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10 Minute Bar Charts 5/9/02 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 Update 5/10/02 12:50 PM The last selloff "should" have been the 1 day cycle low, but the market has the feel of trending. The cmaps for the 1 day lows were Nas 1615, SPX 1062, and NDX 1208, all met or exceeded. The up phase should be weak and short, not lasting beyond 1:30-1:45. The 5 day cycle is headed down sharply, and that should last for another two days. Preliminary cmaps are Nas 1545, SPX 1054 and NDX 1130. The 8 day cycle ozzies are still up. Once they roll over, probably this afternoon, look for the down phase to last another 4 days from then. AM Update 5/10/02 11:30 AM 1 Day cycle low due in next hour. cmaps are at or slightly below current levels. Up phase should be weak, and short, with top projected at 1:30 PM. 10AM Now that I have my data back, here are updated cmaps for this move. The low is due at approximately 10:45 AM. Nas- 1625, NDX 1222, SPX 1068. This should be enough to confirm rollover in the 8 day cycle. Next update around 12:30. AM Outlook (5/10/02) The 5 hour and 1 day cycles were headed down at the bell. The five day cycle topped out yesterday, but the 8 and 13 day cycle states are unclear. The 8 day still apears to be headed up, but a down after a weak up will confirm that the 8 day cycle is also headed back down. the 8 day cycle cmaps are Nas 1690-1710 and 1088-1092 on the SPX. The downside cmap of the move in progress yesterday afternoon was 1650 Nas and 1072 SPX. The Nas closed at 1651 and SPX at 1073. This morning the fucutures are up. The up phase should last until the 11 AM - noon hour. Livecharts.com is down. That's all the data available for now. Will update as soon as possible. Snake Oil Salesman (5/9/02) Crapvision has this really bad habit of trotting out the crusty, but avuncular John C. Bogle every time the market has a little bout of volatility. The thinking is that Bogle, the founder of Vanguard, the world's largest mutual fund company, is a beacon of rectitude and stability, who will urge investors to stay the course. They forget one thing. Bogle is nothing more than a blowhard former mutual fund salesman, the greatest mutual fund salesman in history. You expect him to give him to give an unbiased opinion? So Sue Herass, or Maria, I forget, all whores start looking alike after awhile, asks Bogle about market timing. Now stoolies, I've seen this act before, perhaps 3-4 times in the last two years, and it is exactly the same every time. They always ask the old gas bag Bogle about market timing and he always says the same thing. "I've never known anyone who could time the market, and I've never known anyone who knew anyone who could time the market!" This is a guy who worked in the investment business for 50 years, and he says he never knew anyone who knew anyone who could time the market. Ladies and germs, this statement is simply not credible. It is the snake oil pitch of a mutual fund salesman, nothing more. Another installment in the world's biggest infomercial. Then the Crapvision talking jackass Tyleer Mothersson started spewing the same tired old crapola about how if you missed the 10 biggest up days yadda yadda, you would have seen your return reduced to yadda yadda nothing. Oh yeah? Hmm, well what if you managed to be out during the 10 biggest down days. Or what if you got out and put your money in zero coupon Treasuries in 1980. I seem to remember a time when you could have gotten a GUARANTEED 15%. Or what if you just went into 3 month bills in 1980 and just rolled every 3 months. You would have done just fine, and you never would have had to give any of these thieving creeps a nickel of your money. And what did Bogle say when Herass asked him when would be a good time to be in the market? Why, all the time, of course; fully invested all the time. Because he never knew anyone who knew anyone who could time the market. I thought Sue and Ty would get up and lick Bogle's, uh... uh, face, when he said that. But they are all in the same business. Separating you from your money. The Feed pumped in $7.5 billion today. $5 billion of that was a 28 day repo refunding. They also did a $2.5 billion overnight repo. That temporarily replaced $850 million in maturing T-bills with some left over. On top of yesterday's $2.3 billion bill pass, it does look like they added the last two days. Over the prior five days, Doc estimated total net drain to be approximately $6 billion. The Fed's data released tonight showed a drain of $5.8 billion in factors supplying reserve balances and another $625 million increase in factors absorbing reserves, for a total drain of $6.4 billion through Wednesday. Today's net add of $1.7 billion hardly dents that. It's difficult to see the stock market holding its gains with the Fed not providing massive support. One odd thing in the Fed's daily statement of open market account holdings showed $13 billion in bills expiring today that weren't there yesterday, and wasn't announced yesterday as a purchase. How and when did they acquire this paper with no announcement, and did it have anything to do with the upside explosion in the market? I guess we'll never know. Maybe I should call Al and ask him. $13 billion come and gone, poof, just like that. The money supply data, which
unlike the above data, is not real time, had a jump of $11 billion in M1
and $40 billion in M3 for the week ended April 29. Those jumps are old
news. We saw them in last weeks monetary base data, which was current to
May 1. Next week's money data should be flat to down. The key thing is
that M1 has grown at an annual rate of 1.8% and M3 by 3.1% in the last six
months. The Feed is maintaining a tight grip on the tiller relative to
where they were a year ago. Given the liquidity strains throughout the financial
system, the stock market by necessity becomes a source of funds. This will
