April 27, 2008 Indicant Weekly Stock Market Report

Volume 04, Issue 04 ISSN 1526 6516 © The Indicant Stock Market Report

This Week’s Report

Is Recent Bullish Behavior Sustainable – Part 4?

That question has been persistent for four consecutive weeks and the market has moved north in three of the past four weeks. On the surface, it appears the original inclination on March 11, 2008 was accurate; that is sustainability for several weeks and possibly months.

Historical standards supports bullish sustainability. Presidential pre-election years are the second most bullish on the four year cycle. An 1832 $10,000=investment only in pre-election years yields a balance of over $90,000 as of the end of 2004. Since the market is down so far in this election year, one could easily ascertain the market has to go up to conform to historical standards. Click this sentence to review charts of a convincing nature regarding this phenomenon.

Unfortunately, historical standards are not without variance. When one is interested in the stock market’s directional intensity, one does not really care about what the market did in 1937 or any other year in the past. However, one should always be cognizant of the pre-election year’s performance. It is indeed impressive, but that will not occur until 2010.

Economic fundamentals are always more influential on the stock market’s directional intensity. From time to time, the market’s directional intensity is soaked in emotion and/or short-term fundamentals. Since there are several fundamental factors, the stock market sometimes gets hooked on one to two and loses sight of the others. When the market’s focus is narrowed to just a few, the others will shift unfavorably just a little bit. When that happens the market responds with more than a little bit of adjustment.

Last week’s speculation held that the Federal Reserve is going to depress interest rate reductions. That is expected to strengthen the dollar. That strengthening will be anti-inflationary. It will bring down the imported price of oil. If the dollar held steady from two to three years ago, the price for a barrel of oil would be around $85. The stock market finds appeal with the strengthening dollar right now. After all, those imported Lexus’ and Mercedes Benz will also be cheaper. The problem for exporters will be renewed with less than competitive pricing.

The stock market is no longer a U.S. market. Many companies have profit producing assets around the world. So, the line of thinking that a strengthening dollar is going to be bullish may indeed have the opposite effect. It will depress profits related to exports, while inflating profits from imports. It will discourage the demand for stocks from foreign investors. However, it will enhance economic opportunities in other countries while certainly depressing rust belt economies in the U.S.

Once the market re-focuses on inflation, and if not improved in the next few months, expect dynamic bearishness. The stock market does not ask for too much. All it wants is increasing corporate profits, low interest rates, a healthy economy, and low inflation/deflation. If all those elements are in play, the bull snorts loudly, while the bear hibernates.

We now have mixed corporate profits, but one has to be concerned about Clinton-like truth telling from CFO’s. Enron contributed to the great bear of 2000-2002. It is a little surprising the liars at Bear Stearns has not induced a more bearish response. How many others are not telling the truth?

When one takes a bird’s eye view of the stock market, one can offer an argument supporting stock market bearishness. Although historical standards suggest the stock market should be bullish this year, economic fundamentals are a little shaky. The economy is certainly not in a robust condition. Corporate profits are mixed. Although interest rates are low, inflation is becoming a problem. Strengthening the dollar will certainly help inflation, but that could also send the economy into a deeper recession. After all, millions are losing their homes and the quality of life for them is in a tailspin. If socialism creeps in to help them not lose their homes, rest assured the stock market will not like that either.

Technically, the stock market also appears shaky. There is an old saying that should remembered from time to time. “Do not fight the trend. “ All trends in all things eventually shift to the opposite trend. That is the burning question. Is the current bearish trend about to expire in favor of a bullish trend? Click this sentence to review the current trend.  Intuitive assessment, which is not an Indicant practice, suggests the current bullish cycle is a mere spurt in the face of a bearish trend.

After holding most of the ETF’s since August 2006 through early January 2007, the Quick-term Indicant has encountered some fluttering in the face of a bullish cycle that began in March of this year. Prices are back to where the January sell signals occurred. Many of them are no longer yellow bears. A few have shifted to red bulls, which is very bullish.

