August 29, 2004 Indicant.Net Weekly Update

Volume 8, Issue 5 ISSN 1526 6516 © The Indicant Stock Market Report

Weekly Report Abbreviated this Week

There is only so much time available to read. This week’s report is abbreviated to direct your attention to the new Mid-term Indicant model. It will take about as much time to read as the normal weekly report. The reason for this temporary modification to this weekly report is due to as deep bearish seasonality, which is starting this week. The links to this tour are at the conclusion of this report.

Since 1900, the market has fallen consistently in certain weeks of the years. Specifically, the market typically turns bearish this coming week for about seven weeks or so. In the last 104 years, it has turned bearish fifty-six times. These are the only weeks in the year that express such a high degree of bearishness over the 104-year period. The average DJIA performance during this deep bearish period since 1900 is down 1.4%.

No other weekly series in the 104 aggregate calendar years expresses an average loss. $10,000 invested only during these weeks since 1900 would be down to only $1,509. Investing $10,000 in the remaining weeks of the year would amount to over $20,000,000 while buying and holding since 1900 would be around $1,500,000. This is why we refer to it as deep bearish seasonality.

As previously stated some members of the press saw this when we tested displaying on the open internet a few weeks ago for a few minutes. Although the press cannot do anything publicly at this time, as it is a registered copyright and patent pending, we feel we should share with our members immediately. It is apparent we want you to focus on this.

The MTI-RYS model means Mid-term Indicant-Red-Yellow-Seasonal model. The Indicant is constantly researching for the perfect model. To keep things straight we name our models, much like automotive people name their cars.

Some of you have inquired about the Red and Yellow curves. We are paranoid about proprietary information. The phenomenon commonality works for profit in business, but it works against stock market advice. There is a threshold or critical mass of investors who must practice different tactics and strategies. Once that threshold is breeched, their models will not work. The Stock Trader’s Almanac has been providing market nuances for several years. The authors point out that once these nuances become popular, they quit working. We refer to that as the phenomenon of commonality.

The mathematical modeling employed by Indicant models is intrinsic in that it attempts to measure the emotion of the market. Mechanically, it employs a combination of differential equations and linear programming. The MTI-RYS model computes the red curve with an objective function that finds market’s peaks while minimizing the number of interactions the market would have with that curve. The number of interactions and the value of the Red curve is optimized given a set of various constraints. The modeling includes, as a constraint, the maximum number of members that can be allowed. This has proven difficult because several members are banks, institutions, mutual fund managers, brokerage firms, financial planners, and competitors. The Indicant is marketed to individual investors, but has no way to validate who is a member. The Indicant will not mass market because of the principles inherent in the phenomenon of commonality. The Indicant, by policy, cannot divulge mathematical modeling or details regarding heuristics to anyone. The Indicant spends the majority of its resources into research and is able to share the results of that research with a few people.

You can tell the yellow curve has been modified significantly with an objective function attempting to locate “near market bottoms” of secular bears and gentle lateral market behavior with significant breadth. The combination of our efforts to date have yielded over $30,000,000 on a 1900 $10,000 investment against buy and hold of less than $2,000,000. The MTI-RYS outperforms buy and hold by over 2,000% since 1900. As we have earlier communicated, we expect to release a Quick-term model for stocks and exchange traded funds next year that should perform even better.

As you take the tour, you will notice deep bearish seasonality does not always turn south (bearish). You will notice the charts contain two white colored curves and two pink curves within each year. The second white curve you see in any year represents deep bearish seasonality. You will also see that it sometimes expresses bullish behavior. But, keep in mind over a 104 year period, investments in blue chips in that time period loses money.  Specifically, forty-eight times the market moved north during deep bearish seasonality.

The MTI-RYS model continued to signal bull if the incumbent signal was bull, regardless deep bearish seasonality. Right now, the incumbent signal is bull for all the major indices except the NASDAQ and NASDAQ100. The NASDAQ tour will be made available to you in a few weeks.

Some of you recall the Indicant signaled sell for some stocks about this time a year ago to lock in some profits from the October-November 2002 buying spree. However, this was more a case of Indicant nervousness as the Mid-term Bull shot up another 1.8% during bearish seasonality last year. That was an aberration that helped us enjoy the current bull market we have been enjoying since October 2002.

Do not be surprised with bearish expressions in the next few weeks. The various Indicant models are not providing any attributes that favor bullish expressions. That does not necessarily mean the market is headed deeply to the south. Even if the market does move south, we still have the election year phenomenon working in favor of a bullish response in a few weeks. You will notice from the tour that does not always happen. If it does not happen this year, keep in mind several stocks already have avoid signals while others will receive sell signals in the event the model signals bear. Also, the Quick-term Indicant will advise us if the market develops attributes favorable for bullish expressions.

Many of the recent buy signals may be quickly followed by sell signals. Some of the stocks with buy signals will not fall victim to bearish expressions. Some will continue moving north even if the market decides to turn bearish. That is why you should buy stocks much like a fund manager; own a little bit of several different companies, as opposed to believing you can pick the right one. There are many people, in the investment supply chain, whose only objective is to take your money. Many financial pundits you see on TV do that. If you, as an individual, put a sizeable chunk of money into a single stock, it will not go unnoticed in this type of market. This is not like October-November 2002, where buying stocks was risk free. This is a market expressing uncertainty on low volume and it can go either way and get there in a hurry.

It is important you tour the Dow Jones Industrial Average and the S&P500 as soon as you can. In a few weeks, we will be constructing the next set of trip lines off the currently forming deep bearish cycles. That construction will appear complicated. Please feel free to email your questions. We attempt to answer all emails. Most of you ask great questions and this helps us do a better job clarifying.

It is not important that you understand the details of constructing trip lines. We will do that at the conclusion of the bearish period. The Mid-term Indicant will continue to signal bear, bull, new bear, and new bull every week as it has in the past. That is simple enough, but we know that some of you like to anticipate and it those of you who this issue is addressed to.

The construction of the trip lines sometimes induces an immediate reversal from the current signal. This is quite different from the current Mid-term model where you can anticipate much of the market’s direction by simply looking at the charts. The MTI-RYS has moments of abrupt discrete behavior quite different from the continuum of the current Mid-term Indicant model. Please read on. The links to these two tours are at the bottom of this report. We feel you will be better prepared by reviewing the tours by the time the trip lines are assigned.

Weekly Buy/Sell Summary

The Mid-term Indicant generated eleven buy signals and no sell signals for stocks and funds.

Although there were no sell signals, the Mid-term Indicant is avoiding one-hundred and nine stocks and funds of the 296 tracked by the Indicant. The avoided stocks and funds are down an average of 26.3% since the Mid-term Indicant signaled sell an average of 43.3 weeks ago.

There were only twenty-nine stocks and funds avoided at this time last year. The avoided stocks and funds one year ago were down an average of 8.3% since their respective sell signals an average of 10.5 weeks earlier. This contrasts strongly with the avoided stocks and funds two years ago. On August 30, 2002, the Mid-term Indicant was avoiding sixty-nine stocks and funds that were down an average of 47.9% since their respective sell signals an average of 25.0 weeks earlier.

In addition to the buy signals this weekend, the Mid-term Indicant is currently signaling hold for 176 of the 296 stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 77.0%. That annualizes to 67.1%, which is down from 124.1% reported on June 7, 2003, but up from 50.2% reported over a year ago on February 15, 2003. The Mid-term Indicant has been signaling hold for these 176 stocks and funds for an average of 59.7 weeks.

One year ago, the Mid-term Indicant was holding 259 stocks and funds for an average of 27.1 weeks. They were up 48.2% (annualized at 92.4%). The Mid-term Indicant was signaling hold for 215 stocks and funds two years ago on August 30 2002. They were up by an average of 6.3% (annualized at 45.7%) since their respective buy signals an average of 7.1 weeks earlier. Interestingly, it was about this time two years ago, some stocks and funds had bottomed ahead of the 2002 bear market. The buying spree in October 2002 really began in August 2002.

This paragraph is a repeat from the last several weeks with a few modifications. The current bull market and buying barrage in late 2002 followed the predicted market bottom in 2002. The mid-term presidential election year phenomenon was consistent with history. Even more impressive was how the market synchronized with near perfection with normal seasonality in 2002. The Dow30 found bottom on October 9, 2002 at 7286.27. The NASDAQ found bottom on the same day at 1114.11. 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. Some of you recall the Short-term Indicant Bear for the NASDAQ was the longest in history. It even exceeded the Dow’s 1929-1932 Short-term Indicant Bear in breadth. The good news is that the NASDAQ’s decline did not lead to a depression, which is a clear indication of how little influence the tech stocks have on the economy. Remember, real economic wealth is delivered in only three ways; manufacturing, agriculture, and extraction. All other industries are merely transfer agents of wealth.

This paragraph is repeated from the past several weeks, but it does not hurt to reread it each week during bearish seasonality. You will notice many of the mutual fund buy signals occurred in March 2003. Many of you recall how the market did not synchronize very well with the heart and soul of bullish seasonality from November 2002 through February 2003. After that asynchronous performance in 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 during bearish seasonality during most of 2003. It is unlikely we will enjoy back-to-back asynchronous market behavior with seasonal normalcy in 2004. Bearish expressions on a Mid-term basis in 2004 between May and October should not be surprising. So far, this year has been consistent with normal bearish seasonality. Unfortunately, bearish expressions started ahead of schedule this year.

