BISHOP'S MARKET OUTLOOK, 1-17-02 ENERGY:
Further
weakness in HO and HU is likely to spill over to
CL shortly. Any
late winter bottoms are likely to be MAJOR
bottoms, however, from which a rally to the strong
Apr/May timeframe may be anticipated.
Recent huge commercial net longs indicate
that major bottoms are not far off. HO:
Heading to new low, final downside target of 43 by
mid Feb. HU:
Likely peaked on 1-07, target of 44 by early Feb. CL:
With weak HO and HU, CL may take out Nov lows and
hit 13.80 by early Feb METALS:
Keep tight stops on any longs.
Commercials are shorting ALL metals going
into this seasonal peak period. BONDS/
NOTES: I’ve
been looking for a TOP in this apparent Wave 4
bond rally for the past few days.
The over-extension of the rally from the
December lows is impressive and likely reflects:
1) weak economic expectations
2) failure of Congress to adopt a fiscal
stimulus 3)
the stock market selloff from 1-09.
One day does not make a trend but today’s
(1-17) selloff is impressive.
Watch these markets intently for shorting
opportunities in the days ahead.
IF today is a rally top, our targets are:
US 95, TY 100, and FV 102 by mid to late
Feb. Note, this would probably be consistent with a final upside
pop in stock markets which complicates the outlook
(see stocks). STOCKS:
The stock
index picture is VERY MIXED and inconsistent.
One view is right, one is wrong.
Question is, which ? SPX:
the 1-07 high (1176.97) looks safe with a downside
target of 1070-1100 OTC:
the 1-09 reversal bar high also looks solid w/
downside targets 1820-1900 ON
THE OTHER HAND DJIA:
the Dow pattern is supportive of a short-term low
on 1-16 to be followed by a rally to take out the
1-07 high. Target 10640 by Feb 6.
The 1-16 lows must hold to support this
view. RU2000:
Ditto, with targets to 510 by 2-04. NDX/
ND Future: the NDX and March ND EITHER topped on
1-09 with the broad OTC Composite or have one
final rally short term to the 1776 level.
Which is it ? The
strength in the DJIA, RUT, and apparent bond
selloff are all supportive of a final NDX rally.
The weakness in the OTC, SPX, the
commercial net shorts and the seasonal toppiness
all support the thesis that the NDX highs are in
on 1-09. I narrowly favor the latter view. If the stock markets have sold off during earnings season,
what will suddenly support a strong rally in the
face of the commercial shorts ? On
the intermediate term, recognize that this is a
Peak season for stocks, and the bearish April
timeframe lies ahead. A
more certain position is to look at specific
stocks. Even
if the markets may short-term new highs, the
advance-decline picture is likely to deteriorate
with fewer stocks participating.
Some favorite SHORT PATTERNS: MLNM, QCOM,
RFMD, SLB and PHA.
Also see: JNPR, JDSU, AMCC, CIEN, SPOT,
ATML, VRSN, TLAB, and BRCD. FOREX:
Note that we are leaving the Nov/Dec timeframe
which is typically WEAK for the U.S. dollar and
heading into the Apr/May period where products
invoiced in dollars (Oil, Grains, etc.) rally,
pushing up demand for the greenback.
Euro: This is becoming a favorite
short-sale candidate, coming out of the peak
Nov/Dec timeframe and heading into the bearish
Apr/May zone.
Note the commercial net short position and
the pattern which projects taking out the Oct 2000
lows and heading for a final downside target range
of 75-80 by late March.
JY: Further short-term downside remains as
the Yen is in it’s final downleg.
Keep tight stops on shorts as the bottom is
likely not far off. Look for a rally in the Nikkei
(which may not materialize until the S&P
strengthens) to precede any stabilizing in the
Yen.
ME: the Mexican Peso one of the most
bearish charts today.
Note the toppy pattern on both weekly and
daily charts and the MASSIVE commercial net short
position. MEATS:
LC continues to rally as we forecast two
weeks ago. Keep
tight stops on any longs as the peak Feb/Mar
season approaches. GRAINS:
W: Beware the very toppy Chicago W
chart. Commercials
are taking a pre-top net short position and the
peak Oct/Nov season is behind us. Look for short-sale opportunities to develop soon.
S: the entire Soy complex is very bullish
as we forecast two weeks ago. Commercials are
still supportive of all contracts (S, Meal, Oil)
and the bullish Apr/May period lies ahead.
SOFTS:
CO: Cocoa remains very weak.
Two weeks ago we were looking for a final
blip rally and top.
It looks like we now have it and
substantial downside is likely, heading into the
May/June bottoming timeframe.
SB: Sugar now looks VERY TOPPY.
Commercials are moving to very net short in
this peak Jan/Feb season.
Look for this market to turn south with a
downside target under the Oct 2001 lows, say in
the 5.75 range by May.
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