Night Stool Weakend Edition
26 replies to this topic
Posted 14 December 2002 - 01:46 AM
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Posted 14 December 2002 - 01:50 AM
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Posted 14 December 2002 - 03:17 AM
Sorry this got soooooooo wide. Maybe the new software I'm testing.
The charts have gotten interesting for bears. The Nasduck looks very weak.
Can this be some form of reality check? Nah.
Week ended very weak. We'll see.
CAUTION remember your time frames. This chart has 30 minute bars. Short-term.
Intermediate-term players should use this to confirm their longer term time frames.
I'm using it to try to get insight into Monday's open.
Posted 14 December 2002 - 11:44 AM
Rich here are two good ones Anyone got more details from Arch?
I base my surmise on a planetary pattern that has always coincided with crashes
and/or panics going back to 1857. I hasten to add that not every time this pattern
has formed have markets crashed, but every time markets have crashed this
pattern has been extant. So I view the pattern as a kind of economic hurricane warning.
Last week, most of the world stock indices continued the declines that started the
prior week. Many have now given back a considerable amount of those gains
accrued between October 10 and December 2. All the major indices we follow
closed near their weekly lows on Friday, December 13. Some, like the Japanese
Nikkei, are now perilously close to the lows of October 10. This is important,
because as stated way back in October, the Nikkei may be on the verge of
mini-panic as it flirts with its lowest level in 19 years.
Posted 14 December 2002 - 12:03 PM
Those holding gold or miners were finally rewarded. I'm bullish into Jan. but not holding.
Posted 14 December 2002 - 12:24 PM
A VERY good interview. Highly recommended. Any of you familiar with him I was quite impressed?
Sounded like a stoolie!
Jim Dines -the 40 year stock market veteran- has been on a "sell" signal since 11-27-02.
In addition, he doesn't think the bear market is over, due to the current state of "mass psychology."
AegeanCapital interview by IKE
1. A trend in motion will continue until it actually ends (DITREND).
2. When the trend is flat, dull, or unclear assume that the previous
clear trend has remained until proven otherwise (DITRULL).
3. A trend in motion overrules all "facts", "arguments", and "reason" (DITREMO).
4. An Uptrend is bullish and a Downtrend is bearish; don't think, look (DILOOK).
5. When in doubt, stay out (DIDOUT).
6. Dines Rule of Lost Leadership: When bull or bear stock-market leaders finally falter, the market
usually reverses direction (DROLL).
7. Dines Rule of Gold Countertrend: The price of gold tends to move generally opposite to the
rest of the stock market and the US dollar (DINOPA).
8. Dines Nature of Paradox: Overefforting for the wrong thing produces results opposite
from what was sought. That's why you never got the person you wanted, and never got rid of the
person you didn't want (DINOPA).
9. Dines Rule of Gold Seasonality: Gold shares are seasonally strongest in the first few months
of each new year (DIRGS).
10. Dines Wolfpack Theory: When a few stocks of an economically related group move in a certain
direction, the rest of the group will tend to follow that direction as "Confirmation." So buy laggards in
newly-leading groups. World markets will increasingly move in unison (DIWPAT).
There are 37 more of these wonderful "Dinesisms" ...
Chapter 7 On What is the Gambler's Secret Desire to Lose Based? Is it Sex? 71
Does Money Lost Go to What We Call "Money Heaven"? 72
What is the "Secret Desire to Lose"? 76
Chapter 12 How to Understand Your Place in Different Types of Crowds 186
Mass Market Psychology 186
If the World Were Always Logical, Men Would Ride Sidesaddle 186
The Relationship of Sex to Investing 188
Men Seek Sex and Discover Love; Women Seek Love and Discover Sex 192
What is a "Crowd," a "Mass," and a "Public"? 199
How Does a Crowd Form? 203
The Cycle of the Mass in Motion 207
Blood Might Be Thicker Than Water, But Love is Thicker than Tar 207
Collective Definitions: Rumor, Legend, Gossip and Myth 211
A Lie Will Go Twice Around the World While the Truth is Still Getting Its Shoes On 211
Rising Stocks Creating Their Own Justifications 226
Mass Contagion 227
Imitation and Suggestibility 227
The Dines Greed/Fear Oscillator (DIGFOI) 242
Fads and Fashions 242
Crazes and Binges 248
Demoralization, Panic, and the Return to Sanity 255
Practical Examples of Booms & Busts 263
Extraordinary Popular Delusions and the Madness of Crowds 263
Can "Hot New Issues" Make You Rich? 272
Is Wall Street Another Las Vegas? 275
Do Mysterious Cycles Run Wall Street? 278
Practical Applications of Mass Psychology 281
Approaching the Market Correctly 281
Common Sense Can Supercede Any Kind of Analysis 281
Chiseling Eighths is Too Expensive 286
"Denial" is More Than Merely a River in Egypt 289
Buy-Low-Sell-High, or BLSH 298
There is No Hitching Post in The Universe 301
Should You Average Down? 303
Should You Trade or Invest? 304
The "Secret of Women" is that They Only Want What They Think They Can't Have 304
How to Be A "Tape Reader" 319
Posted 14 December 2002 - 12:39 PM
I posted this on Nov. 30, 2002.
