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10 Minute Bar Charts 5/3/02 Dow Jokes Inflatables
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The Anals of Stock ProctologyPublished 5 times
per week by the American Academy of Stock Proctology and Afternoon Outlook 5/6/02- In the immortal words of Gomer Pyle, "Surprise Surprise!" The AM action pretty much followed the cycle script. Now what? A 1 day low is due in the 1-2 PM hour, but we've seen this cycle stretch out to 9-10 hours, which would imply weakness through the close. There are too many crosscurrents to establish with a reasonable degree of probability which one is most likely. Sooner or later things should get in gear to the downside, but when? 8 day cmaps are 1590 and 1060. Those lows are due 2-3 days from now. Perhaps the best guess is that action remains dull and directionless, as prices drift only slightly lower for a while. Ho hum, but subject to change, with or without notice! Pre Market 5/6/02- At the close Friday. The 5 hour and 1 day cycles were headed down after the 8 and 13 day cycles had topped out early. All cycles appeared to be in gear to the downside, with the exception of the 13 day cycle in the SPX which had just topped out. Lows on the shortest intraday cycles are due at 10 AM and 11:30 based on an apparent 3.5 hour loop and the normal 5 hour cycle. A one day cycle low is due between 1 and 2. There could be a series of bounces or holding actions between those lows. So far there's no sign that Friday's lows will break. The cmaps on the move in progress as of Friday's close was 1609 on the Nas and 1069 on the SPX. A 5 day cycle low is also due today due with cmaps of and 1064 and 1595. Nothing dramatic with the fucutures. Today looks like a pause day. Stocks Are Dead (5/4/02) The bifurcated market continues, with portfolio sphincter favorite Turdy Thirty Big Craps outperforming everything else, especially the hated Nasgag. The next two weeks is a time of high risk and high uncertainty because it is both a time in which a 10-13 week cycle low is due, and at the same time a period when all cycles could be in gear to the downside. Add to that the fact the the Dow Inflatables, Portfolio Sphincters Index and Nasgag are a bit out of phase, and it's doubly confusing. Do we get a death spike into the cycle low and a bungee bounce, or just a slow flat bottom, with a dead cat up phase to follow. All we can do is follow the indications of the various market averages and sectors and make judgments day to day. The Nasgap has the highest probability of a complete breakdown in a final climactic give-up phase that could see a sub 1500 print. If it does, the SPX and Dow may not be able to withstand the pressure. The uncertainty is only in the short run. Today's Anals Weak End Edition has long term views of all of the key indexes and Stoolwethers. Ultimately, the market is going much much lower. Stocks are dead. They're not coming back. The Feed - Perhaps what is so surprising about this market is how unresponsive the Feed has been. Thursday's $9.5 billion in repos was in reality a huge net drain. Then Friday, they did nothing, resulting in another drain, this time of $4.5 billion. They have taken back all of the Feeds of the last two weeks, and then some. Unless Al and the Gang reverse course mid-field, it appears that they are determined to hold money growth down to near flat. Without this liquidity, and the excess credit creation from the dying mortgage bubble, the stock market is a hopeless case. Even when we did see massive injections in response to collapsing markets, the effects were only temporary, from a few days to a few months. They did nothing to reverse or slow the secular downtrend. But without that support the downtrend will accelerate as investors and and companies are forced to sell equities to meet cash needs. The endgame has begun. Dow Inflatables
The 8-13 day cycle oscillator went up for the fourth day, but a down day on Monday will be a sell signal. The 4-5, 6-7 and 10-13 week cycle oscillators had minimal upmoves, still without positive crossovers in the 4-5 and 6-7 week oscillators. The upturn in the 10-13 week smoother oscillator is a yellow light, but sstill too weak to be meaningful at this point. 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 was adjusted to 9,775-9,875 suggesting that the lows of the 10-13 week cycle have been seen. That does not rule out a retest or a minor new low. If this is the beginning of the up phase, it's likely to be no better than sideways, and may even be a downdrift. We would have seen a much stronger initial thrust if the slope was going to be positive. The rest of the market will probably do worse, as the Dow Inflatables benefit from the portfolio sphincters packing it in. Portfolio Sphincters Index (SPX) and Sentiment The weekly chart of the Sphincters Index is beginning to indicate a steepening slope in the long term secular downtrend channel, the lower band of which currently projects to 1000. There is every reason to believe that the secular downtrend will grow increasingly negative, until a climactic selloff carries prices well below the lower band of the 4 year cycle channel, in green, just as it did in April and September 2001. At major bottoms, prices have fallen 100 to 150 points below the trend channel, in a final bungee plunge. That suggests a four year cycle low of 750 to 800 later in the second half of this year.