The Quick-term Indicant will signal buy for many ETF’s if the current bearishly moving Force Vector cycle does not shift Vector Pressure into bearish domains. Although the trend is bearish, this bullish cycle, if normal, is about half way to its impending peak. Such a bullish cycle will endure another bearish cycle before the heart and soul of bullish seasonality that is scheduled later this year. That is when the market should catapult into the expectations consistent with historical standards. Click this sentence to review the current trend.  

The weakness in the S&P600 is suggestive of the current bullish cycle as being a mere spurt. It, along with other small cap indices are typically the most bullish during bull markets and the most bearish during bear markets. The S&P 600 is not performing consistently with the configurations of bull markets. Click this sentence to a table where you can access several major indices’ charts.  You will notice the S&P600’s limited participation in the bullish cycle now underway.

Keep your eye on the daily stock market report. It will help you differentiate sustainability versus spurts regardless of the directional intensity underway.

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

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

The Mid-term Indicant generated two buy signals and two sell signals. This brings the total buy signals to 73 since February 1, 2008. There have been 192-sell signals since October 26, 2007.

Although there were no buy signals, the Mid-term Indicant is signaling hold for 203 of the 345-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 145.7%. That annualizes to 60.9%. The Mid-term Indicant has been signaling hold for these 203-stocks and funds for an average of 123.8-weeks.

In addition to the sell signal, the Mid-term Indicant is avoiding 141-stocks and funds of the 345- tracked by the Indicant. The avoided stocks and funds are down an average of 16.2% since the Mid-term Indicant signaled sell an average of 26.1-weeks ago.

One year ago, on April 27, 2007, the Mid-term Indicant was holding 296-stocks and funds out of the 345 tracked for an average of 100.1-weeks. They were up by an average of 124.7% (annualized at 64.8%). There were 35-avoided stocks and funds at that time. Those avoided stocks and funds were down an average of 11.4% since their respective sell signals an average of 21.5-weeks earlier.

The Mid-term Indicant was signaling hold for 272-stocks and funds of the 345-tracked two years ago on April 28, 2006. They were up by an average of 136.7% (annualized at 71.4%) since their respective buy signals an average of 99.5-weeks earlier. The Mid-term Indicant was avoiding 69-stocks and funds at that time. They were down an average of 5.7% since their respective sell signals an average of 18.9-weeks earlier.

There were 205-stocks and funds with hold signals on April 29, 2005 since their buy signals an average of 87.7-weeks earlier. They were up by an average of 95.7% (annualized at 56.7%). There were only 115-avoided stocks and funds at that time. They were down by an average of 29.3% from their respective sell signals an average of 52.9-weeks earlier.

On April 24, 2004, the Mid-term Indicant was signaling hold for 265-stocks and funds out of 296-tracked. They were up by an average of 71.8% (annualized at 75.1%) since their buy signals an average of 49.7-weeks earlier. The Mid-term Indicant was avoiding only 25-stocks and funds. They were down by an average of 26.5% since their sell signals an average of 49.7-weeks earlier.

Five years ago, on April 26, 2003, there were 247-hold signals for stocks and funds out of the 296 tracked by the Mid-term Indicant at that time. They were up an average of 26.1% (annualized at 87.7%) since their respective buy signals an average of 15.5-weeks earlier. There were 34-avoided stocks and funds then. They were down an average of 26.4% since their respective sell 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 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 imbedded in this weekly report. This allows web-based 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

The Dow is up 76.9% since its secular low on October 9, 2002. The NASDAQ is up 117.5% and the S&P500 is up 80.0% since then. The small cap index, S&P600, is up 123.4%. Even with the S&P600’s dynamic bearish behavior the last several months, it still leads the major indices in bullish performance since the birth of the secular bull on October 9, 2002. As stated the past several months, the secular bull that originated on October 9, 2002 no longer remains solid. A secular bear could indeed be unfolding.

