19/02, 8/20/02, 8/21/02, 8/22/02, 8/23/02, 8/26/02, 8/27/02, 8/28/02, 8/29/02, 8/30/02
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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. Update 9/9/02 12:30PM Terms and methodology The 5 hour and 1 day cycle lows came in on schedule. Highs could come at any time in the PM. Best bet looks like the 1 PM to 2 PM hour. The upside cmaps were hit earlier but could be retested. If materially broken, add 5-10 points. This still looks like part of the 5 and 8 day cycle topping process. Once the down phase gets rolling we'll have a better idea of how low it might go. Don't expect much yet.
Update 9/9/02 9:20AM Terms and methodology The fucutures made a 1 day cycle low around 8:30 AM, but the up phase is off to a pathetic start and we're headed for a weak open. The 5 day cycle highs appear to be in as of Friday's close. We'll watch the mid day up phase closely for clues for the condition of the 8 and 13 day cycles.
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.
Crystal Stool Ball Gazing (9/8/02) Several stoolies have suggested that Doc crystallize his long term views. That seemed like a good idea so, looking at the crystal Stool Ball, here's what Doc came up with. Doc thinks we are in the throes of a long term secular bear market in stocks that isn't going to end any time soon. In last week's Weak End Anals, Doc showed you the 4 year cycle price targets for the SPX and Nasdaq. They were 700 or 500 on the Sphincters Index, and 1100 or 722 on the Nasgap, with lows expected in Q1 of 2003. There's also a chance they could come as late as the third quarter. That's a four year cycle low, mind you. The expectation would be that a cyclical bull market would follow that would last a year or more, but that another long grinding bear cycle would follow. The secular bear market will persist until all the excesses are wrung out of the credit bubble, a process that has not even begun in the most important sectors, and until stocks are truly cheap on a historic basis. That could take a long long time. Just look at Japan. Theirs has gone on for more than 12 years because of central bank and gummit manipulation. Sound familiar? Beyond the next 6 to 12 months, who gives a damn anyway? One of the biggest Wall Street shibboleths is that it is easier to predict the long haul than the short run. Doc's view is that while it is damned difficult to predict the short to intermediate term, it can be done to some extent using simple math. The long haul? Who the hell knows? In the long haul we're all dead. The poodits until recently would parrot the lie that stocks need to be held for 3 to 5 years. The market proved them dead wrong on that one so Art Smokin' a Hogan was on Crapvision a few weeks back saying that you have to look out twenty to thirty years. Doc almost gagged on that one. There has never been any twenty year period that looked anything like the last twenty year period. Those crooks don't have a freaking clue what stock prices will be in two months let alone 20 years. Neither does Doc or anyone else. There is certainly no advantage to owning stocks for the long haul relative to risk free instruments without concern for timing. Bill Gross came out and said as much this weekend. It's a point Doc began making on these pages a long time ago and is still true today. If you're going to need money for your kid's college tuition in 15 years, go buy Treasury Inflation Protected Securities or US Savings Bonds and sleep at night. If you want to maximize your returns, learn to trade the intermediate swings. But be prepared for a costly and time consuming education. There is just no substitute. If you don't want to do it yourself, find an honest professional to help you. They are out there, and your fellow stoolies can point you in the right direction. Use the message board for help on the subject. Ike Iossif at Aegean Capital, who is a good friend of Capitalstool, certainly seems like someone you can talk to if you meet his account minimum. There are others, some of whom are your fellow stoolies. Ladies and germs, feel free to make yourselves known on the Stool Pigeons Wire. As for bonds, the cmaps say that the bond market is now near a major top, (major bottom in yields). Could bond yields go to 3% or 0%. Possible, but not likely on this swing. 18 month and 4 year cycle cmaps are at 3.80 and 3.50, while 3.90 looks like a big resistance level. Buying long term bonds for the long term at current levels could be a losing proposition. As to whether to take something off the table, that's an individual matter depending on whether you are in a fund, or are holding the bonds, what their maturity is, and whether you can wait until maturity. Those are uniquely personal decisions. If you can't make the decision yourself, again, get a professional you can trust. You can start by asking questions on the Stool Pigeons Wire. As for the stocks, to paraphrase a famous quote from Reminiscences of a Stock Operator, "Why, it's a bear market of course." And while this is becoming the granddaddy of all bear markets, it will have its up phases. We are in one now. It is these up phases which exhaust potential demand and feed the bear. There's no new money coming in, and the rallies just burn up whatever cash was raised in the last selloff. This up phase is of the 6 month and 10-12 month cycle variety. It is probably going to be more persistent than the average bear would like. But that persistence may be in terms of time only. As veteran stoolies are well aware, an "up" phase in a bear market may not be "up" in absolute terms. It could be, but it may also be up only relative to the next larger wave which contains it. If the 4 year and 8-9 year and 27 year and 54 year cycles are all coming down, then the 10-13 month cycle may simply move from the lower channel boundary of the four year cycle to the upper, by moving sideways. The channel is a couple of hundred points wide, depending on the index, so if you do happen to be short at the bottom, you will most certainly be dead at the top. A bear market rally is a dangerous animal, as we all well know from the burns we get on our backside when we pooh-pooh them. The weekly chart shows the SPX
bouncing off the bottom of the secular trend (pink) and 4 year cycle
(green) channels. The 10-12 month cycle oscillator says the market is
early in an up phase. That up phase will most likely take the shape of a
trading range between 800 and 950. This would be the mirror image of the
down phase in the second half of 1997, when prices went sideways in the
900 to 980 range for six months before the market began the next up phase.
