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10 Minute Bar Charts 5/8/02 Dow Jokes Inflatables
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The Anals of Stock ProctologyPublished 5 times
per week by the American Academy of Stock Proctology and Mid-Day Outlook 5/9/02 The 5 hour cycle high forecast for 11 AM failed to materialize. The 1 day cycle low is due at 1 PM. The high of the 1 day cycle shifted to the left, i.e. before the mid point in time, a sign that bigger waves are still more bearish than bullish. Cmaps on this down move are 1645 on the Nas, 1076 on SPX (already hit) and 1240 on NDX (hit already). At this writing, 1 day cycle ozzies are bottoming, but have not turned up yet. The 5 hour cycle oscillators are still rising, but the %K line has made an initial cross below %D. There will probably be one more upleg before this wave turns down, although upside cmaps for the cycle have already been hit. The pullback has been deep enough, and has lasted long enough, to take the upper range of the preliminary 8 day cycle cmaps (See AM Outlook) off the table. The odds of yesterday's high having been the cycle high are growing, but we need to see the strength of the 1 day cycle up phase due this afternoon to get a better handle. If the PM up phase does not materialize, then yesterday was almost certainly a 1 day wonder. Explanation of terms and methodology Pre Market Outlook 5/9/02 - Let's see. The 5 hour cycle at yesterday's close was... up? Cmaps for the move were Nas 1700, SPX 1088, and NDX 1277, all close enough to indicate the move in progress at the close is over for now. The 5 day cycle high is also due today. Cmaps for that move are Nas 1695, SPX 1092-1100, and NDX 1280-1290. Those targets have been met as well. The 5 day cycle high is due today. The problem is the 8 day cycle high, which is due 2-3 days out and has preliminary cmaps of Nas 1735-70, SPX 1100-10, and NDX 1290-1330. The current 5 hour cycle high is due at 11 AM. The fucutures are showing pullback early, but look for a retest of the high later in the AM. Unless the down phase after 11 AM is particularly sharp, expect the market to work it's way higher toward the 8 day cmaps over the next 2-3 days. We'll revisit this at mid-day. Uneventful Day (5/8/02) It was another quiet day of dull trading on Wall Street. Traders yawned their way through the day. We all could have stayed in bed it was so dull. Oh, wait. That was yesterday. Sorry. No need to go over the gory details of today's action here. It's thoroughly covered in the chart analysis below. I noticed on Crapvision tonight, however, how most of the sphincters seemed convinced that this rally is for real. Sue Herass, Maria Fartaroma and Bob Pissonit were pretending to be skeptical, but we all know in their heart of hearts they were praying at the altar. They also had on that lying worthless piece of crap semiconductor analcyst from SlimeyandSmithBorkme, (a unit of Citicrap, mind you). You know, the guy with two first names. Jon Joe. Never trust anyone with two first names. This guy, like all these other analcysts, is a master of turning his lousy rotten track record on its head. Whenever one of the TV poodits points out what crappy horrible advice they give, these con artists twist it around to make it seem like they were right, when in fact they were wrong. But they're so clumsy and transparent! It's almost painful to watch. Their spin doctors need to do a much better job of teaching them how to lie to to the camera. They should take lessons from their Washington counterparts. Anyway, when Herass asked him the yadda yadda conflict of interest stuff, this lying piece of crap says, "Oh yeah, we have an investment banking relationship with them, but we downgrade our investment banking clients just as much as non-clients." That's just a worthless, misleading statement. The whole corporate world is either a client, or a potential client of SlimeyandSmithBorkmeCiticrap. And when they talk about "downgrading", please explain to me, what the hell's the difference between "buying" something and "buying it strongly?" Ah yes. What would we do without Crapvision on boring, uneventful days like today? The Feed didn't do much again. This time, we can't blame the rally on Al . For the second day in a row there were no repos. They did do a $2.3 billion bill pass, however. Tomorrow, $850 million in bills mature and there are $5 billion in 28 day systems repos coming due. We'll need to see what they do about that. Anything less than $5.85 billion in new paper is a net drain. Over the last five days, the total net drain appeared to be approximately $6 billion. The weekly data comes tomorrow around 4:30 NY time. That's when we'll find out if they really were tight for the week, or if they snuck something past us under the radar. The theory is that no rally can be sustained without aggressive Fed feeding, or a mortgage bubble. The Mortgage Bonkers Association released its weekly applications index today. Here's what they said:
Keep in mind that this doesn't get
funded for 4 to 8 weeks. We've had upticks for three weeks, but they
remain small relative to last fall's enormous bulge. Looking back 4 to 8
weeks ago, the numbers were weak. It's pretty clear that the big
drop in mortgage rates brought out very little in the way of new refi
activity, and today's bond market reversal is going to put even that to an
end. In terms of money and credit creation, the dying mortgage bubble is going to be of little help. And if long term rates have, in fact, reversed, the real estate bubble will collapse in the months ahead, taking everything with it. Dow Inflatables
