Trading and Investing Books

Market Stats and Kitco Thumbnail Charts

Bear Essentials
Resources for bears

Old Stool Depository

Alan Newman's Crosscurrents

Bill Fleckenstein

Bear Market Central

Comstock Partners

ContraryInvestor

Credit Bubble Bulletin

Daily Reckoning

Fallstreet

Goldseek.com

Marketviews with Ike Iossif

Prudentbear.com
Read the economic
case for the bear.
Home of the Prudent
Bear mutual funds

Tim Wood- Cyclesman

Web  Capitalstool.com

Humor

Wall Street Follies Financial Funnies Hilarious! by stoolie prolerbear

Not In My Backyard
The creative genius of stoolie Fauxcaster

Nasdaq Composite Comments Archive- February

Archive of Nasdaq comments January

Ugly, So What's New (2/28/01)
Rather than repeat what he said yesterday, Dr. Stool is leaving those comments below. The downside projection of 2050 looks pretty solid. The Naz is in the process of beginning to form a short term low. It should work its way down to the target, bounce a little and retest over the next week to ten days. Dr. Stool has started taking some of his short chips off the table.

Hung Out To Dry (2/27/01)
So much for churning a little higher before heading for 2050-2100. It churned all right, right down the drain. If you recall, in Monday night's column, Dr. Stool was looking for upside of between 2330 and 2380, before heading back down to 2050-2100 by March 9. At this rate the Nasty will be at 1100 by March 9th. And upside? Huh!

Rechecking the price objectives, the centered moving averages for the 10 week cycle continue to project to 2050. Expect an interim bounce from Friday's low of 2156, then a move into the low next week. 2050 is also important because it is the lower channel boundary for this bear market. That channel can readily be seen on the weekly chart.  

We should get a better rally after testing the channel trendline. But it will only be the ten week cycle low. We'll churn around for a few weeks, then head lower again in mid spring. 

Rally in the Valley (2/26/01)
No change in the forecast. Dr. Stool still sees Friday's low as very short term in nature, part of the 5-8 day cycle. The upside objective for that wave is now 2330-2380.

The downside objective for the 10 week cycle low due in the second week of March remains at 2050-2100. The Naz got pretty close on Friday. And the 25 day stochastics has begun a turn to the upside. The first upturn in a strong downtrend is usually a pre turn warning, and not the real thing. And there's the risk that the oscillator could simply gyrate at very low levels. 

So for now the expectation is for the index to churn a little higher before diving to a better low the second week of March, coincident with a ten week cycle low.

Uncertainty (2/24/01)
Dr. Stool isn't sure what to make of that turn. It looks like what he expected, BUT, the Nasty didn't make it to the 2050-2100 price objective. Checking the charts after the spike, the objective is still 2100. The Nas only made it to 2156 Friday, and hourly stochastics have gotten back up to a trend line where they've repeatedly turned south in the last couple of weeks.

The short term cycles have been fairly consistent in the 50 plus day range, and we're now in the 40-ish area. So we're getting close, but it's early, and the Nas probably needs to do some more probing down. A lot depends on whether the Fed squats and dumps here as rumored. Dr. Stool suspects that would trigger a spike and an immediate vicious selloff. If that scenario unfolds over the next week to 10 days, it would coincide nicely with the 10 week cycle low due in early March. 

It's going to be difficult and choppy, but Dr. Stool is thinking he'll get short on rallies until the Nas has dropped to 2100, then step aside for a few weeks.

Churning Down (2/22/01)
The Naz plowed through the "support" at 2250, and ran down to a round number, triggering short covering and bottom picking. The folks that did all that buying are going to regret they didn't wait a few more days. The downside objective of 2050-2100 is still in sight. After the bell, Sun Micro did its part to make sure the Nasty gets there.

Do not rest easy when the Nasdaq finally does its spike thing. The last five month and eight month cycle low was at the December - January bottom, and it certainly looks like the recent high was the top of that cycle. That means that the next good intermediate low is not due until late May early April. Any low prior to that is likely to result in only a short up-spike, followed by more protracted selling. Dr. Stool therefore reminds you, please, resist the urge to pick your bottom in this market. 

2050-2100 (2/21/01)
Just when Dr. Stool thought the Nasdaq was nearing a short term cycle low in the 2250 area, the projections have dropped a bit. It appears that the Nasty will drop another 10% before bouncing. Hard to believe when you're living through it day by day. But historic bubbles beget historic collapses. Long term bears and stock proctologists are not surprised. 

Just a reminder. Don't get excited if by some miracle the index manages to bounce sharply from the 2200 level. It's temporary, as are all rallies in this bear. Don't get caught long. 