The SPX lost 11 to 1073, barely holding at the lower boundary of a triangle pattern a week in the making. The 17 day rate of change, a proxy for the 6-7 week cycle, is bumping long at an apparent Dover Sole level. If this is a sideways up phase, it will be followed by devastation. The 6-7 week cycle oscillator superimposed on the chart is now zig zagging in a flat trend, and the smoother is beginning to roll over. A downturn would signal sever weakness. 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 hasn't followed through. An up day is needed for confirmation of an upturn in this cycle. Otherwise, it's a non-signal. The 10-13 week cycle low is due at any time over the next tow weeks. That's still a two week window where all cycles could head down together. IT's also a window in which an upturn could occur. Hence the uncertainty. Short term centered moving average projections for cycles of 4 to10-13 weeks moved down a bit to a range of 1035-1065. That leaves little room to the downside, and raises the possibility that the intermediate down phase is essentially over. But so far, there's no thrust to the upside, and there's a real possibility of a final death spike before the low is in. The VIX closed at 23.23, up from 22.38 Thursday. On the inverted scale chart, VIX is hovering near the upper edge of the stool band, an indication that the option players are still overly complacent, in spite of the beating the market has taken recently. 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 and 10-13 week cycle oscillators are still heading down. The look like Dover Sole, but as we all know, there's no such thing in a bear market, so we don't know if what looks like Dover Sole really is. We won't know until after the turn. We can only assume the cycle is down until clear evidence that it's snot. The short cycle oscillator continues to head up from the lowest level since early September. The lack of thrust off the low raises questions about the strength of the upturn. When the short cycles turn down again, the market could drop like a rock. 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, and that the lows may well be retested or broken in a final death plunge. If the bottom is flat, the up phase will be also. A sharp drop, on the other hand, would lead to a bungee recoil. It's also possible that the market will drift lower while the oscillators correct upward. The next few weeks will be a period of high uncertainty, and high anxiety.
Fibo resistance held at 1090. The next resistance levels is at 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 5/3/02
PTT - Periods Till Turn Nasgap Charts The long term view suggests that the Nasty is still in the early stages of decline in the 18 month cycle, headed for a test of the September low. The trading range the Nas has been in since March 2001 probably represents the halfway point of the entire move. Looking at it on a percentage basis, that would get the Nas down to, say, 600 or so, by the time this is all over.
The Nas lost 32 points to 1613. Hey 32-33 points a day, pretty soon your talking real money. The short cycle oscillator rolled over after a brief Dover Sole bounce. The down phase in the 8/13 day cycle is under way, and is headed for 1500 over the next 3 to 9 days. The 5-6 month cycle
oscillator still appears to be in a topping out
process below neutral, usually a sign of impending disaster. In this case,
lets make that unfolding disaster. A drop below April's lows in the 6 month cycle indicator
would confirm that things are going from bad to worse. The 10-13 week cycle
oscillator is still down, and isn't even Dover Sole yet. Doc's composite trading stoolicator
had flashed a yellow light Thursday, but the indicator turned lower Friday,
coinfirming the downtrend. the structure of this indicator is such that if
both lines are heading in the same direction, the trend is confirmed. A
crossover is a yellow light, and reversal of direction verifies a trend
change. Fibo support at 1660 was busted. The next stop is 1545. Resistance is at 1655-60.
Nasdaq Cycle Conditions as of 5/3/02
PTT
- Periods Till Turn The long term view shows that the drop in yields is part of an intermediate cycle that appears to be part of a bottoming process in the secular trend of long term interest rates. The behavior of this market around the lower band of the intermediate wave over next couple of weeks should give us a better idea of whether the longer cycle is ready to turn up more strongly, or if more probing of the lows is needed.
Sucktor Watch - Dirty Dirty SOX The long view of the SOX shows a secular trend which hasn't yet reversed to the downside. The intermediate wave has turned decisively down, and is headed for a test of the lower secular trend band projection at 400. There's no reason to believe that will hold, and a test of the 4 year cycle band below 300 should be beyond that.
Let's take a long view of a
couple of behemoths. Walmart looks like it's in a huge secular top. Bulls would call it a consolidation area.
Ha ha. The major cycle trend is up,
with trend support in the low 50s. The intermediate cycle is down. A
sustained break below 52 would indicate that the major cycle is
headed down, and that the secular trend wave is flat with the lower edge
band at 40. The final bear market low should see a break below that band. Here's what Doc had to say last week about Mafiasoft, aka Microprice:
In truth, the stock will
probably find support around the lower band of the secular trend
projection, i.e. in the low 30s. A final panic low could see the band
broken by 20%, for an ultimate low of possibly 26. Stock O' The Day- ARMHY Sent in by stoolie, Jeff, Doc has no idea who or what this stock is. But he will say, ARMHY looks unarmed. Let's see, what do they do? Aha! Semiconductors. If it breaks 9, the next support is, uhhh, zero?
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 is headed for a break of the lower secular trend cycle band. Let's
assume that 110 generates a bounce. The implications of the alternative
are too horrific to contemplate. Sorry about scrunching the chart so much.
It's the total perspective that's important. Golden Stool The move in gold could be
starting to go parabolic. Ride it. 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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Chart Powered by METASTOCK (Sorry about the bull.)
The stage managers
kept the Dow Jokes above 10,000 on yet another Nas meltdown day. Still
they lost 89, to close just a hair above 10,000. Ass usual the rest of the
market was worse as the sphincters packed it in to the Dow, in what out
friend, the great Bill Fleckenstein refers to as a flight to quantity. But
without help from the Feed, which once again was not forthcoming, the
stage managers are not going out on a limb to risk their capital. The
bleeding will continue.
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