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10 Minute Bar Charts 5/2/02 Dow Jokes Inflatables
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The Anals of Stock ProctologyPublished 5 times
per week by the American Academy of Stock Proctology and Here I Sit- PM Outlook 5/3/02 Here I sit, broken hearted. Bought and held, my money's departed. That's the sense I get as the market slowly but surely falls apart. All short cycle ozzies with the exception of the 13 day ozzie on the SPX are now headed lower in concert. There could be 4 days of this ahead, and maybe more. A 1 day cycle low is due now, but like the 5 hour low earlier, probably won't amount to a hill of stool. Current cmaps are um, well, I can't even derive one. The trend is too steep and both moving averages are descending at the same rate. Going out to a five day cmap, we're looking at 1055 and 1585. That's due today or tomorrow. Ultimately the cycle lows projected on the daily cycles (see below) are coming into view, and may start adjusting down even more. Prison Bearkout (sic) 10:15 AM 5/3/02 - The downside cmaps on the current prison bearkout are SPX 1070 and Nas 1617 (already hit). 5 hr cycle low is due now. The up phase should last until mid day, then dumpout again. New downside cmaps on 8 day cycle is 1570 on Nas. The 8 and 13 day cycles in the SPX have started turning down, following yesterday's downturn in Nas. The Feed's draining of reserves yesterday appears to have had an immediate impact. (See The Feed below) Excuse To Rally- Pre Market Outlook 5/3/02 The bifurcated, divergent market continues to be troublesome. Yesterday afternoon the 8 and 13 day cycle indicators in the Nas broke down early in the up phase. The SPX did not. It remains in a 13 day cycle up phase. The dominant shorter cycle appears to be 9-10 hours in duration. That bottomed around 3:15. The 8 day cycle upside cmap on the SPX hourly chart is roughly 1093. On the Nas it's 1695. Downside cmaps on the 9-10 hour cycle were 1640 on the Nas and 1079 on the SPX. Both those numbers were hit yesterday afternoon. They could be retested this morning on the reaction to the worse than expected employment data, but should not be broken. This morning's timings are very uncertain. A possible 5 hour low may occur in the first half hour to hour, followed by an up phase through mid day, as part of the 9-10 hour up cycle. At this point that up phase does not appear to have the potential to be more than a swup. If it does play out that way the mid-day high would be an opportunity to scalp a short. We'll take another look at it in the noon-1PM hour. The fucutures sold off in response to the employment data but they remain neutral. Yesterday's lows were tested but not broken. Overall there's no impact here. Looks like nothing dramatic this morning. Stock Packers Market (5/2/02) One of Wall Street's favorite expressions is, "It's a stock picker's market. This is one of those rare occasions when Doc agrees. It is a stock picker's market if you are looking for good shorts. The Nas is much weaker than the more senior big cap averages, as the mental institutions all flee the now hated tech and bioyech sectors. Which reminds me how scared all the bears were about the bioyech weighting in the Nasgap 100 being boosted at the beginning of the year. Back then tech was weak and bioyech was strong. Lately they've both been dogdirt. The addition of the bioyech stocks to the index was one of the great sell signals of all time. That's the way a bear market works. But back to my original point. It's a stock packers market. All the portfolio sphincters are packing in to the same stocks. They're ramming the microcaps of course, which we know is a huge mistake because when one of those behemoth institutions wants to get out of one of those little 100,000 share a day stocks, there won't be anyone there to sell to. See, it works great when Fido buys Little Joe Co., because Fido is the tail that wags the dog. When it says buy, Little Joe has nowhere to go but up and up and up. So what they do is corner the market and drive the stock to infinity. The only trouble is, there won't be anyone to sell to when the time comes. The sphincters are also packing the same 100 big cap stocks. We all know about the stage managed Turdy Thirty, and there's a few more in the Sphincters Index, particularly in energy and DEE-fence DEE-fence, homebuilders and HMO's. We gotta stay away from them until the trends reverse. It's very tough trying to short stocks when the sphincters are still packing them. It's just like the stoopid bulls constantly picking bottoms. You have to look for stocks that are trading in downtrends, and have reacted up to resistance. That ladies and germs, is still tech. That's where the fertile picking grounds still are. So remember, don't be a top picker with the stock packers. Wait for a pop and short the dogs. The Feed Indications that the Feed was a tad easier through Wednesday were confirmed by the Fed's weekly data showing a gain of $7 billion in factors supplying reserve funds for the week ended May 1. They took that back today (Thursday) however. Today's Feed was a total of $9.5 billion, including refunding of a $5 billion 28 day repo, and a $4.5 billion overnight repo. That left $3.5 billion from the previous day's $8 billion overnight repo not refunded, as well as a $7.5 billion 3 day repo from Monday. So not only did they wipe out last weeks $7 billion overrun, they drained another $3 billion in methane from the holding tank. We can only guess that this is an effort to bring long term rates down, and cool inflation expectations. Whatever the rationale, it's bearish for stocks. Without that excess liquidity floating around, the stock market is dead as a doornail. As a result of last week's excess
Feed, the adjusted monetary base jumped by $10 billion over the prior two
weeks, bringing growth back to the 10% annual trend. It's really astounding
when you think about all that money creation, and what little it has
bought in terms of corporate profitability, and a better stock market. But
aside from that, today's net draining of reserves wipes out the entire $10
billion gain. It is becoming increasingly apparent that Al intends to hold
money growth close to the 1% annual growth path it has been on this year.
