April 29,
2007 Indicant Weekly Stock Market Report
Volume 04, Issue 05 ISSN 1526 6516 © The
Indicant Stock Market Report
This Week’s
Report
Arguing
with Tradition
Bullish
divergence the past two weeks and bullish convergence in the prior two
weeks is configuring support for dynamic and continuing bullishness.
Last week’s
bullish divergence configured a theme, suggesting economic optimism
without inflation. The energy sector was bullish, while inflation
sensitive securities, such as precious metals were bearish. One week is
not a trend, but this particular configuration supports declining interest
rates.
Four
consecutive weeks of combined bullish convergence and bullish divergence
is supportive to continuing stock market bullishness. That bullish
configuration has now been enjoyed the past four weeks.
These
configurations are supportive of presidential pre-election year standards,
which is the most bullish year on the four-year presidential election
cycle. The past four presidential pre-election years have enjoyed
twenty-plus percent stock market gains. A $10,000 investment since 1832,
only in presidential election years, is worth $283,810 as of 2003. That
contrasts sharply with a similar investment only in post election years,
where that investment shriveled to $8,758 at the conclusion of 2005.
Economic
fundamentals typically require rising productivity. The combination of the
Toyota Production System and micro-computer usage contributed
significantly to rising productivity since 1980.
Rising
entrepreneurialism, coupled with those two phenomena, helped propel stock
market bullishness to stratospheric levels since 1980. Technology is doing
its job of helping the world’s population segregate the meaningful from
the meaningless. For example, Americans use to hold their political
leaders in high regard. Technology and competitive media has exposed
political leadership’s valueless contributions to society.
Rising
productivity is accelerating with the added dimension of lower cost wages.
Past models were adequate with rising wages and even more accelerating
productivity. The addition of two billion capitalist in Russia, China, and
India is unprecedented. Labor costs are decreasing at exponential rates,
while productivity is rising. Many foreign manufacturing operations are
very efficient as many model their methods from the Toyota Production
System.
Those
additional capitalists around the world will increase a positive influence
on the economy. Rising capitalism will continue to erode the influence of
politicians around the world. Long-term traditionalists, such as radical
religious sects, are resisting this movement, bringing on the new model of
terrorism.
No trend,
positive or negative, is without challenge. The conflict between
traditionalists and international capitalism with continue for hundreds or
maybe thousands of years. Although the rising trend of capitalism will be
disrupted from time to time, the trend itself will continue in a positive
direction. The stock market senses that and thus the reason for underlying
bullishness in the face of potential disruptions.
Keep your eye
on the Quick-term Indicant as it will identify the underlying market bias
on a daily basis and differentiate bearish sustainability from bearish
spurts.
Weekly
Buy/Sell Summary – Stocks and Funds
The Mid-term
Indicant generated twelve buy signals and two sell signals.
In addition
to the sell signals, the Mid-term
Indicant is avoiding 35-stocks and funds of the 345 tracked by the
Indicant. The avoided stocks and funds are down an average of 11.4% since
the Mid-term Indicant signaled sell an average of 21.5-weeks ago.
There were
69-stocks and funds avoided at this time last year. The avoided stocks and
funds one year ago were down an average of 5.7% since their respective
sell signals an average of 18.9-weeks earlier.
Two years ago,
on April 29, 2005, the Mid-term Indicant was avoiding 115-stocks and funds
that were down an average of 29.3% since their respective sell signals an
average of 52.9-weeks earlier. Three years ago on May 1, 2004 there were
only 28-avoided stocks and funds. They were down by an average of 27.5%
from their respective sell signals an average of 39.5-weeks earlier. On
April 26, 2003, the Mid-term Indicant was avoiding 34-stocks and funds out
of 296-tracked. They were down by an average of 26.4% since their sell
signals an average of 28.2-weeks earlier.
In addition
to the buy signals, the Mid-term
Indicant is signaling hold for 296 of the 345-stocks and funds tracked by
the Indicant. The stocks and funds with hold signals are up an average of
124.7%. That annualizes to 64.8%. The Mid-term Indicant has been signaling
hold for these 296-stocks and funds for an average of 100.1-weeks.
One year ago,
on April 28, 2006, the Mid-term Indicant was holding 272-stocks and funds
out of the 345 tracked at that time for an average of 99.5-weeks. Those
272-stocks and funds were up by an average of 136.7% (annualized at
71.4%). The Mid-term Indicant was signaling hold for 201-stocks and funds
of the 320-tracked two years ago on April 29, 2005. They were up by an
average of 95.7% (annualized at 56.7%) since their respective buy signals
an average of 87.7-weeks earlier. There were 237-stocks and funds with
hold signals on May 1, 2004 since their buy signals an average of
39.5-weeks earlier. They were up by an average of 72.1% (annualized at
70.9%). The Indicant was only tracking 296-stocks and funds in 2002-2003,
and early 2004. On April 26, 2003, the Mid-term Indicant was signaling
hold for 247-stocks and funds out of 296-tracked. They were up by an
average of 26.1% (annualized at 87.7%) since their buy signals an average
of 15.5-weeks earlier.
