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Nasdaq Composite Comments Archive- MayArchive of Nasdaq comments January, February, March, April [adbox-upper.htm]Not Ready to Splat (5/31/01) The farther she gets, the worse she looks. That about sums it up for the Nasdaq. The 13 day cycle low projection has been reached, and the Nas may try to form a weak right shoulder on the daily chart. Odds favor a 2075-2175 trading range, with the index bouncing off 2075, once or twice, because some chartists and money mismanagers misperceive it to be a support level. The cycles will then weaken into mid-late June. After that a two or three week summer rally into mid July. Then the big dump. The centered moving average projections for the 4-5 month and 10-11 week cycles are very preliminary. They almost certainly will change. From a time standpoint, cyclicality should be at its weakest in late summer when a number of important trading cycles will be in confluence the downside. Cycle Conditions
What Year Did Columbus Discover America (5/30/01) This famous year coincides with the Nasty's next 4-5 month cycle low. If 1492 is your final answer, you are not the weakest link, and you win Dr. Stool's doodoo prize. Of course 1492 is a minimum, and it's actually looking more like 1400. But it's early yet, we'll have to see how the next few days play out. Suffice to say, it's going down fast, and it's going down hard. Right now the Nas is still within a top formation formed by the upside breakaway gap at 2000 on the way up. Dr. Stool is willing to bet that the gap will be even bigger on the way down, setting up a big island reversal. The lack of liquidity in the market is astonishing, in both directions. The betting here is that it will be more astonishing on the way down. Sellers will come to market, and find a big fat vacuum. Dr. Stool has said it before an will say it again. The one sided buying panic hysteria in the rally will leave a market bereft of demand. No joke about the initial downside centered moving average projection for the 4-5 month cycle. It really is in the 1400-1450 area, although this early in the downturn there's a huge margin of error. There's a little more certainty in the short cycle projections as the days progress. There's some inconsistency in the picture, but except for the 6-7 week projection, targets are ratcheting sharply lower. The next 10 week cycle low is due in mid June. That should generate a little bounce, perhaps into early July. And that will be all she wrote. From here, June looks bad, and the rest of the summer looks worse. Cycle Conditions
Sis Bam, Thank You M'am! (5/29/01) The Nasty has completely reversed its breakout from the impressive looking "bottom." Bear markets be that way. They're just such jokers. Suck everybody in with a really good looking phony breakout, then drop the hammer. Now who do you suppose was doing the sucking? Why, all of those big-hearted market maker brokerage firms of course, who were just pleased as punch to take the other side of the transaction from their portfolio shrinking clients. They took one look at the charts and started licking their chops thinking abut all those short positions they were going to be able to load up on. So they winked at each other and thought, ok, time to run 'em. And run 'em they did. That was the week before last. This is now. That was cause. Now we get the effect-- a vacuum of buyers. "Visibility" is improving as a result of the selloff. Cycle targets for the first wave are now in the 2020- 2080 range. Bear in mind that the 4-5 month cycle is still topping out here, just 8 weeks from the low. The most severe downside, when all key trading cycles get in gear to the downside, will not be until the latter part of the cycle in the July-August. (Dr. Stool is consistent, if nothing else.) There will be some bumps before that-- mostly short covering. That's not to say that things might not get bad sooner. They may. They may not. The news certainly is bad enough, and it is now procyclical, i.e. it's in gear with the cycle. Bad news will now matter. Price action over the next few weeks will tell us how atrocious things will get in the dog days of summer. The worse they are now, the worse they'll be later on. Cycle Conditions
Popping the Boil (5/25/01) The Nasty is poised for the big noogie splat. The 26 day rate of change, proxy for the 10-11 week cycle has flashed a sell signal, and other oscillators are hanging by a thread. Upside price projections have been reached and every indication now is that the turn is at hand. Still, there are no sell signals on the 85 day stochastics, representing the 4-5 month cycle and the 21 day PPO. The heavy short interest in the Nasties is holding things up, as usual. But when everybody tries to get out the door at the same time, that'll change real quick. The index is hanging around the area of the bottom breakout. Being a stock proctologist, Dr. Stool has seen a few of these bottom breakouts, and they tend to get really nasty when they fail. The breakout line is around 2240-50. Once the Nasty drops back below that line, the boil will pop, and those swollen portfolios will begin to shrink again. Cycle Conditions