Dr. Stool was fooling around with the cycle proctoscope on monthly charts to see if it would be possible to project a long term bottom using centered moving averages. The ultimate low of this bear is due sometime around the second half of 2002. After careful study Dr. Stool concluded that the low on the Naz will be a negative number. In other words, stockholders will have to pay other investors to take the stock off their hands.

Well, maybe not that bad.

Meltdown (2/20/01)
The hot wax is flowing. Here comes that test of the 2250 low. After Tuesday's beautiful tape action, the downside objective for this cycle has almost been met. Now the question is by how much will it be exceeded before the shorts start a covering rally, and the bottom pickers start pickin'. On the weekly chart, cyclic centered moving averages are projecting a low of 2200. That seems like a number where something could get started, but who knows. This thing could go vertical. 

Once the daily stochastics get to near zero, as they are here, the Nasty has been prone to some nasty bounces. With the index extended, and near key support, short covering spikes are likely. They'll probably be short lived, but if it looks like that 2200-2250 area is going to hold, then the shorts and the bottom pickers will come piling in on the buy side. The Fed might also try and provide a little goose. No matter what, it's going to be a wild ride. So fasten your seat belt.

Ooogly (2/17/01)
Yes, it was. Just the way bears like it. And if you thought that was ugly, whoooeee, you ain't seen nothin' yet. This intermediate downtrend is young. As key support levels fail, and they will, the gloom and doom is going to thicken like two day old Chinese food in the Frigidaire.

There's long term support in the 2250-2300 area that will contain the decline in the short run, generate some bottom picking, which of course Dr. Stool always warns about, and some short covering, which will cause the idiots to proclaim a successful test and a bottom. Don't worry, it'll only be temporary. This market's headed for 1700 this year and 1000 next year. That might be the bottom. Let's see when we get there.

Dr. Stool made a couple of jokes in Thursday night's comments which turned out to be prescient. The first (see headline below) he expected. That was that the upside gap would be followed by a downside gap. The second- the WAR --HUH- comment, well Dr. Stool is  tuned in, but not that tuned in.

Gap? What Gap? (2/15/01)
Thursday was the kind of day that makes a bear wish he had horns. What a nightmare. But what did it accomplish technically? It's like WAR--HUH, What is it good for??? Absolutely Nothin'! This was a one day short squeeze, pure and simple. Worthless stocks with sky high short interest went straight up because there aren't enough shares around to replace the ones that have been borrowed. The shorts got screwed as a result. Pardon Dr. Stool for saying so, but shorts are their own worst enema. So you bulls can laugh, but remember he who laughs, laughs last, or whatever.

The shortest term technical indicators went up, which relieves the downside extension, meaning that more stock will be available today. From the looks of extended hours trading it looks like lots more. The intermediate indicators remain in essentially the same place they were the day before, on the verge of confirming an intermediate downtrend. And the rally did nothing to change downside price targets. Dr. Stool is sticking with 2250 for this 6-10 week cycle.

Surprise, Surprise (2/14/01)
As stochastics get to near zero, is Dr. Stool surprised that prices go up? Not really. Demand comes from two sources, natural, and "unnatural". The "unnatural" demand comes from Dr. Stool's friends, the short sellers, who play a greater roll in periods of low volume and declining prices. In these environments, profit taking by shorts, perhaps worried that the market is near a bottom, drives these regular bounces. It's frustrating for long term bears, but Dr. Stool thinks it's basically a good thing, for fellow bears that is.

The downside objective on the daily chart appears intact in the 2000 to 2250 range. There's very little left in this bounce. Sellers are waiting at 2500.

Test- One, Two, Test (2/13/01)
The stock proctoscope is projecting a low of between 2100 and 2250 based on daily and intraday centered moving averages. The bulls may project confidence that the test will be successful, but what's that Dr. Stool sees dribbling down their hind legs?

Dr. Stool is a little surprised that the bulls couldn't get it up a little more. But, as he has pointed out in each previous rally, all that short covering causes shrinkage in potential downstream demand. If he's right, this decline could get a lot more boring, and far more devastating over time. There just won't be the fireworks. Only drip, drip, drip.

Hmmm (2/12/01)
Let's run it up the flagpole again and see if anyone salutes. The intraday stuff is still a little positive, and the short term dailies are extended to the downside. Looks to Dr. Stool like we may retrace part of this last selloff. 

The Fed is doing everything in its power to stop the market from falling apart. Might work.

For a day or two.

Maginot Line? (2/11/01) 
The bulls are getting ready to make a last stand at the 2400  level. Intraday and short term daily  downside price objectives are around 2425-2450. Yes sir they are getting ready to defend it with their blood, and with the help of nervous shorts who will want to book some profits Monday. 

