Current Month Indicant Weekly Stock Market Report

May 13, 2012 Indicant Weekly Stock Market Report

Volume 05, Issue 02 ISSN 1526 6516 © The Indicant Stock Market Report

New Weekly Highs Not Supportive of Dynamic Bearishness

Although Europe is unsettling and certainly has the capacity to weigh heavily on economic robustness, most of their problems are like Michigan and New York to the U.S. Both of those states could shut down with limited economic impact. New York City is the problem in New York and Detroit is the problem with Michigan. Outside those two cities, those states are outstanding economic performers. The problem is a narrow one contrasting with millions losing their homes, which occurred in 2007/8.

The European problem is limited to France and Greece. Those two countries could shut down, as well. It would have a significantly less impact than, say, Russia returning to a full communistic state. Of course, the Dow was less than 3000 when Russia was communistic. If the Dow fell to such low levels again, there would be outstanding buying opportunities after it got there. The Indicant would have you out of the market well ahead of that.

Rough calculations have the Dow falling about 1200-1800 points with a Greek default. It is difficult to assess what would happen if the newly elected French government started de-privatizing industry. One would think a hint of that would have the international conglomerates relocating assets from such arrogance to more friendly environments. Therefore, the threats are defaults from Greece and the French government de-privatizing assets.

The world is more nimble now than in the past. One has more options than being conscripted into, say, the Roman army to either conquer or die. People at one time had no options; now there are plenty. The same is true for hard assets. Halliburton, for example, had all their assets removed from Iran in the late 1970’s ahead of the fall of the Shah of Iran. Interestingly, the slow brain processes from the likes of Jimmy Carter still had U.S. government assets in Iran, which contributed to helicopters crashing in the dessert, after the fact.

Today, private sector asset redeployment can happen more quickly. Some will protect their shareholder interests by doing that. The weaker among them will not. So, keep an eye on your holdings. If French assets are involved, sell, unless you know the management has your interest in mind. The slightest doubt in that, though, would be to sell.

Bearish swoons or spurts are always unsettling. They happen quite a bit. The problem with them is not knowing whether they are merely mild corrections or the beginning of major stock market collapses. The Indicant’s Red Bull population remains too high to support a dynamic stock market bear at this time.

There is some evidence that last week’s stock market bearishness is a mere bearish spurt.

Ten stocks tracked by the Mid-term Indicant achieved all-time weekly closing highs last week. That contrasts significantly ahead of the bearish cycles of 2000-2002 and 2007-2009. There were several weeks ahead of those dynamic stock market bears where none enjoyed all-time highs. In essence, as long as some stocks are enjoying all-time highs, the stock market bear’s ambition will be muted. Each of those new highs are discussed below:

There were three NAS100 stocks closing at all-time highs last week. They were NAS#69-EXPE-Expedia (Chart), NAS#72-STX-Seagate (Chart), NAS#86-BIIB-Biogen (Chart). Interestingly, Seagate, after years of flatness, has only recently enjoyed its all-time high. Biogen is sharing a similar configuration after hitting its 2000-peak only recently. Expedia is relatively new and does not offer the same historical perspectives. Expedia, Seagate, and Biogen are up 73.8%, 101.9%, 136.0%, respectively, since the Mid-term Indicant signaled buy. They are diversified and thus support non-bearishness.

There were two ISTK’s closing at all-time highs last week; ISTK#29-LBTYA-Liberty (Chart) and ISTK#52-DLTR-Dollar Tree (Chart). Liberty is a relatively new stock. It was at one time a NAS100 stock. Its market capitalization disqualified it in the 2008-crash. The 2008-stock market bear severely victimized it. As you can see, Liberty hit its all-time in 2011 and then shied to the south. Since then, it has not endured any significant punishment by the stock market bear. It is up 101.9% since the MTI buy signal in January 2010. Dollar Tree, on the other hand, received its buy signal during the harshness of 2008’s stock market bear with a buy signal on Oct 31, 2008. It was the only buy signal that particular weekend. At the time, it was believed to be a quirk, but in hindsight, not so. It received that buy signal because it became a Red Bull on that weekend in 2008. As you can see, it started hitting new all-time highs in 2010 and has not slowed since then even though its Bullish Red curve endured a bearish trend from 2000 through most of 2006. Since then, it has enjoyed a bullish trend. It is up 305.2% since that contrarian Oct 2008 buy signal.

Not surprisingly, solid blue chips among the Dow30 stocks had four closing at all-time highs last week. They were DJIA#11-KO-Coca Cola (Chart), DJIA#25-DIS-Disney (Chart), DJIA#29-TRV-Travelers (Chart), and DJIA#30-VZ-Verizon (Chart). They are up 34.6%, 32.2%, 71.0%, and 46.9%, respectively, since the Mid-term Indicant signaled buy for them. A fundamental view of this would be that the unemployed are enjoying coca colas, while traveling to Disney Land. As they talk to their friends on their cell phones, they have few worries since they are well insured. Some fundamentalists would make such claims, albeit after the fact.

Even the Dow Utilities, which is again the most consistent bullish index, had one stock enjoy a new all-time high last week. It was DJU#08-NEE-Nextra (Chart). This stock hit its all-time high for the first time since early 2008. Some trading models suggest buying stocks when they hit their all-time highs can be profitable. Some refer to that as a breakout. As you can see, this stock took a hard hit in the 2008 stock market bear, but its response to that clearly demonstrates solid resiliency to such calamity. This is a solid company with several years of bullish trend. It is up 36% since the March 2010 buy signal. Although not that impressive, it pays a good and steadily increasing dividend. The Mid-term Indicant does not adjust for dividends. So, including dividends, the annual rate of return is actually much higher for those of you who own Nextra.

Although none of the mutual funds tracked by the Mid-term Indicant are at all-time highs, very few of them are in trouble. One fund is shy of its all-time high by only three pennies. It is MF#81-VASIX-Vanguard Life (Chart). Although its chart is impressive, this fund does not move much. It has some rotation in and out of other Vanguard funds and correlates somewhat with interest rates. This fund will most likely accelerate its growth with mild rate increases by the Fed. It is a nice alternative to those, who will endure financial pain from prevailing bond investments, when the Fed starts increasing interest rates in 2013/14. It is up by only 12.8% since the Mid-term Indicant signaled buy in July 2009. Its annualized rate of 4.5% is nowhere near that of Apple stock, but well over 1,000% better than CD’s. This fund pays nice dividends and the Mid-term Indicant does not adjust mutual funds from dividend payouts. Therefore, the annual rate of return is actually much higher than the 4.5% from the Indicant buy price.

