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Nasdaq Composite Comments Archive- MarchArchive of Nasdaq comments January, February, April [adbox-upper.htm]Heading for Zero (3/30/01)Well, not quite, and not in a straight line, but the future looks pretty bleak. Looking at a nominal 26 month cycle, the centered 26 month moving average has just begun to roll over, enabling a downside projection, early though it may be. The projection of the centered half span moving average (13 months) intersects the long term average projection at 2500, more or less. Under the theory that the point of intersection represents the halfway point of the move, the projected low is minus 100. That's zero, less 100 points. Hmm. Dr. Stool guesses that's why you should NEVER use a straight line price scale on volatile averages. So let's measure the distance on a log chart. It's, let's see, according to the straight edge proctoscope, on this chart it's an inch and a half. An inch and a half down from the crossover is AH HA, 1250. The hard part is telling when the cycle low is due. Dr. Stool suspects that the 1998 crash was a non-cyclical event, and that the cycle low was actually just before the Nasdaq took off in October 1999. That would put the next low somewhere in the fourth quarter of this year or QI of 2002. In the short run, as recounted in the last several columns, the projected low is 1750 to 1800. The four-five month low projects to 1600. That one's due in the April-May time frame. Best guess from here is that the Nasty will do nothing dramatic, just more of that dreadful drip, drip, drip, with occasional short covering spikes to break the monotony. Thursday Night Update (3/29/01)Little to add to last night's comments. The 25 day stochastics has dropped back into deadman land under 20%. Cycle projections have dropped a little, to 1700-1750 on the eight day cycle. The low is due Monday on that. The ten week cycle low projection remains at 1750, but that looks screwy to Dr. Stool. So he tested a projection based on a centered 13 week and 7 week moving average. That projected to 1650-1800, confirming the ten week projection. The 6 month cycle low projects to 1200, in June. What
are centered moving average projections? This technique was taught by
Next
take out a colored stock proctoscope, otherwise known as a marking
pen, and draw extensions of the moving averages on your computer
screen, fitting the projections to the price action beyond the end of
the moving averages. (Hard to describe, get the
Finally, get a clean piece of toilet paper, spit on it, and wipe off your computer screen. (The marker, remember?) That's all there is to it. Works pretty well most of the time. Better than Abby, anyway. Taking No Prisoners (3/28/01)The bear reasserted his authority over the Nasty Wednesday, pulling the pins out of those upside cycle projections of 2000-2030. They're history. The downside of 1750 on the 10 week cycle average projections looks eminently reachable now. The 8 day cycle has a downside projection of 1800. Because there is so little wave action, there are no projections for the 6 week or the 13 day cycle. Which brings to mind the old adage, the trend is your friend. The trend is suppressing wave action to the point that it looks like the Nasdaq will just continue to decline in pretty much a straight line fashion. The rate of drop has been about 8% per month, straight line, over the last seven months. Technically speaking, there's no reason to expect that to change. From the standpoint of cyclicality, if the theory that the 10 week cycle low was at the end of February, is correct, then the downtrend should begin to accelerate soon. Dr. Stool thinks it's sort of like the Mir space station crashing into the Pacific. Ladies and Gentlemen, standby for splashdown. Turn Your Head and Cough (3/27/01)You know what comes next. OK, so only half of you know what Dr. Stool is talking about. The other half, just ask your other half. So we get a little squeeze here, but that's all. The short term cycle low is confirmed. We know it's an 8 and 13 day cycle low. As to longer cycles, there's a buy signal on the 25 day stochastics, which is a proxy for the 10 week cycle, but it came very late in the cycle. It still looks like the end of this cycle was in late February- early March, and we're well into the up phase. Remember up is relative. The wave is up in relation to the next bigger cycle wave, which is headed sharply down. The longer term cycle slope is suppressing the action in the 10 week and 6 week waves. Dr. Stool thinks we're in a phase where the 13 day cycle is going to be dominant for awhile. Staying focused on the 13 day cycle, the up phase projects to 2010. The 8 day cycle projects to 2030. After that it should be straight down again. What if Dr. Stool is wrong and this is a more significant low? Are you kidding? Not a chance. (The opinions expressed herein are those of Dr. Stepan N. Stool PH&D, and not necessarily those of Capitalstool.com, or the Institute of Stock Proctology) Myron Kandel Has Called The Bottom (3/26/01)Don't get Dr. Stool wrong, he likes Mike. He's a kindly gent who means well. It's just that the guy is a permabull who has been bullish throughout the bear market, repeatedly calling for a 12,000 