The second most bullish year along the presidential election cycle is the election year, which is underway in 2004. We are anticipating enjoyment of that as well, but its bullish fervor may not unfold until just before the election this year. The following link will take you to charts that explain this phenomenon, which is currently underway. It is in a “members only” section. This paragraph will repeat throughout this year.

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. So far, we do not expect 2004 to be an exception. If it becomes an exception, the Quick-term Indicant and the other Indicant models will let you know.

Right now, the Mid-term Indicant continues to signal bull. There is more about that later in this report.

Stop Loss Management

The Mid-term Indicant continues recommending a stop loss of 5% because of bearish seasonality. If you are up by 50% or more you may find it advantageous to set your stop-loss at 10% from your current hold position. If you sold a stock on the stop loss and the Indicant continues to signal hold, do not buy the stock unless the Quick-term Indicant is signaling bull. If it continues to run north, do not let that bother you. New opportunities crop up all the time.

Use either a 5% (or 10%) trailing stop loss or the yellow or green values you will find on the tables. 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 8% 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 8% trailing stop loss. If you are up by triple digit amounts and enjoy your ownership of the stock or fund, then use a 15% 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. Very few of them exist in the S&P500 ranks.

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.

Stock and Fund Update

Click the following link to see sorted performance of stocks and funds with hold/avoid signals. In the past, we included them 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. We have changed the display and the download should be much faster.

http://www.indicant.net/Non-Members/Performance/Top-Bot.htm

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 update information is on a single page in the web site. 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

August 22, 2004 Indicant.Net Weekly Update

Volume 8, Issue 4 ISSN 1526 6516 © The Indicant Stock Market Report

Dear Indicant Members:

This Week’s Report

Market Ignoring Current News and Bearish Seasonality

It is not uncommon for the market to ignore current news and events around the world. Sometimes the market seemingly behaves with significant irrationality; but it never does and never will. The market is the ultimate truth to the results of capitalistic efforts. There is no greater truth than an agreed upon price between two investors; the buyer and the seller. As long as no one is holding a gun to the other’s head, then the agreed upon price is the ultimate expression of the true value of the stock.

Last week’s action on the surface appeared irrational. Oil prices approached $50/barrel. A continuation of high oil prices is inflationary. The market does not like inflation. The stock market will eventually move south if the current trend in oil prices does not shift direction away from the north.

The daily reports have been suggesting a technical rally before the end of August. So far, so good. The market moved up nicely last week. If it moves up again this coming week, the technical rally will be more than adequate in the event deep bearish seasonality produces some depth to it this year. The higher the rally goes, more tolerance is available for hold positions.

September is the most bearish month for the stock market. It is the last full month of day light savings time and kids are starting back to school. Distractions are at a maximum in September. Afternoon golf and outside dining are still popular and contribute to a lack of focus. That means the number of potential buyers are not available to participate in the agreed upon price of stocks. Since sellers outnumber buyers, the laws of supply and demand drive prices down.

Strong bull markets have no respect for such seasonal behavior. We saw that last year as the bull showed no respect for seasonal tradition. Strong bulls consistently demonstrate their might at any time of year. Strong bulls do not even show respect for presidential election years, which is historically the second most bullish in the four-year cycle. We do not have a strong bull this year, as we did last year. Although the Mid-term Indicant is still signaling bull for several of the major indices, the bull is old. It does not possess that youthful cockiness and energy that it showed at this time last year.

Strong bears are equally disrespectful of historical standards. They never hesitate letting you know who is in charge, regardless of general expectations. They will gnaw away at the net-worth of those who blindly hold their stocks. Strong bears appear to do this with such pleasure. It seems that strong bears get a kick at watching pundits shake their heads in disbelief.

Right now, there are no strong bears. There are only two Mid-term Indicant bears and they are still young and have little experience in exerting their influence. When young, they are vulnerable to snorting bulls. Right now, the number of bulls outnumbers the number of bears. The bulls have experience but they are relatively old and may not be nimble enough to dodge any aggressive bearish behavior.

Without the obvious dominance of one or the other, this is an extremely tricky time of year. Some of you recall how there were a few sell signals about this time last year that were quickly followed by buy signals. Last year’s sell signals were stimulated by the threat of deep bearish seasonality, which never manifested because of the strength and dominance of the six-month old Mid-term Bull. Weaker stocks fall more quickly and deeply than stronger ones during periods of bearish seasonality.

You will notice a relatively high number of buy signals this weekend. Nineteen buy signals is not actually a big number when compared to the 107 buy signals on October 18, 2002. But nineteen buy signals is a big number for this time of year. This is the time of year when sell signals dominate.

There are a few reasons for these nineteen buy signals. The algorithms contained in the Mid-term Indicant model simply kicked out the word, buy. Our quality checks and systemic reviews confirmed their legitimacy. There is a high likelihood that some of these buy signals will revert to sell signals within a couple of weeks. However, one or two of these buys will hold solid even if deep bearish seasonality exerts itself. That is quite the opposite of the buy signals in October 2002 that were not quickly followed by sell signals. Some of those are still receiving a hold signal.

Some of you recall buy signals were sporadically issued during the bear cycles of 2001 and 2002. Many were quickly followed by sell signals. However, a few of the stocks did very well; some even moving up by double and triple digit amounts. Research at that time would not reveal as to why some performed well and others did not. Sometimes it is just simple human emotion. Sometimes it is just hype. The Indicant does not care why. It simply focuses on holding stocks and funds moving north and avoiding those moving south.

For example, Halliburton (I-Stocks #64) received a buy signal on August 23, 2002, while it was getting negative press about asbestos claims. It got that buy signal well before the war with Iraq began and the corresponding lucrative contracts with the cleanup and support for troops. The press continues to blast away at Halliburton, but the stock continues to hold up well. Although the stock has fallen off lately, it is still up over 100% since that buy signal.

http://www.indicant.net/Members/Updates/MTI-Stks-Indicant%20Sel/S11.htm#64

Several other buy signals were also issued at the time of the Halliburton buy signal. That is why it is important to spread your money around. In this case, big money must have known about the impending war and lucrative contracts well before you did. That buy signal was issued well in advance of “the news.” That buy signal was issued just ahead of deep bearish seasonality and deep into a bear market.

NAS100 #83, Nextel, is another one that is more GNP dependent than Halliburton, which will tend to move parallel to oil prices. Halliburton is one of those stocks that can go up when the market is going down depending on the trend in oil prices. Nextel’s buy signal was issued on August 16, 2002. It is up 233.0% since then. NAS100 #70, Genzyme, is another. It got it current buy signal on August 2, 2002. It is up 147.9% since then. NAS100 #9, Adobe Systems, is up 125.2% since its August 23, 2002 buy signal. Even health destroying Starbucks, NAS100 #40, is up 116.3% since its August 16, 2002 buy signal.

http://www.indicant.net/Members/Updates/MTI-Stks-NAS100/NS14.htm#83

http://www.indicant.net/Members/Updates/MTI-Stks-NAS100/NS12.htm#70

http://www.indicant.net/Members/Updates/MTI-Stks-NAS100/NS02.htm#9

http://www.indicant.net/Members/Updates/MTI-Stks-NAS100/NS07.htm#40

There were several buy signals in August 2002 but there were also many sell signals shortly after those buy signals. As you can see, when a slew of buy signals are issued just ahead of bearish seasonality, do not try to pick the one or two that will do well. Spread the money around. One or two will do well, but some will quickly received sell signals.

Some stocks do not receive sell signals shortly after the buy signals, but their performance disappoints. For example, Dow #19, Minnesota Mining, one of the better blue chips, but certainly spotted with dilettante management. It received its buy signal on August 2, 2002 just ahead of deep bearish seasonality. It is up only 33.9% since then.

http://www.indicant.net/Members/Updates/MTI-Stks-DJIA/DS04.htm#19

Dow #29, Eastman Kodak, is an example of a weak stock. It is a dilettante infested company. It has little chance of effectively competing against their Japanese counterparts. They are focused too much on the numbers and not enough on the processes. They also are typical of “soft” American companies that actually consider social issues and opposed to a strict focus on making their shareholders wealthy. Its last buy signal occurred on May 29, 2003. It is up 14.0% since then. Although this stock may do well, the likelihood of that happening is minimal. It is an old company, lacking in energy and enthusiasm. It is a company that is simply fading away after many generations of success that was built off its great founder.

http://www.indicant.net/Members/Updates/MTI-Stks-DJIA/DS05.htm#29

Last weekend the Indicant introduced a new model. Some of you have read it. As you can see, the MTI-RYS Mid-term Indicant did not signal bear this past weekend for any of the indices. Last week’s bullish behavior moved them safely above their incumbent trip line. This new model will help identify those periods when normal seasonality and other phenomena will be ignored by the market. Also, the Dow’s MTI-RYS model outperforms buy and hold by over 2,000% since 1900. Right now, the MTI-RYS favors holding blue chips, while it suggests the NASDAQ and NASDAQ100 are bears. Keep in mind that some stocks perform very well during bear markets. Most funds follow the market, but stocks march to their own drum beat.

