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BISHOP’S
MARKET
OUTLOOK, 3-01-02 CRB:
Still
technically bearish. Wave 5 downside not yet completed, bearish triangle
developing. Bearish
bias prevails as long as price remains under the
triangle resistance line drawn from the 1-09 and
2-13 highs (currently @ 192-15). ENERGY:
Picture continues to evolve. Downside bias
increases somewhat. After current murkiness
clears, a broad-based energy rally to the strong
Apr/May timeframe may be anticipated. HO:
Given mild commercial selling, a re-test of the
50-51 area is the most likely near-term pattern.
Such a re-test would put in a major bottom of the
long slide from the 11-00 highs. HU:
Developing into a favorite short. Commercials are
at levels consistent with recent tops. A final
plunge to re-test Nov’s low in the 50 area is
most likely.
This would put in a major bottom and setup
for a rally to the strong Apr/May season. CL:
The choppy rally from Nov. lows is very toppy as
commercials are covering their longs and heading
to net short levels consistent with recent highs.
Keep very tight stops on any CL longs. Look for a
mild break above 1-07 high then a final collapse
to re-test the Nov. low and put in a major bottom
prior to a rally into the bullish Apr/May season.
Probability is increasing that the Nov. low will
hold. NG:
from 1-31 (@2.15):”…Awesome bullish
setup…very attractive risk/reward profile.”
From 2-15 (@2.20): “…a favorite long for the
past 2 weeks”. Now at 2.357, keep tight stops on longs at 2.28 or
higher. Commercials
are moving to neutral from huge net long. Let this
rally go as far as it will, cover, then look for
re-entry after retracement. METALS:
Approaching seasonal weakness with short
commercials.
Longer-term, recent new highs confirm
technical bottoms in some markets. GC:
A favorite short on 2-15 (296.70), GC remains
bearish with very net short commercials. A
pullback to the 270 area may be necessary to
generate commercial buying. Look for lower prices
as bearish Apr/May lies ahead. SI:
Forming a major bottom in a range-bound choppy
sideways pattern. Favor the downside of the range
as commercials remain very net short & weak
seasonality lies ahead. HG:
From 2-15 (@73.00): “…keep tight stops on
any longs as HG is short-term toppy”.
HG collapsed the following day, as
commercials were extremely net short at the 2-13
technical and seasonal peak. As a major bottom was
likely established in Nov., look for consolidation
with downside bias in the weeks ahead. Commercials
remain very net short ahead of the weak May/Jun
season. PA:
A favorite short situation from 1-31. PA has
remained flat. A downside re-test with targets of
271-275 is the best chart interpretation. PL:
The PL favorite short from 1-31 has failed to
develop. A short-term blip to 514 is plausible in
the days ahead, followed by a selloff. BONDS/
NOTES: Extended
rallies generally reflect weak economic prospects
and low demand for credit.
Generally not great trading patterns at
this time. US:
Commercials
indecisive. The least informative of the interest
rate charts.
TY:
Commercials very supportive.
The elongated rally from the 12-17 low
speaks to low credit demand in a weak economy. Not
a great pattern for short-term technical
interpretation. FV:
Short-term upside most likely. Note the bullish
descending triangle on cash $FVX (CBOE 5 year
interest rate index). Commercial posture
consistent with minor rally. TU:
Commercials hugely supportive of the on-going
rally. New high is now technically plausible.
If so this economy is far weaker than
generally believed. CORPORATES:
Renewed pressure on lesser-grade corporate yields
speaks to the on-going economic uncertainty and
continuing relative risk of corporates over
treasuries. As
the credit quality spread is at a 3-year high, we
still believe this price area is a good
accumulation zone for mid-grade corporate bonds
(directly and through exchange traded closed end
funds). STOCKS:
The
major indices remain a mixed picture in this
choppy post-bottom (9-21) environment. The most
remarkable feature of the U.S. stock markets is
the large number of Nasdaq 100 stocks moving
together in a unified final downtrend. There
simply is no similar group of stocks moving up on
the bullish side at this point. OTC/
NDX: The
OTC composite and the NDX need to take out their
2-22 lows at least marginally in order to put in a
meaningful post 1-09 bottom and set up for a
summer rally. The ideal timeframe would be in the
next 6 weeks, consistent with a taxtime low and
the April earnings release season.
The OTC is currently dominated by dozens of
“brand name” tech stocks which need to take
out their 9-21 lows before the broader index can
bottom. SPX:
The 2-20 low is technically acceptable as a post
1-07 bottom. The downside pressure from the OTC
increases the likelihood of a test, however.
