The Anals of Stock Proctology

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Doc does not make trading recommendations. This update reports time cycle estimates and centered moving average projections based on the Hurst cycle analysis method. This publication is for entertainment and educational purposes only. Doc assumes no responsibility for the accuracy or inaccuracy of the estimates and projections presented. The market may or may not meet the projections. Stoolies should thoroughly familiarize themselves with the methodology before trading based on this method. Those who do not have the time or inclination to develop a trading strategy based on testing and research should not trade. Trade at your own risk. Yadda yadda. How's your motha?

Intraday Updates 1/14/03

12:30 PM (Chart below) After going nowhere all AM look for PM down phase with timing of lows shown on charts. No sign of a move outside the range as the players await what's "in Tell."

9:15 AM (Chart below) News is noise. We know that. But at major infartion points, when the market is ready for a cycle shift, a news release can be the trigger for the reversal. The trick is knowing the difference. The fucutures have a downside cmap of 922 for the opening move. Nothing dramatic. The QQQ cmap for the opening move is 26.85. The 1 day cycle is due to head down until 11 AM. The juxtapostion of the 5 hour cycle up phase is likely to cause significant chop. The 1 day cycle cmap on the QQQ is 26.62 and on the SPX is 919 based on the fucutures.

Intraday Monday - The market gapped up on the open, pulled back, and made a feeble second try for the top at 10 AM. That formed the 1 day and 5 hour cycle highs. The down phase lasted until approximately 11 AM. They then drifted higher into a 5 hour cycle high at 2:30. The rest of the day was spent becalmed in a narrow range and it ended with the juxtaposed 5 hour and 1 day cycles fighting to a draw. Tuesday should start out with the 1 day cycle heading down and the 5 hour cycle turning up, still juxtaposed. The 5 hour cycle up phase should end by 1:30 while the 1 day cycle down phase may only last until 11 AM. They could both be headed up from 11 AM to 1:30 PM. If there's going to be a retest of the high, that's when it will be. Doc expects the first hour and a half to be flat or slightly down. With the market lacking thrust in either direction, Doc has little confidence in this forecast. Furthermore, it's scam week. Who knows what evil lurks in the hearts of market makers?

Pre Market Update at 9 AM. Follow Doc's intraday commentary and cycle charts on the hour and half hour during the trading day at the Stooltrading Beta Test.

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The cycle map below is en estimate of how the market might behave over the next few hours. Should the pattern be broken, the map should be redrawn to fit the actual. Cmaps and times shown are guidelines only. Cycles vary in wavelength and amplitude. Directional changes within an hour of the expected turn and a few points of the cmap should be respected. The indicators rule. Times and prices are the projected cycle highs and lows with cmaps.

5-8 Day Cycle______ 2-3 Day Cycle_______ 5 Hr-1 Day Cycle

Monday's Markets

Nothing 1/13/03

After exploding out of the gate and quickly reversing that gain, the market spent the rest of the day doing nothing. Doc felt like he was watching an episode of Seinfeld. It was so exciting he even resorted to watching the tick chart of the QQQ. Anyone remember Pong?

Undoubtedly, we have reached an infartion point. The market must excrete, or get off the pot. Doc thinks there's a good chance the 13 week cycle up phase will abort early, or at least confine itself to going sideways for a month or so. The 6-7 week cycle is acting toppy, and if folds its tent, that should mark the price high of the 13 week cycle also, a possible retest notwithstanding.

Be a Johnny Applestool! Help spread the Stool! Feel free to repost snippets from the Anals on message boards around the web. Just give a link back! Many tanks - Doc

The Feed added $3 billion in overnight repos while $2 billion in weekend repos expired for a net add of $1 billion. The overnight repos are Tuesday's only expirations.

This was essentially a neutral action, with total Feed now hovering in the center of the 8% growth channel. The 4 week moving average has turned down, suggesting a relatively inactive period ahead for Al and the Gang. Doc does not think the stock market can hold up without aggressive Feeding. But Al has probably decided that further aggressive pumping might cause the bond market to melt down as fears of inflation build.

