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Nasdaq Composite Comments Archive- JulyArchive of Nasdaq comments January, February, March, April, May, June [adbox-upper.htm]Summer Rerun (7/31/01) by Dr. Stepan N. Stool, Chief of Stock Proctology Got a little scare through most of the day Tuesday, but in the end the Nasty formed a Knuckle Pattern on the chart. (See Digital Exam). In the after hours, the futures continued lower, resulting in the rare and powerful Finger formation. Wednesday we'll see if the Nasdaq did indeed give the portfolio sphincters the Finger. All that sound and fury, and on the daily chart, again, nothing. So there's no reason to change the forecast. The market is due to begin accelerating to the downside now. Let's see how many days in a row Dr. Stool can say that. Dr. Stool thanks you for subscribing to Capitalstool with Paypal, secure payment system insured by Travelers, or Amazon.com's Honor System. Of course, it's voluntary! Cycle Conditions
*SWU= Sideways Up Phase
It's Now Or? (7/30/01) by Dr. Stepan N. Stool, Chief of Stock Proctology Flat as a pancake. That's what this market is, and the pooditas are suggesting that it will continue. Thank God most of these people live in Manhattan and don't drive. A lot of accidents are caused by people driving in their rear view mirrors. Once the driver sees recent past trends clearly in the mirror, the market road ahead curves sharply, and the car crashes. Doc continues to believe that the 10-11 week cycle bottomed in mid June, which is when the 26 day stochastics first bottomed. This cycle has been unable to get off the ground. If longer term cycles were positive, the last 4-5 weeks would have seen the market rise strongly. The fact that it could not get out of its own way means that intermediate and longer term trends are negative. The 10-11 week cycle is now 29 trading days along. That means that if Dr. Stool's interpretation is correct prices should begin to accelerate to the downside, now. There were hourly sell signals late in the day Monday. We'll just have to wait and see whether the rest of the forecast falls into place. Dr. Stool thanks you for subscribing to Capitalstool with Paypal, secure payment system insured by Travelers, or Amazon.com's Honor System. Of course, it's voluntary! Cycle Conditions
*SWU= Sideways Up Phase
The Long March (7/27/01) by Dr. Stepan N. Stool, Chief of Stock Proctology Who wouldn't be frustrated? No one likes sideways markets. But is it so sideways? It looks sideways compared to last year. Yet when you look closely, you see the Nas is down 13% in two months. That sounds like a pretty fair intermediate downtrend. It's just that we bears got spoiled by those 13% drops in two weeks, or two days. So the Nas is in an intermediate downtrend. It just doesn't feel that way relative to our expectations. No question, the decline has slowed since last year. And because it has, and has held above the lows for almost 4 months, an awful lot of people have turned bullish, based on the hope that things can't get worse. They will get worse. Back in late March, Doc began forecasting a sideways up phase, before the next big down. In April, the market exploded and everyone thought we were off to the races again. But looking back three months later, a sideways movement is exactly what we got. Ok, ok, so it was at a higher plateau than Doc thought, and it has lasted a little longer, but it still appears quite normal in terms of cyclicality. Cycle analysis is a fart, not a science. Cycles morph all the time, which is why it's such a pain in the butt, figuring out what periodicity to apply to your indicators. The dominant cycles tend to recur, but not always consecutively. How nice it is when they do! Sometimes the 4 to 5 month cycle is the dominant intermediate wave, and sometimes it's seven months, or ten months. The ten month cycle is so common, that years ago, before PC's, chart books always came with a 200 day moving average, or a 40 week moving average. At this point we have no way of knowing for sure which of those intermediate cycle lengths is going to dominate here. Dr. Stool is beginning to think that one of the longer versions will be it, because four months from the cycle low the market is acting like a top. That would suggest that we're in for either a 7 or 10 month wave. Once the top is complete, the market should do something that feels like the Long March, to the bulls. If the 4-5 month cycle is going to be dominant, we need to be vigilant for signs of a cycle low over the next month. Intermediate indicators show no sign of it yet, and market psychology just isn't right. The portfolio sphincters