One More Time (5/24/01) While the 4-5 month cycle may be in the early stage of a top phase, only the 26 day rate of change is flashing a sell signal. This indicator is a proxy for the 10-11 week cycle. Look for confirmation in the form of a downturn in stochastics or 21 day Percentage Price Oscillator. The 85 day stochastics has not confirmed a top in the 4-5 month cycle, and an upside objective of 2450 is still out there. So there's still risk that the dipshits will be doing enough buying before heading to the Hamptons for the weekend to spike this thing one more time. This will come to an end, but the guess here is that there remains some work to be done at the top. Tops take time to round out. From the time they began to form until the breakdown a 10-11 week cycle top can last from 10-15 days. It would be reasonable to expect this one to last another week. Cycle Conditions
Caca-Ching (5/23/01) A political earthquake is shaking up things in the market. The other day, Dr. Stool wrote, "It'll take a catalyst." The change in control of the US Senate appears to be it. The quake is not as visible on the Nasty, as it is on the Dow chart. People who buy this shit tend not to know or care what's going on in the real world. They just keep putting their dollars in the slot, and pulling the handle ka-CHING ka-CHING. Or maybe that should be caca-Ching. Anyway, apparently we do live in interesting times, as the ancient Chinese philosopher wished us. And the times they are changing. The sell signals are likely to be clear in the next day or so, but Dr. Stool, chickenpoop that he is, will wait for the first dipshit rally before taking the short side plunge. The most important thing on the daily chart may be that the Nasty has fallen back below the resistance trendline connecting the tops of this rally over the last two months, and is ready to fall back below the neckline of the huge reverse head and shoulders bottom. It was that breakout that turned everybody bullish last week. In Dr. Stool's experience, there are few things with more bearish implications than a false breakout. This Nasty "thing" that has caused us so much consternation, is about to be unwound. Cycle Conditions- Please note, the downside projections are very preliminary guesses.
Yellow Light (5/22/01) In the very short run, there's hope for a 13 day cycle top to lead to a little pullback, but cycle projections indicate that it will not be the final high The 13 day cycle is headed into day 7, and the Nas is 50-60 points below the projected high. An unmet objective of 2600-2700 is still hanging out there for the 4-5 month cycle. The dipshits are likely to buy any pullback and ignite another panic that will drive the Nas to its final peak in June. Dr. Stool isn't happy about it, but that's the cycle forecast, for what it's worth. At times like this it's our inclination to want to get short, but this is not the time to be a hero. It remains a time to be cautious. * Financial Bubble Inc. Cycle Conditions
Capitulation is a Two Way Street (5/21/01) Never underestimate the power of FBI* Director Greenspurts to reflatulate a bubble. While we know the final result of the Fed's grand experiment will be a disaster, Dr. Stool has seen, much to his chagrin, the Fed's power to ignite a stampede when it wants to. Truth is, a universally held consensus, like "Don't fight the Fed," becomes a self fulfilling prophecy, for a little while anyway. But, when the last bear, and the last skeptic has finally capitulated to the idea, who's left to buy? Capitulation is a two way street, you see. Looking at the 4-5 month cycle, the centered moving averages are now projecting a high of 2400-2600. The index is 16 weeks from its last high on this cycle, so it's getting close to a top phase (Where have we heard that refrain before?) The 4 and 6 week cycles are only a week from their lows, so this thing could at least try to go higher over that time. Monday's action is a breakout from the downtrend on the daily chart. Will it whipsaw, is the big question bears face. There are some straws in the wind, like weakening mo and toppy stochastics. But until those indicators actually turn down, the trend is duh. (Dr. Stool's tic prevents him from typing the word u-p.) * Financial Bubble Inc. Cycle Conditions
Beginning of the End (5/18/01) There is no chance, repeat no chance, that the Spoox will break out above its 200 day moving average. (Being Dr. Stool means never having to say you're sorry.) Well, we all know that's not true, but fact is, the first attempt usually does fail after a few days of battle. The battle will be joined on Monday. The bulls will have to contend with a major downtrend channel line which is likely to provoke the heaviest selling in a long time. They will also have to contend with having already spent a hell of a lot of money. The market has been overbought for five weeks. Of course, they may never run out of cash so long as the Fed is printing and handing it over for nothing. Anybody looked at broker call rates lately. The more prudent bulls, if there is such a thing, will be ready to take some off the table Monday. Certainly some are going to wake up in the middle of the night this weekend and realize that this rally has been based on a bunch of nonsense. Monday may not be the end of the end, but it should be the beginning of the end. Not Impressed (5/17/01) Dr. Stool is not an easy guy to impress. And he's not convinced that this Fed flatus rally will hold up much longer. The monthly chart tells the story. The market sobriety test line is at 1300. A breakout means the Fed has successfully reflatulated a bubble. Remember, flatus is composed largely of methane, which is both flammable, and explosive under pressure. Also heavier than air.