The market is at a tricky point right now. It expressed bullish behavior last week in the face of sour fundamentals, such as rising oil prices and a few more reports about voodoo bookkeeping. It is also staring deep bearish seasonality in the face. The Quick-term Indicant is increasingly demonstrating some robustness in Force Vectors. That also influenced the buy signals this weekend.

Many of you recall the markets intended direction is obvious most of the time through the various Indicant models. However, right now, it is not that obvious, but the odds slightly favor continuing bearish expressions on a Quick-term basis. Do not attempt to anticipate the market, for it is better that you anticipate what actions you will take when the market tips its hand on which way it will go. Right now, the Indicant is suggesting some moderate buying, but keep your finger on the sell signal trigger. September and early October has the maximum potential of introducing long and enduring bear markets. Keep your eye on the daily reports.

Weekly Buy/Sell Summary

The Mid-term Indicant generated nineteen buy signals and no sell signals for stocks and funds.

Although there were no sell signals, the Mid-term Indicant is avoiding one-hundred and twenty stocks and funds of the 296 tracked by the Indicant. The avoided stocks and funds are down an average of 26.3% since the Mid-term Indicant signaled sell an average of 42.2 weeks ago.

There were only thirty-six stocks and funds avoided at this time last year in addition to one sell signal. The avoided stocks and funds one year ago were down an average of 8.4% since their respective sell signals an average of 9.6 weeks earlier. This contrasts strongly with the avoided stocks and funds two years ago. On August 23 2002, the Mid-term Indicant was avoiding sixty-nine stocks and funds that were down an average of 47.3% since their respective sell signals an average of 25.0 weeks earlier.

In addition to the buy signals this weekend, the Mid-term Indicant is currently signaling hold for 157 of the 296 stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 83.0%. That annualizes to 66.0%, which is down from 124.1% reported on June 7, 2003, but up from 50.2% reported over a year ago on February 15, 2003. The Mid-term Indicant has been signaling hold for these 157 stocks and funds for an average of 65.4 weeks.

One year ago, the Mid-term Indicant was holding 231 stocks and funds for an average of 28.3 weeks. They were up 49.5% (annualized at 90.8%). The Mid-term Indicant was signaling hold for only 189 stocks and funds two years ago on August 23, 2002. They were up by an average of 11.4% (annualized at 81.1%) since their respective buy signals an average of 7.3 weeks earlier. Interestingly, it was about this time two years ago, some stocks and funds had bottomed ahead of the 2002 bear market. The buying spree in October 2002 really began in August 2002.

This paragraph is a repeat from the last several weeks with a few modifications. The current bull market and buying barrage in late 2002 followed the predicted market bottom in 2002. The mid-term presidential election year phenomenon was consistent with history. Even more impressive was how the market synchronized with near perfection with normal seasonality in 2002. The Dow30 found bottom on October 9, 2002 at 7286.27. The NASDAQ found bottom on the same day at 1114.11. 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. Some of you recall the Short-term Indicant Bear for the NASDAQ was the longest in history. It even exceeded the Dow’s 1929-1932 Short-term Indicant Bear in breadth. The good news is that the NASDAQ’s decline did not lead to a depression, which is a clear indication of how little influence the tech stocks have on the economy. Remember, real economic wealth is delivered in only three ways; manufacturing, agriculture, and extraction. All other industries are merely transfer agents of wealth.

Google is nothing without the performance of the big three producers of economic wealth.

This paragraph is repeated from the past several weeks, but it does not hurt to reread it each week during bearish seasonality. You will notice many of the mutual fund buy signals occurred in March 2003. Many of you recall how the market did not synchronize very well with the heart and soul of bullish seasonality from November 2002 through February 2003. After that asynchronous performance in 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 during bearish seasonality during most of 2003. It is unlikely we will enjoy back-to-back asynchronous market behavior with seasonal normalcy in 2004. Bearish expressions on a Mid-term basis in 2004 between May and October should not be surprising. So far, this year has been consistent with normal bearish seasonality. Unfortunately, bearish expressions started ahead of schedule this year.

The second most bullish year along the presidential election cycle is the election year, which is underway in 2004. We are anticipating enjoyment of that as well, but its bullish fervor may not unfold until just before the election this year. The following link will take you to charts that explain this phenomenon, which is currently underway. It is in a “members only” section. This paragraph will repeat throughout this year.

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. So far, we do not expect 2004 to be an exception. If it becomes an exception, the Quick-term Indicant and the other Indicant models will let you know.

Right now, the Mid-term Indicant continues to signal bull. There is more about that later in this report.

Stop Loss Management

The Mid-term Indicant continues recommending a stop loss of 5% because of bearish seasonality. If you are up by 50% or more you may find it advantageous to set your stop loss at 10% from your current hold position. If you sold a stock on the stop loss and the Indicant continues to signal hold, do not buy the stock unless the Quick-term Indicant is signaling bull.

Use either a 5% (or 10%) trailing stop loss or the yellow or green values you will find on the tables. 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 8% 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 8% trailing stop loss. If you are up by triple digit amounts and enjoy your ownership of the stock or fund, then use a 15% 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.

Stock and Fund Update

Click the following link to see sorted performance of stocks and funds with hold/avoid signals. In the past, we included them 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. Be patient with this download. It takes a few minutes.

http://www.indicant.net/Non-Members/Performance/Top-Bot.htm

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 update information is on a single page in the web site. 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

Divergence versus Convergence

Commodity related sectors remained stable this past week, while the formerly bullish counter cyclicals fell closer to bearish domains. Nearly all other sectors moved toward bullish domains, including energy, which is now solidly positioned in bullish domains. Even the Internet sector moved up last week, but nowhere near bullish domains. Google management should have waited until late October to issue their IPO, as opposed to now. That cost them a few billion in capitalization. The Internet sector is not friendly right now in addition to bearish seasonality.

Last week introduced directional convergence which is bullish, but domain convergence is still not convincing. As stated earlier in this report, this is the tricky time of year.

Economic Conditions – Inflation, Currency, Interest Rates

As stated last week, oil prices continue to skyrocket. If the current bullish cycle for oil continues to manifest, the economy will soften. So far, Greenspan appears passive on this inflationary threat. But, who is surprised? This is an election year and he will hold off aggressive adjustments until after the election.

The remainder of this section of this report will be updated next weekend.

http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20Econ.htm

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% one-hundred and thirteen weeks ago since the MTI buy signal in April 2001. One-hundred and six weeks ago, it closed up 30.1%. Last week it closed up 103.4%, which is higher than the 75.9% reported fifty-seven weeks ago. The current annualized growth rate since the April 13, 2001 buy signal is 30.4%, which is slightly higher than 23.1% reported fifty-seven weeks ago. This fund is also down considerably since its most recent peak on December 5, 2003 when it was up 117.3%. This fund was up significant last week on the belief of rising inflation.

The Mid-term Indicant signaled buy for the Fidelity Gold Fund #28 this weekend. The last buy/sell cycle was from December 7, 2001 to April 30, 2004 resulted in a 52.7% profit. This fund was also up significantly last week, triggering the buy signal. If Greenspan gets aggressive in his fight against inflation, this fund will most likely not provide the nice profit it did on the last buy/sell cycle.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 102.5% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 50.2%. Vanguard Energy #18, VGENX, is up 45.4% (annualized at 32.5%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 19.3% (annualized at 27.0%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 27.0% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 26.2%. All of these funds were up last week in the face of rising oil prices.

There is more about mutual funds, including contrarian ProFunds Ultra Short, later in this report and the links to the mutual fund tables can be found there.

The Gold Index is up 4.3% since the bull signal six weeks ago. Is this the 1970’s all over again?

As repeatedly stated in this weekly report, gold prices will tumble if terrorism and inflationary threats subside. There is a “perception” that inflationary threats will subside, as demonstrated by the plummeting gold prices of the recent past. Terrorism alerts are again on the rise ahead of the Republican convention.

These funds and the gold and silver index should convey the market’s perception of terrorism, inflation, and the economy. As long as they are in solid hold positions, there remains some pessimism regarding the future of the economy.

http://www.indicant.net/Members/Updates/MTI-Mkts-Index%20Options/I05.htm#25

Quick-term and Short-term Indicant Update

The eight major indices are down 0.2% since the Quick-term Indicant signaled bear on July 21, 2004. The most bearish is the NASDAQ. It is down 1.9%, which is a remarkable improvement from last week when it was down 6.3%. The second most bearish is the NASDAQ100, which is down 1.4% since July 21, 2004.

As stated the past eight weeks, there is little chance of robust bullish expressions on a Quick-term basis. The Quick-term bias remains in favor of the bear, although a technical rally was anticipated before the end of August a few weeks ago.

All eight indices are above the bearish yellow curve, which contrasts with last week when all eight were below it. The bearish yellow curve acted as a ceiling to rising stock prices on the last few encounters. We are now in the midst of the current interaction with bearish yellow. Read your daily reports. Do not be surprised if it acts as a ceiling in the next few days.