are fully invested and their generals, the chief market analcysts are wildly bullish. The investment advisory services, as you know, are also wildly bullish. The only demand pool left is the shorts, and they've been gettin' squeezed out in these spikes. Very soon, this top heavy monster should begin toppling of its own weight. That should coincide with a downturn due in the 10-11 week cycle next week. There's not much to indicate that this rally has any more than another 20-30 points left, if that. The 2050-2075 level is the third rail. Doc doubts that the market makers will let it get that far. Dr. Stool thanks you for subscribing to Capitalstool with Paypal, secure payment system insured by Travelers, or Amazon.com's Honor System. Of course, it's voluntary! Cycle Conditions
*SWU= Sideways Up Phase
Was Anyone Listening? (7/26/01) by Dr. Stepan N. Stool, Chief of Stock Proctology Was anybody listening yesterday when Dr. Stool said the market would make one or two more attempts to churn higher. The headline of the column (see below) was even "One More Squeeze..., and the column ended with the words, "last gasp." Dr. Stool has seen and heard from an awful lot of bears here Thursday, taking off their shorts and going long to "play the bounce." My, how quickly we panic, we bears do. We are worse, worse I say, than the bulls! Fellow Bears, the market will show you, you cannot play for the other side. You'll get hurt over there! And you should not be ruled by your fears. Dr. Stool, meanwhile, discovered today that, instead of being a technician, quite the contrary, apparently he is a fundamentalist. He must be, because he is holding religiously to his short position, in spite of being surrounded by temptation. This is the true test of Bearian Fundamentalism. Oh yeah, there's just that one other little thing. It's called THE TREND. Friends, brothers and sisters, the trends, including both the primary and intermediate trends, are down, until proven otherwise. Therefore, having become a "position" trader and fundamentalist, by virtue of his position going agin' 'im, Dr. Stool fully intends to sit tight, and enjoy a beautiful bear day on the morrow. Cycle Conditions
*SWU= Sideways Up Phase
One More Squeeze Before You Go (7/25/01) by Dr. Stepan N. Stool, Chief of Stock Proctology So far the indicators are telling us not to get too excited, or too worried, as the case may be, about that little rally Wednesday. Hourly chart buy signals early in the day are related to no more than a 5 or 8 day cycle up phase, which should peter out quickly. The flattish downtrend continues to make reading the short term cycles difficult, if not a worthless exercise. Dr. Stool believes the 10-11 week cycle remains in a sideways up phase, or top, from the mid June low. Time is running out on that, and a downward acceleration is due beginning no later than next week. The holding action has caused short term centered moving average projections to move up a bit, and a 4-5 month cycle low is due in August. However, the possibility of an extended intermediate cycle of 7 or 10 months remains, so that the lows projected below would only be interim lows. Dr. Stool believes that is better than a 50% likelihood at this stage of the major trend cycle. The trading range of the past three months still looks like a distributional consolidation which will ultimately lead to much lower prices. In the very short run, there could be another attempt or two to churn higher. It's the last gasp. Cycle Conditions
*SWU= Sideways Up Phase
Hanging by a Thread (7/24/01) by Dr. Stepan N. Stool, Chief of Stock Proctology The Nas held on for dear life Tuesday, in the absence of heavy selling. The enormous short positions in most Nasty stocks provide support in low volume environments. (Broken record, broken record.) It's going to take a little heavier selling to cause a breakdown. It's coming. Tuesday was day 10 of the shortest visible trading cycle, which has been running 13-16 days. The breakdown "should" come during the next 5 or 6 trading days. Then, of course, a bounce would follow, but it would be inconsequential. The centered moving average projections in the table below, inched up a little. Because it is so early in the down phase, these will move up and down with the market in the days ahead. The range will narrow as the bottom is approached Cycle Conditions
