S&P Forecast 8/11/01 

Here's Dr. Stool's current guess on the market. Yes, it's a guess, but at least it's a scientific guess. Dr. Stool uses the Scientific Wild Ass Guess method, commonly known as the SWAG method. This is more than most analcysts, who more commonly use the WAG method, without the "S."   

This chart illustrates the condition of the four year cycle, the 10 month cycle, the nominal 10-11 week cycle, which sometimes runs 13 weeks, and the nominal 13 day cycle, which runs 10-16 days. 

Here's Doc's diagnosis and prognosis. The 4 year cycle is down (duh). That's the channel outlined in navy blue. The 10 month cycle (magenta) is just topping out, having made a second contact with the upper edge of the 4 year cycle channel. 

Here's where it gets interesting. The 10-11, and sometimes 13, week cycle (like a,e,i,o,u, and sometimes y, let's call it the 10-13 for now), has been in an "up" phase since as early as mid June, and no later than early July. What you see on the chart is the dreaded "sideways up phase," but in this case the "up" phase isn't even up. The implication is that the down phase will be a "slasher," perhaps worse than the January-March debacle.

Finally, the 13 day cycle probably just bottomed on Friday. The 13 day cycle should be in an up phase this week, in a final rigor mortis rally or holding action.

Of course, there is an alternative interpretation which isn't quite as bearish, but we won't get into that. In this game you pays your money, and you takes your chances. Doc is betting on this one. Get ready to get short again.

Discuss this chart here.

Attention re-posters. You are welcome to repost this chart. Please include a link back to http://www.capitalstool.com. Thanks! Doc.