Summary of
Stocks and Funds with Buy and Sell Signals This past Week
To maintain
appropriate security, you can see the Mid-term Indicant "buy/sell" signals
for stocks and funds for this week by clicking the following link. It is
in the member’s only section.
http://www.indicant.net/Members/Updates/All%20Update%20Forms/Buy-Sell%20Summary%20This%20Week.htm
As repeatedly
stated, do not hold more than 10% of your investment resources in a single
stock and do not hold more than 20% of your investment resources into a
single mutual fund. Also, never fall in love with a stock or fund. Only
love the value of your portfolio. Never love its contents. Management
stupidity can wreak havoc on any stock or fund at any time.
All updated
information can be found from a single page at Indicant.Net. Click the
below link to that page. You will need your login ID and password.
http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20Summary.htm
The
Quick/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 for much longer
periods. Beginning in March 2006, the daily stock market report for the
last trading day of each week is imbedded in this weekly report. This
allows retention records of the daily report for much longer than the last
twelve months.
The Daily
Indicant Stock Market Report for the last trading day of the current week
is near the conclusion of this weekly stock market report. It is emailed
each weekend, separately, so you can read it either as a separate document
or in this document.
The
Indicant Stock Market Report’s Secular Market Blend
This section
is a repeated each week with a few modifications, reflecting recent
secular influences and performance data. Although appearing redundant at
times, it is important to read this section to keep abreast of secular
market shifts. Quantifications and qualifications are updated, weekly.
Remember, secular shifts can last twenty-five or more years. Fortunately,
secular market movements do not deter mid-term, short-term, and quick-term
profit opportunities. However, they can wreak havoc to the long-term
investors’ plans and those that buy and hold.
The current
Mid-term Bull market and buying barrage started in late 2002. The mid-term
election year of 2002 conformed perfectly to historical standards with
deep bearish expressions. That contrasts to the meandering bear market
from late January through mid-August 2006 in the more recent mid-term
election year.
Deep bearish
seasonality was not influential in 2006, which usually occurs from late
August through early October. Last August, the Quick-term Indicant
obviated a bullish bias, contrary to the historical standards of deep
bearish seasonality. Many buy signals occurred in late August - early
September 2006, which was unusual.
The market
synchronized with near perfection to normal seasonality in the mid-term
election year of 2002. The rolling half of May-October 2002 was typically
bearish. The 2002 seasonal bear leg was dynamic and configured perfectly
to historical standards, although the depth of that bearish cycle was
deeper than normal. That NASDAQ bear cycle approached the magnitude of the
1930-32 Dow bear cycle but the 2000-2002 NASDAQ bear leg lasted several
weeks longer.
The mid-term
election year of 2006 fundamentally supported historical standards for the
first two thirds. Although mild bearishness exerted its historical
influence in 2006, it was nowhere as deep as 2002’s bearishness. The
meandering bear in the first two-thirds of 2006 supported the historical
standard. That support was extremely mild.
As of
mid-August 2006, hard economic fundamentals shifted in support of a
bullish onslaught for the heart and soul of bullish seasonality and the
normally bullish presidential pre-election year of 2007. The one week of
bullishness, week of March 5, sandwiched between two bearish weeks
(February 26 and March 12), provided some insight on bearish
sustainability. The bullish bounce on the week of March 5 suggests the
bearish aggressions are either going to be mild or not significantly
sustainable. In other words, that bearish behavior was a mere bearish
spurt.
The heart and
soul of bullish seasonality from mid-October 2005 through January 31, 2006
demonstrated bullish normalcy. The market was a meanderer from January 31,
2006 until mid-August 2006, when the Quick-term Indicant shifted from
bearish to bullish bias.
The heart and
soul of bullish seasonality, ending on January 31, 2007, produced
significant and expected gains since the August 15, 2006 bullish bias
shift. The Dow, S&P500, and NASDAQ finished up by 12.4%, 11.9%, and 16.5%
at the conclusion of that heart and soul of bullish seasonality.
How has market
fared after the conclusion of the heart and soul of bullish seasonality?
From January 31, 2002 through September 30, 2002, the Dow fell 23.5%. The
NASDAQ was down 39.4%. The bull market of 2003 did not incur normal
seasonality. From January 31, 2004 until September 30, 2004, the NASDAQ
fell 8.2%, while the Dow was down 3.9%. From January 31, 2005 to June 30,
2005, the Dow was down 2.0% and the NASDAQ down 0.4%. From January 31,
2006 through August 1, 2006, the NASDAQ was flat while the Dow was up a
respectable 6.1%.
From January
31, 2003 through September 30, 2003, the Dow was up 15.2%, while the
NASDAQ was up 35.3%. The last presidential pre-election year was 2003.
Presidential pre-election years are traditionally bullish. So far this
year, the Dow is up 4.0% since January 31, 2007 and the NASDAQ is up 3.8%.
Aggressive bearish expression nine weeks ago and again seven weeks ago
pushed the major indices into negative territory, which can happen after
the heart and soul of bullish seasonality expires. Keep your eye on the
Quick-term Indicant, which right now, suggests this is a simple correction
(bearish spurt). Historical standards suggest the market will go much
higher this year. Political and economic fundamentals also support this
prognosis.
As you can
see, until mid-August 2006, most major market indices have been slightly
bullish since late 2003 with pronounced meandering behavior. The only
significant bullish expressions, not followed by bearish expressions,
occurred in the heart and soul of bullish seasonality (Nov-Jan) in 2004,
2005, and 2006. Other than those “heart and soul” bullish cycles, the
market was relatively flat from early 2004 through August 2006. However,
this is a presidential pre-election year, where meandering to bearish
behavior should not occur. The theme is bullish expectations even in the
face of bearish behavior nine weeks ago and again seven weeks ago.