There are two mutual funds of special interest; MF#19-VGPMX-Vanguard Gold and Precious Metals (Chart) and MF#28-Fidelity American Gold (Chart). Those two funds are down 19.9% and 15.9%, respectively, since their sell signals on Mar 16, 2012. As you can see, they are Yellow Bears. Gold is a contrarian commodity; not a perfect one, but it can certainly be bullish with a bearish stock market and vice versus. Some of you recall how bearish gold was during the 1980’s bull market. Many of you recall how GLD jumped north in Dec 2008 well ahead of the stock market bull’s initial movement in 2009. One question that is going to be asked, will Mitt Romney, if elected, more or less produce an economic environment similar to that of Reganomics. With that, a bullish stock market rewarding production, as opposed to possessions, would tend to be bearish for gold. Capital markets are offering some evidence of that expectation. Presidential polling will be influential on stock prices this year.

As long as new highs are being enjoyed across several industries and sectors, the stock market bear can only pester. Falling commodity prices favor the stock market bull in some situations, since it could depress inflationary pressures. Keep in mind, the stock market is focusing on Quarter I, 2013 around the world right now. Sovereign defaults, of course, can be disruptive from time to time, while asset withdrawals from countries like France could be exceedingly bullish. Politicians with nothing to take will not enjoy long periods of incumbency. That is indeed very powerfully bullish. Other politicians around the world will take note. To retain their incumbency, they will have to create environments friendly to capitalistic endeavors. That could be a rocky road, though, as many are encumbered with diseased thinking about such matters.

Keep your eye on the daily stock market report.

Whipsawed – Review of Wild Swings Last Week

This section highlights last week’s biggest gainers and losers within each group of stocks and funds tracked by the Mid-term Indicant.

NAS#77-VRTX-Vertex Pharmaceuticals (Chart) was up 65.5% last week and up by 82.1% since the Mid-term Indicant buy signal on Jan 6, 2012. NAS#30-CSCO-Cisco (Chart) was down 13.8% last week, triggering a sell signal.

ISTK#72-MWW-Monster (Chart) was up 19.8% last week and up 27.8% since the buy signal on Feb 3, 2012. ISTK#38-ENER-Energy Conversion (Chart) was down 15.6%. It is down 99.9% since the MTI sell signal on Oct 10, 2008.

DJIA#25-DIS-Walt Disney (Chart) was up 6.1% last week. It is up 32.2% since the Mid-term Indicant signaled buy on Oct 14, 2011. DJIA#07-JPM-JP Morgan (Chart) was down 11.4%. It lost $2-billion gambling. However, it remains up 4.5% since the MTI buy signal on Jan 6, 2012.

DJU#08-NEE-Nextra (Chart) was up 2.6% last week and up 39.0% since the Mid-term Indicant signaled buy on Mar 26, 2010. DJU#07-PCG-PG&E (Chart) was down a paltry 0.6% last week. It is up 7.5% since the MTI buy signal on Dec 23, 2011.

MF#30-FBIOX-Fidelity Biotech (Chart) was up 5.2% last week. It is up 47.0% since the MTI buy signal on Aug 17, 2010. Its ETF cousin, IBB (Chart) was immune to bearish influences last week, as well. It is up 23.3% since the Short-term Indicant signaled buy Dec 20, 2011. MF#19-VGPMX-Vanguard Gold (Chart) was down 6.3% last week. It is down 19.9% since the Mid-term Indicant signaled sell on Mar 16, 2011. Its ETF cousin, GLD, (Chart) received a recent sell signal on May 8, 2012 by the Short-term Indicant.

Weekly Buy/Sell Summary – Stocks and Funds – Mid-term Indicant

Click this sentence for a graphical summary of what follows in this section. Simply scroll down the page to see graphical and detail content of this section.

The Mid-term Indicant generated no buy signals and four sell signals.

The Mid-term Indicant is signaling hold for 276 of the 339-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 68.8%. That annualizes to 39.9%. The Mid-term Indicant has been signaling hold for these 280-stocks and funds for an average of 89.7-weeks.

The Mid-term Indicant is avoiding 55-stocks and funds of 339-tracked by the Indicant. The avoided stocks and funds are down an average of 23.8% since the Mid-term Indicant signaled sell an average of 47.3-weeks ago.

One year ago, on May 13, 2011, the Mid-term Indicant was holding 300-stocks and funds out of 335-tracked for an average of 63.6-weeks. They were up by an average of 55.1% (annualized at 45.1%). There were 35-avoided stocks and funds at that time. The avoided stocks and funds were down an average of 46.0% since their respective sell signals an average of 108.3-weeks earlier one year ago. There were no buy signals and no sell signals on this weekend last year.

The Mid-term Indicant was signaling hold for 221-stocks and funds of the 316-tracked two years ago on May 14, 2010. They were up by an average of 31.1%, annualized at 35.6%, since their respective buy signals an average of 45.5-weeks earlier. The Mid-term Indicant was avoiding 93-stocks and funds at that time. They were down an average of 36.8% since their respective sell signals an average of 87.0-weeks earlier. There were no buy signals and two sell signals on this weekend in 2010.

There were only 21-stocks and funds with hold signals of the 344-tracked by the Mid-term Indicant on May 8, 2009 since their buy signals an average of 96.8-weeks earlier. They were up by an average of 116.6% (annualized at 62.6%). There were 323-avoided stocks and funds at that time. They were down by an average of 29.4% from their respective sell signals an average of 48.6-weeks earlier. There were no buy signals and no sell signals on this weekend in 2009, as the stock market bear was tiring and completing its destructive behavior.