Let's watch the pullback and reaction, before deciding. The bet here is that there will be a sharp pullback, which the dipshits will buy, pushing prices up to another test of the downtrend in relatively short order. Then it'll be all over. For the life of him, Dr. Stool can't help but feel we've witnessed a historic blowoff. The man needs help. He's one of only six bears left in the world. Three of the others stop by every day to commiserate. The others are out there. We know they are. The Big Lie Machine (5/18/01) Thursday night's column said it all. This is a bear market rally. Prices remain within their long term downtrend channel, the market is overbought and momentum is weakening. The poodits are wildly bullish. Guess they haven't noticed that the Nasdaq is in the same trading range it's been in for a month. Guess they haven't noticed that it's only been a 50% retracement of the last decline. But that's Wall Street, the Big Lie machine. Worth 1000 Words (5/17/01) Pictures speak louder than words.
This is a monthly chart of the Nas bubble deflating. Dr. Stool isn't too impressed with this rally. The downtrend is intact. Dr. Stool is a broken record.
This is a monthly chart of the Dow bubble deflating. A rally in January 1931 looks similar to the one the Nas is now having.
Nikkei had some massive rallies as its bubble deflated.
In both the Dow and Nikkei, after the bottom, there was at least a 50% retracement of the initial rally.
Both the Dow's collapse and the Nikkei collapse lasted nearly three years, top to bottom.
More Flatus (5/16/01) The Nasty's Big Move (BM), unlike the Dowager's, left it in the same trading range it has been in for the last month. If the Nas were the whole market we'd say, "No big deal." Not enough happened in this index to change anything. Unless the Nas can ramp up to 2232, it could very easily form a head and shoulders pattern, and still be on schedule for the scenario Dr. Stool has been projecting for the past week or so-- a gradual rollover, then splat this summer. The whipsaw around the 21 day moving average could be a bad sign, however. In order to be comfortable, Dr. Stool would like to see the index fall below that average. That would confirm that the bearish cycle forecast is still probable. Dr. Stool expected bulls to keep the pot boiling for a day or three (see below), but he isn't crazy (depressed perhaps, but not crazy). If prices manage to stay above the 21 day average, it could get ugly for bears. Thursday isn't critical, but if they don't start falling back by Friday, there'll be more flatus in the bubble. Flat Top (5/15/01) Wow, what a non-event. This is the kind of market you get when cycles oppose one another. While the major trend cycles are headed down, the 4-5 month cycle is still up, although late in the game. The 10-11 week cycle is topping out, and some shorter cycles including the four week, 13 day and 8 day waves are all up. The result is a flat market. This will resolve to the downside, but the bulls will try to keep things going for another day or three. Old heads, excuse Dr. Stool for the repetition, but newer readers may not realize that cycle configs cal for this thing to roll over and go gently into the night initially, before picking up steam to the downside in mid-summer. For bears it's a midsummer night's dream. As with the Dowager, there are few cycle projections to be made. The market has to do something before that can happen. Moving averages based on the 6-7 week cycle are pointing toward 1850 or so. But that doesn't mean much since that wave has been of such low amplitude as to barely matter lately. It's going to take a fairly good break down from the top to give us a decent idea of where we may be headed. Skinny Dippers (5/14/01) The 26 day rate of change turned down yesterday and the 53 day stochastics are in position to flash a sell signal. These two indicators are proxies for the 10-11 week cycle, and have a good record of reversing at just the right time. But, as Yogi would say, "It ain't over till it's over." When the 53 day sto does tick down, the Nas will probably be on its way back below 2000, and you shorts can breathe a sigh of relief knowing you're going have that big long dump you've been waiting so long for. In the very short run, there's a wee bit of a visibility problem, something about a Fed meeting. The shortest cycles seem to have hit a low Monday afternoon, pretty much on schedule, so it looks like the skinny dippers will try to take it off one more time when Greenspurts gives the word. It'll be the last time