The Dow is down 9.0% since its last closing peak on Oct 9, 2007. The NASDAQ is down 15.3% since its last peak on Oct 31, 2007. The S&P600 is down 14.3% since its last closing peak value on Jul 19, 2007. The Small Caps Index was bullish last week with a meager 0.3% gain, while the blue chips were equally bullish with a 0.3%-gain.  The NASDAQ100 was the most bullish index of the majors with a 1.0% gain.

The NASDAQ is down 52.0% since its last weekly secular peak on March 9, 2000. The S&P500 is down 8.5% since its similar secular peak on March 23, 2000. The Dow is up by a mere 10.0% since January 13, 2000 when it peaked from the 1990’s roaring bull. It has expressed no timidity in roaming above the new peak area, until recently. The NASDAQ needs to climb 108.4% to achieve a new record high. Do not be surprised if this occurs after the year, 2025.

The Dow is down 2.8% so far this year. The NASDAQ is down 8.6% this year. These conditions are incongruent with historical standards. 2008 should be a bullish year, based on those standards. The stock market occasionally delights in violating historical standards. This will always happen when such standards gain in popularity.

The NASDAQ year-to-date performance was bearish by 16.6% through this week in 2001. Keep in mind the NASDAQ finished 2001 down by 21.1%.  So far, this year looks similar to that of 2001. There will be some more bearish cycles in 2008 and one of the reasons for expectations of a solid bullish cycle ahead of those impending bearish cycles. This is now being challenged.

The NASDAQ was down by 12.1% through 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 YTD 2003 performance was up by 7.4%. It finished up in that solidly bullish year by 50.0%. It was up on this weekend by 2.3% in 2004, but down by 10.3% in 2005. Many of you recall that 2004 and 2005 were meandering bear markets. In 2006, it was up by 5.7% and up by 5.5% at this time last year.  

As previously stated, so far this year, the DOW30 is down 2.8% and the NASDAQ down 8.6%. The NASDAQ and Dow are down at this time of year more than any other year this century.

This paragraph, originating in the March 30, 2008 Weekly Stock Market Report, will remain unchanged until it becomes irrelevant. Bearish behavior this year contradicts historical standards whereby the presidential election year is typically bullish. The political establishment and their appointees are doing their part to support bullish behavior with interest rate cuts and tax rebates. On the other hand, the stock market appears to be short of buyers who at one time refinanced their homes to buy stocks. Their replacement buyers are expected to be foreign investors, where the weak dollar is an added bonus for those who desire bullish market behavior. If the Fed strengthens the dollar next week by stabilizing interest rates, this bullish option may wane.

The bullish bias shift on August 15, 2006 expired on January 4, 2008. The heart and soul of bullish seasonality also expired on January 4, 2008.  The Dow increased 14.0% since the bullish bias shift on August 15, 2006. The S&P500 was up 9.8% and the NASDAQ up by 18.4%. The NASDAQ was down 9.9% since the expiration of that bullish bias shift on January 4, 2008. The Dow was down 5.0%. The ensuing bearish bias expired on March 11, 2008. The Dow is up 5.7% since the March 11, 2008 bullish bias shift, but the Indicant has reluctantly retracted that bullish bias shift due to mixed attributes; some favoring the bear and some favoring the bull. The NASDAQ is up 7.4% since then. There is an increased probability a new bearish bias shift is now underway. The VIX index violated recent normalcy two weeks ago and added to that violation last week, favoring additional bullishness. That was/is discussed in the daily stock market report.

As stated last week, the presidential pre-election year of 2007 was below average (+10.5%) with the Dow gaining 6.4%. This was the smallest gain since Reagan’s 2.3% gain in 1987, when the market endured sharp sell off in October of that year.

Where is the market headed in 2008, the presidential election year, which is the second most bullish year on the four-year presidential election cycle? If historical standards prevail, which is bullish, the market is setting up nicely for a tremendous profit this year. All that is needed is a bottom to this bear, as 2008 should finish up on the year, based on historical standards and falling interest rates. The fundamental requirements are limited inflation and economic stabilization.