Internally the OEX is in much better shape than
the NDX. We
note an increasing number of SP500 stocks setting
up for accumulation (SBC, TXN, KO, F, CCU, and
even AOL and EK as examples). DOW:
From 2-15: “…the Dow Industrials and
Russell 2000 are in positive patterns vs. the less
clear S&P 500 and OEX. The NDX and OTC are
most bearish of the lot.”
Today the Dow pattern remains very much to
the short-term upside with a target above 10,400
by mid March.
RUT:
The Russell 2000 has an orderly Elliott pattern
with a clear turning point bottom on 2-22. The
upside probability of testing the 1-09 high in the
near-term is not nearly as strong as the Dow,
however, with slightly less than 50-50 likelihood.
SPECIFIC
STOCKS SHORT:
Our short
sale selections continue to perform very well as
follows (entry price, current price, % profit,
current stop) from 1-18: TLAB (15.95, 10.26, 36%,
11.58) BRCD (35.36, 21.97, 38%, 25.14) JNPR
(17.00, 9.32, 45%, 10.50) JDSU (8.18, 4.85, 41%,
5.35) AMCC (10.41, 7.69, 26%, 8.88) CIEN (13.54,
7.76, 43%, 8.75) VRSN (33.95, 23.73, 30%, 26.26)
from 2-15: ICOS (44.70, 42.90, 4%, 46.00) BEAS
(16.00, 12.71, 21%, 14.60) CHKP (29.80, 27.92, 6%,
31.45) MOLX (29.04, out 2-27 @ 30.16, -4%) CNXT
(11.38, 10.24, 10%, 11.20) NTAP (18.84, 15.99,
15%, 18.41) CMVT (17.46, 15.65, 10%, 17.45) ADLAC
(19.97, 21.95, 10%, 23.41) RFMD (17.50, 15.64,
10%, 17.00) SANM (12.60, 10.15, 19%, 11.15) SUNW
(8.90, 8.51, 4%, 9.37) MOT (12.74, 13.00, -2%,
13.80) INFS (17.00, 17.36, -2%, 18.45) RSH (27.59,
27.44, 0%, 28.50) HWP (20.36, 20.12,
1%, 21.21) CPB (26.58, 26.74,
–1%, 27.40). SPECIFIC
STOCKS LONG:
In this whipsaw market environment our long
selections have less consistent than our shorts:
from 1-25: MO (49.90, 52.61, 5%, 51.40) LTD
(17.16, 18.01, 5%, 17.31) SBUX (22.88, 23.01, 0%,
22.20) from 2-15: SBC (37.12, 37.84, 2%, 36.80)
TXN (31.50, 29.35, -7%, 29.60) CCU (48.90 out 2-27
@ 46.30, –5%) XRX (10.00 out 2-20 @ 9.49, -5%)
NSC (21.30, 24.32, 14%, 22.10) UIS (11.95, 11.10,
-7%, 10.76) G (33.23, 34.19, 3%, 33.44) DD (44.90,
46.84, 4%, 45.80) HD (50.52, 50.00, -1%, 49.70)
INTC (32.29, out 2-28 @ 29.17, -9%) IDTI (30.88,
out 2-27 @27.42, -11%) AMZN (13.41, 14.10, 5%,
12.95) ADBE (35.69, 36.38, 2%, 34.50) AMAT (47.20
out 2-21 @ 43.72, -7%) OPWV (6.21, 5.59, -10%,
5.00) SEBL (32.86, out 2-22 @ 28.71, -12%) SRI
(8.40, 8.60, 2%, 8.25) ABAX (6.34, 6.60, 4%, 6.10)
CDMS (10.75, 10.95, 1%, 10.45) VVI (25.33, 24.90,
-2%, 24.40) WDC (5.98, 5.81, -3%, 5.30) LION
(7.45, 7.20, -3%, 7.15) OS (6.05, 5.85, 3%, 5.50)
ROC (5.16, 4.80, -7%, 4.46) FPF (3.38, 3.32, -2%,
3.10) TTF (4.85, 4.95, 2%, 4.58) TRF (20.00,
19.80, -1%, 18.90) EWS (5.61, 5.51, -2%, 5.28) EWJ
(7.27, 7.47, 3%, 7.30) EWA (9.68, 9.53, -2%, 9.38)
IFN (10.82, 10.86, 0%, 10.74) HIS (3.70 out 2-21 @
3.45, -7%) COY (9.04, 8.82, -2%, 8.65) KYT (8.13,
7.99, -2%, 7.83%) DSU (6.56, out 2-28 @ 6.53, -1%) 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.