All eight Force Vectors are moving north, which is relatively consistent with last week when seven were moving north. Although the early northward movement had no robust expressions, some recent behavior has been slightly robust. All eight are residing in bullish domain, which should dampen bearish ambitions. The Force Vector cycles are mature and should start moving south in a few days. Read your daily reports.

All eight Vector Pressures also remain in bearish domains, but they are moving north under the influence of the Force Vectors. If Vector Pressure approaches bullish domains and then turns back south, deep bearish seasonality will have a much higher probability of manifesting itself this year. The problem is not knowing how much depth there will be at this time. As long as the Mid-term Indicant continues signaling bull, the depth will be shallow. If the Mid-term Indicant signals bear, there will be a much higher probability of a deep bearish expression. However, that would be preceded with a high sell signal volume to protect net worth.

Keep in mind Force Vectors and Vector Pressure are eight dimensional and cannot be plotted. We continue to research methods to convert to two-dimensional arrays so you can see them. About a year ago, one of our members, a Mechanical Engineer, made some suggestions that appear to be promising for plotting. Until then, we will continue to use words to describe them.

Please review the daily reports for more details regarding the Quick-term Indicant.

To view the Quick-term Indicant charts, please click the following hyperlink:

http://www.indicant.net/Members/Updates/STI-Mkts/QT.htm

As stated in daily reports the six weeks ago, the NASDAQ’s Indicant Volume Indicator recent increase with bearish market expressions is ominous. However, a pattern of lethargy continues to emerge. That should dampen some of the recent bearish enthusiasm. Also, there is little support for dynamic bullish behavior with the current lethargic cycle. There is no hint of it rising. Last Friday’s market increase was not supported with significant volume. It was extremely light. That is a non-bullish relationship.

http://www.indicant.net/Members/Updates/STI-Mkts/IVI.htm

The Dow Jones Industrial Index is down0.6% since the Short-term Indicant signaled bear on July 8, 2004. The NASDAQ is down 5.0% since the Short-term Indicant signaled bear on July 8, 2004. Last week the NASDAQ was down over 9.0%. Last week’s technical rally helped reduce the depth of this Short-term Bear.

To view the Short-term Indicant charts, please click the following hyperlink:

http://www.indicant.net/Members/Updates/STI-Mkts/STI.htm

A link to the Dow’s Short-term Indicant table is as follows:

http://www.indicant.net/Non-Members/Tours/STI%20Tour/ST-Table%20DJIA1995-2002.htm

A link to the NASDAQ’s Short-term Indicant table is as follows:

http://www.indicant.net/Non-Members/Tours/STI%20Tour/ST-Table%20NAS1995-2002.htm

Perspectives

As stated last week, the NASDAQ100 Index and NASDAQ are rapidly approaching their breakdown lines. It will be interesting to see what behavior transpires upon contact. In strong bear markets, the market typically plummets on contact. We will monitor this closely in the daily reports. Right now, both indices are just under 5.0% from making contact with their breakdown lines.

To view the Perspective Charts (Quick-term Indicant, please click the following.

http://www.indicant.net/Members/Updates/STI-Mkts/QTP.htm

Refer to the daily reports for more information about the Quick-term Indicant.

For more information about the Quick-term Indicant, refer to last week’s daily reports.

Mid-term Indicant Positions - Major U.S. Market Indices

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

Six of the eight major indices are bulls. They are up an average of 18.7% since the Mid-term Indicant signaled bull an average of 60.4 weeks ago. The Dow Transports is the strongest bull. It is up 36.6% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Jones Industrial Average is up 18.6% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Composite is up 26.1% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Utilities, Dow Transports, and Dow Composite of Sixty-Five stocks are Mid-term Indicant Red Bulls. That provides some comfort against any nasty crashes. The market seldom crashes when any index is a Red Bull. However, all the major indices are in jeopardy of losing their bull status.

The Mid-term Indicant signaled Bear for the NASDAQ and NASDAQ100 on July 23, 2004. They are down 0.6% and 0.6, respectively, since that Mid-term Bear signal. That is a remarkable improvement from last week when they were down about 5.0%.

To view Mid-term Indicant charts for U.S. Market Indices, please click the following link.

http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20MTI-Mkts-US.htm

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

There were no new bull or bear signals last week.

The eight bulls are up an average of 30.2%, annualized at 18.2%. They have been bulls for an average of 86.5 weeks.

The two bears, NASDAQ and NASDAQ100, are down an average of 2.1% since their respective bear signals an average of 5.0 weeks ago.

The MTI-RYS performance is at $32,602,519 against buy and hold performance of $1,538,132 on a 1900 $10,000 investment. The MTI-RYS S&P500 is at $151,301 against buy and hold’s $107,586 on December 31, 1971 $10,000 investment. The MTI-RYS NASDAQ is at $162,506 against buy and hold’s $65,296 on an October 18, 1985 $10,000 investment.

Click the following link to view the charts.

http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20MTI-RYS.htm

Mid-term Indicant Positions - International Markets

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

Sixteen of the twenty-two foreign indexes tracked by the Indicant are Mid-term Bulls. They are up an average of 102.0% since the Mid-term Indicant signaled bull an average of 98.7 weeks ago for an annualized gain of 53.7%, which is less than the 72.9% reported sixty-three weeks ago.

Six indices have been bears for an average of 6.8 weeks. They are down an average of 0.1% since then. The International indices were flat last week.

http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20MTI%20Intl%20Mkts.htm

August 15, 2004 Indicant.Net Weekly Update

Volume 8, Issue 3 ISSN 1526 6516 © The Indicant Stock Market Report

Dear Indicant Members:

This Week’s Report

New Mid-term Indicant Model, MTI-RYS

There is not much difference in the market from the past few weeks. Oil prices continue to rise. That continues to threaten this decade to becoming similar to the 1970’s. It does not matter if the inflationary equivalent of oil is low compared to the 1970’s. The higher price of fuel is sucking money from both the consumer and companies. Spending habits are not hard to change when there is little money left to spend.

Due to little difference in the market, we are preliminarily releasing a new model ahead of schedule. Although we have not completed the new Mid-term Indicant model, referred to as MTI-RYS, we have several reasons for advancing it to you at this time. While testing links to it the DJIA Tour on the open Internet, some members of press viewed it. Therefore, some information about it may be released by the press. Members always get information before the press. So, here it is.

With that, we determined it would be better to reveal it to our members this weekend. This will help your learning curve understand it. However, do not feel that you need to understand it, as the signaling is the same; Bear, Bull, New Bear, and New Bull.

MTI-RYS means Mid-term Indicant-Red, Yellow, Seasonal. The Red and Yellow curves represent mathematical computations that minimize interactions with the indices. That reduces the number of Bull/Bear signals. The Mid-term Indicant uses weekly data. The new model was tested back to 1900. It is currently outperforming the Buy & Hold by over 2,000%. A Buy & Hold investor would now have a little over $1,500,000 on a $10,000 investment in 1900. The MTI-RYS yields over $30,000,000 in the same period for the DJIA. The same model was applied to the other major indices, but they do not go back to 1900. However, the MTI-RYS model performs very well in the other indices as well.

The final reason for releasing the new model a little ahead of schedule was influenced by the stock market. Although it will take some time for you to comprehend the details of the model, you will notice several indices are perilously close to their respective trip lines, which is where Bull and Bear signals are generated.

The NASDAQ and NASDAQ100 Mid-term Indicant –MTI-RYS are already bears. They are the only bears for the older Mid-term Indicant. The other indices are bulls for both the old and new model. Therefore, there are no surprises here.

To view the current updates, click the following link.

http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20MTI-RYS.htm

Since this is the first time you have seen the new model, click the following link to take you on a tour of the DJIA since 1900. Keep in mind some of the verbiage is not complete. You will see that Buy & Hold can generate losses covering over thirty years. To take a tour of the Dow Jones Industrial Average since 1900, click the following link.

http://www.indicant.net/Non-Members/Tours/MTIRYS-Mkts-US/MTIRYS-DJI-0000.htm

We developed this model to facilitate fewer trades as many of our members are aging and wanting to be more conservative in their trading volume. The other models, including the Quick-term Indicant, will continue to updated every day. We are in the process of developing a Quick-term Indicant for stocks. Those of you who like to trade a lot, including options will enjoy that model. It is scheduled to be released next year.

Tours of the other major indices will be released to the website in the next few weeks. We will keep you informed as they are made available to you. Also, as you peruse them, feel free to send us emails about any questions or comments.

Although the Indicant does not officially forecast the market, links to the 1970’s are below:

http://www.indicant.net/Non-Members/Tours/MTIRYS-Mkts-US/MTIRYS-DJI-1972-1976.htm

http://www.indicant.net/Non-Members/Tours/MTIRYS-Mkts-US/MTIRYS-DJI-1976-1980.htm

The Indicant is not suggesting the balance of this decade will look like the 1970’s where tremendous profits or losses were made. It would be fun if the 2000’s were like the 1970’s for us, while the Buy & Hold investor would be biting nails. However, as long as rising oil prices continue to suck money from the economy, it is important to recognize the increasing probability of history repeating itself.