Looks like the grease fire raged. No downdraft. Now the question is how long and how high? The 8-13 day cycle oscillator is still negative. That's a shocker. It's usually pretty good on the short term turns. The 4-5 week cycle oscillator did turn up on Tuesday. Normally we don't pay much attention to that one. The 6-7 remains in neutral, and did not presage the rally either. The 10-13 week cycle is in a trough, and hardly turned up at all. All in all, enough to make a bear suspicious, and hopeful that this will be unwound quickly. If they hold most of the gains tomorrow, however, or do the unthinkable, and move higher, these indicators should turn sharply higher. Then we'd know we're in for a really big rally. Tomorrow is important, no question. The upside centered moving average projection for the 13 day cycle is at 10,100-10,225. The Dow is already in the zone. OK, the 10-13 week cycle low is in. What we don't know yet is if this up phase will just be a sideways up phase, or if it will be a real rally. I suspect the former, because of the lack of monetary support. Let's see if the Fed joins the party tomorrow. If they do, expect the bond market to crash. If they don't, this rally phase will be nasty, brutish, and short. Portfolio Sphincters Index (SPX) and Sentiment The SPX exploded for a gain of 39. The 17 day rate of change, a proxy for the 6-7 week cycle, turned up, barely. The low is also out of phase for that cycle but that may be a non-issue. If it was a 10-13 week cycle low, shorter cycles resynchronize from the low. The 6-7 week cycle oscillator superimposed on the chart remained negative, however. It could be the issue of being out of phase, or it could be calling into question the validity of the rally. Doc can't always deliver certainty. This is one of those times. The 29 day rate of change, representing the 10-13 week cycle, turned up, but also not enough for a buy signal. The 10-13 week cycle low was due, and we were looking for it, but why is there no confirmation from the indicators? We may be in for a retest. The VIX fell to 23.29 from 24.57 Tuesday. On the inverted scale chart, VIX remains in the center of the Stool Band, nowhere near the levels of fear necessary to signal a significant bottom. A big intermediate rally probably won't come until the index is below the outer band, i.e. a reading above 30. This is just one of those ugly upside spikes so typical of bear markets. 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 upticked slightly from bottomville, but again, the weakness of the turn in the indicators makes the turn is highly suspect. The short cycle oscillator whipsawed back to positive. The Trading Stoolicator is in a trough and the blue indicator line is beginning to put some space between itself and the red smoothing line. Still, the up phase signal is not conclusive yet. The SPX fell shy of most short term centered moving average projections. Very preliminary upside projections are in the 1090 to 1115 range. Let's proceed initially on the assumption that the 10-13 week cycle low is in, that we may see a semi-retest in a few days to a few weeks, and that the market will settle into a range with a possibly upward bias in the weeks ahead.
Fibo resistance is at 1090, 1100 and 1111.
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 5/8/02
PTT - Periods Till Turn Nasgap Charts The Nas blasted out to a 122 point gain, as tech shorts were hit with a bad case of explosive diarrhea. The 5-6 month cycle oscillator whipsawed back to positive from a rather significant positive divergence. The price low was not confirmed by a low in cycle momentum. What does that mean? Nothing unless the 5-6 month cycle indicator breaks out to a new high. We'll cross that bridge if it happens. Otherwise it's just a blowoff, part of the topping out process in the 5-6 month psychological cycle. The 10-13 week cycle
oscillator barely upticked, and the overall pattern is still down. Doc's composite trading stoolicator
is still only on a yellow light. If
both lines are heading in the same direction, the trend is confirmed. A
stronger upturn is needed to confirm this rally. Wave band
resistance is in the 1710-20 area. If that's broken to the upside, then
the trend is up. Doc will reserve judgment for now. Fibo support is at 1708, 1728, and 1752.
Nasdaq Cycle Conditions as of 5/8/02
PTT
- Periods Till Turn While the stock charts are
ambiguous, this one isn't. The long term uptrend is intact and cycles have
turned up. SOX- There's not
enough here to conclude yet that yesterday's rally constituted a reversal
to any but the shortest cycles. Homebuilders Will rising
mortgage rates finally snuff this bubble? We'll revisit this regularly in
the days ahead. Crisco - So they
greased it up and stuck it to us. Looks like a blowoff in a six month
cycle top. The key will be whether it falls back within the intermediate
cycle channel (light green), i.e. back below 15 1/2, in the next day or
so. If it holds up here for more than 2 days, the 10-13 week cycle is in
an up phase, but with upside limited to the 17-18 area. Microprice- Mr. Bill
got some back all right. The same comments that apply to Crisco apply to
Mafiasoft. Upside is limited to another 2-3 points, if this turn is, in
fact, a real one. Gold stocks are in a down
phase in all cycles up to 6 months. So far, it's a sideways down phase,
which is when a trend corrects by trading in a range. If NEM holds above
28.50, the long term cycle channel (Navy blue) is trending higher than
shown on the chart. If that level breaks down, the corrective phase could
end with a spike down to 26-27. 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 We thought the dollar is
the biggest market. Why is the stock market the tail that wags the dog?
Because it's about speculative hot money flows. Golden Stool The 10-13 week cycle down
phase is under way. At this point, given the strength of the long term
uptrend, the assumption should be that the down phase will be more or less
sideways, although 10% downside is certainly possible. The up move should
resume in June. 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.)
Wow!
Yesterday I wrote, "We are getting closer to one of
those bigger bounces. The double bottom on the chart, and the silly
reaction to the Crisco announcement could trigger it, but there's a decent
chance of one more downdraft before the grease fire catches and burns
awhile." 
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