The Long Slow Grind (7/23/01) by Dr. Stepan N. Stool, Chief of Stock Proctology The market fell apart just as Dr. Stool thought it would Monday. The mental institutions and portfolio sphincters were no longer able to keep things under control. This will continue throughout the summer. Their holding action is failing as the pressure is building. As they leave their Wall Street offices, trails of a brown liquid are appearing on the street. Portfolio sphincters, poodits, and analcysts will soon switch from the traditional blue suit to brown, for obvious reasons. Dr. stool hates to say this, for the sake of those who still have their life savings tied up in this market. In fact, while he makes fun of it, it angers and sickens him. BUT, ladies, gentlemen, and stool seekers everywhere, this index is still in a top! Look at the chart below. Intermediate cycle oscillators are still in top patterns or zones. The 75 day rate of change, which is a proxy for the 7 month intermediate cycle is still rising, and is now at the level at which it topped out last September. From that point the Nas lost 61.8% of its value (some kind of Fibbing Nacho number) at the April low. Dr. Stool believes it is entirely possible, if not likely, that the Nasty will suffer a similar loss over the next three months, taking the index to 900 by October. The projections below may be wrong (as you know) but they are not a joke. They're based on centered moving average projections, the same as always. Gimme Some Action (7/20/01) by Dr. Stepan N. Stool, Chief of Stock Proctology Friday's market was what Dr. Stool likes to call a pegged market. Market makers and mental institutions, the ones that manage your retirement money, engaged in stabilizing activities as option positions were unwound. IF Doc is right, the market will head down with reckless abandon on Monday. To say that the market has been behaving oddly is an understatement. It's manipulation, pure and simple. It can't continue indefinitely, and when it ends, the market should fall apart. The projections below are still guesses at this point. Some action is needed to remove some of those question marks Cycle Conditions
Why I am a Bear (7/19/01) by Dr. Stepan N. Stool, Chief of Stock Proctology There is only one way to describe what happened Thursday. Indescribable. So in order to gain a little visibility in this market that has the dreaded lacavisibiliti bacterium, Dr. Stool took the old Etch-a-Sketch out of the closet and drew some pretty pictures for your listening pleasure.
You see three envelopes on the chart. The big wide one represents the four year cycle due to bottom in mid 2002. The bright blue one represents the nominal 4-5 month cycle that sometimes runs 7 or 10 months. (Now there's a real big help.) And the red one represents the the nominal 10-11 week cycle. The pink lines are the extrapolation of the red channel which just rolled over. This shows why Doc thinks that cycle bottomed in June and is just now topping out. It explains to some extent the craziness of the last few days. Tops are characterized by bullishness come unhinged. Now, what could go wrong with this little exercise in mixed techniques. That line running through 2000 could be broken to the upside. Not likely. Cycle Conditions
Channeling With Dr. Stool (7/18/01) by Dr. Stepan N. Stool, Chief of Stock Proctology Looks like that great big rally in tech is falling apart right on schedule. Here's the chart that Dr. Stool's editorial asst. Bernie Butts posted over the weekend, which caused such a stir, updated. Once the centerline of the most recent channel is broken, around 1980, look for a move to 1850, post haste. (You need to have that chart open.) Assuming we get the kind of down day Thursday that the after hours Wednesday action is suggesting, the projections call for an interim low of 1800, and a low of 1300 either in early September or perhaps November. But hey, who cares? Cycle Conditions
Dumbass Trading Range (7/17/01) by Dr. Stepan N. Stool, Chief of Stock Proctology All cycle price projections are now off the table. The Nasty has gone too flat over the past couple of weeks, and yesterday's rally severely muddled the picture, suggesting a continuation of this annoying, dumbass trading range, for yet a little while longer. Now that that's said, the Nas is sure to do something dramatic tomorrow. Key short term cycles still appear to be topping out. But the 6 week cycle is in a bottom. That wave hasn't shown much amplitude lately, and it's not likely to give much lift now, but it could be enough it to keep prices from falling apart right way. As for that boomerang (see below), it grew a handle. The boomerang with handle tends to behave erratically. Doc still expects this market to break out of this range to the downside, in the not too distant future. No question, the uncertainty is agonizing. Here's something both bulls and bears can agree on. This is one aggravating market.