Dow, and other such nonsense. In case you don't know, Kandel is the financial commentator for AOLCNN Moneyhype. He gets to make a clown out of himself every night in front of millions and millions of investors. Anyway, Stool seekers know better than to trust anything that comes out of AOL's backside. As for the Nasty, let's just say she had a little seepage there, opening at the high of the day, and closing near the low. Drip, drip. Wait a minute. Here's the Caint Nobody Buy Channel doing a self serving piece on how the media covers the analysts. Sue Herrera says that CNBC does keep the track records of the analysts. Where's the beef, Sue. Where's the story. Dr. Stool certainly hasn't seen it. Dr. Stool is calling CNBC a liar. If you have the records, tell us what they are. If you have those records, and you are withholding them from us, you are in cahoots with the bastards. If you don't have the records, then you have just misled us. Get the records and MAKE THEM PUBLIC DAMMIT. Yes, now as Dr. Stool was saying, the Nasdaq. Excuse Dr. Stool, he is still fuming. The upturn here is just a bump in the road. The ten week and five week centered averages have still not veered away from that 1750 target. The ups in the oscillators on the daily chart are not big enough to signal anything significant. The 13 day cycle averages are pointing to an upside objective of 1980, 20 points above Monday's high. The eight day cycle upside objective is 1966, and the five day is 1975. Hourly indicators suggest a 50-50 chance of trying to make one more weak stab to the upside. That's not much to hang your hat on. The 17 day rate of change on the daily chart below shows no momentum improvement. Which brings Dr. Stool back to the theory that the ten week cycle low was a couple of weeks ago, and the 1800-2000 trading range has been a dreaded "sideways up phase" with a downward skew. If that is the case, things are about to get dramatically worse, if you can imagine that. Perspective
(3/24/01) Meanwhile, Neil Cavuto, who covers the market on FoxNews, is complaining that the media's coverage (read that, Caint Nobody Buy Channel) is too negative. Dr. Stool has a novel idea for the business press, and for you Neil. Try, just reporting the facts, such as the fact that after long periods of above average returns, stocks do extremely poorly for many years. (More detail on that in an article later this week.) The Nasdaq is down 60 something percent. An object in motion tends to remain in motion. Same for human behavior. Once it starts going in a direction, it tends to keep going in that direction. And if it's going real fast, it has to slow down first before it changes direction. In other words, you don't turn the Queen Mary on a dime. Did the Titanic turn around and go back to England after it hit the iceberg? Let's say it with pictures.
You're looking at a monthly bar chart of the Nasdaq, courtesy of the fine folks at Stockcharts.com, with a few creative touches added by Dr. Stool. As the bubble deflates, it has gone through a six year uptrend line on the chart under an increasing head of steam. That trendline actually dates back to 1990, so it's really an 11 year trendline. The 24 month Percentage Price Oscillator shows the acceleration of the downtrend. It bears repeating that there is no such thing as support, and no such thing as oversold, in a bear market. People who tell you the market is oversold do not understand the context of the indicators they are looking at. The indicators only work if you know how to read them, and if you have an unbiased perspective. Remember that most of these pundits and anal-ists are in business to S-E-L-L you something. Some intermediate cycle work suggests a low around 1600, while other cycles suggest 1750. However, the slope of the major trend is so steep that longer term forces will skew and truncate whatever upside there may be. The Nasdaq is approaching a secondary ten year trendline dating to an intermediate low in 1991. It will, in the weeks ahead, at some point slice right though that, headed for the secular trendline at 1000, which dates back to 1974. There is even some suggestion that the period of November through February was the up phase of the one year cycle. The price objective for that cycle, based on centered moving averages is in the 1200-1250 range. That would be due, as usual, around September-November. In the near term, prices may churn around those long trendlines for a month or two, if the bulls are lucky, but things should go nose down after that. Most of the pundits will look at that churning, assuming it happens, as another in an endless series of bottoms. In fact, from a cyclic standpoint, exactly the opposite is likely, another dynamic collapse. Dr. Stool suspects that it will be sooner rather than later. (3/22/01)If The Nas Goes to 2258 in the next week, is that a bull market? According to the morons in the media, it would be. That would be a 20% move from the low. The more they talk, the more it becomes clear that you should never listen. The projections on the ten week cycle averages pointed to 1750-1800 on Wednesday. In spite of yesterday's rally, prices are still firmly within the recent downtrend channel, and the ten week cycle centered moving averages are still projecting to 1750. The index got to 1794 Thursday, so it's a tossup as to whether a short term low may form here, or get blown out again after a brief pause. There's no sign on the daily chart either that this was anything significant. The stochastics and ROC are still dead in the water. A lot of anal-ists are getting bullish on tech. Looks like wishful thinking to Dr. Stool. Wanna bet they'll get their asses kicked? But first, knowing the Nasty, those guys getting out of their shorts, and the anal-ists sniffing bottoms will probably drive it to 2000 by lunchtime. Off