On May 9, 2008, the Mid-term Indicant was signaling hold for 210-stocks and funds out of 345-tracked. They were up by an average of 145.1% (annualized at 60.3%) since their buy signals an average of 125.0-weeks earlier. The Mid-term Indicant was avoiding 132-stocks and funds at that time. They were down by an average of 16.6% since their sell signals an average of 28.6-weeks earlier. There were no-buy signals and three sell signals on this weekend in 2008 in addition to 205-sell signals in the prior 26-weeks. A huge number of sell signals continued for the next several months as the bear market gained momentum throughout most of 2008, through early 2009.

Five years ago, on May 11, 2007, there were 312-hold signals for stocks and funds out of the 344 tracked by the Mid-term Indicant at that time. They were up an average of 121.6% (annualized at 64.0%) since their respective buy signals an average of 98.8-weeks earlier. There were 31-avoided stocks and funds then. They were down an average of 13.7% since their respective sell signals an average of 25.3-weeks earlier. There were two buy signals and no sell signals on this weekend in 2007. The bull was solid, for the most part, in 2007 until July of that year, when sell signals started accelerating.

On May 12, 2006, there were 253-stocks and funds with hold signals from the listing of 345-tracked by the Mid-term Indicant at that time. They were up an average of 131.2%, annualizing at 71.0%, since their respective buy signals an average of 96.0-weeks earlier. There were 71-avoided stocks and funds then. They were down by an average of 7.9% since their sell signals an average of 18.5-weeks earlier. There were no buy signals and 21-sell signals on this weekend in 2006.

There were 201-stocks and funds with hold signals on May 13, 2005. The Mid-term Indicant was tracking 320-stocks and funds since then. They were up by an average of 93.9%, annualizing at 54.5%, since their buy signals 89.6-weeks earlier. The 117-avoided stocks and funds were down an average of 28.0% since their respective sell signals an average of 54.7-weeks earlier. There were no buy signals and two sell signals on this weekend in 2005.

On May 14, 2004, there were 218-stocks and funds with a hold signal, enjoying a 75.4% gain since their respective buy signals an average of 57.2-weeks earlier. That annualized at 68.5%. There were 73-avoided stocks at that time. They were down by an average of 10.0% since their sell signals an average of 11.3-weeks earlier. The Mid-term Indicant was tracking 296-stocks and funds from 2002 through late 2004. There were two buy signals in addition to 474-buy signals in the prior 60-weeks. The 2003-04 bull market was 63-weeks old on this weekend in 2004. Unfortunately, a meandering bear market pestered throughout most of 2004.

On May 16, 2003, there were 275-stocks and funds with hold signals. They were up 36.3% since their buy signals an average of 16.8-weeks earlier, annualizing at 111.9%. There were eight-avoided stocks and funds since the Mid-term Indicant signaled sell an average of 26.4-weeks earlier. The avoided stocks and funds were down 26.0%. There were eleven buy signals on this weekend in addition to 194-buy signals in the prior seven weeks. A new bull was born seven weeks earlier on Mar 21, 2003. There were two sell signals on this weekend in 2003.

Comments about Mid-term Indicant Buy and Sell Signals

There were again some sell signals. That has occurred in ten of the last eleven weeks. These recent sell signals remain few in numbers. There have been 33-sell signals since Mar 9, 2012. They have been among the weaker organizations or those fluttering around bearish yellow. This is not a major concern, but worth noting. Strong bulls pull the weak upward, but this bull continues having trouble doing that. It would not be surprising to see them turn bullish once the stock market resumes a bullish cycle along the short-term horizon. Clicking this sentence will take you to this weekend’s buy/sell signals.

You will notice two sell signals are for the same company, Cisco. That is because it is a NAS100 and DJIA company.

Stop Loss Management

The Mid-term Indicant recommends a trailing stop loss of 8% for holds with less than a 20% unrealized gain. Of course, this includes new buys. Stop losses shortly after buying are the trickiest. Right after buying, set the stop loss at the lesser value of 8% or green curve values, depending on your personal preferences.

For your longer-term holdings, where you are enjoying triple and quadruple digit gains, you may want to set your stop at the bearish yellow price. Do not worry if you stop out. New opportunities always emerge. The idea is to minimize losses.

Floor traders are aware of stop loss positions. If prices near those stop losses against the grain of directional bias, the floor traders will drive the price down to those stop losses and then buy for themselves and then quickly sell for profits at your expense. Although seemingly immoral, it is the nature of free markets and contributes to the desired liquidity of stock markets. This is one reason why stop losses should be well below prevailing prices but well above your buy price. That perfection, of course, is not attainable shortly after buying, which is the most dangerous period for holding. Use the Blue and Green curves or a combination thereof for stop loss management shortly after buying.

Long after a successful buy, monitor prices relative to the bearish yellow curve. That will minimize the number of trades, while protecting portfolio values.

For new buys, set stop losses at the blue or green values in the tables. If green is deeply lagging the prevailing price, you may want to average the blue and green prices for your stop losses. If the green curve is rising and above your buy price, set the stop loss just below it. Green is a common bouncing point. Consider a stop loss a percentage below its value. Once green passes above your buy price, then adjust your stop losses, periodically, say weekly, at or just below green. Once yellow passes above your buy price, you should set the stop loss at the yellow price. That is a good tactic when longer-term holding positions are supported with expected fundamentals and your enjoyment of owning a piece of a great company or fund.

If your stop loss triggered sell, while Indicant continues signaling hold, normal advice would be to buy again. However, if the Near-term Indicant is signaling bear/avoid in related sectors, it is better to wait for specific buy signals from the Mid-term Indicant. In other words, other opportunities will emerge.

The ETF’s are signaled on the Near-term, Quick-term, and Short-term Indicant and are updated daily. These shorter-term models attempt participation in significant bullish spurts and rallies, while the Mid-term Indicant focusses on fundamentals and longer-term technical data.

The Indicant Stock Market Report’s Secular Market Blend

The Dow is up 76.0% since its secular weekly low on October 9, 2002. The NASDAQ is up 163.3% and the S&P500 is up 74.2% since then. The small cap index, S&P600, is up 160.5% since October 9, 2002.