Cycle Conditions
Rare Powerful Chart Pattern (7/16/01) by Dr. Stepan N. Stool, Chief of Stock Proctology Dr. Stool is writing to you from the shores of Lake Montezuma's Revenge, from whence he has just returned, to report to you on sighting one of the rarest chart patterns known to technicians the world over. As you know, Dr. Stool is a student of, and in fact the discover of many of these rare, but extremely powerful patterns. These include the now famous Manhattan Skyline formation, the Aculpulco Cliff Dive, the Grand Canyon, the Three Mile Island, which is precursor to the Meltdown formation, and of course, the Finger formation, as in, "Yo, d'you jus gimme da finger?" Now, for the first time in recent memory Dr. Stool has spotted one of those rarest of the rare, only occasionally seen before in the Australian market, and never before in US markets, The Australian Boomerang Pattern, also known in Japanese candlestick charting as the Who Flung Dung Formation. This formation is fleeting and is not connected to the previous or following action. The boomerang (or dung), in this case the Nasdaq Composite on an hourly chart, is flung into the air, where it suddenly becomes visible after a day or two, then overnight, it miraculously returns, from whence it was flung. At this point in time, the boomerang, or dung, that being the Nasdaq Composite, remains airborne, poised to return to the flinger. But thrown with enough force, the boomerang, or dung, not only returns to he who who flung it, but the flinger will be unable to catch it, so that it falls to the ground with a thud.
Many people have made a lot of money from rare chart patterns, mainly from writing books about them. So if you learn enough about them, you too can have a career in rare chart pattern book publishing. Dr. Stool enjoys bringing you these lessons in rare chart patterns and hopes that you benefit from his experience.
Cycle Conditions
Do You Hear An Echo? (7/13/01) by Bernie Butts- Editorial Asst. to Dr. Stool. A little of the wind came out of the Nasty's sails Friday. Dr. Stool would say that was the Nasty breaking wind. He has been reading my columns from his hospital bed, where his ass is in a sling, as a result of the rally. He thanks everyone for the flowers and good wishes. I'd like to talk a little about trends. Click on this little chart thingy. I want to show you something.
Now here's what I want you to see. The long blue center trendline is based on all the data from the market top in March 2000 until now. The hot pink lines are based on the data from the May 2000 low until the January 2001 lows. Look at where an extension of that regression line goes. Do you have the chart open? Now keep in mind folks, that line is calculated only on data from last May through January. The rest of the line is just an extrapolation. Seems the market has a memory! The last three short term lows have all come right down to that line, the central tendency of the long term trend from last year's cycle, and the last three short term highs have have been on a parallel line. And they are all parallel to the long term linear regression. The market is declining over the last two months at the same rate as it did last year and since the beginning of this big BM. Now here's something even weirder. I did a linear regression of the rally from May through August of 2000. Then I had my Metastock software draw a couple of lines rising at the same percentage slope. Then I overlayed those lines onto the recent April-May rally. Lo and behold, those lines formed the exact trendlines of the tops and bottoms of the rallies. In other words, like the rally last summer, the rally this spring went from the bottom to the top of the linear regression channel at exactly the same percentage rate of increase. Not only that, but the 2000 rally topped out first on day 37 from the low. This year's rally topped out on day 34. The final top of that summer 2000 rally was on the 70th day from the low. Friday was the 70th day since the April low. I hope you enjoyed this little lesson in market memory. If I'm guessing right, these portents mean that the rally is over, and that we may just get Dr. Stool's big dumper in mid-July after all. Oh yeah, one other thing. The day of the high of that rally last year? Monday, July 17th. Cycle Conditions