Three of the big four are okay for the time being; inflationary threats have cooled but again threatening with a significant increase in the CPI. Interest rates remain low, which is bullishly favorable. Deflation is not yet threatening. In addition to a resurging CPI, another unfavorable condition for stock market bullishness is the weak economy. The unknown is voodoo bookkeeping. The market reacts to corporate earnings. If those earnings are perceived as fiction, the market will move bearishly. Fictional financial representations and the stock market do not mix.

Keep your eye on the daily stock market report.

Stop Loss Management

The Mid-term Indicant recommends a stop loss of 10% due to increasing bearish potential.

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.

As stated the past twenty-four weeks, falling interest rates typically accompany stock market bullish behavior. The primary exception to stock market bullishness with declining interest rates is inflation or deflation.

The CPI rise is significant. It will eventually take its toll on the stock market. That should occur next year. As stated the past several weeks, an increasing CPI above 4.0% with falling interest rates will not stimulate bullish behavior. This paragraph will remain until commodity prices demonstrate a cyclical decline on a Mid-term Indicant basis. Commodity prices are definitely engaged in a secular bullish cycle, but the stock market will need to enjoy some periodic bearish cycles in commodity prices.

Commodity prices tumbled last week. They have been bearish in three of the past four weeks. That suggests demand is softening; a common recessionary attribute. As stated last week, though, demand must fall in other countries. In other words, there needs to be a world wide recession for that to happen.

Interest rates are providing significant liquidity, but when budgets are strapped for fuel, expect little economic stimulus.

As stated last week, the U.S. Dollar remains fixed in its cyclical decline in value. Continuing weakness should stimulate increased demand for U.S. based stocks by foreign investors. Also, U.S. exporters should enjoy increased demand for their products. Strategically, this should invigorate capital spending for new plants and equipment with the corresponding low costs.

Speculation holds the Fed will discontinue reductions in interest rates. That will shore up the dollar and possibly mitigate inflationary concerns. If the recession is mild but significant enough to slow demand for commodities, the stock market could be bullish.

As stated last week, 2009 is setting up to be a solid recession and bear market. Historical standards support rising interest rates next year that will encourage the bear.

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 is up 401.2% since the April 13, 2001 buy signal. Its annualized growth since that buy signal is 56.2%. It moved to the north in 51 of the past 85-weeks. It has been bullish in 22 of the last 36-weeks. This fund has been bullish in seven weeks of the last eleven weeks. It was solidly bearish last week.

Fidelity Gold, Fund #28, is up 7.9% since its buy signal on September 7, 2007. It is annualized at 12.3% since that buy signal. This fund was solidly bullish in six of the past eleven weeks. It was bearish last week.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 379.7% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 65.8%. This fund has been bullish in four of the last eight weeks and was solidly bearish last week.

Vanguard Energy #18, VGENX, is up 264.4% (annualized at 51.5%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 242.0% (annualized at 54.4%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 215.5% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 45.3%.

These energy related funds were bearish last week.

Investors in these funds are supporting a 1970’s type of market with high inflation and high oil prices. 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 100.5% since then. It is annualized at 36.3%. This fund has been bullish in 25 of the past 35-weeks. It has been solidly bullish in six of the last 10-weeks. It has been bearish the last two weeks.

The SQI signaled buy for ETF#03 – Energy and Natural Resources on March 26, 2003. It is up 285.5% (annualized at 55.3%). This fund has been bearish in six of the past 16-weeks. It was bearish last week, following bullishness in the previous four weeks.

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

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

The Mid-term Indicant signaled bull on March 20, 2008. All ten major indices are up by an average of 6.8% since then. They are annualizing at 68.8%. The most bullish is the NASDAQ100 index. It is up 8.7%. The S&P100 is the weakest. It is up 3.9%. Disappointedly, the most bullish during bull markets is the S&P600, which is up only 5.3% since the March 20, 2008 bull signal. This suggests the bull cycle may be short-lived.