Here's a weekly chart of the NASDAQ Bubble. I've tried to represent some
very long term cycles with the Rate Of Change indicator.
The 500 ROC is an attempt at the 20 year cycle and so on down.
The 1000 ROC seems to have shorted out the sites software.
It looks to me like it produced a 6 month cycle.
The point is that by superimposing them, whatever they really are,
it should show how all cycles peaked at the top of the bubble. Duh.
Don't look for peaks and valleys in these cycles this chart isn't anywhere
near big enough to show a full cycle in any but the suspected 6 month cycle.
Check out the lower right corner of the chart. By my eye and by
examining in closeup the data points there seems to be an upward bias to the lines.
Me no like. :-\
This is the same chart as of Friday Dec. 13, 2002.
That upward bias has turned down. Much more friendly to bears.
Posted 14 December 2002 - 12:52 PM
I may play the NASTY or NOT but I like looking at the S&P 500 because it's not so nuts.
Much easier to see what's going on. Less noise.
That said the NASTY seems to be the weak sister.
880 or Bust
We need to get thru that 880 major congestion area on the way to 860 and maybe , maybe....
Sto is the 10-13 week cycle.
ROC is 4-5 week cycle.
Posted 14 December 2002 - 01:17 PM
One of the stoolies was wondering why Fannie was going up when the
market was going down.
Fannie is slighly out of phase with the overall market.
I successfully played Fannie during the rally. Yeah somtimes I get it right.
She was weak during the rally and her 10-13 week cycle turned over early
and headed south. Now however her 10-13, 6-7 and 4-5 week cycles are in
an up phase along with the moving averages.
Posted 14 December 2002 - 01:53 PM
If you have not read this yet do so. This is a must read.
Storm Watch Update from Jim Puplava
November 16, 2002
by Jim Puplava
Remembering Black Monday
Monday, October 19, 1987 was a day no one would forget. A storm appeared out of nowhere that
would wreak havoc on the world’s financial markets. By the end of the day, it looked as if the financial
system was headed for the abyss. In the words of one observer on the Street,
"This one came out of the blue. I didn’t expect it to be so bad…we froze around 3p.m. and just started
watching the screens. Even the phones stopped ringing. We were watching history in the making."
It was with trepidation that I awaited the opening of the market the following day. Fortunately for
myself and my employees, an unnamed buyer showed up and started buying in the futures market in a
major way. The "Plunge Protection Team" had been born. The large intervention by this unnamed buyer
helped to turn the markets around. President Reagan addressed the nation and said all was well and
the nation believed him. The markets recovered. Behind the scenes, the new Fed Chairman, Alan
Greenspan, began a round of shuttle diplomacy among central bankers in a coordinated effort to rescue
the markets. It seemed to work. Asian markets reopened and U.S. stocks went on to rally, closing out
the year with about a 6 percent gain.
The stock market and the bond market began to decouple. The plunge in interest rates since 2001 and
the drop in the stock market is a good example of this decoupling. Other relationships, such as gold
leading commodity prices, became muted after 1994. Inflation was viewed differently. What is not
understood in western economies is that inflation moved from the real economy of “things” to the
financial system (paper), especially here in the U.S. in the form of asset bubbles. Rising asset prices are
no longer considered inflationary. When stock prices go up more than 20 percent a year for five years or
when housing prices go up 20-30 percent, this is considered the good fortune from benevolent
government leadership. The “new era,” “new paradigm” shibboleth’s of the 90’s was simply the spin
that justified the inflationary asset bubble.
Much Much More
The Perfect Financial Storm?™
Financial Storms Heading Towards The U.S. Economy
© Copyright 2000-2002 James J. Puplava
The Big Picture
Posted 14 December 2002 - 02:22 PM
This seems like a good point to review the commodities discussion.
Now I think I see why MH has been all over this.
Chart courtesy of www.contraryinvestor.com
Very cool chart.
Machinhead if you read this would you care to comment.
The red line now on top is the CRB.
Thanks for the excellent charts. Here is a PDF chart of the CRB index of 17 commodity futures, going
back to the 1970s:
After the great Jan. 1980 record high of 337.60, the CRB made four subsequent lower highs, the last
one being a triple top in the 232-234 range during Oct. 2000 to Feb. 2001. Today's dramatic breakout in
gold over $330 brought the CRB right to the edge of the 234 resistance. A rise beyond 234 would break
the long stairstep downtrend and establish a higher high for the first time in 22 years.
What was missing today was breadth. Yes, the concept of breadth applies in commods too. Today's
strength came from precious metals and energy. Other sectors - softs, industrials, grains, etc. - were
flat to down. A convincing breakout would mean not just a move through 234, but across-the-board
strength in commodities, materials, commodity-related bourses such as Canada, Australia and many
Asian markets, and commodity-related currencies (same countries).
