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10 Minute Bar Charts 5/1/02 Dow Jokes Inflatables
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The Anals of Stock ProctologyPublished 5 times
per week by the American Academy of Stock Proctology and Late Update 5/2/02- The 8 and 13 day cycles in the Nas have broken down. The swup appears to have ended. The 9-10 hour cycle upturn due in the last hour may be the last before the Nas breaks down. The consolidation area between 1650 and 1695, may be the halfway point of the move down that began at 1825. The 8 and 13 day cycles in the SPX are still holding on, but if Nas breaks, it will take the whole market with it. PM Outlook 5/2/02- Still Cautious The 9 -10 hour cycle down phase forecast from this morning is on schedule. It has been much weaker in the Nas than the SPX. Low cmaps are 1082 and 1651. Lows so far are 1082 and 1654. The timing of the low could be anywhere from now until 3 PM. 5 hr cycle ozzies are bottoming now. The 8 and 13 day cycles are still in a swup. They could top out at any time, but we need to see at least 1 more upleg, and perhaps an up-down-up sequence to see whether that cycle is peaking. I apologize for being overly cautious here. The up phase will probably be no better than a trading range, but I don't like to trade against the 8 and 13 day cycle ozzies unless there are clear signs of a final upleg. If this thing is going into crash mode, I expect there will be a sign, and time to get in. Or I expect to hear from you. Total Feed of $9.5 billion is $3 billion short of refunding all rollovers. That should be bearish. Pre Market Outlook 5/02/02- Paranoia- At the risk of being badly fooled, Doc doesn't like what he sees. He doesn't like it one little bit. He went through dozens of charts this morning and sees the same thing everywhere, i.e. signs that many stocks are at least near the formation of a 10-13 week cycle low. Doc would not want to get short yet on intraday sell signals, unless he was scalping, and prepared to cover at the first sign of trouble. At the very least, the 13 day cycle remains up. The ozzie configurations indicate that that cycle will take at least a few days to top out. 13 day cycle cmaps are 1095 on SPX and 1710 on the Nas. If that cycle rolls over without too much upside progress, that would be a better time to get short. The 1 day cycle has stretched out to 9-10 hours, a phenomenon we've been seeing every couple of weeks. The top of that cycle came on schedule at 3 PM yesterday. A 5 hour cycle low is due in the first hour. The 9-10 hour cycle down phase should extend into mid afternoon, with a low due around 2 PM. If the down phase is sideways, the market could head toward the new 13 day cycle cmaps late in the day. So far, the fucutures are doing nothing to contradict this outlook. They appear to be coming into a one day cycle low just prior to the pre-market close. Is Doc suffering paranoid delusions? Check back around mid-day to see if he's foaming at the mouth. Frankly My Dear, I Don't Give A Damn (5/1/02) What does that mean? Pretty much that most investors and traders have been beaten up so much, they really don't care any more. Why should they? This market has only alternated teasing them and then battering them. In this market, bulls lose money, bears lose money, and pigs break even. Bears are plenty frustrated. Just when it looked like they'd gain the upper hand, Uncle Al shows up with a little extra Feed, and the market stage managers were off to the races. That may not last long. There's a giant rollover coming tomorrow in 3 different maturities of Feed repo paper. Uncle Al has to come up with something like $15 billion just to refund that. The bond market has been very cooperative lately, as the Feed spent the last couple of months draining the toilet. Thursday is decision day. Will they come up with the bucks, supporting stocks, but possibly flushing the bonds again? We'll have to see what they do and take our cue from that. This remains a very tricky and dangerous time for shorts. Doc thinks the risk reward equation on the short side just ain't all that hot. It's not like stocks look like they're going to take off to the upside, there just doesn't appear to be much downside, and there's no sign that's going to change any time soon. It looks like we're going to be consigned again to weeks of this up and down nonsense that makes everyone say, "Frankly my dear, I don't give a damn." The Feed gave us a big $ 8 billion overnight repo today, rolling a $5 billion overnight repo from yesterday, and leaving $3 billion, to be rolled tomorrow to maintain the support. There's a rollover of a 3 day $7.5 billion repo, and a $ 5 billion 28 day repo on Thursday. They had given themselves some room by letting the toilet drain the past couple of weeks and the bond market has been cutting them slack as well. In order to maintain the support that $3 billion may have lent to the market today, they are going to have to add at least $15.5 billion on Thursday. Anything less than that is a drain, and the rally will probably fail. $15.5 billion is a huge 1 day refunding, and just the print of a number anywhere near that is likely to send the bulls into paroxysms of joy. But keep this in mind, stoolies. It's a neutral number. The market will not be able to hold its gains for long unless the total Feed is larger than that.