The Mid-term Indicant Dow Jones Industrial Average performance is at $38,709,208

That beats buy and hold performance of $1,961,336 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $185,139. That beats buy and hold’s $136,922 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $224,862. That beats buy and hold’s $84,013 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 1,873.6%, 35.2%, and 167.7%, respectively, for these indices as of this past week.

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

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.

Note from April 5, 2008: Enron will be removed from Indicant tracking later this year. It was removed from the Dow Utility Index several years ago. It is now a penny stock, but the Indicant kept tracking it at the request of members. Its low cost nature is not friendly to Mid-term Indicant assessment due to small price changes and corresponding large percentage impact. The Mid-term Indicant is not designed for penny stocks. Although recovery is always possible, this stock has become too busy to track. This position will be re-accessed based on member feedback as the year progresses.

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 signaled buy for ProFunds Ultra Short on January 18, 2008. It was down 32.3% since the Mid-term Indicant signaled sell on September 15, 2006 until the buy signal on January 18, 2008. Historical norms of market cyclicality suggested the next buying opportunity for this fund should not occur until 2009.

The Mid-term Indicant signaled sell for this fund on March 20, 2008 after it garnished 8% gain since its buy signal last January. It was down 5.6% since the March 20, 2008 sell signal.

The Mid-term Indicant again signaled buy for this fund on April 12, 2008. Unfortunately, it is down 12.6% since that buy signal. Increased bearish potential should minimize a loss and may flip back to profit in the next three to seven weeks.

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 345.4% (annualized at 20.9%) since the Long-term Indicant signaled bull 860-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: Seven of thirty; six are non-contrarian, offering bullish support.

Quick-term Yellow Bears/Threats: Three of thirty. This remains borderline non-bearish.

Quick-term Non-Bearishness: QTI differential is bullish 4.1%. Although this is a normal bullish configuration, the last time this support shifted to the bull, the bear responded with some gusto. This continues to be the expectation.

Short-term Non-Bearishness: Breakout/breakdown differential is bullish by 4.1%. Again, this is a major attribute shift in support of the bull that should invite a bearish response.

Force Vectors: Force Vectors remain with bullish support, but the cycle is mature and many shifted back to the south today (Friday, April 25).

Vector Pressure: Twenty-seven in bullish domains but about half of them are positioning to return to bearish domains. They are holding steady, though, but declining Force Vectors should bring them down. However, if they hold steady for a few more days, then this bullish cycle, may in fact, not be a short-cycle bullish spurt. Major inflection points contaminate attributes with conflicting bias, but increasingly supportive of a near-term bearish bias.

Immediate Tactics: Sell aggressively on signals until the breadth and magnitude of the current bear market completes.

Current Quick-term Bias: Many attributes are mixed with a slight bearish advantage. Bullish sustainability of the current Quick-cycle underway remains elusive.

Overall Market Status: Many attributes are mixed, but with a slight bearish edge. Dominant bearish responses did not occur two weeks, adding to the cumulative probability there will be one. You saw some of that make-up bearishness with last Tuesday’s bearish behavior. Bullish expressions in the succeeding two days were not strong.

Profit Potential from Naked Options: Volatility is high, enhancing option opportunities.

Volume: The NASDAQ is bordering robustness, which is configuring an increased probability of a bullish bias shift. Keep in mind that lethargy is commonplace during daylight savings time.

Quick-term/Short-term Indicant Stock Market Report Details

Click this sentence to view the VIX chart.   As stated in yesterday’s daily stock market report, the bullish cycle now underway has now destroyed predictable congruencies with respect to this index. Its bearish yellow curve fell below the tangential trend line last Thursday, which is a bullish stock market  attribute. That trend line held symmetrical significance since early 2007. It helped spot the fake bear cycles in early 2007. Such destruction is setting up to offer additional technical support for a bullish stock market in 2008 and possibly early into 2009.