What we're looking for is flashover -- when a roomful of superheated gases ignites from one end to the
other in a big whoosh. The inflation flashover will be a point of psychological recognition -- a belated,
seemingly overnight realization that deflation is not the problem. Rather, spiraling prices, costs and
taxes are eating us alive, and it's quickly getting worse. Doc alludes to this in the Anals tonight.
When inflation flashover occurs (probably together with a crumbling dollar), bond yields will rocket
higher. At that point, no amount of tightening - 5%, 10%, even 15% T-bill yields -- will brake the slide of
For deflation to prevail, the rise in PMs and energy must turn out to be a flash in the pan. The dollar
must strengthen, and the Fed must fall asleep at the switch, nodding, drooling and mumbling. Moreover,
the GSEs must turn tail and run from the housing market. It's not impossible -- it happened in the
1930s -- but it's hard to believe the interventionist authorities are going to let it happen again. For so
many reasons, inflation better suits their interests.
Nice assessment MH. We have been blinded somewhat by the absurd CPI regime constructed over the
years to downplay inflation. That is the evil government I suppose, but urged on by it's most important
As always the dollar is the author of this story. So it was in the 70's and so will it be in the future.
Inflation caused by market forces as described in Econ 101 is a mirage, a straw man. It is possible in
commodities from time to time but in the world of manufactured goods it essentially never happens.
Oil is a big dog in the CRB and as we know this baby could do a moonshot almost anytime. This is the
one thing that would cause the recognition you speak of almost instantaneously. Currently there is
much hope that the ME situation will resove itself in our favor (speaking simply in brutal oil supply terms)
and eliminate this uncertainty. This is THE official administration story. If you were a bigwig who got
breifings from the WH that is what you would hear. Could happen I suppose. It almost has to happen,
or else. The lack of discussion about at least the possibility of an oil shock is possibly the number one
example of wishful thinking.
Always complicating this discussion is the fact that financial assets are usually never considered to be
inflating or deflating. A fatal error. We stoolies know, paper is going down, one way or another. I even
think in terms of falling bond prices (rising rates) as deflationary. So yes I am in the school that says we
can have both inflation and deflation.
"I even think in terms of falling bond prices (rising rates) as deflationary." - Jorma
Mainstream economists have totally missed this issue, but stoolie Jorma has not.
In the 1870s to 1890s when very little monetary gold was added to the Treasury, the gold-backed
dollar got more valuable and deflation ensued. Farmers and ranchers were crushed. After the South
African gold discovery, monetary gold holdings increased and a mild inflation started in the early 1900s.
Now we have a bond-backed dollar. Both bond prices and bond supply (Fed holdings of Treasury
obligations on its balance sheet) are pertinent.
During the 1970s, bond prices declined drastically as rates rose. You can't directly exchange your FRNs
for T-notes at the Fed, but you can do it via Treasury auctions. What is the result? Does the shrinking
value of its paper backing make each dollar less valauble, thus stoking inflation? Or does the shrinking
aggregate quantity of currency make each dollar more valuable (deflation)? Or since FRNs and
Treasuries are both paper assets, do they devalue at the same rate?
Bear in mind that the Fed's holdings of Treasuries were sharply increased in the 1970s, so two factors
(value and supply) were changing at once. And it probably will happen again from here on.
Macroeconomics is not a true science because to date it has been impossible to conduct real-life
experiments where only one variable is changed whilst the others are held constant. Economists try to
extract significance from one-off events and multivariate correlations. But it doesn't work all that well.
Posted 14 December 2002 - 07:22 PM
Commitment Of Traders - COT
The commercals continued to decrease their long position in the DOW.
They also continued to increase their short position in the S&P.
Looks like they are getting ready for a down market.
COT S&P 500
Notice that the dumb money is on the other side of the trades.
Posted 14 December 2002 - 08:10 PM
This happened to Rich several years ago. The only good news is
that it's portable and you can get control.
In a worst case senario that would be a good thing.
It May Be Time to Plumb Your Pension's Depths
By MARY WILLIAMS WALSH
AT least 23 million Americans work for companies that offer
traditional pension plans — the kind that provide a fixed monthly income
based on length of service. For many of them, the pension regulations
proposed last week by the Bush administration pose a threat to their
future retirement. The new rules would make it easier for cost-conscious
companies to switch to another type of pension plan that would shrink
their pension liabilities, reducing some employees' benefits.
"The switch to a cash-balance plan is tantamount to a pension pay cut for
older workers unless they get adequate transition protection," said J. Mark Iwry,
former benefits tax counsel at the Treasury Department during the Clinton administration.
Posted 15 December 2002 - 02:52 AM
For explanations of terms with some instruction try these links:
Chart School at Stockcharts.com. Type phrase in search box
Also don't forget Doc's Stoolhoo.
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