The market composite index of mortgage loan applications-a measure of loan purchases and refinances-for the week ending April 26 increased 9.2 percent to 539.3 on a seasonally adjusted basis from 493.8 the previous week... On an unadjusted basis, the application index increased 9.4 percent but was down 6.5 percent compared to the same week a year earlier. The MBA seasonally adjusted Purchase Index increased to 368.4 from 351.6 the previous week. The seasonally adjusted Refinance Index increased to 1533.5 from 1320.6 the previous week. ...Refinancing activity represented 38.7 percent of total applications, increasing from 36.5 percent the previous week. The average contract interest rate for 30-year fixed rate mortgages was 6.82 percent, decreasing from 6.84 percent the previous week. While purchases are back near
their highs, the refi index has only moved up slightly in spite of the big
drop in mortgage rates. The refi bubble is over, and it's not going to be
reflated any time soon. Without the engine of the mortgage bubble, the
markets will get nowhere fast. Dow Inflatables
The 8-13 day cycle oscillator went up for the second day. The 4-5, 6-7 and 10-13 week cycle oscillators flattened but haven't turned up. The 10-13 week cycle oscillator is above its smoother and the Dow is within its 10-13 week cycle low window. For now, the configuration indicates that the upturn is limited to the 13 day cycle, and that larger cycles are still declining. This is a day to day thing. The centered moving average projection for this cycle moved up to 9,775-9,825. The Dow has hit the upper limit of that range each day for the last three days. For now it looks like the Dow is beginning the trough of the 10-13 week cycle. We should expect a trading range to develop between 10,150 and 9,775 for the next several weeks. Portfolio Sphincters Index (SPX) and Sentiment The SPX reversed a big drop in the morning and ended with a gain of 9.54 to 1086, back to the center of its descending short term linear regression channel. The 17 day rate of change, a proxy for the 6-7 week cycle, has started to turn up from the same level where the last two market bounces began, but it needs one more up day to flash a buy signal. The 6-7 week cycle oscillator superimposed on the chart is now zig zagging, and the smoother is still rising. The smoother needs to turn down to confirm a sell signal. The 29 day rate of change, representing the 10-13 week cycle, turned up from below the level from which it turned up in February. An upturn in the oscillator should be respected as a 10-13 week cycle upturn if you are trading that cycle. But again, another up day is needed for confirmation. Short term centered moving average projections for cycles of 4 to 10-13 weeks have jumped up to 1045-1070. That leaves very little room to the downside, and raises the possibility that the intermediate down phase is essentially over for awhile. The 10-13 week cycle oscillator is at the level where the last two cycles bottomed. The Trading Stoolicator is still heading down, but the indicator line has crossed the signal line. That's a caution signal. The VIX closed at 22.31, dropping again from Tuesday's 23.51. On the inverted scale chart, VIX has moved back to near the upper edge of the stool band, yet another indication that the option players are still overly complacent, in spite of the beating the market has taken recently. Another drop to near 20 should be read as a sell signal. A big intermediate rally probably won't come until the index is well below the outer band, i.e. above 30. The blue channel lines are the extension of a linear regression channel from the February and May 2001 highs.
The 5-6 month cycle oscillator is heading down. The 10-13 week cycle could bottom at any time. The oscillator is at the same level that gave rise to the last two intermediate rallies. The short cycle oscillator turned up from the lowest level since early September. We need another day, maybe two, before a judgment can be made whether the bounce is transitory, or whether it might lead to something bigger.
Fibo support held at 1062, a 50% correction of the September-January rally. Resistance is at 1090 and 1115. If the low is broken, the next support is at 1035.
The Cycle Conditions tables include cycle phase and a wild guess as to number of periods to the next turn, in days for the shortest cycles, weeks (W) or months (M) for the longer ones. This is a fluid exercise, in other words, the projections are likely to be wrong, but they force us to be vigilant for key turning points, and frequently work well enough to prevent costly misreadings. SPX Cycle Conditions as of 5/1/02
PTT - Periods Till Turn Nasgap Charts The Nas lost 10 points to 1677. The short cycle oscillator turned up from the lowest level it's been since the bear market began. The 5-6 month cycle
oscillator still appears to be in a topping out
process below neutral, usually a sign of impending
disaster. That would be negated if the indicator turned positive from
here. The 13 day cycle turned up on schedule. The 10-13 week cycle
oscillator is still down, but Doc's composite trading stoolicator is
flashing a yellow light to shorts. Strictly speaking it means exercise
caution unless both lines are moving down together. Fibo support at 1660 has held up after being repeatedly probed this week. Resistance is at 1700 and 1715.