The Dow30
found bottom in the last presidential mid-term election year on October 9,
2002 at 7,286.27. The NASDAQ found bottom on the same day at 1114.11.
Finding cyclical bottoms in mid-term election years is common.
Fortunately, the bottom of 2006 was minimal and not sharp when compared to
that of 2002. The Dow is up 80.1% from the 2002 mid-term presidential
election year bottom. The NASDAQ is up 129.5% since October 9, 2002. The
S&P600, small caps, is up even more by 150.8% since October 9, 2002.
The NASDAQ is
down 49.3% from its historical weekending high of 5048.62 on March 9,
2000. The Dow is up by 11.9% from its previous weekending historical high
of 11723 on January 13, 2000. It took over five-and-a-half years for the
DJIA to establish a new high. The S&P500 is down 2.2% since its all time
weekly closing high of March 23, 2000. So far, the new century, 2000
inclusive, has not been kind to long-term investors. The NASDAQ needs to
climb 97.4% and S&P500 by 2.2% to establish new weekly closing highs.
Historical
standards suggest the NASDAQ will not return to its historical high until
2025 or so. A 2000 buyer and holder will not be back to break-even until
then. Including inflation, a thirty-year-old investor will be in his or
her eighties before the NASDAQ profits from early 2000 investment dollars,
which assumes minimal inflation. However, the late 2002 investor is up
triple digit amounts. Timing is indeed important.
Economic or
corporate earnings fundamentals did not support the stock market’s
meteoric rise in the 1990’s in many sectors. Unprecedented demand for
stocks skewed the supply-demand ratio and thus the powerful bull leg of
the 1990’s enjoyed sustainability. The simple law of supply and demand
propelled stock prices dynamically to the north in the 1990’s. The great
bear leg of 2001 and 2002 depressed those prior sources of demand for at
least one generation of investors. The market now has to wait for a new
generation of investors to enjoy dynamic secular bullishness even though
it has been bullish since late 2002.
The great bull
leg of 2003 was a relatively short bull cycle that has not enjoyed dynamic
follow-on bullish behavior due to this lack of demand. As you can see from
the NYSE trading range, the northerly sloping cycle is not a strong as the
trading ranges from late 2002 through most of 2003. However, bullish
expressions occur during the heart and soul of bullish seasonality
regardless of any technical or fundamental reason. The meandering segments
of 2002, 2003, 2004, 2005, and 2006 were appropriately followed by
historically significant bullishness in each of those years.
As earlier
stated, the Indicant began its buying barrage in October – November 2002
just after the market bottomed from the severe 2000-2002 Bear Market.
There were 239-buy signals between October 5, 2002 and November 9, 2002
out of the 296 stocks and funds tracked by the Mid-term Indicant at that
time. Even badly managed companies received a buy signal, which is a
common attribute of sustainable new bull markets. As many of you noticed,
those companies eventually dipped back to the south after the euphoria of
new bullishness.
Since August
18, 2006, the Mid-term Indicant generated 208-buy signals and only
75-sell signals. That is an unusually high number of buy signals when
considering historical seasonal market influences. However, all Indicant
models supported this recent buying surge just as they did in October 2002
and March 2003. Now that the heart and soul of bullish seasonality has
expired, the resistance to generate sell signals has softened. Buying
stimulants within the Mid-term Indicant are more reserved, but not as much
during post election years.
Some of you
recall the Indicant Stock Market Report tracking the
Short-term Indicant Bear for the NASDAQ in 2002. It was the longest in
history. It even exceeded the Dow’s 1929-1932 Short-term Indicant Bear in
breadth and approached it in magnitude. The good news is that the NASDAQ’s
decline did not lead to a depression, which is a clear indication of how
little influence tech stocks have on the economy.
There are two
important axioms to remember and are always repeated in this report. 1)
Real economic wealth is created in only three ways - manufacturing,
agriculture, and extraction. 2) The only positive influence politicians
have on the economy is to undo their prior damage. That is also why the
presidential pre-election year is historically the most bullish on the
four-year cycle. If the strength of the current Mid-term Bull can be
subjected only to meandering behavior, like 2004, 2005, and 2006, then it
is possible for the current Mid-term Bull to be a record setting one in
terms of duration. The prior threat to this historical standard has now
diminished.
Political
institutions reduce wealth. Politicians continually attempt to
redistribute wealth, which flies in the face of the laws of nature. They
promote “middle class” attainment. The larger the middle class, the more
power politicians and their academic brethren have. The communists tried
that, resulting 99% poverty, while the ruling 1% lived like kings.
Socialism rewards an ability to intellectualize, while capitalism rewards
the results of appealing effort.
The remainder
of this section, Secular Market Blend, is repeated, in part, from the past
several months, but it does not hurt to reread it each week. As time
progresses and conditions change, there will be modifications to it to
maintain a balanced frame of reference.
You will
notice many of the
mutual fund buy signals occurred in March 2003. Many of them endured
sell signals for the first time since early 2003 during the mildly bearish
meandering behavior in mid-2005. However, the bull’s resiliency has
minimized selling activity. The Mid-term Indicant is now signaling hold
for nearly all mutual funds it tracks with the exception of contrarian
funds.