Numerous currencies (JY, AD, CD, etc.)
likely forming major bottoms.
DX: Further
blip upside is likely to narrowly take out the
July 00 high with a target in the 121 to 125 range
by mid to late April. Commercials selling short
into this rally, keep tight stops on any longs. Euro:
From 2-15 (@8736): “ … a favorite
short…we resume our downside bias with current
targets of 7900 to 8170 going into the bearish
Apr/May season.” Now
(@ 8656) we look for EC near term to break the Jan
cash low of 8578 with a short-term target in the
8540 range. Over the next few months the EC
continues to look vulnerable to a test of the 7-01
and even the 10-00 lows. BP:
Look for immediate blip down to the 1.400 area. A
re-test of the Jun 01 1370 cash low is appearing
more likely over the next month or so with
ultimate bottoming targets in the 1300 to 1310
area. JY: From 1-31:”… Look for a final bottom plunge to 7380 – 7390.” JY looks very close to a major bottom. Multiple 5-wave technical chart completions are possible in the 7340 to 7375 range in the days just ahead. Commercials are supportive. Note the synergy with the Nikkei pattern. From 1-04: “…Look for a rally in the Nikkei to precede any stabilizing in the Yen” and from 1-31: “…the Nikkei bottom is overdue. Note the bottom reversal bar in EWJ (Japan WEBS) on 1-30!” And from 2-15: “…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”. The Nikkei is now rallying smartly with the JY likely not far behind. We’re putting it on our Favorite Long watchlist, a bit prematurely but well worth watching. ME:
An on-going Favorite on the Short-Sale Watchlist.
Currently the world’s most toppy chart. The ME
makes a new 10-day intra-day and closing low on
2-28. Is this the beginning of the collapse? Time
will tell. Our best guess is that 2-13 saw the
high in Peso cash. Commercials go further net
short. Very bearish.
AD:
The rally from the Sept lows is very much a mirror
of the Sydney stock exchange. We’ve highlighted
the on-going rally in Aussie and Asian stocks and
the apparent major bottoms forming in many of
these markets. While Australian stocks look
short-term toppy (EWA, Aussie WEBS), the AD
congests sideways.
CD:
Blip rally from 1-18 cash low is stalling in a
choppy/sideways pattern as commercials move off of
net longs. Technically
a major bottom is developing. MEATS: In the peak Feb/Mar season. LH:
A final blip rally to the Mar / Apr peak hog
season is technically likely. Keep tight stops on
any longs, as commercials are very net short at
this point. GRAINS: W:
A favorite short on 1-17 (W @ 300.75) “…beware
the toppy Chicago W charts“. We continue to
tighten stops on this short sale. From 2-15: “…keep
tight stops on shorts as commercials are moving to
flat from net short.”
Stop at 269 basis March to capture profits.
Commercials are moving further net long in setup
for a rally.
S:
Along with the CRB, SI, CL, etc., beans are
forming a major bottom with a choppy sideways
pattern. Commercials are very supportive and
bullish Apr / May planting season lies ahead. C:
A poorly defined pattern. All short-term bullish:
Wave count completion from the Jul high to the Feb
low, commercials net long, positive Apr / May
season ahead. SOFTS
/ FIBERS:
CO:
An on-going favorite on the Short Sale Watchlist.
Commercials hugely net short at a technical chart
top in the peak season. Very toppy.
SB:
A favorite short from 1-17 (SB @ 7.48),
From 2-15: “…keep very tight stops
on shorts…” With
the plunge on 2-28, exit shorts on very tight
target and trailing stops. One blip down may
remain in the days ahead but commercials are
moving to setup a significant rally. OJ:
A favorite long from 1-31 (@ 86.4) “…hitting
the Dec / Jan low on an Uptrend correction…look
for a rally beginning in the days ahead. Target
high: 95 to 102”. From 2-15 (@89.90):
“…a favorite long situation”. Now (@
92.55), current upside targets are sharpened to
the 99 to 102 range. CT:
A favorite short from 2-15 (@ 35.57): “… a
final plunge to test the Oct 01 low”. Now
(@ 33.70), CT continues to look like further
downside ahead. KC:
Setting up for at least a brief rally. Commercials
going net long with chart at a technical bottom.
Don’t expect more than a blip (like the Oct,
Nov, and Feb head-fake rallies.
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