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BISHOP’S
MARKET
OUTLOOK, 2-15-02 CRB:
This
important inflation and commodity price gauge
remains technically bearish with the price under
the 1-09 high. Best technical projection is a test
of the 10-01 low with targets to 177-181. ENERGY:
Likelihood of major bottoms in is increasing.
After current murkiness clears, a broad-based
energy rally to the strong Apr/May timeframe may
be anticipated. HO:
In process of forming a major bottom. Short-term
mixed picture. Bullish: commercial net longs and
technical weekly Wave 5 completion. Bearish: still
in weak Nov/Dec/Jan timeframe and daily chart with
bearish triangle would benefit from final plunge
to test 12-00 lows.
Final downleg should be over by mid-March.
Best to watch HO from the sidelines for a bullish
setup to support a rally into Apr/May. HU:
Again a mixed picture. Bullish: Ascending
triangle, daily technical Wave 5 completed.
Commercials neutral.
Bearish: Seasonal bottoming, weekly
technicals resemble a counter-trend rally.
Most likely is a short-term rally to take
out the Jan 01 highs in days ahead.
Thereafter the picture turns murky. Keep
tight stops on any longs. CL:
Further short-term upside is likely in days ahead,
to take out the Jan high. Likelihood of major low
in 11-01 is increasing but still inconclusive.
NG:
A favorite long situation for the past 2 weeks.
Daily and weekly technicals align with a massive
net long commercial position. METALS:
Approaching seasonal weakness with short
commercials.
Recent new highs confirm longer-term
technical bottoms in some markets. GC:
Taking out the 9-01 highs confirms a longer-term
major rounding bottom in place.
GC is now very toppy on short-term basis.
The rally from the 2-01 low has completed a 5-wave
sequence (with the 2-06 engulfing bar) in the peak
Dec/Jan/Feb timeframe. Commercials are now very
net short and the bearish Apr/May metals season
lies ahead. SI:
In a long-term bottoming zone, with 11-01 looking
more like a major bottom as time passes.
Technicals point to sideways choppiness
bounded by the recent Nov lows and Dec/Jan highs.
The commercial net short position is
short-term bearish. HG:
Recent takeout of the 11-01 high points to the
daily and weekly chart Wave 5 completions on
11-7-01 as a likely major low.
Keep tight stops on any longs as HG is
short-term toppy.
Note the bearish ascending pennant pattern
and the Wave 5 upside completion on the daily
chart in the peak Feb/Mar season.
Commercials very net short. PL
& PA:
A favorite short situation. The PL pattern remains
bearish if PL remains under the 12-31 high.
Commercials not yet supportive. PL often
peaks in early Feb with weakness prevailing from
late Feb to late Apr. BONDS/
NOTES: From
1-17: “I’ve been looking for a TOP in this
apparent Wave 4 bond rally for the past few days….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. “ US:
The next 3
months seasonally trend downward. Commercials are
indecisive. Both weekly and daily technicals point
to near-term downside. However the extended rally
from the 12-17-01 low points to greater than
expected economic weakness and the failure to pass
a Federal stimulus package.
TY:
Ditto from 1-31: …”Commercials are more
supportive of the TY than the US and the Dec lows
look somewhat safer.
The shorter you go on the curve (5 years, 2
years, etc.), the longer the commercials and the
stronger the chart.
Further curve steepening in light of a
tepid economy?” CORPORATES:
As the credit quality cycle favors a narrowing of
the corporate / treasury spread, the majority of
higher-yield corporate closed end funds (with
double-digit yields) continue positive patterns:
HIS, COY, KYT, DSU, CNN, VIT, DHF, PHY, ARK, etc.
STOCKS:
From 1-31: …”The
uncertainty of the moment is whether the indices
will take out their 1-07 and 1-09 highs on any
follow-through of the bounces begun on 1-30 or
whether these will be rally failures followed by
new post 1-07 lows…” My erroneous
conclusion on 1-31 was that the weight of the
evidence supported the first scenario. In
retrospect the “missing indicator” was the
INTERNAL weakness of the indices, and in
particularly the influential OTC and NDX.
On 1-31 there was a large group of NDX (Nasdaq’s
Top 100 stocks) in very clear final downlegs from
their 1-07 / 1-09 highs. This group included many of the “Kryptonite Tech Stocks”
presented reviewed as downside-vulnerable on 1-04. There just simply was no similar “block” of bullish NDX
stocks on 1-31.
Ditto for the OEX (the S&P’s Top 100
stocks). Today
the stock market picture remains mixed with the
Dow Industrials and Russell 2000 in positive
patterns vs. the less clear S&P 500 and OEX. The NDX and OTC are the most bearish of the lot.
The indices are likely to remain somewhat
out-of-sync through the next wave of earnings
reports in the seasonally weak April timeframe.
SPECIFIC STOCKS:
I’ve favored individual stocks over
end-of-day directional index bets for the past few
months. See
current lists of Favorite Long and Short
Situations at the beginning of this Outlook.