Weekly Buy/Sell Summary

The Mid-term Indicant generated two buy signals and six sell signals for stocks and funds.

In addition to the sell signals, the Mid-term Indicant is avoiding one-hundred and thirty-three stocks and funds of the 296 tracked by the Indicant. The avoided stocks and funds are down an average of 29.1% since the Mid-term Indicant signaled sell an average of 41.4 weeks ago.

There were sixty stocks and funds avoided at this time last year in addition to four sell signals. The avoided stocks and funds one year ago were down an average of 7.1% since their respective sell signals an average of 8.6 weeks earlier. This contrasts strongly with the avoided stocks and funds two years ago. On August 16 2002, the Mid-term Indicant was avoiding one-hundred and two stocks and funds that were down an average of 42.9% since their respective sell signals an average of 18.7 weeks earlier.

In addition to the buy signals this weekend, the Mid-term Indicant is currently signaling hold for 155 of the 296 stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 77.0%. That annualizes to 61.5%, which is down from 124.1% reported on June 7, 2003, but up from 50.2% reported over a year ago on February 15, 2003. The Mid-term Indicant has been signaling hold for these 155 stocks and funds for an average of 65.1 weeks.

One year ago, the Mid-term Indicant was holding 197 stocks and funds for an average of 31.0 weeks. They were up 52.6% (annualized at 88.2%). That contrasts significantly with the Mid-term Indicant signaling hold for only 66 stocks and funds two years ago on August 16, 2002. They were up by an average of 14.4% (annualized at 84.6%) since their respective buy signals an average of 8.9 weeks earlier. Interestingly, it was about this time two years ago, some stocks and funds had bottomed ahead of the 2002 bear market. The buying spree in October 2002 really began in August 2002.

This paragraph is a repeat from last several weeks with a few modifications. The current bull market and buying barrage in late 2002 followed the predicted market bottom in 2002. The mid-term presidential election year phenomenon was consistent with history. Even more impressive was how the market synchronized with near perfection with normal seasonality in 2002. The Dow30 found bottom on October 9, 2002 at 7286.27. The NASDAQ found bottom on the same day at 1114.11. 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. Some of you recall the Short-term Indicant Bear for the NASDAQ was the longest in history. It even exceeded the Dow’s 1929-1932 Short-term Indicant Bear in breadth. The good news is that the NASDAQ’s decline did not lead to a depression, which is a clear indication of how little influence the tech stocks have on the economy. Remember, real economic wealth is delivered in only three ways; manufacturing, agriculture, and extraction. All other industries are merely transfer agents of wealth.

This paragraph is repeated from the past several weeks, but it does not hurt to reread it each week during bearish seasonality. You will notice many of the mutual fund buy signals occurred in March 2003. Many of you recall how the market did not synchronize very well with the heart and soul of bullish seasonality from November 2002 through February 2003. After that asynchronous performance in 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 during bearish seasonality during most of 2003. It is unlikely we will enjoy back-to-back asynchronous market behavior with seasonal normalcy in 2004. Bearish expressions on a Mid-term basis in 2004 between May and October should not be surprising. So far, this year has been consistent with normal bearish seasonality. Unfortunately, bearish expressions started ahead of schedule.

The second most bullish year along the presidential election cycle is the election year, which is underway in 2004. We are anticipating enjoyment of that as well, but its bullish fervor may not unfold until just before the election this year. The following link will take you to charts that explain this phenomenon, which is currently underway. It is in a “members only” section. This paragraph will repeat throughout this year.

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. So far, we do not expect 2004 to be an exception. If it becomes an exception, the Quick-term Indicant and the other Indicant models will let you know.

Right now, the Mid-term Indicant continues to signal bull. There is more about that later in this report.

Stop Loss Management

The Mid-term Indicant continues recommending a stop loss of 5% because of bearish seasonality. If you are up by 50% or more you may find it advantageous to set your stop loss at 10% from your current hold position. If you sold a stock on the stop loss and the Indicant continues to signal hold, do not buy the stock unless the Quick-term Indicant is signaling bull.

Use either a 5% (or 10%) trailing stop loss or the yellow or green values you will find on the tables. 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 8% 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 8% trailing stop loss. If you are up by triple digit amounts and enjoy your ownership of the stock or fund, then use a 15% 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.

Stock and Fund Update

Click the following link to see sorted performance of stocks and funds with hold/avoid signals. In the past, we included them 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. Be patient with this download. It takes a few minutes.

http://www.indicant.net/Non-Members/Performance/Top-Bot.htm

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 update information is on a single page in the web site. 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

Divergence versus Convergence

Nearly all sectors reside in bearish domains, except commodities and counter-cyclicals. Interestingly, the energy sector softened last week in the face of record oil price. Some of that softening ties to the “sell on the news” investing paradigm. Many of the energy stocks in Indicant hold positions were bought two years ago “on the rumor” although there were no rumors.

As stated last week, most sectors requiring robust economic activity are now solidly in bearish domains. Economy dependent sectors are converging deeper into bearish domains. That convergence is bearish for the general stock market. Even energy related sectors declined last week along with the stock market. That is extreme bearish convergence.

Economic Conditions – Inflation, Currency, Interest Rates

Oil prices continue to skyrocket. If the current bullish cycle for oil continues to manifest, the economy will soften. So far, Greenspan appears passive on this inflationary threat. But, who is surprised? This is an election year and he will hold off aggressive adjustments until after the election.

Other than oil, commodities were relatively stable last week. It is interesting that wheat has fallen into bearish domains. The same is true for Reuter U.K. The CRB Bridge Futures even fell into the neutral zone. As stated last week, the CRB Bridge Futures is in the neutral zone for the first time since mid-2003. This is a closely watched inflation indicator by most economists, including Greenspan. Commodities, other than oil, continue to appear they are falling from their most recent cyclical peaks.

As stated the past few weeks, Gold is still a question mark. It is vacillating in the neutral zone. Each Quick-term cyclical peak is lower than the prior one. The configuration suggests a bearish bias in the immediate future.

As stated the past two weeks, the three-month Treasure Bill is moving north from still historically low levels. The same configuration exists in all the other interest rates. The market does not have much experience with increasing cycles from historically low levels. So far, the market seems dispassionate with historically low interest rates.

The U.S. Dollar continues to strengthen on a cyclical basis, but remains weak. The Canadian dollar moved back into the neutral zone this past week from the prior weeks venture into bullish domains.

Overall, economic factors appear relatively stable. There are no robust or dynamic expressions other than the plummeting wheat prices and Reuters U.K. commodity prices. Those two configurations are favorable for any potential bullish aspirations. The other commodities need to follow suit.

http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20Econ.htm

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% one-hundred and twelve weeks ago since the MTI buy signal in April 2001. One-hundred and five weeks ago, it closed up 30.1%. Last week it closed up 94.7%, which is higher than the 75.9% reported fifty-six weeks ago. The current annualized growth rate since the April 13, 2001 buy signal is 28.0%, which is slightly higher than 23.1% reported fifty-six weeks ago. This fund is also down considerably since its most recent peak on December 5, 2003 when it was up 117.3%. This fund was up slightly last week.

The Fidelity Gold Fund #28 is up 2.7% since the Mid-term Indicant signaled sell on April 30, 2004. The last buy/sell cycle was from December 7, 2001 to April 30, 2004 resulted in a 52.7% profit. This fund was also up modestly last week but still receiving the avoid signal from the Mid-term Indicant.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 96.1% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 47.5%. Vanguard Energy #18, VGENX, is up 43.7% (annualized at 31.7%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 15.3% (annualized at 21.9%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 25.6% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 25.4%. All of these funds were up slightly last week.

There is more about mutual funds, including contrarian ProFunds Ultra Short, later in this report and the links to the mutual fund tables can be found there.

The Gold Index is down 4.4% since the bull signal five weeks ago. This bull is only five weeks old and remains vulnerable. It was basically flat last week.

As repeatedly stated in this weekly report, gold prices will tumble if terrorism and inflationary threats subside. There is a “perception” that inflationary threats will subside, as demonstrated by the plummeting gold prices of the recent past. Terrorism alerts are again on the rise ahead of the Republican convention.

These funds and the gold and silver index should convey the market’s perception of terrorism, inflation, and the economy. As long as they are in solid hold positions, there remains some pessimism regarding the future of the economy.

http://www.indicant.net/Members/Updates/MTI-Mkts-Index%20Options/I05.htm#25

Quick-term and Short-term Indicant Update

The eight major indices are down 3.9% since the Quick-term Indicant signaled bear on July 21, 2004. The most bearish is the NASDAQ. It is down 6.3%. The second most bearish is the NASDAQ100, which is down 5.7% since July 21, 2004.

As stated the past seven weeks, there is little chance of robust bullish expressions on a Quick-term basis. The Quick-term bias remains in favor of the bear.

All eight indices remain below the bearish yellow curve. The bearish yellow curve acted as a ceiling to rising stock prices. The next interaction with yellow is not deterministic now. A second interaction with yellow acting as a ceiling will provide the current bear more confidence.