All of the major indices were at new lows on the same week in 2002, which is a common attribute for bottoming. That will again be an attribute to monitor in coming months. Configurations shifted in support of normal pre-election-year bullishness 27-weeks ago. The stock market disappointed in the normally bullish pre-election year in 2011. However, the second most bullish year along the four-year cycle is the election year, as the Fed and other disruptive political forces typically stay on the sidelines. Historical standards favor the stock market bull this year. So far, mid-term cyclical attributes remain supportive of that, while the short-term cycle endures pestering behavior by the stock market bear.

The NASDAQ is down 41.9% since its last weekly secular peak on March 9, 2000. The S&P500 is down 11.4% since its similar secular peak on March 23, 2000. The Dow is up by 9.4% since January 13, 2000 when it peaked from the 1990’s roaring bull. As stated the past several years in this report, do not be surprised at the NASDAQ equaling its March 9, 2000 high until after 2025. One should note that buy and hold so far this century is a loser, as the stock market has been flat to bearish the last twelve years. Technically, one could call that a secular bear; albeit a mild one with respect to the S&P500, but a major one for the NASDAQ.

The Dow has stumbled three times when encountering its 2000-peak. Will it do that again? It remains above its 2000 peak for the fourth time this century for the twenty-second consecutive week in this attempt to hold above that level. The S&P500 topped its 2000 peak for a few brief weeks in 2007 and has drifted bearishly since then including its participation in the 2008-massive bear market. The 2009-2010 bullish rebound, however, has not overcome bearish influences so far this century. The NASDAQ has never come close, as its prior peak was hype driven. The DOTCOM sector does not perform agriculture, manufacture, or extract. Therefore, most companies within that index created no real wealth. It remains appropriately bearish relative to the 2000 phony peak prices. Its constituents are becoming a bit more diverse and thus the cleansing of the DOTCOM sector is nearing completion.

If socialism expands, the NASDAQ may not hit its 2000 peak until after 2050 and that depends on a resumption of entrepreneurial support by politicians. Significant downsizing of federal governments and related regulatory shrinkage will stimulate a reassessment of the previous sentence. If the opposite occurs with increasing federal bureaucracies, the NASDAQ will never return to its 2000 peak. Look at the resumes of intellectual elites who argue against these points. You will detect they are pure economic leeches arguing on behalf of such regulations, which is a source of their livelihoods. None has ever produced anything of value.

The NASDAQ was down 14.7% on this weekend in 2001. It finished 2001 down by 21.1%, which was congruent with standards of post-election-year-bearishness. As many of you recall, the markets succumbed to the stock market bear during the most part of 2001. As you can see, much of the bear’s wrath occurred in the first calendar quarter of that year. However, the stock market bear’s wrath was far from complete at this time in 2001.

The NASDAQ was down 17.9% on this weekend in 2002. Some of you recall the dynamic bear market in 2002, where the NASDAQ finished that year down by 31.5%. The NASDAQ stock market bear cycle found bottom in October 2002, which was consistent with historical standards of finding bottoms during mid-term election years.

The NASDAQ was up 138% on this weekend in 2003. This turned out to be an excellent buying opportunity. It finished 2003 up by 50.0% in 2003, which was consistent with historical pre-election year results. It was down on this weekend in 2004 by 3.6%. The meandering bear market of 2004 dampened bullish enthusiasm, but the NASDAQ finished 2004 up by 1.4%. This was congruent with election year bullishness, although shy of magnitude standards.

It was down 9.4% on this weekend in 2005’s post-election year, which was consistent with historical standards of losses and/or minimal gains during post-election years. This was an excellent year, based on post-election year historical standards of bearishness. Many of you recall that 2004 and 2005 were meandering bear markets.

In 2006, the NASDAQ was up by 3.1% on this weekend. It finished up in 2006 by 9.5%, which maintained congruency of historical bullishness for a mid-term election year. It was up by 6.1% at this time in 2007, finishing that year up by 9.8%, which was consistent with pre-election year bullishness. The stock market peaked in 2007 from the 2003 bull leg after democrats took control of Congress in early 2007. George W. went along with them as opposed to repelling them. That inspired the bear and added depth to its decline.

The NASDAQ was down by 7.8% on this weekend in 2008. It finished 2008 down by 40.5%. That was extreme contrarian performance to the standards of historical election year bullishness. The overall stock market endured the most bearish presidential election year since related records from 1832.

It was up 9.8% on this weekend in 2009 and finishing that year up by 43.9%. Keep in mind, the extraordinary bullish cycle in 2009 finished that year down by 20.6% from its prior weekly cyclical peak on October 31, 2007. The 2008 bear market more accurately reflected economic fundamentals than the 2009 bull market. Much of the 2009 bull market correlated well with declining political popularity.

The NASDAQ was up 4.7% on this weekend in 2010. It finished 2010 up by 16.9%, which was consistent with mid-term election year bullishness; especially in the second half of such years. It was up 7.2% on this weekend in 2011. Unfortunately, the NASDAQ finished 2011 down by 1.8%. The S&P500 was flat in 2011 while the DJIA finished up by 5.5% that year.

The Dow is up 4.9% this year. The S&P500 is up 7.6% for the year. The NASDAQ is up 12.6% this year. So far, the second most bullish year along the four-year presidential election cycle is very bullish and very much ahead of historical standards, but retracting a bit this past week.

The Dow is down 9.5% since its last weekly closing peak on Oct 9, 2007. The NASDAQ is up by 2.6% since its last cyclical peak on Oct 31, 2007. The S&P500 is down 13.5% since its Oct 9, 2007 peak. The 2007 peaks coincide with political coziness in Washington D.C., which solidified in early 2007, as George W. Bush’s liberal tendencies melded well with the newly elected congress with a similar fiscal liberalism.

Bull market expirations are not as obviating with simultaneous peaking like bear markets are with simultaneous bottoming among the major indices.

Eclipsing and holding above 2007 cyclical peaks remains elusive, but challenging again. As of this past weekend, four of the major indices remain below their 2007-cyclical peaks and four are above those peaks. The NASDAQ100 is above its Oct 31, 2007 peak by 16.8%. The S&P400-Mid-cap is above its Jul 31, 2007 peak by 4.1%. The NASDAQ and S&P600 crossed above their 2007 cyclical peaks on Feb 3, 2012. The NASDAQ remains above that peak by 2.6% while the S&P600 is again down 0.1% from its 2007-peak. Nearly five years of flatness in the most productive index is not good for future products and services.