In such an environment it's important to stay focused on shorter term entry and exit points, unlike May to
July, when all key swing cycles were in gear to the downside, and you
could just be content to sit tight in your shorts.. In the Nasty, look for a 1200 to
1400 range (maybe 1500 at the outside). The six month cycle up phase probably shouldn't
last beyond mid October. The 10-13 week cycle will be in a down phase
during that time, which would lead to a tight range. When the 6 month
cycle begins to turn down, ideally in late October, the 10-13 week cycle
will be heading up. The result could be more weeks of trading in a narrow
range. The big down could be delayed until December-January. Whether
that leads to the final washout of this 4 year cycle remains to be seen.
We'll only be able to judge when it gets here. Longer term views of Market Suctors and Stoolwethers. The Feed drained $5.5 billion Friday, the third day of draining in a row. They added $3 billion in weekend repos, while $8.5 billion in overnight repos expired. The $3 billion issued Friday will expire Monday. Anything less than that in new repos will represent a drain. As a result of three days of draining
Al is back to square one.
Total Feed is once again smack in the middle of Al's no growth, caution
box. The knee jerk to the upside early in the week was a reaction to weak
economic data, and possibly signs of a market meltdown. With better data
toward the end of the week, Al the Indian giver took back what he gave in
the previous 3 days. The Feedometer, which theoretically
measures excess Feed available for market jamming, is back to the lower
side of its 3 month range. Doc
is convinced that, barring a total collapse which endangers the immediate
stability of the financial system, Al has decided to let the market sink
or swim on its own. He will probably only intervene when the market goes
into meltdown mode, and its doubtful that will do any good.
All of Doc's
cycle charts
are powered by METASTOCK Portfolio Sphincters Index (SPX) and Sentiment The VIX fell to 40.04. The 30.96 reading on August 22 was the 10-13 week cycle high, as the upper Stool band projection dropped to that level after the fact. It now looks all but certain that we'll see record setting (for this bear market) high numbers on the VIX. Sentiment extremes change in conjunction with the market's trend and it is difficult to gauge when a reading is extreme enough to indicate a price high or low. Price based indicators must always be the final arbiter. The 17 day rate of change, a
proxy for the 6-7 week cycle, is
downtrending in negative territory. The superimposed 6-7 week cycle
oscillator (red line) is now at the level from which previous bounces have
launched. The low was due in this cycle at any time between Friday and
next Friday. It may have already occurred. The
10-13 week cycle oscillator (dark blue) is heading down. It should be at least
4 weeks, and as much as 7 weeks, before a low in this cycle. The upturn in the 6-7
week cycle will result in a good
short selling opportunity for a downswing of several weeks, at some point. That
point will be days, if not weeks, away. The 6 month cycle oscillator is in a weak up phase. The trading stoolicator is heading down. The 10-13 week cycle oscillator just topped out on Wednesday. The 10-13 week cycle is now in a down phase, but it may be a sideways down phase or a very long topping phase, with the 6 month cycle still heading up. This would be similar to the long top and down phase from November to February. Prices did not break lower until the final weeks. It's probably not a good idea to establish swing short positions until the 4 and 6-7 week cycles show signs of getting in gear t the downside with the 10-13 week cycle. The short cycle oscillator is still on the trampoline. It needs to correct upward before a low risk shortsale entry point can be considered. Cycle juxtaposition could lead to a rangebound market for several weeks. A rally beginning 6-7 weeks after the July low will be widely touted by bulls. The environment will be a tricky one, and Doc still feels that scalping trades over the course of a day or two remains the best strategy in this environment. With the upside bias, he would be prone to avoid shorting for the time being. Short term downside cmaps
have been met. The upside cmaps can't be projected yet, with the exception
of a preliminary reading of 905 on the 8 day cycle. That doesn't leave
much headway, but because it's early in the upturn that could shift
higher.
Fiber Nacho Dump- Support levels and downside targets.