Seven of the eight Force Vectors shifted back to the north last week, but without any robust expressions. All eight are residing in bearish domains, which adds fuel to the increasingly aggressive bear.

All eight Vector Pressures also remain in bearish domains. Six weeks ago, all eight were in bullish domains.

Keep in mind Force Vectors and Vector Pressure are eight dimensional and cannot be plotted. We continue to research methods to convert to two-dimensional arrays so you can see them. About a year ago, one of our members, a Mechanical Engineer, made some suggestions that appear to be promising for plotting. Until then, we will continue to use words to describe them.

Please review the daily reports for more details regarding the Quick-term Indicant.

To view the Quick-term Indicant charts, please click the following hyperlink:

http://www.indicant.net/Members/Updates/STI-Mkts/QT.htm

As stated in daily reports the five weeks ago, the NASDAQ’s Indicant Volume Indicator recent increase with bearish market expressions is ominous. However, a pattern of lethargy is emerging. That should dampen some of the recent bearish enthusiasm.

http://www.indicant.net/Members/Updates/STI-Mkts/IVI.htm

The Dow Jones Industrial Index is down 3.4% since the Short-term Indicant signaled bear on July 8, 2004. The NASDAQ is down 9.2% since the Short-term Indicant signaled bear on July 8, 2004.

To view the Short-term Indicant charts, please click the following hyperlink:

http://www.indicant.net/Members/Updates/STI-Mkts/STI.htm

A link to the Dow’s Short-term Indicant table is as follows:

http://www.indicant.net/Non-Members/Tours/STI%20Tour/ST-Table%20DJIA1995-2002.htm

A link to the NASDAQ’s Short-term Indicant table is as follows:

http://www.indicant.net/Non-Members/Tours/STI%20Tour/ST-Table%20NAS1995-2002.htm

Perspectives

The NASDAQ100 Index and NASDAQ are rapidly approaching their breakdown lines. It will be interesting to see what behavior transpires upon contact. In strong bear markets, the market typically plummets on contact. We will monitor this closely in the daily reports.

To view the Perspective Charts (Quick-term Indicant, please click the following.

http://www.indicant.net/Members/Updates/STI-Mkts/QTP.htm

Refer to the daily reports for more information about the Quick-term Indicant.

For more information about the Quick-term Indicant, refer to last week’s daily reports.

Mid-term Indicant Positions - Major U.S. Market Indices

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

Six of the eight major indices are bulls. They are up an average of 15.3% since the Mid-term Indicant signaled bull an average of 59.4 weeks ago. The Dow Transports is the strongest bull. It is up 31.1% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Jones Industrial Average is up 15.3% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Composite is up 22.5% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Utilities  remains as the lone Mid-term Indicant Red Bull. That provides some comfort against any nasty crashes. The market seldom crashes when any index is a Red Bull. However, all the major indices are in jeopardy of losing their bull status.

Six weeks ago, all eight major indices were Mid-term Red Bulls. Bearish expressions the past six weeks damaged the current Mid-term Bull, which as born on March 22, 2003.

The Mid-term Indicant signaled Bear for the NASDAQ and NASDAQ100 on July 23, 2004. They are down 5.0% and 4.9%, respectively, since that Mid-term Bear signal.

To view Mid-term Indicant charts for U.S. Market Indices, please click the following link.

http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20MTI-Mkts-US.htm

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

There were no new bull or bear signals last week.

Eight of the ten major indices are up an average of 26.0%, annualized at 15.8%. They have been bulls for an average of 85.6 weeks.

The two bears, NASDAQ and NASDAQ100, are down an average of 6.4% since their respective bear signals an average of 4.0 weeks ago.

Click the following link to view the charts.

http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20MTI-RYS.htm

Mid-term Indicant Positions - International Markets

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

Sixteen of the twenty-two foreign indexes tracked by the Indicant are Mid-term Bulls. They are up an average of 102.3% since the Mid-term Indicant signaled bull an average of 97.7 weeks ago for an annualized gain of 54.5%, which is less than the 72.9% reported sixty-two weeks ago.

Six indices have been bears for an average of 5.8 weeks. They are down an average of 1.6% since then. The International indices were flat last week.

http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20MTI%20Intl%20Mkts.htm

August 8, 2004 Indicant.Net Weekly Update

Volume 8, Issue 2 ISSN 1526 6516 © The Indicant Stock Market Report

Dear Indicant Members:

This Week’s Report

The Influence of Bearish Secularity

The last confirmed secular bear market began in February 1966. It ended in August 1982, lasting sixteen plus years. In that sixteen-year period, the DJIA netted a 22% loss. It was not as bad as the previous secular bear market that lasted from September 1929 until June 1949 that fell 58%. That secular bear lasted for almost twenty years.

Mid-term Bull cycles can and do occur in secular bear markets. You enjoyed the Mid-term Bull that originated in March 2003 for the eight major indices. It is still alive for all the indices except the NASDAQ and NASDAQ100. Those two indices’ Mid-term Bulls expired two weeks ago after providing some joy for nearly a year and a half.

The NASDAQ had been in a secular bull since its inception. That secular bull expired in March 2000, which is where the current secular bear was born. The Dow’s most recent secular bull originated in August 1982 and expired in January 2000. It gained 1,409% in that seventeen plus year period. That secular bull had more magnitude than any of prior secular bull. The secular bull from August 1921 through September 1929 increased 497%. The June 1949–February 1966 secular bull increased 516%.

The most powerful secular bull that began in August 1982 was stimulated by the revolutionary counter move against creeping socialism that originated with FDR’s New Deal in the Dirty Thirties that cascaded throughout the economy through the 1970’s. Reagan’s massive tax cuts and a tilt toward supply side economics helped fuel that powerful secular bull market.

Entrepreneurialism increased significantly by the middle 1980’s. Young college graduates were not as intent on going to work for IBM or General Motors like their parents. The youngsters wanted to make their own mark. Those that did join the S&P500 ranks were shocked at the incompetence of their dilettante bosses. Rather than working for the dilettantes and run the risk of being contaminated with stupid thinking, many started their own companies. Others were simply laid off. Fortune 500 companies go through periods of down-sizing before they expire. Many laid off employees were faced with little choice, but to do something on their own.

Keep in mind that only seventy-four of 1957’s S&P500 companies are in business today. That should give you a clear indication of what dilettante management does to large companies. One characteristic that hurts large companies is they typically have to rub elbows with politicians and government bureaucrats. The government tends to tell big companies what they can and cannot do. That interaction between politicians and corporate management contaminates the S&P500 manager. Rather than working sixty to eighty hours a week for their shareholder, they tend to work for legislative agendas. That is never good for the shareholder.

Small businesses are the prime source of employment growth. The big companies tend to shrink in size before becoming extinct. Small businesses contribute to over 80% of employment growth in the U.S. Small business owners typically know their business and work ninety-plus hours a week at it. They do not have time to rub shoulders with politicians. As long as they are small, they do not need to. Many small business owners could grow their businesses but choose not to because they and their employees are happy with the simple life.

Some cannot escape the greed factor and decide to grow. Once they get big, then watch out. The founder and possibly the first generation management team follow operating principles that guide the company to growth and success. That is why the market indexes, such as the S&P600 tend to outpace the larger company indices, such as the S&P500.

Mid-term Indicant bulls will occur during secular bear markets. Even though the NASDAQ’s recent Mid-term Indicant Bull expired a few weeks ago, more will be born and will perform well. Cyclical bulls can last from one to three years in secular bear markets. The most recent NASDAQ Mid-term Bull lasted about a year and a half.

The Mid-term Indicant will continue to spot those cyclical bull/bear cycles. There is no reason to avoid secular bear markets. Money can be made in them, as many of you enjoyed since October 2002. It is not uncommon for investors to lose money in secular bulls and equally not uncommon for investors to make money in secular bears. Right now, the investment climate is a secular bear.

Here are some fundamental reasons why the secular bear market continues. Stock market junk mail is again on the rise. We get several offers every week. Stock market popularity means the crowd is now buying and the crowd will be wrong. When marketing experts decide to promote the stock market “after” some stocks are up by triple digit amounts, that is typically a sign the current Mid-term Bull is about to expire. The stock market will always show no respect for hype. It only respects the substance of hard work and high performance.

CNBC had a guest on Friday evening, just after the market closed. She was promoting that a vote for John Kerry. We will quote her. “The country was founded by expanding the middle class.” The Indicant does not promote any political view or any candidate. We are only interested in what the stock market is doing. It goes up when capitalists are active, optimistic, and spending. It goes down when politicians are influential. The question is, where did this girl get her education?

Economic opportunities provide a forum for increasing numbers of people to join the middle class, but rest assured it was not founded for such purposes. There was no such term, middle class, when the United States was founded. Oh well, she probably got a public education, where more and more money is poured into it by the government with your money and where the quality output has been in general decline for years.

It may not be necessarily bearish for allowing misinformation of a philosophy in the financial media, but that media continues to mislead in specifics, which must be leading them to find another way to “entertain.”

The same program interviewed young people, who suggested that oil companies should be in businesses other than oil. Although not certain if it is the majority of people, but there are big numbers of people who like to tell others what to do. Large oil companies are pretty much dilettante driven. All that will happen to them is when we run out of oil, most of them will go out of business.