The other four major indices have not yet challenged their prior peak levels. The weakest index, S&P100, continues lagging. It is down by 15.7% since its Oct 9, 2007 weekly closing peak. As you can see from recent stock market behavior, suspicions about the 2009-2011 bull leg had merit. It still does. The reason for those suspicions was near maximal incongruence between political leadership and the underlying principles of capital markets. The Dec 12, 2010 Indicant Weekly Stock Market Report discussed this phenomenon.

Most major last cyclical bottoms occurred on March 9, 2009. That includes the four major Dow Indices, the NASDAQ and all of the major S&P Indices. The only exception is the NASDAQ100. It encountered its last weekly cyclical bottom on November 20, 2008.

Although exact simultaneous bottoming did not occur on March 9, 2009, tracking from that pivot-point has been and will continue to be appropriate. This inexactness lends credence to the reverse tangential projections with a short-term view and increasingly so. Consequently, March 9, 2009 is the pivot date to monitor performance since the March 2009 bottoming from the 2007-2008 bear cycle. If prices fall below reverse tangential projections, new pivot points will be defined.

The Dow is up 95.8% since March 9, 2009, which is the “bottoming” pivot date from the great bear market of 2007/8. The NASDAQ is up 131.3% and the S&P500 is up 100.0% since then. The S&P600, Small Cap Index, is up 144.6% since March 9, 2009. That March 2009-current bull leg was/is indeed powerful, but such cycles have occurred many times in the past only to be followed by bear cycles of varying breadth and depth. Such a successor bear cycle may now be underway, although not expected to continue as Washington DC has a propensity to stalemate during presidential election years. This is especially true when the president is unpopular. Both of those conditions persist and favorable to the stock market bull, but polls are suggesting it is close enough to reinvigorate the stock market bear from time to time. That, coupled with European weakness, confronts the stock market bull.

Keep your eye on the daily stock market report.

Economic Conditions – Inflation, Currency, Interest Rates

Click the above heading for a summary of hard economic indicators.

Although this paragraph has remained unchanged for several years, do not fall asleep. It will change. It will be significant and dramatic when it does change. The markets both free and controlled are not constant. This will result in a massive bear market, depending on the magnitude of combined interest rates and inflation. As you saw in September-December 2011, the potential for a massive and long-lasting bear is possible, as dilettantes, worldwide, continue converting their currencies to meaningless expressions. Interestingly, an “instinctive” resistance to this is manifesting. The November elections will help identify the majority’s desired direction.

As promised by Bernanke in late 2008, the discount rate (and prime) rate continues holding flat at their depressed levels. The fed funds closing rate and call money also continue flat and very depressed. The 2012 forecast suggests values closer to zero than any other value. Bernanke continues with his promise of more of the same through 2014, which was extended from 2012 in late 2011. Policy settings typically remain fixed during the second half of a president’s term. That stability is one reason why the historical record demonstrates stock market bullishness from the mid-term election year through the election year. Fortunately, U.S. politicians are losing influence on the shrinking world stage. Unfortunately, foreign politicians are made of the same DNA, which is unfavorable to any economic activity. Paper currency basis of worldwide economies is under threat, as the culmination of OPM disease by politicians may be approaching the “critical dimension.”

Unfortunately, the majority in Europe may be facilitating a repeat in history. They are voting against austerity. Their hands are out. They are weak. The conclusion to all of that is not bullish.

The 3-month T-Bill remains flat and depressed, along with short-term CD’s. After yielding zero for several months up to 38-weeks ago, it is continues refusal to return to zero. Increases are common in post-election years where political ramifications are at a minimum and where the newly elected typically unleash most of their economic damage, when congressional support is maximal.

The Euro jumped to Red Bull status 70-weeks ago. It lost Red Bull status 34-weeks ago with a continuing sharp drop against the greenback. It fell to Yellow Bear status five weeks ago and again increasing its value against the U.S. dollar. You can see it has a triple camelback with negative (bearish) trend. As stated for several weeks, it appears readying for a yellow bear cycle despite its recent bullish bounce off the yellow curve. However, its resistance to that prognosis is interesting. If it crosses above Red, then it may indeed discontinue the prevailing bearish cycle.

The Canadian dollar remains entrenched in cycle of weakness, even though it has been expressing a mini-bullish cycle the past several weeks. The CA$ moved above Red (bearish) 18-weeks ago, but fell below Red eleven weeks ago. However, the Red Bull forecast continues projecting a bearish cycle. If politicians get out of the way of the Keystone project, the CA$ should strengthen. It continues somewhat lazily in the neutral zone (between Red and Yellow).

The Japanese Yen continues weakening along a mini-bullish spurt cycle. It has been bearish the past several weeks, and extremely bearish in six of the past eight weeks, while mildly strengthening the last two weeks. The Japanese yen remains strong due to that country’s superior management in the private sector. It appears to be attempting a weakening cycle, but the country’s resiliency and favorable productivity offers significant confrontation to continued weakening. However, it crossed into neutrality 16-weeks ago and jumped to Red Bull status a few weeks ago. It remains a Red Bull, albeit a weak one. Keep in mind a Yen Red Bull reflects a weakening yen.

Gold’s optimistic 2012 forecast has been elevated to $1800/oz. A few weeks after falling below Red, gold returned to Red Bull status 14-weeks ago. Despite solid bearish behavior in fifteen of the past 33-weeks, it continues trading above the 2012 yearend forecast curve, but getting close to losing that lofty position. The $2,000/oz.-forecast by 2014 remains challenged, based on political dynamics. For example, reduced government spending should strengthen paper currencies and with that, the price of gold would decrease. So far, that thesis remains weak. It may take a few more years before this political influence manifests. However, gold, like the stock market, does not wait for manifestations. It anticipates such manifestations. Statistical bullishness remains intact along the mid-term cycle. At the same webpage, you will notice oil is less stable, but recent strengthening threatens its bearish cycle; even though bearish the past few days. It fell below yellow 39-weeks ago on souring economic news, but rebounded above the bearish yellow curve 29-weeks ago. It continues holding above that curve and has been above Red the past seven weeks. Despite periodic days of depressed behavior, it is holding up well. It escaped Yellow Bear status, as expected, and again with Red Bull status. As you can see, it has endured a similar bearish cycle in the past. With a strategic perspective, such cycles were obviously irrelevant. Printing more paper currencies will continue elevating the price of gold and other commodities.