the Bottom of The Chart (3/21/01) There are intermediate price projections to 1750 and 1800 which could represent a brief resting point. A one year cycle objective now looks like 1600, possibly in May. This is down from the original projection of 1700, made in January. This is the orderly liquidation of an asset class which will be out of favor for a generation to come. It will continue for many more months. There is no oversold. There is no support. And when capitulation finally comes it will be too late to matter. Bizarre
and Macabre (3/20/01) The strength of this trend is smashing short term, and even intermediate cycles, to smithereens. As Dr. Stool said in his commentary on the Dowager, he's getting out of the business of projecting pauses and pimples in the decline. This night train just continues to gather steam, and it's going down that mountain, bumps or no bumps. As for the cyclic projections, the ten week cycle averages still point to 1800, but shorter cycles have been flattened to the point of meaninglessness. There are no visible cycles, just the sound of that big old night train rolling in the distance. And where her next stop is, noobody knows. Itty
Bitty Bottom (3/19/01) The 10 week cycle, which is overdue for a low is still projecting to 1750-1800, so the bulls are not out of the woods yet. The last cycle lasted about 55 days. This one is about that old. So we bears should not be too complacent here either. Things could get hairy if the Fed cuts a big one. Get ready to hold your nose and get the hell out of the room. If somebody lights a match, look out. The pundits all seem to be predicting the market will go down whether the Fed rips a big one, or only squeezes out a little one. Now there's a turnaround in the CW. The old rule was, "Don't fight the Fed." Now it's "Fight The Fed." In view of that, the market will probably dip just a little, then surprise the crap out of everybody and rally for a few days. At which point all the idiots will proclaim the bottom again, which of course will signal the end of the rally. The charts show no real improvement here. Until they do, any rally, no matter how sharp, is just a lot of, what was the name of that book? Bear Market Baloney? What ever happened to that Wade Crook. Bataan
Death March for Tech (3/17/01) Stochastics show no sign of coming out of their flatlines. In fact, their moving average smoothers are actually descending, although it's difficult to see on the chart. The fact that the 17 day rate of change has only gone flat after getting down to minus 20 is a horrific indication. This could mean that the Nasty is actually in a cyclic up phase here, and that things could actually accelerate to the downside over the next several weeks. It doesn't seem possible, but that's the usual interpretation of this indicator. Dr. Stool take no pleasure in this. While all of this is completely within the context of the projections made at the beginning of the year, the actual experience of it is horrifying and macabre, even to as big a bear as Dr. Stool. The short term cycle projections now point to a ten week cycle low of 1750. That cycle low is due or overdue. There's a projection of 1825 on the 8 day cycle, and 1780 on the 13 day cycle, due next Tuesday. The 6 week cycle has been suppressed by the trend. The up phase that follows will be severely limited by the slope of the intermediate cycles' down phase. Don't expect much. What's
Wrong with This Picture (3/15/01) Dr. Stool heard somebody say the other day, that on the Nasdaq, the declines were slowing, as the index sought to find a bottom. Ladies and Gentlemen, Yo, over here, it's Dr. Stool! Ladies and Gentlemen, the decline is not slowing at all. In fact, it's accelerating. The reason some pundits, chartist types, think the decline is slowing is because they are looking at linear charts, which are always misleading in big moves. Look at the log chart at the bottom of this page. A log chart is scaled so that percentage price moves are the same throughout the chart. Do you see the decline slowing? Every night Dr. Stool does this thing with the stock proctoscope, formerly known as a Magic Marker (sniff sniff), where he draws projections of centered moving averages for the various cycles, one of full span duration, and the other of half the span of the cycle, for each of the various cycles which appear dominant at the moment. The crossing point of those projections is the theoretical halfway point of the move. That's how Dr. Stool makes his projections. It was a method first taught 30 years ago by J.M. Hearst. Now this is not an exact science. Hell, it's not even a science, but the method works pretty well most of the time (except