Nasdaq Cycle Conditions as of 5/1/02
PTT
- Periods Till Turn The bonds rallied and yields fell again. They're parked in neutral, but they (yields) could blast off again at any time.
Sucktor Watch - Dirty Dirty SOX Doc looks at
this chart and says, boy, I do not want to be short this right now. There
are too many signs this could be a cycle low. Crude Earl If Doc were a bull (ha ha),
and if this were a bull market, this would be a an example of a good chart
to be looking to buy. Energy is historically counter cyclical to the rest
of the market. It's also a good example of how fiber nacho reflux works. A
move above 550 that holds would trigger buy signals on the oscillators. Stoolwethers - Microprice Doc sees a lot of charts
like this. Many stocks are trying to make cycle lows. Not there yet, but
close. With all the cautionary signs, Doc would not want to be short at
the moment.
Stock O' The Day- DROOY In honor of all the goldbugs who got it right, here's one of the big winners, DROOY, requested by a stoolie yesterday. What can you say except, WOW! It appears that the 10-13 week cycle has begun a corrective phase. Doc expects that to manifest as a SWDP, a sideways down phase lasting a month to six weeks. If the intermediate channel band is broken at 4, there's major trend support at 3 1/2.
Follow Up- EMLX Several of you have asked for a follow up on EMLX. Doc was cautious on this last time, and remains cautious. The stock is has been in a 6 month cycle swup for about 6 weeks. It's now bumping against the upper projection of the downtrending intermediate cycle band at 30. A test of the recent high at 31.59 could be a good place to short, if the oscillators show signs of turning down. If Doc were going to short it, he'd do it there, with a close stop, or alternatively he'd short when the composite stoolicator or the 29 day ROC began to roll over. For now everything still points up, and if the stock does break 31.59, the next stop is 35.
If you have an idea for a Stock O', send it to [email protected]. Include some original reason for why you think the stock is deserving. Be clever! Anything longer than 25 words- automatic disqualification! And please, no penny stocks. Feel free to request follow-ups too. Uncle Buck's Illness Uncle
Buck doesn't look like he's going to rise from the grave. There should be
support here, and in fact, he's rebounding some this morning. Could be a
short cycle low. Golden Stool The golds
remain in a classic uptrend. A break below 109 would signal the beginning
of a sideways down phase that might last a month. For now, the uptrend is
intact, with no signs yet of a significant pullback. See you in Intraday Stool. Dr. Stepan N. Stool Let me know what you think on the Stool Pigeons Wire. Previous complete issue with all features Welcome To New Subscribers Welcome, and thank you for subscribing to the Anals of Stock Proctology. You may note some subtle differences in style now that this is no longer a free service. The perspective is still bearish, but it will have a more balanced approach than my message board ravings. You won't see me screaming "BUY" about anything except perhaps gold, but you will see stronger indications of areas and times when I think it might be a good idea to avoid being short. And I promise that I will lose my temper from time to time to keep you entertained! There's also a new feature, Doc's By Request Stock O' The Day. If you have a stock you're interested in, send an email to [email protected], naming the stock, and why you think Doc should look at it, in 25 words or less. 26 words, and you're disqualified! Those that look interesting, Doc will try to feature here within the next day or two. If you have suggestions about other features you'd like to see, send them along to [email protected]. Again, thanks for subscribing!
Explanation of Intraday Commentary-Build charts at http://www.livecharts.com. For custom time bars insert a comma after symbol and number of minutes, e.g. compx,90. This will give you a bar chart of the Nas with 90 minutes per bar. The one day cycle is usually most clear with 8 minute bars and 26/18 stochastics. It varies from day to day. Sometimes 6 minutes works best. Experiment to find the best fit for your trading style, and the market's dominant frequency at the time. The goal here is primarily to monitor the condition of the 8 and 13 day cycles. I typically use 90 minute bars with 26/18 stochastics for the 13 day cycle proxy on the indices during regular trading hours. Other cycles use 26/18 stochastics with the following: 8 days- 60 minute bars On the 24 hour futures charts, use a time per bar approximately 3 to 4 times the above number of minutes, to represent the cycles listed above. ABBREVIATIONS: cma: centered moving average |
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The
Mortgage Bonkers Association released their Mortgage Application Index for
the week ended April 26. It was up for the second week in a row. Here's
the press release:
Chart Powered by METASTOCK (Sorry about the bull.)
Chart Powered by METASTOCK