How long will the bounce last? Dr Stool has no idea. Could be 15 minutes, 15 seconds, or a couple of days. The momentum generated on the downturn should overwhelm any rally in short order. The short term downtrend line (at about 2500-2550) should contain the upside.

Only The Beginning (2/8/01)
Dr. Stool likes to listen to the CNBC Shill Channel, and CNN's Moneyhype to get an idea of where we are in the market cycle, from the viewpoint of stock proctology. A basic tenet of stock proctology holds that all analysts on the tube are speaking from their rectums. The worse their flatulence smells, the sicker the market is. 

These analysts are trotting out there now, as if they actually do have the trots. Some tech portfolio guy from Integrated Capital Resources (poor bastard) on MoneyHype last night was sweatin' and stammerin', and making up some bullshit about "the news should get worse but multiple compression has ended, the market is building a base, and it's a great time to buy for a five year hold."

Dr. Stool wants to know how the hell this guy knows that multiple compression has ended? And how does he know what multiples and earnings are going to be in five years. This business of forecasting the long run, when you can't even get today right, is a bunch of crap. But they all do this stuff, and it's a bunch of lies and hooey. A year ago most analysts were wildly bullish on the big tech stocks. Yet today people sit there and listen as if these people know what they are talking about, instead of being a bunch of failed comedians who died on the club circuit. 

Let's get one thing straight folks. When bear markets compress multiples, they don't stop compressing when multiples are still at or near record highs, which is where we remain today. 

And as for the charts, no change from yesterday. They look really bad. That's all.

Going Down (2/7/01)
There are many kinds of bear markets, and many phases within them. It looks to Dr. Stool like we're now in the Chinese Water Torture Phase of this long-long term Bear. The bulls aren't ready to give it up, so it's down two steps and back up one. It'll probably stay that way until we break a really big support level, like 2250.

Meanwhile the bulls, and the pundits, will say, "Oh that wasn't so bad. The market rallied. It should have been worse than it was, and since it wasn't, that's good. Looks like the worst is over." And they'll throw good money after bad - all the way down.

And the nervous nellie shorts will take their profits every day around 2PM, because they lack both courage and conviction. Think about it. How many shorts have stayed short since the top? So the short interest shrinks, and gradually, slowly at first, then with increasing momentum, demand from both the bulls, and the bears, dries up. At that point the world will have given up on any hope of a market recovery. And we are nowhere near that point.  

Is That All There Is? (2/6/01)
The uptick came, and with just a little dab of Cisco Crisco, it went. 

Cycles in the Naz are highly irregular. There's no way to forecast which period will dominate now, but Dr. Stool will bet on the 10 week cycle. That would give us a down phase lasting well into March. It's too early to forecast a downside price objective.  

Daily short term cycle oscillators are on sell signals. Interestingly, the hourly stochastics which Dr. Stool uses to track the five and eight day cycles, are not, but they are oh so close. However, both the QQQ, and NDX did give sells slate in the day.

Lagging signals occur when up-phases are much shorter than typical. Such instances further imply that the down phase will be longer and more severe than normal. So fasten your seatbelts.

Dr. Stool Sees Backup (2/5/01)
The Nasty put in an 8 day cycle low at 2600 on Monday, according to hourly stochastics oscillators. Dr. Stool suspects that the up will  be verrrry short. At this point there's no upturn in the moving averages he looks at intraday, so there's no way to project an upside objective. Suffice to say, there's plenty of stock waiting to pound this thing every time it pops its head up.

The breakdown from the double top does suggest a move down to 2520, based on the height of the top from the baseline. So let's look for a little bounce for a day or two. Call it the Crisco, uh -  Cisco - effect. That'll grease the skids for the next slide. 

Quick Disintegration (2/3/01)
When the bear finally reawakens from his nap, is he in a bad mood, or what? Friday was a joy for bears to behold, as the bulls finally got some comeuppance after four weeks of stampeding blindly.

The big question in Dr. Stool's mind is how the market will react to some normally bullish short run indications on Monday. The Nasdaq is at the baseline of its short term double top. Intraday stochastics are at extremes which often signal at least a bounce, and at 2660, the index has reached a price objective for the 4-5 day cycle. 

Dr. Stool would not be surprised to see that bounce, but would be, if it amounted to more than a little bump up, considering that the 20 day stochastics has given a strong sell signal. A break below 2660 portends a move to 2440. That shouldn't take long.

Not Quite Ready (2/1/01)
The Naz gave a little short cycle buy signal on the 4-5 day cycle stochastics in the last hour Thursday. It could mean that that upside objective of 2970 ain't dead yet. There remain lots of signs that we're near the peak of this nonsense, but no clear signal that we're actually at, or over the hump. The bulls are in an insane frenzy right now, and it's clear they intend to put every last penny they have back into this market. So let 'em. 

Stepan N. Stool PH&D