Two trends are evident on the Feed Index, which is the total Fed holdings of loans and securities. One is the 10% growth trend beginning in May of 2001. The blue channel going back to last December suggests an 8% growth rate. Look at the 4 week moving average (brown line) and compare it with the slope of the tow larger channels for an indication for whether the slope of short term growth is slower or faster than the 2 longer term trends.

The Feedometer's recent uptrend was broken and the Slowmo Feedo has turned down. The uptrend was sufficient only to keep the market in a range. Weak Feedometer action should be bearish, but they will probably pump just enough to prevent a rapid meltdown.

The Feedometer theoretically measures excess Feed available for bond or stock market jamming. Al selects a trend level he feels is needed to reflatulate the economy. The Feedometer measures the difference between the apparent trend target, and actual day to day Feeding (Fastow Feedometer), as well as a four week moving average (Slowmo Feedometer). A break above the orange trendline might indicate a more aggressive jamming policy.

Bond yields were down on Monday. Shorting by the Gang of 22 rose to above normal levels again, continuing a trend of massive borrowing of bonds from the Fed. The up phase in yield is not over, with a cmap of 4.33 on the 4 and 6-7 week cycles, although the 13 day cycle is due for a down phase lasting a few days. The 13 week cycle up phase remains sideways so far, with an initial tentative cmap around 4.33 also. The 6 month and 1 year cycles remain juxtaposed. If the 6 month cycle turns up from the zero line or above, this would signal a strong move up in yields. The refi boom will turn to bust, and the financial system will begin to collapse.

Bond Yields-Long Term View

Fed Turdsday Monetary Review

Dow Inflatables- The Dow is in a sideways down phase in the 13 day cycle. The 4 and 6-7 week cycles still have upside cmaps of 8900 but the indicator for those cycles already looks toppy. It's an increasingly good bet that the 10-13 week cycle up phase is sideways, and that when it ends the market will come down hard.

All of Doc's daily cycle charts are powered by METASTOCK. (Sorry about the bull.) Available at Doc's bookstore! Metastock is the industry pioneer in charting software. Doc has used it for over 20 years. If you have questions about purchasing Metastock from Doc's store, you can email Doc.

Portfolio Sphincters Index (SPX) and Sentiment

Cycle Chart
The red channel is the idealized 18 month-2 year cycle. Dark blue is the 10-12, or 6 month cycle. Teal is the 10-13 week cycle.

Short Term Cycles

The 8-13 day cycles now look like they are in a sideways down phase which could last up to 4 days. The 4 and 6-7 week cycles should peak within 3 days, if they didn't Monday. The cmaps are 935-945. The short cycle oscillator is toppy, and could flash a sell signal at any time. But for now, the 6-7 week cycle oscillator continues to point upwards.

10-13 Week Cycle

The cycle oscillators continue to move weakly higher as the 29 day rate of change remains stalled in neutral. This kind of action is frequently the precursor to a huge decline if it persists without moving substantially above the neutral line. It's still too early for upside cmaps.

Several stoolies have asked how long an up phase has to be. There is no rule. It can end in one day, or it can last for the entire cycle. The earlier it ends, the longer and weaker is the down phase. The current up phase could peak in price at any time, although one or more vicious rally attempts are likely from lower levels into mid February. The cycle could actually make a price high now, but the wave crest could continue to pound against the upper edge of the downtrend until then. After mid-February, it should be mostly downhill through the second quarter and into the third.

Sentiment

VIX was up again. (Chart scale is inverted to show relationship with prices.) The indicator is extended at the top of a 6 month channel that has marked previous intermediate highs and lows.

The 15 day rate of change is a proxy for the 4-7 week cycle. The 29 day rate of change is a proxy for the 10-13 week cycle. The dark blue overlaid line is the 10-13 week cycle oscillator, while the red line is the 6-7 week cycle oscillator. The VIX is a measure of implied options volatility reflecting relative fear or complacency. It is plotted below on an inverse scale to better show the relationship to the price chart. The "Stool Bands" may reflect either 6 month or 10-12 month cycles.

Both the 17 and 29 day moving averages of the putzcall, representing the 6-7 and 13 week cycles, are at or below trendlines that have marked past key intermediate tops in the bear market: February- March 2001, May-June 2001, December 2001-January 2002, August 2002, and the past two months.