Fiber Nacho Reflux- Resistance levels and upside targets 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 9/6/02
PTT - Periods Till Turn Nasgap Charts Downside cmaps for the 13 day and 4 week cycles have been met, but the market may be trending, and a lower low remains a possibility for the 6-7 week cycle in the next week or two in spite of Friday's big jump. The 17 day rate of change is still downtrending, in spite of the uptick, casting doubt on the staying power of the rally. The cmap for the 6-7 week cycle suggests a test of the July low may still lie ahead. The downturn in the 10-13 week cycle should limit the upside of any rally and will put increasing downward pressure on prices as tie goes on. The 29 day rate of change is near a sell signal. The signal looks late, but it may also be that the market has a final rally left in it before the big dump. This may be it. Everyone in the world "knows" that a test of the low is at hand, and that that would mark the end of the bear market. A few cowboys tried to get a jump on that Friday, as expected, and we saw the first of a series of short vicious bounces that are likely to continue right up to the breakdown of the lows down the road a piece. The 10-13 week cycle
is entering a down phase that should
last 4-6 weeks. The short cycle ozzie says
a bounce is under way and the 6 month cycle is still headed up. The best bet
under the circumstances is for a few weeks of bass-o-matic before the Nas
breaks down from the area of the lows.
Fiber Nacho Dump- Support levels and downside targets.
Fiber Nacho Reflux- Resistance levels and upside targets Nasdaq Cycle Conditions as of 9/6/02
PTT
- Periods Till Turn 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! Golden Stool Now this,
fellow stoolies is one boollish chart, although it probably won't make it
past 150 on this push. The chart of
the metal looks pretty nice too, with a wonderful 5 year saucer bottom. If
it breaks 330 on this move, Doc suspects that will be temporary, to be
followed by months of basing leading to a sustained mega move.
If not "The Bottom", then damned close. Long term cmaps are
between 3.50 and 3.80. They hit 3.90 last week. Uncle Buck's Illness Lon term, Uncle Buck may be
in for some months of better health. Looks like a range could develop
between 106 and 110. The improvement is by default, since the rest of the
world is no better off than US is. Aerospace may retest highs
on war speculation. When we win in 3 weeks, it'll be a short. Bonks- Lowest interest
rates in 40 years and look at these suckers. Can't get out of their own
way. 750-800 for awhile. Next year 650 and beyond. Con sumer- Back to
resistance at 520, then next year to 440. Druggies - 285-315
range for the next few months HMO's have last hurrah. Housing Bubble- Hey is that
a Hunchabck froming? Retail- End of the World Formation
nearly four years in the making. Explosions and mushroom clouds
everywhere. Dead man walking can retest 300-310. Mid-Crap- Back in the
Spring Wall Street was touting the "bull market" in mid-crap.
Now they're touting big crap. Nice timing boys. Another End of The World
Formation in the making. Small Craps- The Street
loved these too, back at the top. Bull market they said. It was bull all
right. What they really meant was, here please take these off my hands
fergodsakes. The small stuff has always been cyclical. Intermediate is
cycling up at the moment. Won't get far. Energy- Long term down but
could pop to 530 first. SOX- The chips are chipping
off. This is the beginning of a weak sideways up phase that isn't going
anywhere, but could persist for a few months. Soft Where- It looks like Softie
and the Gang could be trapped in a narrow range for months in this
intermediate up phase. On an arithmetic basis, the long term cmap is zero,
and on a percentage basis, the long term cmap of 160 has been smashed. We
are in uncharted waters on that score. Nutworkers- The most broken
chart of all. Another one which has smashed its long term percentage cmap
on the way to zero. This intermediate sideways up phase can last a few
more weeks. Telecoms- have broken their
long term cmap of 400 on an arithmetic basis, and crushed the percentage
basis cmap. The bottom of the secular trend is blown out. The intermediate
up phase will last a few months. The final death plunge will follow. Stoolwethers Citicorpse- Has met several
long term cycle downside cmaps and could go into a long sideways up phase
before the next leg down. General Custer is in an
intermediate sideways up phase that could last a few months. Resistanvce
is at 31 and support at 24. The Other General- A wild
cycler that could also go sideways for a few months before making new
lows. Support at 41, resistance at 50. ItBM- Ultimately headed for
50 and below, but has to go sideways for a while. Support at 67, resitance
at 80. Mr. Bill- This is a prime
example of the Bataan Death March formation. Intermediate sideways up
phase is ageing. When the judge rules, look out below. Market Makers Mirage- The
one stock single handedly responsible for making the market look better
than it is. Why, because they can. The largest weight in the Dow, with one
of the smallest capitalizations. Don't be surprised if they push it again.
It's their best hope to "keep hope alive." PiG- Another one they like
to push around on the plate for the same reason. These two are the one's
they pump the Dow with. Look for 98 to signal the final top of this market
cycle. Wally will be the last man
standing. But he's building an End of the World Formation too. In this
case prepare to be bored to death as the stock moves in a narrow range for
months. 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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. (Sorry about the bull.)
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