Click this sentence to view the S&P600 chart. As stated the past several days, the configuration mentioned on Thursday, April 10, 2008 remains the most discerning at this point. This index again moved above its bullish red curve on Friday. It has expressed timidity the past few times that has happened. The probability of the market being less than April 10 position within a few days or even weeks remains high.

To view STI for the ten major indices, click here.  Keep in mind, some of the charts are being used for research, but the actual market data is pure. You can see that most of the indices remain above their bullish red curve, which is a bullish configuration.

The Short-term Indicant signaled bear last Friday April 11, 2008. The Dow is up 4.6% and NASDAQ is up 5.8%, respectively since then. This signal is obviously in error with respect to market performance since then. This is being influenced, in part, by a four week period of historical bearish seasonality. Although the market goes up during this period more often than it goes down, the few periods of decline have been dynamic; enough so, that this period generates a loss since 1900.

Please read on. Click here to see the Short-term Indicant’s history.

The NASDAQ Indicant Volume Indicator  is in the early stages of robustness. This is concurrent to bullish behavior. As stated the past few days, this is a powerful bullish configuration. However, other attributes remain mixed. The Fed’s meeting is next week and some think the bias will shift from economic stimulus to anti-inflation. Speculation of relaxing interest rate reductions strengthened the dollar somewhat last week and thus lowered oil prices. That was “temporarily” bullish. Unless action is taken by the Federal Reserve, the market will eventually take an unacceptable rising CPI in its sights and that is bearish. High volume ahead of such meetings is common.

April 21, 2008 – Both the NYSE and NASDAQ remain above bullish red, which is bullish. However, they expended a lot of energy getting there. The bull is panting. Economic fundamentals simply do not support this lofty position. As stated last week, do not be surprised at bearish behavior on the immediate horizon.

April 22, 2008 – Both the NYSE and NASDAQ remain positioned above bullish red. A bounce to the north off bullish red will be technically significant. Falling below will encourage bearish ambition.

April 23, 2008. Today’s bullish expression was mild; so mild that it cannot be construed as bouncing north off of bullish red. However, they continue residence in bullish domains.

April 24, 2008. The NYSE remains barely above its bullish red curve. The NASDAQ is configuring with bullish red as a bounce point, which is exceedingly bullish. However, the S&P600, small cap continues configuring with behavior consistent with bear markets. As previously stated configurations remain mixed.

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 15-ETF’s. They are up by an average of 57.2% (annualized at 24.7%) since their respective buy signals an average of 119.0-weeks ago. Although there were no sell signals, the SQI is avoiding sixteen-ETF’s at this time. They are up by an average of 2.9% since their sell signals an average of 5.8-weeks ago.

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 nine 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 16-ETF’s. They are up an average of 117.6% (annualized 47.0%) since the STI signaled, buy, an average of 128.6-weeks ago.  Although there were no sell signals, there are fifteen ETF’s with avoid signals. They are up by an average of 2.8% since their sell signals an average of 5.2-weeks ago.

The Short-term Indicant is 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 11-ETF’s. They are up by an average of 29.2% (annualized at 38.3%) since the QTI signaled buy an average of 39.2-weeks ago. Although there were no sell signals, the Quick-term Indicant is avoiding 20-ETF’s. They are up by an average of 4.0% since their sell signals an average of 3.3-weeks ago.

Conflicts Between the Short-term and Quick-term Indicants

There are five conflicts, whereby the Short-term Indicant and the Quick-term Indicant are in disagreement between hold and avoid status. The combined Short/Quick Indicant models identify 40-hold signals and only 50-avoid signals, providing a bearish edge. The bullish bias shift on August 15, 2006 expired on January 4, 2008, but a potential bullish bias shift was born on March 11, 2008, which has now expired. A new bearish bias shift is now underway, but being threatened by the bull. Configurations suggest the market and most of the ETF’s with hold signals will be lower than they were in early April within a few weeks. Timing will be more predictable when bearish yellow curve inflects. Some are now configuring with minor adjustments suggesting inflection points are developing.