A financial system starved for liquidity will be forced to sell equity. The seasonally adjusted data for
the week ended April 22 showed both M1 and MZM taking rather large jumps.
With the treasury depositing tax checks, it's probably best not to give
too much weight to these numbers until the dust settles in a few weeks.
Looking at the charts, the trends remain flat since the beginning of the
year, evidence that Al's champagne music machine isn't feeding enough gas
to keep those bubbles coming.
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 excess liquidity engine of the mortgage bubble, the markets will implode.
Dow Inflatables
The 8-13 day cycle oscillator went up for the third day. The 4-5, 6-7 and 10-13 week cycle oscillators are turning up, but without confirmation of positive crossovers in the 4-5 and 6-7 week oscillators, and without a confirming upturn in the 10-13 week smoother. The 10-13 week cycle oscillator is above its smoother but the downtrend channel is still intact, and the index has reached resistance. For now, the configuration indicates that the upturn is limited to the 13 day cycle. This is a day to day thing, with the Dow within its 10-13 week cycle low window, but still downtrending. The centered moving average projection for this cycle moved up to 9,775-9,925 suggesting that the lows of the 10-13 week cycle have been seen. If this is the beginning of the up phase, it's likely to be no better than sideways. We would have seen a much stronger initial thrust if the slope was going to be positive. We should expect a trading range to develop between 10,150 and 9,775 for the next several weeks. The rest of the market will probably do worse, as the sphincters increasing concentrate in the Dow Inflatables. Portfolio Sphincters Index (SPX) and Sentiment The SPX lost 1.90 to 1084, backing off from 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. No signal is no signal. The 6-7 week cycle oscillator superimposed on the chart is now zig zagging in a flat trend, and the smoother is still rising, but slowing. The smoother needs to turn down to confirm a sell signal. On Wednesday, 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, but it didn't follow through. Again, an up day is needed for confirmation of an upturn in this cycle. Otherwise, it's a non-signal. Short term centered moving average projections for cycles of 4 to10-13 weeks have moved up to levels that were reached last week. That leaves very little room to the downside, and raises the possibility that the intermediate down phase is essentially over for awhile. But so far, there's no thrust to the upside. The Trading Stoolicator is still heading down, but the indicator line has crossed the signal line. That's a caution signal. Taken all together, Doc's best guess is that a cycle low is beginning to form on the 10-13 week cycle, that the lows may well be retested, and that the up phase will be flat at best. It's also possible that the market will drift lower while the oscillators correct upward. There just doesn't seem to be anything dramatic here. The VIX closed at 22.38, little changed from 22.31 Wednesday. 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 still heading down. The 10-13 week cycle oscillator is also still down. 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. The lack of thrust off the low raises questions about the strength of this upturn, and when the short cycles turn down again, the market could drop like a rock.
Fibo resistance held at 1090. The next resistance level is at 1090 and 1105. Support levels are 1062 and 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 5/2/02
PTT - Periods Till Turn Nasgap Charts The Nas lost nearly 33 points to 1645. The short cycle oscillator is still heading up from the lowest level since the bear market began. This looks like only a sideways up phase in the 13 day cycle and given the Nasty behavior today, that up phase may already be over. The 5-6 month cycle
oscillator still appears to be in a topping out
process below neutral, usually a sign of impending
disaster. A drop below April's lows in the 6 month cycle indicator
would confirm the downtrend. The 10-13 week cycle
oscillator is still down, but Doc's composite trading stoolicator is
flashing a yellow light. Strictly speaking it means exercise
caution unless both lines are moving down together. That could happen
Friday, and if the lines begin to descend again, the Nas is headed for the
low 1500's as the downtrend reaccelerates. Fibo support at 1660 is being tested again. If that goes the next stop is 1548. Resistance is at 1700.
Nasdaq Cycle Conditions as of 5/2/02
PTT
- Periods Till Turn Bond yields rose yesterday.
The chart has reached an inflection point as yields sit on the bottom of
the long term linear regression channel. A break would signal that the
downtrend is intermediate and could extend for months, whereas a reversal
now would confirm the uptrend. There are signs pointing both ways. We'll
have to wait for them to resolve. Sucktor Watch - Dirty Dirty SOX The SOX went in the wash
yesterday. The index is approaching multiple support lines in the 480-90
area. Cycle indicators remain weak but in position to signal a bounce at
any time. If they don't hold 480, the next stop could be 375, but this
sucktor has a nasty habit of bouncing big just when things look worst. Doc
remains cautious. Health Care Services Here's an example of portfolio sphincter packing. Stay away form shorting these until there are clear signs the major trend has reversed.
Bioyech Going the other way, but closer to a bottom than a top, with support around 390.
Stoolwethers - General Custer The General's supporters
have stepped up to the plate. The 31 areas is the lower channel projection
of intermediate cycles. Mo is signaling the beginning of a 10-13 week
cycle up phase. We should watch the 10-13 week cycle oscillator. It's
close to confirming that signal. A 31-35 trading range is likely if the
market finds a reason to rally. 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 Buck tried to get out of the grave yesterday, bouncing from the lower cycle wave band. This looks like a short cycle phenomenon only.
Golden Stool Gold stocks stayed on trend as they remained locked on the central long term regression line projection. That's about as orderly as you can get. The short cycle oscillator suggests a consolidation phase. Prices may go sideways in a range for a few weeks.
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 on
Wednesday for
the week ended April 26. It was up for the second week in a row. The
details are in 
Chart Powered by METASTOCK (Sorry about the bull.)
Chart Powered by METASTOCK