Many of you
recall how the market did not synchronize with the heart and soul of
bullish seasonality from November 2002 through February 2003. December
2002 was the most bearish since 1931, but not nearly as dynamic as the
1931 bearish expression. After the asynchronous behavior in the November
2002 rolling third of the year, the market turned bullish in March 2003
and again did not synchronize with normal seasonality. The Mid-term
Indicant continued signaling bull/hold during bearish seasonality in 2003.
The market continued moving north during that time, contrary to historical
standards. As stated in most of 2004, bearish expressions on a Mid-term
basis between May and October 2004 should not be surprising. That is
exactly what occurred. The result was a meandering market with a slight
bearish bias during most of 2004 and 2005 and the first two-thirds of
2006. This presidential pre-election year will be fundamentally tested in
the face of war, terrorist threats, and rising oil prices.
The Quick-term
Indicant’s bearish bias during most of 2006 was replaced with a bullish
bias in mid-August 2006. Several buy signals ensued shortly after that
bias shift. Bullish behavior occurred, as expected, since mid-August 2006.
As stated since that bullish bias shift, the various Indicant models,
economic fundamentals, and historical standards suggest significant
bullishness in the coming months, but keep your eye on the Quick-term
Indicant.
http://www.indicant.net/Members/Updates/History-Seasonal/HS0001.htm
Make certain
you read the entire pages on the above link. You will see there are
exceptions.
Stop Loss
Management
The Mid-term
Indicant recommends a stop loss of 8% on recent buys because of the
Quick-term Indicant’s bullish bias and bullishly evolving economic
fundamentals.
Use a 10%
trailing stop loss or the yellow or green values you will find on the
tables for your longer-term hold positions. If your stock or fund is above
the bearish yellow curve and below the green curve, set your stop loss
equal to the greater of the yellow curve and the trailing stop loss. If
your stock or fund is above the green curve, set your stop loss at no less
the value of the green curve or 10% trailing, whichever is greater. If
your stock or fund is above the red curve and you bought at the Mid-term
Buy signal, you should use the 10% trailing stop loss.
If you are up
by triple digit amounts and enjoy your ownership of the stock or fund,
then use a 20% trailing stop loss or the slow moving blue curve price. If
you really enjoy holding the stock, keep a close eye on the management.
Dilettante managers have a way of worming into the business. Watch closely
for cronyism and lazy-hazy management dialog. Keep your eye on lavish
spending and excessive concerns about social issues. Those types are more
interested in burning your money for their pleasures, as opposed to making
you money. High performing companies remain focused on honoring the
investments made by their shareholders.
In a few
instances, you will see a hold signal for a stock or fund that is down
from its buy signal or below one of the above conditions for selling. If
you are more of a trader than an investor, feel free to buy stocks and
funds with those “bearish” attributes. They are configured for a possible
rebound, while at the same time, it is important to set the stop losses
mentioned in this report. Use the Quick-term Indicant as a guide in your
decision-making processes. If the stock price is falling in a Quick-term
Bear market, it is not advisable to buy.
Do not short
on stocks if they are up from an avoid signal. Stocks go up more often
than they go down. Stocks have a tendency to march to their own drumbeat
when rising. Some stocks rise and continue to rise in the most severe of
bear markets. Short selling opens up an opportunity for the snakes on Wall
Street to take everything you own. They can cause a stock to rise at their
whim and without any regard to fundamental reason. It usually does not
make sense to bet against the sweat and toil of hard-working people.
Stock and
Fund Update
Click the
following link to see sorted performance of stocks and funds with
hold/avoid signals. In the past, they were included in this email message
but now display them on the website. This is available to the public,
while the specific buy and sell transactions are limited to members only.
The below table is public information and not updated on a frequent basis.
http://www.indicant.net/Non-Members/Performance/Top-Bot.htm
Economic Conditions – Inflation, Currency, Interest Rates
Click the
above heading for a summary of hard economic indicators.
Three weeks ago, it was noted the 6-month CD fell below bullish red.
It again held there last week. As stated last week, several other
benchmark interest rates continue to hover near their cyclical peaks. That
is because commodity prices are not falling in addition to other pestering
inflationary threats with a burgeoning economy.
Equally
important is the
3-Month T-Bill fell below its bullish red curve two weeks ago. Again,
this is also indicative of the bullish potential that remains latent in
the stock market. If it starts a major shift to the southeast on the
charts, the stock market should move significantly to the northeast on the
charts.
As stated the
past three weeks, it is unfortunate that
commodity prices are uncooperative to the desired decline in interest
rates. Healthy economies stimulate demand. If the supply sources do not
keep up with that demand, prices rise. These rising prices threaten with
inflationary concerns. This is the reason for interest rate reduction
hesitancy, even though two of the Indicant’s tracked rates have fallen
below their bullish red curves in the past two weeks.
Consequently,
commodity prices remain elevated and worse yet they continue to increase.
That stifles economic stimulus tactics by the Federal Reserve Board. The
only consistent countermeasure to rising commodity prices is productivity
growth, which keeps costs down. However, if productivity growth slows with
rising commodity prices, the producer price index and consumer price index
will rise. That will prevent interest rate reductions and impose a
stifling effect on the stock market’s bullish bias.
