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 will be traveling until October 23, God willing. The Anals will be published in a scaled down format, whenever possible. Pre-market and Mid-day updates will be published irregularly. There will be no mid-day update Thursday or Friday. I will try to do pre-market updates both days. Publication notices will be posted on the message board during this period. Since we are nearing a short term turning point, I'll do my best to report to you regularly on how the charts look.

Suctors and Stoolwethers will not be updated today.

Road Apples Weak End Edition- 10/18/02

The Fed stayed tight this week. They are again barely maintaining an 8% growth rate over the last 10 months.

The market rallied in spite of Feed draining. From whence cometh thine liquidity, asketh thee?

From henceth. Although the bleeding stopped Friday, there's more pain ahead for bondholders. The BEEG question is at what point does a skyrocketing discount rate screw up the Sphincters yield valuation models for stocks. By the way, 90 day bill rates also rose 12 bp's this week. Some folks at least seem to be feeling the effects of Fed tightening, even as the band plays on.

SPX-

Same comments for yet another day. The Sphincters still haven't broken the 4 month downtrend. The 8 and 13 day cycles are in a top to down phase for the next 1-6 days. Ideally, as bears we don't want to see that shape up as a flat. VIX is again inching towards indicating a high. A reversal will confirm a top. Keep in mind, there are still no sell signals. Until there are, we have to give the benefit of the doubt to the upside. A good shorting opportunity will present itself, and we'll recognize it soon enough when it does.

Sentiment and Momentum Indicators
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 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.

The six month cycle is topping out. (But alas the 10-12 month cycle is still in a sideways up phase. See long term chart below.) They could run this thing higher before it's all over, but this should be the last rally before a sustained plunge to new lows. The short cycle ozzie has finally reached the top zone. This would be only a short term peak in the process of beginning to build a 10-13 week cycle top. This may take several weeks.

The red channel is the idealized 2 year cycle. Dark blue is the 10-12, or 6 month cycle. Teal is the 10-13 week cycle. Purple is the 4 or 6-7 week cycle.

Fiber Nacho Reflux Levels- Upside Targets and Resistance

The long term chart shows the 10-12 month cycle in a sideways up phase since July. That could have been the 4 year cycle low. The difference between this one and the one in October 1998 is that then the secular trend was up, and now it's down. If that was the 4 year cycle low, the up phase will be nasty, brutish and short, and probably sideways. The market could be sloppy and choppy for months, with the upside should be limited to the low 900s as the 2 year cycle channel turns sideways.

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 10/18/02

Cycle	Phase/PTT	Target
6 Month	Top-Down/3-4 Mos.	680-700
10-13 Week	Up/9-24	???
6-7 Week	Up-Top/0-7	905-915
20-25 Days	Up-Top/0-3	905-915
8,13 Day	Top/1-6	880-905

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

Golden Stool-

Downside cmaps remain 106-108 in what still looks like a 10-13 week cycle bottoming process. (fingers crossed)

Suctor Watch and Stoolwethers- Now posted on separate page. Updated each morning between 8 AM and 9:30 AM NY time. Suctors and Stoolwethers will not be updated until fudder no dis. (Upon Doc's return to Happy Acres, at the latest.)

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

Welcome, and 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!

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
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.

ABBREVIATIONS:

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