Meaningless Rally! (7/12/01) In Dr. Stool's abscess, tonight's guest columnist is Mathbear. Mathbear is a perfesser of arithmetic at a large Southern football factory. You can join mathbear and other stock proctologists in symposium at the Stool Pigeons Wire. - Bernie Butts- Editorial Asst. to Dr. Stool. [Doc]- Judging from your general commentary on Wednesday, I expect you are feeling a good bit of anguish at this point, so I wanted to point out how meaningless today's rally in the markets really is according to "classically reliable" indicators I follow. 1) Look at the chart of the Nasty from the January highs until now. Draw in the horizontal support line at 1963 and the trend line down from the top at 2860 that just grazes the tops of the last two feeble rallies. Note how the Nasty is "trapped" in the triangle formed, and how it is fast running out of time moving sideways as it is into the narrowing apex of the triangle. Unless you think it's possible it will break out up through the downtrend line (which I don't for a minute), you must conclude it has only days before it has to break DOWN through the support line. This is very impressive--you NEED to look at it! 2) Take a look at the 20 day MAV of the Nasty, and how it has repelled the last two weak rallies and how, as of today the Nasty was stopped EXACTLY as it was rising and then rammed head-on into this strongly down-trending MAV. It ain't goin' no further up against this piledriver coming down directly on top of it like a hammer on the head of a nail!! Take a look--you'll be impressed! 3) The pattern of lower highs and lower lows is still intact after this rally. 4) Even without the Microsoft earnings "surprise" (that they've been pulling off EVERY quarter, and are famous for, for years!!), there may very well have been a bounce today ANYWAY because the Nasty completed a 50% retracement just yesterday and a lot of daytraders are always primed to play the expected bounce for a quick in-and-out couple of bucks. The MSFT "news" and consequent panicky short covering just exaggerated it, that's all. 5) The volume of trading of the QQQ's was only about the average of what it's been over the last 3 months or so, hardly evidence of great enthusiasm on the part of investors--more evidence that the prime movers of the Nasty today were nervous short-coverers. Anyway, the today rally is in no way, shape, or form indicative of the beginning of a long term up-move, as I'm sure we'll see tomorrow. This is the time to be shorting, not covering, I'd say. At times like this I recall Peter Lynch's dictum; "An investor makes money with his stomach, not his brain". To which I might add: "and a tight sphincter is a big help, too!" Good luck with your trades, and I hope you WILL show up tomorrow in spite of what you wrote today to the contrary! The editorial staff of Capitalstool agrees and thanks mathbear! Short Covering Panic (7/11/01) Microsoft said it would beat expectations after the bell triggering a short covering panic. It was a circus. Something about a $3.6 billion write off got lost in all the hoopla. What puzzles Dr. Stool is why anybody would be surprised, that the most powerful monopoly in the world increased its revenues. He's also puzzled by how, when everyone else is reporting big misses, Mister Softee can be doing so well. Third, why would what's good for Microsoft be good for the rest of tech? Fourth, why ignore the charge off? This reaction doesn't pass the smell test. At one point, the Nasty futures were up over 80 points, and at this writing were up about 67. The Queers were up 2, which also translates into an 80 point move. Ouch! This is mindless panic, and it won't last. (ahem, ahem). There's still an unmet downside objective of 1880 or so on the 13 day cycle. There's no sign of meaningful improvement in any of the short term technicals. So Dr. Stool hereby guarantees-- guarantees, I say-- that this will be a 20 minute wonder. The sellers waiting with baited breath above 2000 will clobber it. On the other hand, there's a little more coherence and sanity to the downside centered moving average projections for the 4 week through 10-11 week cycles. They are now pointing toward 1800. That suggests that the 4-5 month cycle projection should adjust up some. We'll see. There's likely to be more swing to these numbers in the next few days. Cycle Conditions
It only Gets Worse (7/10/01) Look folks, the centered moving average projections are what they are. There's some guesswork involved, but basically it's a matter of extending a line to fit the data, sort of a linear regression of a simple moving average from the recent past to the present to the near future. As the cycles progress, the projections change, gradually becoming more certain. It's still early in these cycles and things could change, but at this point this looks very good for bears, and really, really bad for the rest of you. As far as the 13 day cycle low Dr. Stool expected on Monday? History. Now it looks like Thursday, somewhere in the low 1800 range. After that it only gets worse. Cycle Conditions