If the price of oil proves it is no longer volatile and at permanently high levels, capitalists (individual, hard-working people) will develop and offer alternative energy sources to the extent politicians will not interfere by protecting the employment of those in the oil industry. Politicians will only slow the process for developing alternative sources of energy. In the meantime, for those who like to tell oil companies what to do, better yet, burrow in and put in the 100+ work week to figure out the alternative, finance it, and take it to the market. Henry Ford worked in his garage until mid-night. Today, pundits watch TV and believe the mess they hear. Hard working effort is the requirement and you hardly ever see them on TV. Either they are too busy or simply intimidate the pundits who dominate the news are not invited.

Such news is bearish. They are not reporting progress in production, research and development, and other value-adding tasks. They, for the most part, are attempting to influence how you vote. The best way to vote is to make sure the Congress and the White House are not dominated by the same party. A do-nothing government is bullish for the stock market, much like those great years when Newt Gingrich and Bill Clinton were vetoing each other.

Finally, but more importantly, the secular bear market will have plenty of fuel from voodoo bookkeepers. Belo stock fell 7% on admissions of overstating their circulation figures. They apparently did this to jack up advertising rates to their customers. Although this has no impact on prior earnings, the stock market will not tolerate fiction in any department of a public business. As long as fictional expressions are used to tout company’s position or status, the stock market will not go up. It makes the honest companies numbers suspicious.

Voodoo bookkeeping is done by individuals; not companies. Until the severe criminal penalties are assigned to the voodoo bookkeeper to counter their fiction, the stock market will languish.

Weekly Buy/Sell Summary

The Mid-term Indicant generated one buy signal and five sell signals for stocks.

In addition to the sell signals, the Mid-term Indicant is avoiding one-hundred and thirty stocks and funds of the 296 tracked by the Indicant. The avoided stocks and funds are down an average of 27.8% since the Mid-term Indicant signaled sell an average of 40.5 weeks ago.

There were only thirty-three stocks and funds avoided at this time last year in addition to sixty-two sell signals. The avoided stocks and funds one year ago were down an average of 11.0% since their respective sell signals an average of 15.0 weeks earlier. This contrasts strongly with the avoided stocks and funds two years ago. On August 9, 2002, the Mid-term Indicant was avoiding one-hundred and sixty-eight stocks and funds that were down an average of 37.2% since their respective sell signals an average of 15.5 weeks earlier.

In addition to the buy signal this weekend, the Mid-term Indicant is currently signaling hold for 160 of the 296 stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 75.8%. That annualizes to 61.1%, which is down from 124.1% reported on June 7, 2003, but up from 50.2% reported over a year ago on February 15, 2003. The Mid-term Indicant has been signaling hold for these 160 stocks and funds for an average of 64.5 weeks.

One year ago, the Mid-term Indicant was holding 199 stocks and funds for an average of 30.6 weeks. They were up 48.9% (annualized at 82.9%). That contrasts significantly with the Mid-term Indicant signaling hold for only 51 stocks and funds two years ago on August 9, 2002. They were up by an average of 26.7% since their respective buy signals an average of 19.6 weeks earlier.

This paragraph is a repeat from last several weeks with a few modifications. The current bull market and buying barrage in late 2002 followed the predicted market bottom in 2002. The mid-term presidential election year phenomenon was consistent with history. Even more impressive was how the market synchronized with near perfection with normal seasonality in 2002. The Dow30 found bottom on October 9, 2002 at 7286.27. The NASDAQ found bottom on the same day at 1114.11. 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. Some of you recall the Short-term Indicant Bear for the NASDAQ was the longest in history. It even exceeded the Dow’s 1929-1932 Short-term Indicant Bear in breadth. The good news is that the NASDAQ’s decline did not lead to a depression, which is a clear indication of how little influence the tech stocks have on the economy. Remember, real economic wealth is delivered in only three ways; manufacturing, agriculture, and extraction. All other industries are merely transfer agents of wealth.

This paragraph is repeated from the past several weeks, but it does not hurt to reread it each week during bearish seasonality. You will notice many of the mutual fund buy signals occurred in March 2003. Many of you recall how the market did not synchronize very well with the heart and soul of bullish seasonality from November 2002 through February 2003. After that asynchronous performance in 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 during bearish seasonality during most of 2003. It is unlikely we will enjoy back-to-back asynchronous market behavior with seasonal normalcy in 2004. Bearish expressions on a Mid-term basis in 2004 between May and October should not be surprising. So far, this year has been consistent with normal bearish seasonality. Unfortunately, bearish expressions started ahead of schedule.

The second most bullish year along the presidential election cycle is the election year, which is underway in 2004. We are anticipating enjoyment of that as well, but its bullish fervor may not unfold until just before the election this year. The following link will take you to charts that explain this phenomenon, which is currently underway. It is in a “members only” section. This paragraph will repeat throughout this year.

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. So far, we do not expect 2004 to be an exception. If it becomes an exception, the Quick-term Indicant and the other Indicant models will let you know.

Right now, the Mid-term Indicant continues to signal bull. There is more about that later in this report.

Stop Loss Management

The Mid-term Indicant continues recommending a stop loss of 5% because of bearish seasonality. If you are up by 50% or more you may find it advantageous to set your stop loss at 10% from your current hold position. If you sold a stock on the stop loss and the Indicant continues to signal hold, do not buy the stock unless the Quick-term Indicant is signaling bull.

Use either a 5% (or 10%) trailing stop loss or the yellow or green values you will find on the tables. 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 8% 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 8% trailing stop loss. If you are up by triple digit amounts and enjoy your ownership of the stock or fund, then use a 15% 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.

Stock and Fund Update

Click the following link to see sorted performance of stocks and funds with hold/avoid signals. In the past, we included them 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. Be patient with this download. It takes a few minutes.

http://www.indicant.net/Non-Members/Performance/Top-Bot.htm

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 update information is on a single page in the web site. 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

Divergence versus Convergence

Nearly all sectors reside in bearish domains, except energy and counter-cyclicals. Most sectors requiring robust economic activity are now solidly in bearish domains. Economy dependent sectors are converging deeper into bearish domains. That convergence is bearish for the general stock market. Even energy related sectors declined last week along with the stock market. That is extreme bearish convergence. Utilities were surprisingly strong last week and continue to express bullish behavior, which provides some hope for a timid bear.

Economic Conditions – Inflation, Currency, Interest Rates

Oil prices continue to skyrocket. If the current bullish cycle for oil continues to manifest, the economy will soften. It along with increasing commodity prices will energize Greenspan to accelerate rate hikes. Greenspan, like his predecessors, will sacrifice the economy to defeat inflation.

Reuter U.K. continues to express aggressive bearish behavior. The CRB Bridge Futures continue to remain below its bullish red curve this past week. As stated last week, it is now in the neutral zone for the first time since mid-2003. This is a closely watched inflation indicator by most economists, including Greenspan.

Gold is still a question mark. It is vacillating in the neutral zone. Each Quick-term cyclical peak is lower than the prior one. The configuration suggests a bearish bias in the immediate future.

There is nothing different from last week with respect to commodity prices. Overall, other than the price of oil, most commodity prices have been softening, just as Greenspan and his boss, George W. Bush, are wanting just before the election. However, it is unlikely George W. Bush will be re-elected with $50 oil prices. The American voter generally votes their wallets and bank accounts. If light, the incumbent is voted out.

As stated last week, the three-month Treasure Bill is moving north from still historically low levels. The same configuration exists in all the other interest rates. The market does not have much experience with increasing cycles from historically low levels. So far, the market seems dispassionate with historically low interest rates.

The U.S. Dollar continues to strengthen on a cyclical basis, but still remains weak. The Canadian dollar moved from neutral to bullish last week against its neighbor’s dollar. 

http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20Econ.htm

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% one-hundred and eleven weeks ago since the MTI buy signal in April 2001. One-hundred and four weeks ago, it closed up 30.1%. Last week it closed up 93.3%, which is higher than the 75.9% reported fifty-five weeks ago. The current annualized growth rate since the April 13, 2001 buy signal is 27.7%, which is slightly higher than 23.1% reported fifty-five weeks ago. This fund is also down considerably since its most recent peak on December 5, 2003 when it was up 117.3%. This fund was down slightly last week.

The Fidelity Gold Fund #28 is up 1.6% since the Mid-term Indicant signaled sell on April 30, 2004. The last buy/sell cycle was from December 7, 2001 to April 30, 2004 resulted in a 52.7% profit. This fund was also down modestly last week but still receiving the avoid signal from the Mid-term Indicant.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 95.1% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 47.5%. Vanguard Energy #18, VGENX, is up 42.9% (annualized at 31.6%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 16.5% (annualized at 24.3%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 25.4% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 25.7%. All of these funds were down significantly last week due to the market’s rebound.

There is more about mutual funds later in this report and the links to the mutual fund tables can be found there.

The Gold Index is down 5.6% since the bull signal four weeks ago. This bull is only four weeks old and remains vulnerable. It was basically flat last week. Although the market fell on weak economic news last week, inflation related securities also did because weak economies are not perceived as a stimulant to inflation.

