The Anals of Stock Proctology

Is your subscription up for renewal? If you want to renew, do nothing, unless your credit card has expired. Please be sure your credit card info is current. If your credit card has expired, you must enter the new expiration date in your Paypal account in order for your subscription to be processed. If you subscribed via Paypal, your subscription will be renewed for one year on the 90 day anniversary of your sign-up and your credit card will be charged. If you want to cancel, use the button at the bottom of the page. This applies only if you subscribed through Paypal. Mailed-in subscriptions are for 1 year. If you subscribed by prior contribution, I will send you a notice before your subscription expires. If you have any questions, see the subscription page and FAQ's. If you can't find the answer, email me.

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 1/22/03 Chart Below

12:30 The process of building a 1 day cycle high should be under way. The 5 hour and 1 day cycle lows are due at 2:30 and 4 PM respectively, as shown on the charts. No downside cmaps. If this is a swup in the 8 day cycle, the earlier lows, if exceeded, won't be by much. Follow Doc's intraday commentary and cycle charts on the hour and half hour during the trading day at the Stooltrading Beta Test.

9:15 AM Stocks are weak in the pre market. Doc expects a 5 hour cycle low on the open at 24.85 on the QQQ and 880 on the SPX based on the pre-market fucutures action. The 3-8 day cycle cmaps on QQQ is at 24.75-80. On SPX the 3 day cycle cmap is 883 and the 8 day is 873, again based on the fucutures. Based on the SPY, the 8 day cmap is closer to 880-885. This is probably more reliable than the fucutures. A swup in the 8 day cycle "should begin after the early weakness.

Intraday Tuesday - They opened at the high of the day, then slid and slud and slipped and slupped some more. It was a beautiful thing for a bear, unless you were waiting for a bounce to get short. If so, ouch! They put in a 5 hour - 1 day cycle low at 11 AM and inched up just a bit from then until 1-1:30. That turned out to be the 1 day cycle high. A 5 hour cycle low will be due around 10 AM Wednesday. the close may have been it, since the cmaps were hit, but there should at least be a retest if they do bounce on the open. Whether that will be the turn, or there's another low for the 1 day cycle around 11:30, we'll have to wait and see.

And where oh where is that 8 day cycle low? Was that it at the close? Thy went through the 8 day cycle low cmaps of 895 and 25.20, posted Friday, and then the revised cmaps issued late in the day as well. As Clara Peller would say, "Where's the beef?" Perhaps tomorrow morning? A 5 hour -1 day cycle up phase is due in the first two hours. Both 8 and 13 day cycle lows are now a day overdue. Will bears, patiently waiting for a bounce to get short, get one, or will we be shut out? Doc is expecting at least a weak swup. The important thing will be to recognize it as such when it comes, as in, maybe we are already in it.

Pre Market Update at 9:15 AM.

Get StoolieSignal Special offer here only!

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

Tuesday's Markets

Where's The Beef 1/21/03

How quickly things change. Just a few short weeks ago bulls and bears alike were expecting the market to retest its November highs. Bears covered and bulls bought. Now, bears are waiting for a bounce to get short on. But with all the bulls in, where will the buying come from to drive the bounce? The institutional nutcases shot their load in the first week of the year. Foreign investors are getting hit with the double whammy of declining stock prices and declining dollar. They're getting out of Dodge. And a $16 billion Feed did absolutely nothing to prop things up. Meanwhile, public shorts aren't doing any covering. They either haven't gotten short yet, waiting for the perfect opportunity that may never come, or they are in for the long haul, determined not to cover until Dow 3600, or the next big squeeze, whichever comes first.

Probably Dow 3600.

Fed Turdsday Monetary Review

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 an astounding $16 billion in overnight repos. There were no expirations. Other than the $16 billion, there are no expirations scheduled for Wednesday. Turdsday will be a big day for refunding when $7.25 billion in 6 and 9 day repos, and $5 billion in 28 day repos come due.