for awhile. Cycle Projection or Colonic Reaction (5/11/01) If the swollen membraned portfolio shrinkers think this is a correction, they'd better think again. Prices are dropping, but the 26 day rate of change is still rising. This indicator is a proxy for the 10-11 week cycle, and it's telling us that the Nasty is still in a top, and remains grossly overbought. The 26 day R.O.C is a coincident indicator. The 17 day R.O.C. is a leading indicator for the 10-11 week cycle. It tends to form a negative divergence over several weeks at important tops. The indicator is presaging the completion of the top over the next week or so. It could be any time. The 8 and 13 day cycles and the 4 week cycle are in down phases. The target is 2100, based on centered moving average projections. This suggests a bounce from current levels, but Dr. Stool's colonic reaction says no way. We'll see which is more reliable, cycle projections, or Dr. Stool's colon. Either way, it won't matter. One more dip buying excursion by money mismanagers will only further weaken future demand. Sure as stool, that collapse you've all been waiting for will be playing this summer on your local computer screen. Just Keep Buying, You Morons (5/10/01) It's laughable watching these people buy these worthless pieces of crap, because another anal cyst, who promoted the loss of all that money in the first place, tells 'em to. Can you believe it? The hopeless, hapless, money mismanagers still give these anal cysts their full attention. They must all be on drugs. Or maybe it was too much blue blood inbreeding. There's just no reasonable explanation for it. None whatsoever. But this is the way it works on Wall Street. Always has always will. The credo of the Street is, "Doesn't matter what you do, as long as everyone else is doing it." Then you can't be blamed for being an idiot. Or so they think. Well, now we have our first sell signal on the daily short term stochastics. It looks pretty definitive, but a breakdown out of that top pattern would be comforting. It looks pretty certain that the 6-7 week cycle has topped. The 4 week cycle is now in a down phase. The target is 2050. Same for the 13 and 8 day cycles. If that unfolds as projected, then it will be clear that the 10-11 week cycle also topped last week. Over the next week we should see continuing gradual deterioration, with increasing downside mo going into June. The dipshit buyers will try and give 'em a pop, probably every day, but one look in the proctoscope will tell you, it's coming down. Complacent At The Top (5/9/01) The Nasdaq pulled back Wednesday in spite of persistent dip buying by portfolio shrinkers. Upside cycle projections for the 10-11 week cycle, adjusted for the Fed repricing, come in at 2250. The 13 day wave requires no adjustment because its last low was subsequent to the revaluation. It projects to a high of 2230. Last week's high of 2232 was probably it. Meanwhile Dr. Stool can now project a downside target for the 8 day cycle low due in a day or two. Its 2100-2140. Don't expect anything dramatic for a week or so. Daily oscillators remain superextended. They have not corrected at all, in spite of prices moving sideways for a week now. That's a good sign for bears. It signals that portfolio shrinkers are continuing to turn cash into crud (tech stocks), as the market churns. Complacency and bullishness are the order of the day among the pundits. So what else is new. The best that can be said for these people is that they are silly mindless jackasses. The worst, is that they are criminals and thieves. Dr. Stool thinks it's a mix of the two. This is what drives Wall Street, stupidity and criminality, and of course, the desire to take your money. Cyclicality will be mixed for awhile, which is reason to expect a trading range. The daily oscillators indicate that the portfolio shrinkers are working toward being 100% invested. Once they get there, the trading range will morph into a downtrend, 'cause they ain't gonna be no mo' buyers. Once it becomes clear they are tapped out, the bears will come back out of the woods. Bulimic Market (5/8/01) How stupid can people be? Over the next three months, we're gonna find out. Notice Dr. Stool didn't say who is stupid. He does, however, have his suspicions. How these people could have actually been buying the market because some jackass anal ist said to, in anticipation of Cisco, is something that Dr. Stool just doesn't get. Hasn't anybody learned anything? Apparently not. This is living proof that portfolio shrinkers have shit for brains. Or