However, the
stock market is sensing a bullish combination of falling interest rates
due to economic cooling. This cooling effect will contribute to rising
productivity and thus lowering costs and related inflationary threats.
That, combined with cooling economic activity, should result in commodity
price reductions. All this fosters stock market bullishness.
As stated the
past seven weeks, the U.S. Dollar remains mixed with other currencies.
However, a weakening U.S. Dollar bias the past three weeks also acts
against anticipated interest rate reductions. Considering the U.S.
Dollar’s strength (or weakness) is becoming less important as the
international economies are becoming more closely linked.
Overall,
economic conditions appear shifting in favor of a continuation of this
strong bull market.
Fear
Metrics: Economics and Terrorism
Vanguard Gold and Precious Metals (VGPMX) - #19 is up 334.2% since the
April 13, 2001 buy signal. Its annualized growth since that buy signal is
54.6%. It moved to the north in 21 of the past 28-weeks. After moving
north for seven consecutive weeks, it fell sharply this past week.
Fidelity Gold, Fund #28, is up 39.5% since the Mid-term Indicant
signaled buy on August 26, 2005. That annualizes to 23.3%. After moving
north for four consecutive weeks, this fund has fallen the past three
weeks.
State Street Research Global #9, SSGRX, which is isolated in the
energy sector, is up 291.0% since the Mid-term Indicant signaled buy on
August 16, 2002. It is annualizing at 61.1%.
Vanguard Energy #18, VGENX, is up 194.3% (annualized at 47.2%) since
the Mid-term Indicant signaled buy on April 5, 2003.
Fidelity Energy Services #40, FSESX, is up 149.6% (annualized at
39.9%) since the Mid-term Indicant signaled buy on December 6, 2003.
Fidelity Energy #39, FSENX, is up 149.6% since the Mid-term Indicant
signaled buy on August 16, 2003. It is annualized at 39.9%.
These energy
related funds moved solidly to the north last week after bearish
expressions in the prior week.
Investors in
these funds are supporting a 1970’s type of market with high inflation and
high oil prices. Energy and gold always do well during such times.
Fundamentals appear to be shifting in favor of selling the above funds
(09/10/06). Do not sell until the Mid-term Indicant signals sell. They
continue to rebound and from time to time endure fluttering. As long as
capitalism remains in vogue around the globe and alternative sources of
energy continue to lag exponentially increasing demand, a long-term
perspective on holding strategy is appropriate.
The SQI
(Consolidated Short-term and Quick-term Indicant) model signaled buy for
the
GLD-ETF#11 on August 3, 2005. It is up 55.2% since then. It is
annualized at 31.4%.
The SQI
signaled buy for
ETF#03 – Energy and Natural Resources on March 26, 2003. It is up
198.3% (annualized at 47.8%).
Both of these
contrarian ETF’s moved mildly to the south last week after moving solidly
to the north in the previous week.
Mid-term
Indicant Positions – Ten U.S. Indices
There were no new bull signals and no
new bear signals.
All ten major
indices are bulls. They are up by an average of 29.4% since the Mid-term
Indicant signaled bull an average of 90-weeks ago. That annualizes to
16.5%, which is down significantly from the past three years. This is due
to the bear signals for the S&P400 and S&P600 Indexes on July 21, 2006,
which had been receiving a bull signal since October 25, 2002. Those two
indices endured some fluttering after the expiration of the tremendous
bull leg that lasted nearly four years. A new bull leg is underway and may
proceed just as vigorously for these two indices as the bull leg from
October 2002 through July 2006, where the S&P400 and S&P600 increased by
66.3% and 79.3%, respectively.
Dynamic
bullish statistics were also eliminated due to the Dow Transports bear
signal and a new bull signal on January 19, 2007. The Dow Transports
enjoyed a 23.1% gain from its March 21, 2003 bull signal until its bear
signal on March 19, 2004. It fluttered with a new bull signal one week
later on March 26, 2004 and enjoyed an 80.0%-gain until a new bear signal
on December 22, 2006.
The Dow
Utilities increased by 104.4% from its October 25, 2002 bull signal to the
March 21, 2006 bear signal. After some fluttering, it received a new bull
signal on June 2, 2006. Interestingly, the Dow Utilities was the best
performing index since the October 25, 2002 Mid-term Indicant bullish bias
shift.
The Mid-term Indicant Dow Jones Industrial Average performance is now
at $39,746,472
That beats buy
and hold performance of $2,006,187 on a $10,000 investment in the Dow
stocks in 1900. The
MTI S&P500 is at $192,905. That beats buy and hold’s $146,348 on a
December 31, 1971 $10,000 investment. The
MTI-NASDAQ is at $213,964. That beats buy and hold’s $88,669 on an
October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy
and hold by 1,880.7%, 31.8%, and 141.3%, respectively, for these indices
as of this past week.
The Indicant’s
percentage advantage over buy and hold does not change during bull
signals. The advantage changes only during bear signals. That is because
the buy and hold model has to keep holding, while the MTI-RYS model avoids
bear markets. The only purpose of the Mid-term Indicant model is to avoid
the bear markets. That is why it beat buy and hold by nearly 2,000% over
the past 100+ years.
Click here to go to the current Mid-term Indicant assessment of the ten
major indices.
Click here for a tour of the Mid-term Indicant for major market indices.