when the Fed or Intel drops a bomb in the river). What's weird here is that the slope of the moving averages used on the short term projections continues to steepen. And since there has been no actual moving average crossover yet, the low continues to project lower. We started at 2050, a couple of weeks ago, and at this point it's pointing to 1650. That appears to be for a belated 10 week cycle low. The low back on the 12th looks like a 13 day cycle low. The next low on that cycle projects to 1800. After that there's, ahem, a lack of visibility. The next step down might be in a few weeks, or it might only take a few days. It's been a long time since Dr. Stool has seen a market this bad. Actually, Dr. Stool has never seen one this bad, but he sure as hell has seen a chart of one. WHERE'S
THE BEEF!!! (3/14/01) Here's how it works, stool fans. If you bought stocks that were going up in a bear market, because they were going up, the bear is now in the process of kicking you in the ass for your stupidity. BEAR MARKETS ROTATE. The leaders are still the leaders, and the followers follow. The leaders are the tech stocks, everything else follows. If you were one of those people holding out hope because your stocks were still doing ok, it's not too late to save your ass. Be thankful the bear got around to you last, take your chips off the table, and go home. The Mother's stock picks will bite the dust, just like last year's picks. As for the downside, no change in short term price objectives - 1850. Hourly indicators for cycles of 5-13 day are actually a little higher, 1950 or so. So maybe they'll churn around in here for a bit. Whatever bounces do come will be very puny indeed. It's ugly, it's really, really ugly. You don't need Dr. Stool to tell you that. Firming
Up (3/13/01) Tuesday's recovery raised the downside objective for all cycles shorter than 11 weeks to 1850. There's no sign of improvement on the daily chart, however. Now that the index is in the gap it created Monday morning, it will probably fill. But that gap is the area where both the descending lower trendline since the bear market began, and the rising long term trendline since 1990 (log chart) intersect. That area will become a battle zone which the bulls should find difficult to breach. The top of the gap is at 2050. That's also short term downtrend resistance. There's
No Such Thing As Support in a Bear Market (3/12/01) Dr. Stool had a bad feeling about the weekend column when he saw that he had referred to "support trendlines". (See last column). The Nasty gapped 'em all right. The question is will she ever revisit. Normally, reactions occur relatively soon after the breakdown. But this isn't a normal market. This is a collapse of historic proportions. Cycle frequencies are shifting, making it difficult to get a handle on just what cycles are dominant. The ten week based measures proved too short, and did not project the low, low enough. The projected low of 2050 quickly failed, as did the outside projection of 1935. Stretching the centered moving averages a couple of weeks, to 13 and 7, from 10 and 5 the projection is a low of 1500-1550 by the end of March, not six weeks. (See last column) A very important thing to note is the fact that the Nasty gapped through a DESCENDING lower channel boundary, dating back to the first low of this bear market. The means the downtrend is actually accelerating! As unimaginable as it seems, if this bugger doesn't recover above that trendline PDQ, the last twelve months may look like a Sunday School picnic. Bad
Stool (3/9/01) Dr. Stool got juked because he was so damn worried about the potential for a short squeeze coming out of the ten week cycle low. Dr. Stool has assigned himself to write on the blackboard 100 times, "The trend is your friend, the trend is your friend, the trend is your friend...." C'est la vie. Dr. Stool missed this one. It sure is annoying, but not half as annoying as all those analysts, like Joey "Brass Balls" Battipaglia, who are always wrong, and who never ever admit it, take responsibility, or think about feeling sorry for the billions in losses they've caused to your retirement funds. What did Dr. Stool miss? Mainly, he grossly underestimated the impact of the Intel news. If you drop a big enough bomb in the river, the force of the explosion will disrupt the waves and maybe change the river's course. The question now is, was this a temporary disruption, or does it represent something, dare I say it, "fundamental" that will suppress cyclical wave patterns, and shoot prices straight down the slope without much countertrend minor and intermediate wave amplitude. One thing's for sure. The change, if there is one, is in the direction of the big secular cycle, down. There's never been any doubt that that's where we're headed. (See the Nasty's long term forecast.) Assuming the cyclical wave patterns are not blown out by this event, the daily averages are projecting a low of 1935-2000, which is only slightly below where those averages have been pointing for a week or two. The hourly charts are pointing to lows of 2000 on cycles up to 13 days. The ten week cycle is still in its trough, and if the cyclicality hasn't been totally disrupted, then the Nasty will trade in a 2000-2250 trading range for another one to three weeks, before taking another really big dump. Might the Nasty continue to crater from here without a pause? Sure it could. But a couple of support trend lines argue against it. One is the lower downtrend channel line from the beginning of this bear market. The second is a secular uptrend line going back to the 1990 bottom. Both of those lines come in at around 2000, a nice big fat round number. The bulls will make a stand here, especially if the follow through from Friday's debacle isn't too terrible. If those big trendlines do give way, particularly if there's a big gap Monday, things are going to go to hell, and they'll get there fast. We'd be looking at 1500, probably within six weeks. Don't