Previous selections have performed
reasonably well as follows:
SHORTS
1-18
2-14
% Change
Status
TLAB
15.95
13.01
18.43%
stop @14.10
BRCD
35.36
32.64
7.69%
stop @ 35.40
MLNM
21.11
20.29
3.88%
(hit 16.72)
out 2-11
QCOM
44.95
40.05
10.90%
(hit 34.59)
out 2-11
RFMD
18.82
18.10
3.83%
(hit 16.00)
out 1-28
SLB
49.62
55.26
-11.37%
out 1-24
PHA
39.15
40.45
-3.32%
(hit 36.67) out 2-08
JNPR
17.00
10.92
35.76%
stop @ 13.60
JDSU
8.18
6.08
25.67%
stop @ 6.77
AMCC
10.41
8.86
14.89%
stop @ 10.00
CIEN
13.54
9.12
32.64%
stop @ 11.65
SPOT
20.80
21.50
-3.37%
out 2-14
ATML
7.59
7.75
-2.11%
out 2-13
VRSN
33.95
25.61
24.57%
(hit 23.93) stop @ 30.00
SPX change: -.27%, OTC –4.51%
Average
short:
11.29%
LONGS 1-25
1-28
MO
49.90
51.00
2.20%
stop @ 49.75 LTD
17.16
18.08
5.36%
stop @ 17.25 SBUX
22.88
21.74
-4.98%
stop @ 20.60 TMPW
43.01
35.55
-17.34%
out 1-30 NVDA
67.99
62.16
-8.57%
out 2-05
Average
long:
-4.67%
Average all:
7.09% Other
short-sale NDX setups presented 1-04 in the
“Kryptonite tech stocks vulnerable in any OTC
sell off included: CNXT, NTAP, ERICY, NXTL, CHKP,
VRTS, VTSS, BEAS, CSCO, ITWO, CMVT, SANM, YHOO,
ADLAC, MOLX, SUNW, SEPR, ADCT, and DISH. It is precisely because such a tight group of stocks are
moving in unison to test their post 9-11 lows that
the OTC has favored the downside since 1-09!
The OTC will put in a significant low when
the majority of these stocks begin to bottom. Also
from the 1-04 Outlook, the high-yield corporate
bond closed-end funds mentioned in Bonds above
have performed positively as have the Global
country funds mentioned.
The Globals deserve particular attention as
those funds with the most bullish patterns
highlighted on 1-04 have continued to do well:
Taiwan (ROC), Philippines (FPF), Singapore (EWS),
Australia (EWA), Thailand (TTF), Russia (TRF), and
India (IFN).
The long drought in Asia beginning with the
“Asian Contagion” meltdown in Oct. 1997 is
definitely over.
Note further evidence with the likely
bottoming of the Nikkei (EWJ) on 2-05 as mentioned
under JY (Forex) in this Outlook.
FOREX:
Note that we are leaving the Nov/Dec timeframe
that 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.
DX: Still looking setup for a
final burst to take out the 1-02 high and test
7-01. Euro:
From 1-31…”a countertrend pop to 880-890 by
mid Feb is plausible…thereafter look for
downside to 790-815 by mid Apr-May” The
countertrend pop may have peaked at 8783 cash on
2-11. We now resume our downside bias with current
targets of 7900 to 8170 going into the bearish
Apr/May season.
JY: From 1-31: “ …
Look for a blip rally to 7580 by early Feb,
followed by a final bottom plunge to 7380 – 7390
later in the month.” The
current blip rally is now likely to reach 7700 –
7800. Net long commercials are supportive.
Technically, a final low is still in the cards.
Bearish Apr / May would be seasonally perfect for
a major JY bottom. NOTE that the Nikkei is
behaving very positively. From 1-17: …”
Look for a rally in the Nikkei (which may not
materialize until the S&P strengthens) to
precede any stabilizing in the Yen.”
EWJ (the Japan WEBS traded on the AMEX)
completed a weekly, daily, and 60-minute bottom on
2-05 and 2-06 at 6.71, 2 days prior to the recent
JY low. ME:
The stubborn Peso hangs in the air while
commercials go further net short. Very bearish.
AD: Setting up for a
plausible final bottom. Likely to sink or swim
with GC (which is short-term very toppy).
Commercials not yet supportive. Favor the
downside.
CD: The 1-18-02 cash low is
looking more like a major bottom with 5 wave
technical weekly and daily completions within a
large weekly bullish descending pennant.
Look for additional blip upside in the days
ahead. Commercials remain supportive. MEATS: Keep tight stops on longs. The peak Feb/Mar season approaches. LH:
In a nice pullback with one final Wave 5 rally to
Mar seasonal highs likely. Net short commercials
also setting up for a top. GRAINS: W:
A favorite short on 1-17 (W @ 300.75), now at 280
in sideways hiatus. Blip downside continuation
likely in the days ahead. Keep tight stops on
shorts as commercials are moving to flat from net
short.
S: In a multi-year process of
completing a major bottom. Bullish: commercial
buying, the Nov/Dec bottom season is past, Wave 5
bottoms on short-term charts. Bearish: Weekly Wave
5 bottom not yet completed. Best to be patient and let current murkiness clear up while
looking for bullish setups as the peak Apr/May
season lies ahead.
Technicals and commercials both strongly
favor Oil over Meal here. SOFTS
/ FIBERS:
CO: A favorite short situation
for the past month. Feb (Valentines Day) is peak
season for CO. Commercials are selling massively
with 5-wave upside completions on both weekly and
daily charts
SB: A favorite short from
1-17 (SB @ 7.48), now testing 6.00.
Commercials are moving to mild net long.
Keep very tight stops on shorts. OJ:
A favorite long situation.
Note the reverse H & S pattern
developing around the “H” of the 1-31 reversal
bar. This comes at the bottom of an apparent Wave
4 counter-trend pullback in the bearish Jan
season. More
bullish Apr/May lies ahead. Most importantly,
commercials are at a very supportive net long
position. CT:
A brief blip rally to take out the 12-07-01 high
is possible.
This rally if at all is likely to precede a
final plunge to test the 10-01 low and put in a
major bottom to the long slide from the 2000
highs.
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