Divergence
versus Convergence
Inflation
sensitive securities were bearish last week. However, the energy sector
was bullish. That divergent configuration suggests economic optimism
without inflation. The stock market was bullish. The last two weeks have
configured with bullish divergence. That followed two weeks of bullish
convergence. Overall, this suggests the market is preparing for dynamic
bullishness.
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.
The Mid-term
Indicant is now avoiding
ProFunds Ultra Short. It is down 25.3% since the Mid-term
Indicant signaled sell on September 15, 2006. Historical norms of market
cyclicality suggest the next buying opportunity for this fund may not
occur until 2009.
Click here for
Mid-term Indicant Table of Mutual Funds.
Always
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
353.3% (annualized at 22.7%) since the Long-term Indicant signaled bull
808-weeks ago. Economic data is the primary influence on the Long-term
Indicant. Recessions, deflation, and inflation have not been strong enough
to signal bear since that bull signal. A link to the Long-term Indicant is
below:
http://www.indicant.net/Members/Updates/LTI-Markets-DJIA/DJIA.htm
Quick/Short-term Indicant Stock Market Report - Summary
Quick-term
Red Bulls: Twenty-six of
thirty; bullish support is being maintained.
Quick-term
Yellow Bears: None; maximum
non-bearish support.
Short-term/Quick-term Non-Bearishness:
Countering “sustainable” deep bearish ambition.
Force
Vectors: Supporting bullish
bias..
Vector
Pressure: Supportive of bullish
bias.
Long-term
Hold Positions: Solidly safe.
Current
Quick-term Bias: Non-bearish.
Overall
Market Status: Short-term
Indicant bear signal on March 13, 2007 for NYSE and NASDAQ.
Profit
Potential from Naked Options:
Improving with increasing volatility.
Volume:
Increasing robustness will
obviate the market’s desired sustainable direction.
Comments
from April 20, 2007
Both the
NASDAQ and NYSE Indexes passed above their upper trading range limit. That
means a new trading range is being established and it not an indication of
immediate bias.
Force Vectors
and Vector Pressure maintained bullish bias during the Greenspan/China
bearishness that originated in late February and lasted for a few days in
early March. Viewing the Indicant Volume Indicator charts (link is below)
is a testament about how one should not engage trading behavior based on
contemporary news. Only two ETF sell signals were generated from the late
February, early March bearishness that was invoked by news and nothing
substantive. The bullish bias that originated on August 15, 2006 prevails.
Quick-term/Short-term Indicant Stock Market Report Details
The
Short-term Indicant signaled bear on March 13, 2007 for both the Dow
and NASDAQ. Click here to see the
Short-term Indicant’s history. The market rebounded with solid bullish
expressions after that bear signal. The Short-term Indicant has yet to
signal back to bull. The decreasing probability of bearish inclinations
toward the lower trading range limit suggests any pull back would be
irrelevant with respect to your longer-term hold positions.
Both
Indicant Volume Indicator’s are again enjoying a robust cycle.
Although this new cycle is not concurrent to dynamic market bullishness,
it supports to the underlying bullish bias.
SQI Report Card (Consolidated Short/Quick), Status, and Charts
There were no
buy signals and no sell signals. Although there were no buy signals, the
SQI is signaling hold for 30-ETF’s. They are up 71.0% (annualized at
32.8%) since their respective buy signals an average of 111.3-weeks ago.
The SQI is not avoiding any of the 30-ETF’s.
The SQI model is the one that most of you will prefer for your trading
decisions. It generates fewer signals than the other two models and
represents consistencies in the Quick-term and Short-term outlooks for the
specific ETF’s. It also beats buy and hold on a regular basis, although
there is only eight years of proof. The quality of that proof is high
since this period includes a powerful bull and bear. The model sours a
little during meandering markets with an excessive number of signals from
time to time. Research toward perfecting continues.
Short-term Indicant Report Card, Status, and Charts
There were no
buy signals and no sell signals. Although there were no buy signals, the
Short-term Indicant is signaling hold for 30-ETF’s. They are up an average
of 72.9% (annualized 34.6%) since the STI signaled, buy, an average of
108.3-weeks ago. The STI is not avoiding any of the 30-ETF’s.
Keep in mind,
the Short-term Indicant is much more active in buying/selling than the
Consolidated model. The Quick-term Indicant, which follows, is even more
active.
Quick-term Report Card, Status, and Charts
There were no
buy signals and no sell signals. Although there were no buy signals, the
Quick-term Indicant is signaling hold for 29-ETF’s. They are up by an
average of 20.6% (annualized at 24.0%) since the QTI signaled buy an
average of 44.1-weeks ago. The Quick-term Indicant is avoiding one ETF. It
is up 0.5% since its sell signal 2.4-weeks ago.
Conflicts
Between the Short-term and Quick-term Indicants
There is one
conflict, whereby the Short-term Indicant and the Quick-term Indicant are
in disagreement between hold and avoid status. The bias shift on August
15, 2006 remains in favor of the bull even though bearish behavior would
not be surprising over the next few weeks.
There are
89-hold signals out of a possible 90. There is one avoid signal. The
bullish bias remains strong.
Quick-term Indicant Bull/Bear Health Report
None of the
30-ETF’s are below their bearish yellow curves. The average position of
all thirty ETF’s is above bearish yellow by 11.0%. This is maintaining
the market’s non-bearish posture. This non-bearish configuration persists.