Commodity prices remain below their recent record highs due to souring economic forecast. None are Red Bulls and somewhat volatile the past 18-weeks, but with a bearish twist to them. They have been bearish in eight of the last eleven weeks. Their potential contribution to inflationary pressures remains absent. Many have lost their Yellow Bear status and now approaching the high end of neutrality. Their mid-term cycles remain non-bullish. Increasing paper currencies should elevate commodity prices, but increasing the numbers of lazy people around the world has a depressing effect on consumption. Massive laziness is depressing the demand curve, while massive technology and related productivity advances maintains a healthy supply.

Scrolling down a bit on the aforementioned webpage, the CRB Bridge Futures fell prey to bearish economic pressures the past few months. It is approaching Yellow Bear status, but it continues resisting that condition with solid rebounds in thirteen of the last 25-weeks. It was solidly bearish in seven of the last nine weeks, but holding well in neutrality and actually threatening to climb above its bullish Red Curve.

Commodity prices, overall, are no longer favoring the potential for a long-term bearish cycle. If they resume with cyclical bullishness, inflationary threats will be renewed.

Mortgage rates continue moving bearishly. They did not find comfort at their first Red Curve interaction since late 2008 on Feb 11, 2011. They continue along a bearish cycle. The government continues intrusion and with that, normal optimizations cannot be found. If it continues, all will live in public housing, while all politicians live like kings and queens, but for no more than two or three generations.

The consumer price index and producer price index are computing with unfavorable results. Inflationary threats are detectable. However, the combined absolute value of interest rates and inflation or deflation remains relatively safe at this time.

Overall, hard economic data is supportive of lackluster economic behavior and currently non-threatening toward inflation or deflation. Stability in their prices or even mild bullish behavior could very well be inspirational to the stock market bull.

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 162.2% from its April 13, 2001 buy signal until the Mid-term Indicant sell signal on October 3, 2008. The Mid-term Indicant again signaled buy on Sep 17, 2010, but had to signal sell on Dec 16, 2011 for a disappointing loss of around 15%. It endured another disappointing loss of 9.7% since the Jan 27, 2012 buy signal and the Mar 16, 2012 sell signal. It is down 19.9% since that sell signal.

Fidelity Gold Fund #28 is down 15.9% since the most recent sell signal on Mar 16, 2011.

Both of those gold funds are Mid-term Yellow Bears.

Vanguard Energy #18, VGENX, was up 144.9% from since the Mid-term Indicant buy signal April 5, 2003 until its sell signal on October 3, 2008. The Mid-term Indicant signaled buy on Sep 17, 2010, following a couple of buy/sell cycles since late 2008. It received a buy signal on Oct 28, 2011 after missing an 18% opportunity due to rapid bullishness ahead of Force Vector justification to signal buy. Unfortunately, a sell signal was triggered on Apr 13, 2012 after dropping about 13% from the previous buy signal. The price is not below yellow, so for those of you with some boldness could continue adding to this outstanding fund that should escape these noisy bounces in the neutral zone in the future. This fund is down 2.6% since the Apr 13, 2012 sell signal. Force must climb above Pressure before the next buy signal.

Fidelity Energy Services #40, FSESX, was up 107.2% since the Mid-term Indicant signaled buy on December 6, 2003 until the next sell signal on October 3, 2008. The Mid-term Indicant signaled buy on Oct 28, 2011 after missing about 20% of opportunity. The Mid-term Indicant had to signal sell on Dec 16, 2011. The MTI missed a 10% growth spurt, as the Mid-term Indicant signaled buy on Jan 13, 2012. It is down 2.6% since then.

State Street Research Global #9, SSGRX, was up 174.2% from its August 16, 2002 buy signal to the Mid-term Indicant sell on October 3, 2008. A couple of disappointing buy-sell cycles since 2008 have disappointed. It is down 11.8% since the Jan 27, 2012 buy-signal. Its Force Vector got too lazy, triggering a sell signal. This fund has frustratingly been fluttering around the Mid-term bearish yellow curve for several months.

Fidelity Energy #39, FSENX, was up 81.2% since the Mid-term Indicant signaled buy on August 16, 2003 and the sell signal on October 3, 2008. After a few disappointing buy/sell cycles since late 2008, the Mid-term Indicant again signaled, buy, on Sep 17, 2010 and was flat until the Mid-term Indicant signaled sell on Sep 30, 2011. It again signaled buy on Oct 28, 2011 after missing about 24% of opportunity. Unfortunately, the Mid-term Indicant had to signal sell on Dec 16, 2011. The MTI missed an approximate 10% growth spurt until a buy signal on Jan 13, 2012. It is down 4.7% since then.

The Quick-term signaled sell for ETF#03 – Energy and Natural Resources on May 9, 2012, as it fell below the QTI bearish yellow curve. It is down by 0.3% since that sell signal. The Near-term Indicant signaled sell on May 7, 2012. It is down 1.1% since that sell signal.

The Quick-term Indicant and Near-term Indicant signaled sell for the GLD-ETF#11 on May 8, 2012. It is down 1.6% since then

Mid-term Indicant Positions – Ten U.S. Indices

There were no new bull signals and no new bear signals.

The Mid-term Indicant is signaling bull for all ten of the major indices. They are up by an average of 9.6%, since their bull signals an average of 29.9-weeks ago, annualizing at 16.7%.

The Mid-term Indicant Dow Jones Industrial Average performance is at $40,925,900. That beats buy and hold performance of $1,921,841 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $1,735,479. That beats buy and hold’s $797,049 on a Jan 6, 1950 $10,000 investment. The MTI-NASDAQ is at $876,219. That beats buy and hold’s $293,382 on a Jan 29, 1971 $10,000 investment. The Mid-term Indicant model beats buy and hold by 2029.5%, 117.7%, and 198.7%, respectively, for these indices as of this past week.