Back From the Brink (7/9/01) The Nas pulled back from the abyss Monday. As a result, Dr. Stool was forced to adjust his somewhat hysterical preliminary downside centered moving average projections for the 10-11 week cycle upward. (Guilty! Guilty!) The 13 day cycle low due Monday may be in place, but there is still an unmet downside downside projection of 1960. Shortest term daily stochastics have not yet signaled a cycle low but could at any time. Most indicators are in neutral with only a mildly negative bias. This week should be a period of watchful waiting. Dr. Stool expects the Nasdaq to consolidate or move slightly higher for the next week or so, with the downside breakout to follow. Cycle Conditions
Oh What A Beautiful Morning (7/6/01) Friday was a lovely day for bears, a nice orderly decline. The poodits found solace in the story that it was the "little guy" doing the selling, and that the mental institutional guys were "sitting on their hands." HAH, just wait until they get in the act, is Dr. Stool's thought. The market has now given us some downside projection material. The 13 day cycle low is projected at 1975. That's due Monday. Look for a holding action in the area of the 1950-2000 gap. Of course, if she jumps that gap Monday morning, all bets are off. That would give us a gargantuan multiple head and shoulders island reversal that will scare the crap out of the portfolio sphincters. Still, expect a bounce, from somewhere, beginning Monday or Tuesday. Once that's over with the Nasty will begin its grind toward 1500, due sometime in August-September period. Cycle Conditions
500 Club (7/5/01) Bears got their fireworks on the 5th. Then it really came unglued at the end of the day, with post closing earnings warnings sending the techs, and the QQQ, over the cliff. This was day 11 of the 13 day cycle, so we could get two days of fairly freaky selling ahead. The Nasty will give us a downside gap on the opening. Dr. Stool has had, shall we say, more than a passing interest in the QQQ since about 2PM last Friday. The Queers are bid 42.40, after closing at 43.45. Based on that, the COMP should open down 40-50 points. Things have a habit of changing overnight though. In this case, Dr. Stool thinks they'll get worse. Could be wishful thinking. Dr. Stool finds that having a position is real bad for objective analysis. Wait, this is Capitalstool. Who said anything about objectivity? Anyway, it does appear that Dr. Stool correctly identified the top in the 4 week and 13 day cycles, and it's odds on that the 6-7 and 10-11 week are also headed down. Dr. Stool now has a very preliminary projection for the 10-11 week cycle low due in late August or September. We're looking at 1520, subject to lots of change because it's so early. Oh yes, by the way, there's now a projection for the two year cycle low due in March-April of next year. 500. Cycle Conditions
Definition of a Downtrend (7/3/01) Is it the handle of a "cup and handle, or a right shoulder in a multiple head and shoulders top. In the first case the implications are tremendously bullish. This is what the consensus sees. The analysts and poodits are all anxiously awaiting the upside breakout. Ah, but the trend, my friends the trend is down. As our friend mathbear wrote today:
Mathbear- Dr. Stool couldn'a sed it better hisself! Join Mathbear and the other crazies on the Stool Pigeons Wire. Cycle Conditions
Do or Die Bears (7/2/01) It's do or die time for bears. The Nasty has risen to the upper limit of its downtrend channel. Some hourly oscillators consistent with the 13 day cycle flashed sell signals on the late selloff Monday afternoon. Price objectives for the 13 day and 4 week cycles appear to have been met. If the interpretation is correct that the 4-5 month cycle and longer waves are headed down, the index should begin to weaken now. The 6 and 10-11 week cycles should peak early, and lead to an extended decline, although they will be exerting upward pressure for a few weeks yet. That upward pressure will stem any sharp declines, but shouldn't lead to new highs. If the sell signals are correct, the Nas will sell off Tuesday, to be followed by a little more post holiday downside. There should be one more rally attempt thereafter, then the downside should take over after mid month. Cycle Conditions
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