There is minimal support for sustainable bearish assertions.
Twenty-six
ETF’s are above their respective bullish red curves. This supports the
underlying bullish bias. Threats to bullish bias have been significantly
diminished. All thirty ETF average positions are 3.0% above their bullish
red curves. This attribute is supportive of bullish bias.
Short-term Indicant Bull/Bear Health Report for ETF’s
The above
heading is linked to the Short-term Indicant table. This paragraph is
repeated daily as a reminder of accurately interpreting the charts. By
clicking the charts on the table you can review potential contact with the
breakdown lines (bearish) and potential contact with breakout lines
(bullish). It is extremely bearish when several ETF’s are contacting their
respective breakdown lines. The breakdown lines are the yellow lines
(bearish). The breakout lines are the red ones (bullish). Close proximity
to breakout implies an increased probability of an actual breakout
occurring. It is certainly bullish and you will want to be in a hold
position for those few days a year when the breakout occurs. Conversely,
significant contact with yellow (breakdown) suggests “avoid” positions are
best.
Four of the
ETF’s are contacting their breakout lines. As stated the past several
months, the high concentration of breakout-contact the past several months
is solidly bullish. Contact frequency is no longer diminishing. This
enhances support of bullish bias. Contact in seventeen of the last
eighteen trading days remains supportive of bullish bias.
The average
distance from breakout contact is at a miniscule 1.5%. This is approaching
bullish exuberance again. Any pullback at this point is irrelevant to your
longer term hold positions.
None of the
ETF’s are contacting their respective breakdown lines. The average
distance from the price and breakdown is 26.5%. This configuration
provides tremendous non-bearish support, which has been the case since
March 2003. There have been several bearish “spurts” since then with no
sustainability or dynamic support. The probability of immediate contact
remains low and thus a non-bearish bias is maintained on a short-term
basis.
This
attribute remains solidly non-bearish, regardless of recent bearish
behavior.
ETF Force
Vector Configurations
You can scan
the
Quick-term Indicant for Exchange Traded Funds table and click on the
charts to observe Force Vector configurations. Scroll down each of the
charts, where a quick link has been added to take you to the next series
of Quick-term ETF charts. Use you back arrow on your browser to return to
the previous page.
Ten of the thirty ETF Force Vectors continue toward bullish domains.
Although down from last Friday, it continues supporting bullish bias.
To understand
potential financial opportunities,
click here to learn to identify Robust Force Vectors. They are visible
on the
Quick-term Indicant charts.
ETF Force
Vectors/Vector Pressure Crossings/Option Signals
Remember, the
links contained herein are more visible when reading this on the website.
Click this sentence for Vector Pressure Option Signals. There were no
option buy signals today.
Twenty-eight
ETF Vector Pressures are in bullish
domains. This configuration continues to support the bullish bias shift
from August 15, 2006.
Make certain
you sell naked options when the Force Vectors shift direction or within
two days of the purchase, whichever occurs first. If you are unfamiliar
with this, take the
options tour.
Remember
options trading is risky. Never offer “market prices.” Always bid low in
hopes of an intraday contrarian movement to the underlying assumption of
directional behavior. Always place day-orders, only. That keeps the floor
folks out of your pocketbook. Do not despair if your order does not take.
There are plenty of opportunities throughout the course of the year.
Remember, stalking is the key to success here. Although not necessary for
stock market success, those of you who have a gambling instinct will enjoy
this. For those of you with a longer-term perspective, it does not hurt to
see what the short-term folks are thinking. The Indicant indicates both
perspectives.
Quick-term
and Short-term Indicant Summary
The shift
from bearish bias to bullish bias started on Tuesday, August 15, 2006
after maintaining a bearish bias from early February 2006 until August 15.
The Quick-term and Short-term Indicant models continue suggesting a
bullish bias. The bullish bias is again losing strength.
Do not write
covered call options while Vector Pressure is positive (bullish), which is
the current configuration.
The
Quick-term Bull remains in tact.
ProFunds Ultra Short mutual fund moves inversely to the QQQQ by
exponential amounts. The Consolidated Indicant model is no longer avoiding
QQQQ, which no longer supports holding contrarian fund, ProFunds Ultra
Short.
To
familiarize yourself with viewing the market from an ETF perspective,
click the following update links.
Quick-term ETF Options
Quick-term Indicant for ETF’s
Short-term Indicant for ETF’s
Consolidated Quick-term/Short-term Indicant for ETF’s
Click here to the report card, which is updated weekly, to link to related
tours.
Links to the
Short-term Indicant and Indicant Volume Indicator are below:
Short-term Indicant for DJIA and NASDAQ
Short-term Indicant Tables for the Dow Jones Industrial Average Index
Short-term Indicant Table for the NASDAQ Composite Index
Indicant Volume Indicator
Indicant
Conclusion
Bullish
divergence the past two weeks followed bullish convergence in the prior
two weeks. This configuration is exceedingly bullish. Also, last weeks
bullish divergence supports significant longer-term stock market
bullishness as inflation sensitive securities, such as gold, were
bearish.
Vector
Pressure continues to support the bullish bias. It has been doing that
since August 15, 2006.
Do not get
lazy and set those stop losses for those stocks and funds that continue to
enjoy hold signals.