keep pressure on stock prices unless and until the Fed eases massively
again, and even that won't do much good. Next Thursday we'll also get the bi-weekly monetary base data, which will be current through next Wednesday. Dow Inflatables
The 8-13 day cycle oscillator is still negative! It's usually pretty good on the short term turns. Could Wednesday have been a blowoff in a sideways up phase of the 13 day cycle that began on April 29? It sure looks that way. The 4-5 week cycle oscillator turned up on Monday. Normally we don't pay much attention to that one. The 6-7 finally turned up but did not presage the rally, and the upturn is too small to be material yet. The 10-13 week cycle is in a trough, and is barely rising. The upside centered moving average projection for the 13 day cycle is at 10,150-10,300. This smells like the early stages of a weak sideways up phase in the 10-13 week cycle, that may simply develop into a 9800-10,200 trading range. Portfolio Sphincters Index (SPX) and Sentiment The SPX gave back 16. The 17 day rate of change, a proxy for the 6-7 week cycle, turned south again. The 6-7 week cycle oscillator superimposed on the chart also remained negative. It may simply be out of phase, or it could be calling into question the validity of the rally. The market will reflect this uncertainty by going nowhere until it's resolved. The 29 day rate of change, representing the 10-13 week cycle, still hasn't flashed 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 rose to 24.36 from 23.29 Wednesday. 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. You'll notice that Doc made an adjustment to the duration of the Stool Band in order to give better signals for the 10-13 week cycle. A big intermediate rally probably won't come until the index is below the outer band, i.e. a reading above 30. But at the end of April the index reached a level indicating an imminent upturn in the 10-13 week cycle. So we are probably already in a sideways up phase in the 10-13 week cycle. The Stool Band should begin to head down as the 5-6 month cycle heads down. When the indicator goes through the lower blue band, that's when we'll be looking at a big bottom. 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 in the cycle chart below upticked slightly from bottomville, but still not enough for a definitive buy signal. The short cycle oscillator stayed positive. The Trading Stoolicator stayed 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 because neither line has turned up. Shortest term upside projections fell back to 1090. It's too early for a 10-13 week cycle projection. In the back of my mind is the fact that downside projections of 1025-1030 weren't reached. In this wildly emotional market, it's still possible. Let's proceed initially on the assumption that the 10-13 week cycle low is in, that we may see a retest in a few days, and that the market will settle into a sideways up phase trading range in the weeks ahead.
Fibo resistance is at 1090, 1100 and 1111. The rally died at exactly the 50% retracement level of the two week decline that led up to it. Yesterday's pullack was fibo 38.2% retrace. The next fibo level are 1067 and 1064.
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 5/9/02
PTT - Periods Till Turn Nasgap Charts The Nas plunged 46, as the shorts all got blown out yesterday and weren't there to cover today. The 5-6 month cycle oscillator is stuck in neutral in what Doc believes is still a 6 month cycle top phase. The 10-13 week cycle
oscillator's overall pattern is still down. Doc's composite trading stoolicator
is beginning to form a trough. Both lines need to head up to confirm the
rally. Wave band
resistance is in the 1710-20 area. It held. If it's broken to the upside, then
the trend is up. For now, it's still down. The rally was a perfect 50% retracement of the preceding 2 week decline. Fibo resistance is at 1692, 1708, and 1735. Going back down, retracement levels are 1642, 1625 and 1609.
Nasdaq Cycle Conditions as of 5/9/02
PTT
- Periods Till Turn Bond yields pulled back
less than stock prices. A 10-13 week cycle upturn appears to be in
progress. With the
exception of the shortest cycles, no buy signals in the dirty SOX yet. Wall Street
universally loves the HMO's. It figures. Birds of a feather flock
together. But this bird's ascent looks to be over. Wall Street
also loves the small craps. This becomes a self fulfilling prophecy. When
they sell part of their position in Mafiasoft, they can use that cash to
push up the price of a dozen small craps. But is that a hunchback
formation on the Rusty 2k? Doc reminds you that when Wall Street develops
a unanimous consensus, Precept Number 8 of Stock Proctology holds that the
consensus is, by definition, wrong. When The Street is totally in love
with something, it's the TOP. We'll follow the Crisco
skid for a few more days here, since this was the Street's excuse to
panic. This is such a weird chat, it's hard to make sense of it. Doc's
guessing that this was a blowoff that is part of a six month cycle top
process. If this is a 10-13 week cycle up phase, it is likely to be not
much better than a sideways range that doesn't get much above Wednesday's
high. General Custer had an
upturn on the 10-13 week cycle oscillator following momentum upturns a
couple of weeks ago. But the stock's been dead in the water. Verdict-
sideways up phase for a few weeks, then a breakdown. 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's chart continues to look just like the stock market, proving, as we
always knew, that the market is in fact under alien control. Call Roswell. Golden Stool The uptrend has slowed, but
there's no sign of a substantial pullback. Stay the course. 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 giveth, and the stage managers taketh away. That's what
they did today, taking back 104 points of Wednesday's panic. 
Chart Powered by METASTOCK