Quick-term Indicant Bull/Bear Health Report

Three of the 30-ETF’s are below their respective bearish yellow curves. That is a decrease from yesterday and the lowest since late last year, which is non-bearish. The average relative position of all thirty ETF’s is above bearish yellow by 4.9%. This is the nineteenth consecutive trading day with non-bearish support.

Seven of the ETF’s are above their bullish red curves. All thirty ETF average positions are 0.8% below their bullish red curves. Overall, this remains mildly non-bullish. Six of the seven red bulls are non-contrarian, which supports bullish bias, but barely hanging onto that bias. Keep in mind, as long as just one non-contrarian ETF is bullish red, dynamic bearish expressions are muted.  Keep in mind that most ETF bullish red curves are decreasing and one of the reasons for buying hesitancy.

The QTI differential is bullish by 4.1%. This is the seventh consecutive day of bullish support.

Click the heading link in this section to view the charts. Click this link as a reminder from the Weekly Stock Market Report of April 6 to view the issue at hand. Several Vector Pressures have crossed into bullish domain the past few days. As stated the past few days, the problem is that this crossing is from yellow bear status. This typically invites a violent bearish response with sustainability and depth. If the bearish response is mild and does not cause another bearish cycle to the south, then this bull cycle should enjoy several more weeks of life. Early March attributes favored this, but shifted against that outlook in early April. The bias remains in favor of the bear right now, but it could be mild.

Mild bullish behavior late this past week insignificant. After the impending bearish expressions complete, this bull could become another dynamic one. If bearish yellow inflects with tangential support, this bullish cycle could last a few more weeks.

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.

None of the thirty ETF’s are contacting their breakout lines, which is non-bullish. This is the third consecutive day with non-bullish support.

The average distance from breakout contact is 12.1%. Double digit variances from breakout contact for 77-consecutive trading-days is not supportive of the bull.

None of the thirty ETF’s are contacting their breakdown lines, which is non-bearish.

The average distance between the price and breakdown is 16.2%. This configuration is providing non-bearish support, which has been the case since March 2003.

The breakout/breakdown differential is bullish by 4.1%, which is supportive of the bull, but weaker from last Monday.

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.

Twenty-seven Force Vectors are in bullish domains. That is up by fifteen from April 11. Overall bullish support is configured. The question regarding sustainability persists.

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 after Friday’s close.

Twenty-seven of the thirty ETF Vector Pressures are in bullish domains, which for the seventeenth consecutive day since several months ago is no longer configuring in support of the bear. Vector Pressure is shifting back to the south and that is cause of concern since bearish yellow was attacked from the south. This typically incites more bearishness but that has been elusive the past four weeks.

Bearishly forming Force Vectors two weeks ago were in the process of changing in favor of the bear. However, the bear obviously chose to remain absent, defying high probabilities of its stock market participation. Such variances have a cumulative effect. Absences, such as those late last week,  make up for the lost time when they eventually appear. In other words, the bear is late for its own party and when it arrives, it will be in a bad mood. You saw some of that last Tuesday and more is about to come.

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 bullish bias shift that began on August 15, 2006 expired on January 4, 2008. However, a new bullish bias was born on March 11, 2008. It is not a thoroughbred, though. It is tainted with Enron-like misguidance from Bear Stearns. The March 11 bullish bias shift expired on April 11, 2008. It is expected to be just another short bullish spurt. As stated last week, there is little consistency among the attributes favoring either bull or bear, but there is a small bearish advantage.

Continue avoid writing covered options due to potential volatility. Opportunities will expand as soon as Vector Pressure drips back to the south.