Long Term View

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 1/13/03

Cycle	Phase/PTT	Target
10-12 Month	Top-Down/5-7 M	??
6 Month	SWD/0-4W	??
10-13 Week	SWU/0-30	??
4-7 Week*	Up-Top/0-3	935-945
8,13 Day	SWD/0-4	???

PTT - Periods Till Turn
L-Low, H-High
SWD= Sideways Down Phase- Trading Range
SWU=Sideways Up
p: preliminary
Too Early: Too soon to project
No Factor: Low amplitude is dominated by larger cycles
* The 4 and 6-7 week cycles are distinct but usually overlap. The dominant cycle is reported.

Nasgap Charts

The Nas is expected to behave more like the SPX with the continued de-weighting of tech. In the interest of publishing the Anals earlier in the evening Doc is presenting the charts and data without commentary, as it is largely redundant relative to the SPX commentary above.

Cycle Chart
The stoolicator is a proxy for the dominant trading cycle, either 6-7 or 10-13 weeks. The 17 day rate of change is a proxy for the 6-7 week cycle. The 29 day rate of change is a proxy for the 10-13 week cycle. The teal channel is the idealized 2 year cycle. The light green channel is the idealized 10-12 month cycle. The dark blue channel is the idealized 5-6 month cycle. The red channel is the 10-13 week cycle.

Long Term View

Nasdaq Cycle Conditions as of 1/13/03

Cycle	Phase/PTT	Target
10-12 Month	Top/0	1490 Done
6 Month	SWD/0-6W	??
10-13 Week	SWU/1-24	??
4-7 Week*	Up/0-3	1465-1475
8,13 Day	SWD/0-5	??

PTT - Periods Till Turn
L-Low, H-High
SWD= Sideways Down Phase- Trading Range
SWUP=Sideways Up
p: preliminary
Too Early: Too soon to project
No Factor: Low amplitude, dominated by larger cycles
* The 4 and 6-7 week cycles appear to have merged into one.

Long Bong Hit - See top of page.

AM Edition Features

Golden Stool Comments 1/14/03 7:30 AM Updated in AM edition

Gold was trading at 354 at 6:30 AM NY time. The 13 day cycle on the metal is still up with a cmap of 362. The 4, 6-7 and 13 week cycles remain in sideways down phases. The six month cycle is beginning to top out, and this should also develop into a sideways down phase. Doc expects HUI and the pog to consolidate for two months, in a series of rallies and shallow pullbacks. The structure of long term waves will prevent a deep correction. Initial short cycle downside cmap is 140 on HUI. There is no downside cmap on gold yet. Its 13 day cycle is still up. Unmet 13 week cycle upside cmaps are 158 on HUI and 370 on gold. 6 month cycle cmaps are 170 on HUI and 368 on gold.

Charts as of 1/13/03 Close

The long term charts reveal a powerful new secular uptrend. The double top will be broken to the upside within weeks, as the 1 year cycle is early in an up phase. The 1 and 4 year cycle cmaps are 195-215 on HUI and 395 +/- on gold. They should be reached by the end of 2003.

Uncle Buck's Illness Comments1/14/03 7:30 AM. Updated in AM edition

Uncle Buck was up slightly during the day Monday, then took a dump overnight and was trading around 101.13 at 6:30 AM NY time. The 10-13 week cycle cmap is 99.25-99.50. The cmap on the13 day cycle is 100 due within 5 trading days. Although a 6 month cycle sideways up phase is due, the 1 year cycle is heading lower. Doc expects to see the mid 90's by the third quarter.

The 1 year cycle cmap is 94.50 due late in the second or early in the third quarter.

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Suctor Watch and Stoolwethers- Now posted on separate page. Updated each morning between 8 AM and 9:00 AM NY time.

See you in Intraday Stool.

Dr. Stepan N. Stool
Chairman of the Department of Stock Proctology
A.S.S. Endowed Chair
American Society of Shortsellers Endowment
American Academy of Stock Proctology

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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
5 days- 40 minute bars
3 days- 24 minute bars
2 days- 16 minute bars
1 day- 6, 7, or 8 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.

About centered moving average projections.

ABBREVIATIONS:

cma: centered moving average
cmap: centered moving average projection
os or ozzie: oscillator
sto: stochastic
swup: sideways up phase
swdp: sideways down phase