The daily
updates are on the following link.
http://www.indicant.net/Non-Members/Back%20Issues/QT.htm
Hyperlinks
To access all
major markets, stocks, funds, economic data, charts, statuses, etc, click
the following hyperlink:
http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20Summary.htm
In addition,
once you are inside the website, click on "members update" or simply log
in. It is on the top of every page in the web site so you can always find
your way back.
Happy
Investing,
www.indicant.net
04/29/07
April 22,
2007 Indicant Weekly Stock Market Report
Volume 04, Issue 04 ISSN 1526 6516 © The
Indicant Stock Market Report
This Week’s
Report
Trading
Range Tracking – Part 5
Bullish
divergence last week followed the previous two weeks of bullish
convergence. The NYSE crossed above the upper trading range limit. It did
not express timidity once it penetrated that stratospheric level. Click
the following link.
http://www.indicant.net/Members/Updates/STI-Mkts/IVI.htm
Scrolling down
on the above link, you will notice the NASDAQ setting on its upper trading
range limit. How it will behave in the coming days? As you can see, it has
had trouble crossing above that upper limit, while at the same time has
expressed comfort in the upper quartile of the trading range.
The market has
enjoyed several days of bullish behavior the past three weeks. The first
two weeks of the past three weeks enjoyed bullish convergence. That
attribute indicates the market’s confidence in underlying economic
conditions. The bull senses economic balance and growth. More importantly,
it is sensing the internationalism of capitalism.
The trading
range trend the past two years has been along a gentler bullish slope than
that of 2003 and early 2004. That was when the bull punished the bear,
quite severely, for its 2000-2002 shenanigans. The current trading range
trend was aborted last week by the NYSE index. That has very little
meaning on a short-term basis. It will take several months to configure
and new trading range trend. You will notice though the last time contact
was made, bearish behavior followed.
The market’s
bullish behavior the past three weeks is a testament to the historical
significance of traditional bullishness in presidential pre-election
years. The bearish behavior in late February and early March turned out to
be a bearish spurt in the face of the underlying bull. However, the threat
of additional bearish spurts has not diminished.
There are no
Quick-term Indicant configurations supporting bearish spurts on the
immediate horizon, while the Short-term Indicant continues to read that
threat. However, the bullish expressions the past three weeks have
eliminate threats to your longer-term holdings. In other words, a typical
bearish spurt along the upward sloping trading ranges will not produce
lasting unfavorability to your hold positions, whether from Mid-term
Indicant trading or Quick-term Indicant trading.
Keep your eye
on the Quick-term Indicant as it will identify the underlying market bias
on a daily basis and differentiate bearish sustainability from bearish
spurts.
Weekly
Buy/Sell Summary – Stocks and Funds
The Mid-term
Indicant generated fifteen buy signals and no sell signals.
Although there
were no sell signals, the Mid-term Indicant is avoiding 47-stocks and
funds of the 345 tracked by the Indicant. The avoided stocks and funds are
down an average of 7.3% since the Mid-term Indicant signaled sell an
average of 17.5-weeks ago.
There were
63-stocks and funds avoided at this time last year. The avoided stocks and
funds one year ago were down an average of 6.6% since their respective
sell signals an average of 20.1-weeks earlier.
Two years ago,
on April 22, 2005, the Mid-term Indicant was avoiding 110-stocks and funds
that were down an average of 28.7% since their respective sell signals an
average of 52.4-weeks earlier. Three years ago on April 24, 2004 there
were only 25-avoided stocks and funds. They were down by an average of
26.5% from their respective sell signals an average of 39.3-weeks earlier.
On April 19, 2003, the Mid-term Indicant was avoiding 42-stocks and funds
out of 296-tracked. They were down by an average of 26.6% since their sell
signals an average of 15.8-weeks earlier.
In addition to
the buy signals, the Mid-term Indicant is signaling hold for 283 of the
345-stocks and funds tracked by the Indicant. The stocks and funds with
hold signals are up an average of 127.0%. That annualizes to 64.1%. The
Mid-term Indicant has been signaling hold for these 283-stocks and funds
for an average of 102.8-weeks.
One year ago,
on April 21, 2006, the Mid-term Indicant was holding 271-stocks and funds
out of the 345 tracked at that time for an average of 98.5-weeks. Those
271-stocks and funds were up by an average of 138.4% (annualized at
73.1%). The Mid-term Indicant was signaling hold for 205-stocks and funds
of the 320-tracked two years ago on April 22, 2005. They were up by an
average of 94.7% (annualized at 57.6%) since their respective buy signals
an average of 85.4-weeks earlier. There were 265-stocks and funds with
hold signals on April 24, 2004 since their buy signals an average of
49.7-weeks earlier. They were up by an average of 71.8% (annualized at
75.1%). The Indicant was only tracking 296-stocks and funds in 2002-2003,
and early 2004. On April 19, 2003, the Mid-term Indicant was signaling
hold for 226-stocks and funds out of 296-tracked. They were up by an
average of 25.5% (annualized at 84.3%) since their buy signals an average
of 15.8-weeks earlier.
Summary of
Stocks and Funds with Buy and Sell Signals This past Week
To maintain
appropriate security, you can see the Mid-term Indicant "buy/sell" signals
for stocks and funds for this week by clicking the following link. It is
in the member’s only section.