perhaps it was what few shorts are left standing doing their final bit of covering? Man, are they gonna be disappointed. Now look at that daily chart down below. Look itchy those oscillators. Notice anything? Sure you do. They're right at the same levels they were when the big crapper started last fall. What makes this different than then? Absolutely nothing. And don't spew that crap about the Fed being loose. Pushing on a string. Ok, lets not get too excited here. The 4-5 month cycle up phase is only about half done. As for the 10-11 week cycle-- stick a fork in it. Forget the shorter cycles, no amplitude. The long wave secular downtrend will govern from here on out, but that 4-5 month cycle up phase means the portfolio shrinkers will try, try again, before they give up. So we'll have a bulimic market, alternately gorging and puking, gorging and puking, before the big diarrhea sets in later this summer. Dr. Stool's been giving some thought to the fact that targets for the 10-11 week cycle remain about 4-5% above last weeks high. The effect of the Fed repricing on April 18 was 4.5%. That's the amount the Nasty rose immediately following the announcement. Dr. Stool thinks that that repricing created a false picture in the technicals. At the instant the Fed cut rates, all financial assets were in fact worth that much more. The market was simply recognizing that fact. The trends were skewed higher on the charts, and it looked like the technicals had improved. This is an illusion. If you take out the effect of the revaluation, the index would just be bumping into the 53 day average, which would still be downtrending. The Fed was manipulating, and it succeeded for awhile, but Dr. Stool believes that the picture of the trend was actually false. It was not as strong as it looked. The fact that the Nasty has failed to break through its long term resistance trendline supports that thesis. You and Dr. Stool will find out soon if the thesis is correct. Dr. Stool is betting that those price targets in the 2300-2340 range will never be met because the revaluation did nothing to improve the underlying trend. They just picked it up and moved it a few steps away. But it's the same trend it was before. If anything the revaluation weakened it, because the result was an historic buying panic that probably exhausted buying power for months to come. In the weeks ahead, prices will trade below the level of the day the Fed cut the big one. At that point we'll begin to see the true effects of that buying panic. And we'll see who the dumb ones are. Needing a Good Dump (4/7/01) Every time bears looked like they would take control, the bulls stepped up, until the last hour, Monday. Volume was pathetic, as buying interest wanes, but selling remains muted. This is the kind of behavior we should expect at this phase of the cycles. The 4-5 month cycle is only 6 weeks old. The lack of interest is a good sign for bears. An atmosphere of complacency would mark a relatively uneventful top formation process. The 4-week cycle is now rising, joining the 4-5 month cycle which is still in an up phase. This will work against the 10-11 week cycle which is in its top phase and due to turn down. The 6-7 week cycle looks like a non-issue. It doesn't have any amplitude. The long term downtrend line, now around 2200, should keep a lid on the upside. But with some cyclicality still positive, the Nasty my try to hug the line for awhile. The behavior of prices around this line will tell us whether the long wave, aka "fundamentals", are as negative as we bears think. If they are, the price action will weaken over the next few weeks, and the trendline will hold. There's precious little sign of weakening yet. If the thesis that the long wave is down is correct, then price weakness must begin to manifest itself now. A sideways movement with oscillators correcting would not be a good thing. If prices then break out above 2200, you're looking at another bubble. The worrisome part is that price objectives for the 6-7 week and 10-11 week cycles have adjusted upward to 2320-2380. The longer the bulls are able to continue to hold prices near current levels, the greater the likelihood that these adjusted projections will be met. Bears need to have a good market dump, and they need it soon. The Return of Insanity (5/5/01) Traders took a second look at the unemployment data Friday and concluded that interest rates must come down again. So they automatically decided that Looking at the long term view, there's a lot less to this rally than meets the eye, so far.