The Indicant’s percentage advantage over buy and hold does not change during bull signals.

Click here for a tour of the Mid-term Indicant for major market indices.

Mid-term Indicant Positions - NASDAQ100 Stocks

Click here to see NASDAQ100 report card history. Click here for Mid-term Indicant Table of NASDAQ 100 Stocks.

Mid-term Indicant Positions - Dow Jones 30 Industrial Stocks

Click here to see Dow 30 report card history. Click here for Mid-term Indicant - Table of Dow Jones Industrial Average Stocks.

Mid-term Indicant Positions - Dow Jones 15 Utility Stocks

Click here to see Dow Utilities Report Card history. Click here for Mid-term Indicant - Dow Jones Utility Stocks Table.

Mid-term Indicant Positions - Indicant Selected Stocks

Click here to see Indicant Select Stock Report Card history. Click here for Mid-term Indicant Table of Indicant Selected Stocks.

Mid-term Indicant Positions - Mutual Funds

Click here to see Mutual Fund Report Card history. Click here for the Mid-term Table of Mutual Funds.

The Mid-term Indicant signaled sell for MF#22-ProFunds Ultra Short on April 3, 2009. It is down 84.6% since then. Although this is classically a post-election-year hold, the Mid-term Indicant was unable to signal buy and hold during 2009, as the stock market bear remained in hibernation for the most part. The Short-term Bull displayed attributes of a thoroughbred in 2009 and thus no opportunities were available to shorting the stock market since the April 3, 2009 sell signal, which approximates the normal time to buy this fund.

The next opportunity is classically going to occur in 2013. Much depends on the elections and underlying political philosophies of the newly elected in Nov 2012. Socialistic agendas will propel this fund to the north, while capitalistic friendly politicians will contribute to this fund’s continued bearishness.

Click here for Mid-term Indicant Table of Mutual Funds

Remember never to keep more than 20% of your investment resources into a single mutual fund. Sector investing in mutual funds is an extremely good way to mix your investments.

Long Term Indicant Positions - Dow Jones Industrial Average

The blue-chip Long-term Indicant Bull signal was at 2895 for the DJIA in November 1991. Keep in mind the Long-term Indicant generated only five bull/bear cycles since 1920.

The Dow is up 342.9% (annualized at 16.6%) since the Long-term Indicant signaled bull 1,071-weeks ago. Economic data is the primary influence on the Long-term Indicant. Recessions, deflation, inflation, and unreasonable interest rates have not been strong enough to signal bear since that bull signal, including relative performance since that bull signal. Even with today’s economy and stock market position, the 1991 investor is still up triple digit amounts, which remains above average performance when considering long-term planning.

Influencing parameters in the LTI include prior bull cycles. The great bull market in the 1990’s was powerful enough to offset the 2008-2009 recessionary bear market in this long-term modeling.

The Short-term Indicant Stock Market Report

The Indicant website maintains the last twelve months of daily reports on an annual basis. These weekly reports are maintained on the website for much longer periods. Beginning in March 2006, the daily stock market report for the last trading day of each week is included in this weekly report. This allows web-based retention records of the daily report for much longer than the last twelve months. This report is in the next section and a mere repeat of the daily report you received on the last trading day of the week, which is usually on Friday evening or Saturday afternoon.

Short-term Indicant Stock Market Report – Summary

The DJIA NTI bullish blue curve collapsed on Friday. However, its Force Vector shifted sideways. Although barely detectable on the charts, that suggests potential bullishness next week.

Adding to potential bullishness next week, VIX’s Force Vector shifted south and with a bit of aggression. The VIX continues displaying some discomfort since last Wednesday’s Quick-term bull signal. If its Force Vector shoots straight down, it will again endure a new bear signal. If the VIX opens up on Monday, a few put options may be pleasing and especially so if you prefer to continue holding VXX. Keep in mind, the May options expire next week.

The non-contrarian Yellow Bear population held steady the past two days with mixed stock market behavior. The Yellow Bears are ETF#03-XLE (Chart), ETF#20-EEM (Chart), ETF#11-GLD (Chart), ETF#21-EWZ-Brazil, and ETF#06-EWJ-Japan. This is the highest number of yellow bears since mid-2009, when most of the ETF’s were still climbing out of the 2008-stock market bear. Three of these yellow bears are international and two are contrarian commodity based. With that, the yellow bear threat to stock market bullishness is without breadth and thus minimal.

Only one of the eleven non-contrarian major indices is a Red Bull. It is the Dow Utilities (Chart). So far, it has enjoyed near-complete immunity from the stock market bear along the short-term and mid-term cycle. Many of you recall how utilities retained bull status in 2008. It resisted the stock market bear for several weeks after a major bear was an obvious requirement. The DJU’s eventually collapsed in late 2008, allowing the stock market bear to wreak its havoc; but not before Utilities acquiesced to the stock market bear. With that, a major bear cannot occur as long as the DJU remains configured with bullish attributes. Its mid-term cycle is equally offending the stock market bear. As you can see, it is a solid mid-term Red Bull and short-term Blue Bull with bullish Force and bullish Pressure.

There are only six ETF Red Bulls. Some retain significant bullish strength. None of them enjoyed immunity from bearish influences in 2008. With that, current configurations represent a discomforting bearish swoon; not dynamic and not sustainable.

Although the stock market bear is gaining momentum, those Red Bulls prevent dynamic bearishness. As stated last week, “although the stock market is a bit shaky right now along the short-term cycle, these Red Bulls prevent dynamic and sustainable stock market bearishness.”

Near-term, Quick-term, Short-term Indicant Stock Market Details

Index Report Card Summary

The Near-term Indicant signaled no new bulls and no new bears. Click this sentence to see table leading to the charts.

The Near-term Indicant is signaling bull for four non-contrarian indices and contrarian VIX. All four-bulls are up by an average of 5.3% since their bull signals an average of 3.8-weeks ago, annualizing at 72.4%. The Dow Transports endured a new bear signal today.

There are eight existing near-term bears. They are all non-contrarian. They are down 0.4% since their bear signals 0.7-weeks ago.

The Quick-term Indicant signaled no new bulls and no new bears.