let your guard down (3/8/01) The ten week cycle low is still projecting to 1950-2050. So there may yet be residual downside cyclical momentum, while the index is in the 10 week cycle trough. Are you confused by all this? You should be. Dr. Stool is confused too. The next couple of weeks look treacherous. Dr. Stool suspects the Nasty needs to March up and down in the 2000-2250 range for a while before embarking on its trek lower, but he doesn't see an extended downside right away. If you want to try and trade the range, you'd better be cold blooded, and stick with the Qube. That way if one stock goes haywire, you won't get creamed. Helluva
Rally (3/7/01) The upside for the 8-13 day cycles projects to 2250-2280. Dr. Stool isn't sure it will get there. The bulls have thrown a ton of crap, and Mother Joseph Superior dropped a really big turd there yesterday. Even with all that poop, most Nasty stocks were down from the opening. So far, this up phase has been pretty pathetic, and it's likely to stay that way for a week or two. Don't get chewed up in all the churning. And remember, anything the Mother Superior says, do the opposite. Cannon
Shot Gap (3/6/01) There's a little buy signal on the daily stochastics, from deeply oversold levels. As Dr. Stool's been warning, there's potential for a little squeeze here so don't let your guard down. Dr. Stool hopes you heeded his warnings last week to cover those shorts. Yesterday was painful if you elected not to. The Nasty hit a five day cycle upside objective of 2245, so it's probably finished bashing the bears for a day or two. However, there's now an objective of 2300 on the eight day cycle. Strangely, the daily centered moving averages have not improved enough to confirm that last weeks low was the low for the ten week cycle. In fact, 1975 is still a possibility. So Dr. Stool is guessing there may be huge up and down swings over the next week, in a range of 1975 to 2300. Traders, strap yourselves in. One
Little Caveat (3/5/01) The hourlies are actually pointing higher now, to around 2225-2250. This is part of a 5-8 day cycle. If there's no good pop Tuesday, or Wednesday at the latest, that increases the chance of a sub 2000 washout. The 4-7 month cycles look down hard. It's no secret that overall mo is atrocious, and there's strong trend resistance at 2300-2350. If you are thinking of trying to play from the buy side for a week or two, don't stick around too long. As for shorting, do so near resistance trendlines, and take quick profits. Cyclically, this baby wants to go up, or at least sideways, for a week or two. Dr. Stool prefers not to be short until we've gotten a couple of weeks out from this ten week cycle low, and preferably near resistance. What
Year Is This? (3/3/01) At any rate, it's close. So let's stick with the outlook. Some Nasdaq stocks have probably made their cycle low, while others will be cycling thorough over the next week. This is not the time to be establishing or adding to short positions. It's a time to stand aside for all but you wild and crazy day traders. Dr. Stool isn't going to short 'em again until the Nasty pokes her head up, and some of the rampant gloom dissipates a bit. Forget
The After Hours News (3/1/01) The Nasty is now 49 days from its prior ten week cycle low. That is simply too close to be quibbling about the fact that the Nasty only got to 2071, and not 2050 as projected. Dr. Stool originally thought the cycle low was due on March 9. Unfortunately he forgot how to count. The first low of the last cycle was on December 21. That's damn close to ten weeks ago, isn't it. Here's a guy who claims to be a stock proctologist, and he can't even count to ten. Just like all the other analysts, huh? Fear not bears, this up phase won't amount to a pile of stool. But there is severe short squeeze risk in some stocks, however. It will not be pleasant if you stay short, believe Dr. Stool. The afternoon rally was just a taste. Dr. Stool will post the new Nasdaq biggest shorts this weekend. That way you'll know if you're in deep doodoo or not. January's list is here. Remember, rallies are absolute necessary to relieve the pressure that builds up on the short interest in these declines. Short covering spikes deplete future demand. And they scare the crap out of inexperienced shorts, not to mention wiping out their equity. Once burned, twice shy. If you stayed short through that nonsense in January, you know what Dr. Stool means. So lets just chill awhile. Cool. |
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