Doc was as surprised as anyone by the huge Feed. New stoolie ChainGangof22 mentioned that it might have to do with an announced 4 week bill auction by the Treasury. But the amount of 4 week bills to be refunded is $16 billion. There's no new money to be raised. We'll need to wait until after Wednesday and Turdsday's repo refunding and the Fed's H41 release after Turdsday's close to see if there's anything significant here. It looks ominous on the chart, but it could be based on a technicality that is immediately unwound.

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.

Ditto for the Feedometer. Until we see the Fed's books on Turdsday after the close it won't be clear how much money was actually put out in Feed. Obviously the Gang wasn't buying stocks with it. They did nibble at bonds.

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 fell slightly and are now trading a bit below the short cycle cmaps posted Friday. Cmaps have been revised down to 3.80 on the 6-7 week cycle. Interestingly, the Gang of 22 started shorting heavily again. That's usually a good indication that bonds will sell off and yields rise. With indicators mixed, there's no sign of a big move in either direction yet. But if the big guys are shorting, the low in yields may be at hand.

Long Term View

Doc's Pooper Scooper.

Dow Inflatables- The Dow's 13 day cycle cmap for the low now due dropped to 8350. The 4 week cycle cmap is now 8300. There's a tentative projection of 7750 for the 6-7 week cycle low due in 4 weeks.

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 short cycle oscillator above, and the 6-7 week cycle oscillator (chart below), declined. The 8-13 day cycle is due for a low now, with the cmap now at 890, down from 895-900. They closed below that. We should see at least a weak up phase lasting from 1 to 6 days. The 17 day rate of change is now very close to confirming the downturn. Mohas lagged price on the downside because the turn came very early in the cycles.

10-13 Week Cycle

We are starting to see signs of rollover in the 10-13 week cycle oscillators, and the 29 day rate of change is close to a signal. When a top reverses early, it's normal for the sell signals on these indicators to be late.

The 10-13 week cycle up phase went out with nary a whimper. It's too early for a downside projection, but it's looking might ugly at this point. this cycle. The completion of the top and down phase may last up to 10 weeks.

Sentiment

VIX rose sharply. The indicator has turned down from the top of a 6 month channel that has marked previous intermediate highs and lows. This is normally a reliable intermediate sell signal. The breakdown from the upper band on the chart confirms the reversal.

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.

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 1/21/03

Cycle	Phase/PTT	Target
10-12 Month	Top-Down/5-7 M	??
6 Month	SWD/0-3W	??
10-13 Week	Top-Down/34-49	??
4-7 Week*	Down/15-20	840p
8,13 Day	Down-Bottom/0	890

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 1/21/03

Cycle	Phase/PTT	Target
10-12 Month	Top/0	1490 Done
6 Month	SWD/0-3W	??
10-13 Week	Top-Down/37-52	??
4-7 Week*	Top-Down/8-22	1240 p
8,13 Day	Down-Bottom/0	1360-1370

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.

Golden Stool Comments 1/22/03 AM

HUI and Gold remain in a sideways down phase for cycles up to 13 weeks. Doc does not think this is a significant top as longer term cmaps remain significantly higher than current levels. A 6-7 week cycle low is due now. Downside cmaps were hit at last weeks lows.

Charts as of 1/21/03 Close

Long Term View

Uncle Buck's Illness Comments1/22/03 6:30 AM

Uncle Buck continues to stumble, with the 10-13 week cycle cmap now possibly as low as 97.25 and the 6 month cycle cmap at 95.50 After dipping as low as 100.06, he's back to 100.41 this morning. The 13 day cycle low is due now, at a cmap of 100. Although a 6 month cycle sideways up phase is due now, the 1 year cycle looks lower. Chart as of 1/21/03

Long Term View

Get StoolieSignal Special offer here only!

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

Share your thoughts on the Stool Pigeons Wire.

Renewals

Thank you for subscribing to the Anals of Stock Proctology. Your trial subscription will run for 90 days. At the end of that period your subscription will renew automatically, unless you cancel. If you wish to cancel your subscription use the button below. If you want to renew your subscription do nothing. Your subscription will renew and your credit card or Paypal bank account will be charged. If you want to renew, be sure your credit card information in your Paypal account is current. Paypal will not renew your subscription if the card has expired!

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