ProFunds Ultra Short mutual fund moves inversely to the QQQQ by exponential amounts. The Mid-term Indicant continues signaling hold for ProFunds Ultra Short in anticipation of bearish stock market behavior, even though it moved unfavorably to that hold position last week. However, the magnitude of that bearishness may not be that significant and thus minimal profits should be expected. Small losses are possible due to recent bullishness.

The Quick-term and Short-term Indicant tracks ETF#31, QID, which is the ETF cousin to ProFunds Ultra Short. This ETF is relatively new and has not yet developed enough data to formally track its outlook. It is excluded from overall ETF statistics because it is purely contrarian. It is designed to move bullishly during bear markets and bearishly during bull markets. This exclusion is required for convergent/divergent monitoring.

The Indicant signaled buy for QID on Friday April 11, 2008. You will notice its Force Vector  continuing to the south today, offering less bullish potential and with negative Vector Pressure. However, that Force Vector cycle is mature and priming to move north, favoring bullish expressions. However, the risk/reward of holding is supported by the potential for bearish aggression. It is down by 12.0% since that buy signal.

Other Contrarian Funds

ETF#03-Natural Resources   - continues with strong hold attributes. It is one of the red bulls. It remains sizzling hot, but appears cooling due to speculation the Fed will discontinue a policy of relaxing rates. That is expected to strengthen the dollar and lower oil prices. It is up 46.0% since the Quick-term Indicant signaled buy on October 25, 2006. It is annualizing at 30.2%. After hitting yellow bear status last January, this ETF rebounded back to red bull status. It is paralleling record high oil prices and also paralleling recent reductions in oil prices.

ETF#11-Gold and Precious Metals   continues struggling. It is the one that encountered a put option buy signal earlier this week and its price decline appears supportive of that. It is up 100.5% since the Quick-term Indicant signaled buy on August 3, 2005. It is annualizing at 36.3%. Its Force Vector is wandering in a pitiful configuration. This fund could fall to bearish yellow, which could be an excellent buy point for those who are getting in late. Rest assured if the CPI continues to rise, this fund will be holding leading the way.

LETF#14-Long Government  - This fund is down 3.0% since the Quick-term Indicant signaled buy on April 7, 2008. This fund has little volatility. It is mildly contrarian to the stock market. If the market turns bearish this fund should perform okay. Keep in mind this fund has little movement in price, while it also is stable and safe in bear markets.

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

Divergence versus Convergence

The market has enjoyed a combination of bullish convergence and divergence in six of the past seven weeks. Last week enjoyed bullish divergence. Nearly all sectors were bullish with the exception of precious metals and a few other commodities.  The energy sector was dynamically bearish and thus the reason for divergent performance. Much of that bearishness was due to the expectation of dollar strengthening.

Indicant Conclusion

As stated the past two weeks, it is unlikely the stock market’s recent bullish cycle will enjoy sustainability. However, the Quick-term bullish cycle is strong and a bearish response, which is expected, may not flip it back into deep bearish cycles. Configurations are shifting from recent normalcy and thus somewhat of a waiting game for those configurations to solidify into obviating positions are now in play.

As stated last week, severe bearishness is expected in 2009, as the stock market is expected to conform to historical standards. New political leadership will then be in office and rest assured their focus for economic well-being will not be until 2010, the mid-term election year. Social policies will be implemented at that time and depress capitalistic enjoyment.

Keep up with the daily stock market report as the Quick-term attributes can shift quickly.

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 

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

04/27/08

April 20, 2008 Indicant Weekly Stock Market Report

Volume 04, Issue 03 ISSN 1526 6516 © The Indicant Stock Market Report

This Week’s Report

Is Recent Bullish Behavior Sustainable – Part 3?

As stated last week, the answer was “no.” The bullish cycle now underway remains elusive in answering the question of bullish sustainability with obviating support. Although the Mid-term Indicant’s attributes support bullish behavior, several Quick-term and Short-term attributes remain mixed. Many of those Quick-term and Short-term attributes are discussed later in this report.