All eleven non-contrarian indices are Quick-term bulls in addition to contrarian VIX. All 12-bulls are up by an average of 6.3% since their bull signals an average of 18.6-weeks ago, annualizing at 17.5%. Contrarian VIX was the lone Quick-term bear until last Wednesday’s bull signal. It was down over 32.0% since its bear signal on Nov 29, 2011. It may be a short-lived Quick-term bull. Its Force Vector has started falling.

Indicant Volume Indicators

Both indicators continue behaving in a lethargic manner, but with an increasing probability of a shift toward robustness. That suggests the stock market is nearing a period where greater commitments to bullish or bearish directional intensity should manifest. Current configurations are favoring the stock market bear.

May 11-Fri-Below average volume on mild bearishness is not encouraging the stock market bull.

May 10-Thu-Volume was down on today’s mixed stock market behavior. It remains confused on directional intensity.

May 9-Wed-Above average volume again paralleled bearish aggression, favoring the stock market bear along the short-term cycle.

May 8-Tue-Aggressive volume, coupled with aggressive bearishness, would normally add favor to more bear victories. However, much of that volume was coupled with a late day rally, adding favor to the stock market bull. All in all, it is a wash, but with a continuing mild advantage to the stock market bear along the short-term cycle.

May 7-Mon-Low volume on mild/mixed stock market behavior on a day with very high bearish expectations based on Asia and European strong stock market bearishness bodes ill will to the stock market bear. However, volume indicators equally do nothing for the stock market bull. There is no checkmate here.

Short-term ETF Report Card, Status, and Charts

The Near-term Indicant generated no buy signals and no sell signals.

The Near-term Indicant is signaling hold for 11-ETF’s. Some of them are contrarian and others are non-contrarian. Combined, they are up by an average of 5.0% since their buy signals an average of 7.3-weeks ago, annualizing at 35.2%.

The NTI is avoiding 22-ETF’s. They are non-contrarians with a few partial contrarians, such as GLD and XLE. They are down by an average of 1.8% since their sell signals an average of 0.8-weeks ago.

The Quick-term Indicant generated no buy signals and no sell signals.

The Quick-term Indicant is signaling hold for 25-ETF’s. They are up by an average of 9.3% since their buy signals an average of 21.2-weeks ago. This annualizes at 22.8%.

The Quick-term Indicant is avoiding seven-ETFs. They are down by an average of 13.9% since their QTI sell signals an average of 10.4-weeks ago.

Contrarian Funds

Click Quick-term Indicant, Near-term, and Short-term for all 31-ETF’s.

ETF#03-Natural Resources. The Near-term Indicant signaled sell on Mon, May 7, 2012, as price fell below NTI Green with depressed and a declining Force Vector. It is down 1.1% since that sell signal. The Quick-term Indicant signaled sell on May 9, 2012. It is down 0.3% since then. Its Force Vector increased on Friday’s bearish behavior. Do not be surprised at a bullish bounce next week.

ETF#11-Gold and Precious Metals Received a sell signal from the Near-term and Quick-term Indicant on May 8, 2012. It is down 1.6% since both of those sell signals. It is also a QTI Yellow Bear.

Click this sentence for additional charting and current forecasting of the actual price of gold. As the U.S. dollar strengthens, gold is in trouble along the short-term cycle. The Fed suggests there will be no QE3, which should strengthen the dollar and lower the price of gold in dollar terms.

ETF#14-TLT-Long Government received buy signals from the Near-term Indicant and Quick-term Indicant on Apr 9, 2012. It is up 3.7% since those buy signals, annualizing at 41.3%.

ETF#31-QID received a sell signal from the Quick-term Indicant on Dec 23, 2011. It is down 25.9% since that sell signal. It will not receive a QTI buy signal until it crosses above QTI-Yellow. The Near-term Indicant signaled buy on Friday, May 4, 2012, as price climbed above NTI Blue with Force crossing above Pressure and into bullish domains. It is up 1.6% since that buy signal, annualized at 83.8%.

The Quick-term Indicant signaled sell on Nov 30, 2011 for ETF#32-VXX. It is down 58.2% since that sell signal. The Near-term Indicant signaled buy on May 4, 2012. Its Force Vector climbed above Pressure, while price is above NTI Blue. It is up 1.4% since that buy signal, annualizing at 71.6%.

Major ETF Events

May 11-Fri-Many non-contrarian Force Vectors moved north on Friday’s bearish behavior. VIX Force moved a bit aggressively to the south on Friday. That favors a bullish response next week. The nature of that response will shift it from a meaningless expression to greater evidence of directional bias. If weak, then the short-term bear will maintain dominance.

May 10-Thu-DJT fell below NTI Green with falling Force. That prompted another near-term sell signal. Interestingly, DJU was bullish and increasingly supportive of its bullish configuration.

May 9-Wed-XLE and EEM joined the ranks of Yellow Bears.

May 8-Tue-There were several. GLD became a QTI Yellow Bear. VIX could not escape Yellow Bear status. NAS100 Force is at recent cyclical minimum. All of that indicates stock market confusion, where corporate profits are impressive, while European democracies are expressing clear stupidity. Universal law holds that species continues toward its extinction, just as they did seventy year ago.

May 7-Mon-Mixed stock market behavior following bearish aggression in Europe and Asia that reflected socialistic successes in France and Greece is indeed impressive. However, the battle between good (bull) and evil (bear) is not over. If U.S. duplicates France and Europe in Nov 2012, 2013 should invoke a powerful stock market bear.

Current Strategy-Short-term Indicant-May 11, 2012-The Red Bull population continues declining, with increasing Yellow Bears. There are some solid Red Bulls remaining, however. Just one Red Bull disallows dynamic bearishness along the short-term cycle. As stated the past few weeks, “significant bull/bear divergence supports a passive approach to trading and investing.”

Reverse Tangential Projections

Click this sentence to the table, highlighting RTP’s (Reverse Tangential Projections). The values and magnitudes are expressed in the table on the website. Keep in mind there is 100% confidence in these bearish projections.

Click the Short-term Indicant to see the combined table of the Near-term Indicant, Quick-term, and Short-term Indicant. The table has links to charts for each. Each chart contains all three models and there are two separate buy and sell signals for the Near-term and/or Quick-term Indicant.