Short term price objectives range from 2210 to 2300, for cycles from 13 days to 6-7 weeks. Short term oscillators on the daily charts are in a top zone, assuming this remains a big bear market rally. If the Fed has been successful at engineering a second bubble, we'll know this week, because prices would break out above the long term downtrend line, and oscillators would simply continue to ride the topline, if that is the case. Then we'd have to start projecting how far it might progress before ending in a thunderous collapse this summer. It's a scary scenario, but it could happen. We're just going to have to watch and see what happens around that downtrend line on the weekly chart. The Return of Sanity (5/3/01) Suddenly bad news matters again. This is the first real sign that cyclic forces are beginning to turn negative. In the up phase of intermediate cycles, the chattering classes ignore the bad news, and exaggerate the good news. Bad news is good, and good news is good. As cycles turn negative, "investors" (Dr. Stool uses the term loosely) are suddenly troubled by bad news, and begin to interpret good news as bad. When you see the market in terms of cyclicality you begin to understand the why sometimes bad news seems to matter, and other times not. Bad news will start to matter again. The Nasty has been in an up phase of the nominal 21 week intermediate cycle, and the 10-11 week cycle, since late March. Dr. Stool interprets the last price low as being somewhat after the cycle lows, based on the behavior of momentum oscillators. This wave is therefore either 4 or 6 weeks old. The dominant trading cycle has been the nominal 10-11 week wave. The 10-11 is definitely ready to head into its down phase. The 4 and 6-week cycles have up phases due now, but the amplitudes of those waves have been almost nil in recent months. The bet here is that that pattern will continue and the 10-11 week wave should remain dominant. A little bounce here would not be a concern. A downturn in the 21 day stochastics and the 26 day rate of change would confirm that the down phase of the 10-11 week cycle is under way. Be mindful that the 21 week cycle is only 4 or 6 weeks old, so that it may not be ready to turn down. The propensity for the next month or so will be to bump along the downtrending resistance trendline, rather than drop sharply away. The really big downside risk wouldn't be due until the last 6 weeks of this cycle, beginning in July. While the worst of the insanity may be over, the market isn't yet positioned for a real bear party. Dr. Stool expects a nice looking top to develop first, after which the Nas will begin to work its way gradually lower. Action like this will lull the bulls into a false sense of security. They will proclaim a normal testing phase. Then things will get really bad beginning in mid- summer. The trouble may start a little earlier, but as reader yobob1 said, take 2 aspirin and call me in September. Perpetuating Madness (5/2/01) Wild bull buying, fed by excessive Fed flatulence drove the Nasty higher again Wednesday. As a result, the ambiguity only increased. Short term price objectives rose for the 6-7 and 10 week cycles to 2340-2420 Dr. Stool refuses to believe the bullish chatter that the bottom is in. Whether this is simply bias, or advance communication from Queen Ursa Major remains to be seen. The thing that bothers him most, other than the fact that sentiment has gotten wildly bullish at the top of the downtrend channel, is the fact that the rationale of the bulls simply doesn't meet the smell test. This is a bald faced experiment by a bald faced Fed to reflatulate a bubble, plain and simple. It seems to Dr. Stool that it has to result in either hyperinflation, or ultimately, outright collapse. A couple of readers have posted some excellent essays to that effect on the Stool Pigeons Wire. Dr. Stool thinks these folks are as good a reading as King Fleckenstein every day, and cheaper. They have the Capitalstool seal of approval. Of course, maybe we're all just full of beans. Anyway, here's the perspective Dr. Stool has of this rally.
If it does manage to blow through that downtrend line, it'll probably make a run for the 48 month moving average at 2600. That would be the logical place for the madness to end, if it doesn't end here. Bears
Last Stand (5/1/01) This is a big, impressive rally. Prices have hung around 2100-2200 for nearly two weeks. Lots of dough has been committed to equities during that time. And the pundits are wildly, obscenely bullish. Their bullish crowing is deafening. None of which changes the fact that the Nasty is just now approaching a test of the downtrend resistance line. Unless that channel is broken, Dr. Stool remains bearish. Wednesday will be interesting. It may be the bears' last stand. Or the bulls. |
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Nasdaq 1999-2001
Dow
10/28-3/33
Nikkei
1/89-3/93