As repeatedly stated in this weekly report, gold prices will tumble if terrorism and inflationary threats subside. There is a “perception” that inflationary threats will subside, as demonstrated by the plummeting gold prices of the recent past.

These funds and the gold and silver index should convey the market’s perception of terrorism, inflation, and the economy. As long as they are in solid hold positions, there remains some pessimism regarding the future of the economy.

http://www.indicant.net/Members/Updates/MTI-Mkts-Index%20Options/I05.htm#25

Quick-term and Short-term Indicant Update

The eight major indices are down 3.7% since the Quick-term Indicant signaled bear on July 21, 2004. The most bearish is the NASDAQ. It is down 5.2%. The second most bearish is the NASDAQ100, which is down 5.1% since July 21, 2004.

As stated the past six weeks, there is little chance of robust bullish expressions on a Quick-term basis. The Quick-term bias remains in favor of the bear.

All eight indices below the bearish yellow curve. The bearish yellow curve acted as a ceiling to rising stock prices. The next interaction with yellow is not deterministic at this point in time. A second interaction with yellow acting as a ceiling will provide the current bear more confidence.

Force Vectors are moving south for all eight major indices. This recent northerly movement is not robust. All eight are residing in bearish domains, which adds fuel to the increasingly aggressive bear.

All eight Vector Pressures also remain in bearish domains. Five weeks ago, all eight were in bullish domains. This reversal is threatening the remaining Mid-term Bulls, which are very near receiving a bear signal.

Keep in mind Force Vectors and Vector Pressure are eight dimensional and cannot be plotted. We continue to research methods to convert to two-dimensional arrays so you can see them. About a year ago, one of our members, a Mechanical Engineer, made some suggestions that appear to be promising for plotting. Until then, we will continue to use words to describe them.

Please review the daily reports for more details regarding the Quick-term Indicant.

To view the Quick-term Indicant charts, please click the following hyperlink:

http://www.indicant.net/Members/Updates/STI-Mkts/QT.htm

As stated in daily reports the past four weeks, the NASDAQ’s Indicant Volume Indicator’s recent increase with bearish market expressions is ominous. Keep you eye on this configuration. Its future expressions can be a tell all about the market’s Quick-term and Mid-term ambitions.

http://www.indicant.net/Members/Updates/STI-Mkts/IVI.htm

The Dow Jones Industrial Index is down 3.5% since the Short-term Indicant signaled bear on July 8, 2004. The NASDAQ is down 8.2% since the Short-term Indicant signaled bear on July 8, 2004.

To view the Short-term Indicant charts, please click the following hyperlink:

http://www.indicant.net/Members/Updates/STI-Mkts/STI.htm

A link to the Dow’s Short-term Indicant table is as follows:

http://www.indicant.net/Non-Members/Tours/STI%20Tour/ST-Table%20DJIA1995-2002.htm

A link to the NASDAQ’s Short-term Indicant table is as follows:

http://www.indicant.net/Non-Members/Tours/STI%20Tour/ST-Table%20NAS1995-2002.htm

Perspectives

There is nothing different to report here. The remainder of this paragraph remains unchanged from the last eleven weeks. As you can see, the major indices have hit cyclical peaks on a Quick-term basis. Look at the charts. It is encouraging the breakdown curves are increasing. That means any potential bearish expressions will begin at a higher magnitude, which solidifies your hold positions.

You can also see that the breakdown curve and the market are headed for a collision course. Contact should be made by early October. Expect a nice sustainable bounce to the north shortly after that collision, as it should harmonize with bullish seasonality. Of course, this is not an official forecast, as the Indicant assesses the Quick-term attributes each and every day the market is open.

To view the Perspective Charts (Quick-term Indicant, please click the following.

http://www.indicant.net/Members/Updates/STI-Mkts/QTP.htm

Refer to the daily reports for more information about the Quick-term Indicant.

For more information about the Quick-term Indicant, refer to last week’s daily reports.

Mid-term Indicant Positions - Major U.S. Market Indices

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

Six of the eight major indices are bulls. They are up an average of 15.4% since the Mid-term Indicant signaled bull an average of 58.4 weeks ago. The Dow Transports is the strongest bull. It is up 31.0% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Jones Industrial Average is up 15.2% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Composite is up 22.5% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Transports lost its Red Bull status last week. The Dow Utilities  remains as the lone Mid-term Indicant Red Bull. That provides some comfort against any nasty crashes. The market seldom crashes when any index is a Red Bull. However, all the major indices are in jeopardy of losing their bull status. The Dow Utilities strengthened its position last week, while the other indices weakened.

Five weeks ago, all eight major indices were Mid-term Red Bulls. Bearish expressions the past six weeks damaged the current Mid-term Bull, which as born on March 22, 2003.

The Mid-term Indicant signaled Bear for the NASDAQ and NASDAQ100 on July 23, 2004. They are down 3.9% and 4.4%, respectively, since that Mid-term Bear signal.

Keep in mind another bearish week will prompt the Mid-term Indicant to signal bear for the remaining six indices with the possible exception of the Dow Utilities.

To view Mid-term Indicant charts for U.S. Market Indices, please click the following link.

http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20MTI-Mkts-US.htm

Mid-term Indicant Positions - International Markets

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

Sixteen of the twenty-two foreign indexes tracked by the Indicant are Mid-term Bulls. They are up an average of 102.2% since the Mid-term Indicant signaled bull an average of 96.7 weeks ago for an annualized gain of 55.0%, which is less than the 72.9% reported sixty-one weeks ago.

Six indices have been bears for an average of 4.8 weeks. They are down an average of 1.7% since then. The International indices were mixed last week with the Mid-term Indicant bulls moving north slightly and the Mid-term Indicant bears moving south about the same.

http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20MTI%20Intl%20Mkts.htm

August 1, 2004 Indicant.Net Weekly Update

Volume 8, Issue 1 ISSN 1526 6516 © The Indicant Stock Market Report

Dear Indicant Members:

This Week’s Report

Deep Bearish Seasonality This Year?

Since 1950, the Dow and S&P500 have lost money, on average, in the month of August. A $10,000 investment in 1950 only in the month of August would net you $8,767 for the Dow and $9,173 for the S&P500, as of 2003. Based on historical standards, August is not the month to invest new money. Last year, we enjoyed an exception to this, as the bull market that originated in October 2002 did not show respect for historical standards. This year, there is a high probability the market will manifest historical standards.

The rolling bi-monthly period of June-July-2004 was down for the Dow, S&P500, and NASDAQ by 0.5%, 1.7%, and a whopping 5.0%, respectively. The markets were down by more than average during this rolling bi-monthly period. That could bode well for a rebound since the Mid-term Bull market still dominates. Rebounds to the north are more common during Mid-term Bulls. The open question is, will the market turn bearish?

The upcoming August-September rolling bi-monthly period is the most bearish for all three indices. A $10,000 investment only in the months of August and September in the Dow since 1950 amounted to only $4,474 as of September 2003. A similar investment in the S&P500 would amount to $5,573. Even with the NASDAQ’s explosive growth since 1970, investing only in the August-September bi-monthly period would amount to only $6,268. The September-October bi-monthly period is the second most bearish for the NASDAQ, which supports continuing bearishness over the next few months.

The market’s recent weakness contrasts with last year’s strong bullish behavior. This supports an increased probability that historical standards will deliver deep bearish seasonality in 2004. However, it should be buffered by the presidential election year phenomenon, which is the second most bullish year on the presidential election cycle.

The Dow is down 3.0% for the year. The NASDAQ is down 5.8% for the year. The S&P500 is down 0.9% so far in 2004. The dilettante infested S&P100 is down 2.4% for the year. The only two indices up for the year are the S&P400 (mid-caps) and the S&P600 (small caps). They are up 0.5% and 3.5% for the year, respectively.

The presidential election year is the second most bullish on the four year cycle. Since the market is bearish for the year, historical standards suggest a rebound before year-end. The last back-to-back bearish presidential election years for the Dow were in 1913 and 1917. The Dow was down 6.0% in the last presidential election year in 2000. This phenomenon favors a bullish response before year-end.

The August-October rolling quarter of the year is the most bearish for the Dow and the S&P500. It is the second most bearish rolling quarter for the NASDAQ. A $10,000 investment since 1950 in only these months amounted to $5,727 and $8,325 as of October 2003. The NASDAQ amounts to only $6,690 in this rolling quarter since 1970.

The market violated these historical standards last year with impressive gains. Although the August-October rolling quarter is the most bearish for the Dow, it is possible to enjoy back-to-back gains in this rolling quarter. Last year, the Dow gained 6.3% in this rolling quarter. The NASDAQ has enjoyed gains in this rolling quarter the past two years. The last time there were three consecutive years of gains in the August-October rolling quarter was in 1994-1996. Since 1970, the NASDAQ has been down 18-times compared to being up 15 times in the August-October rolling quarter.

The July-October rolling third is the second most bearish for the Dow and S&P500, while it is the most bearish for the NASDAQ. The good news is that NASDAQ July was down sharply by 7.8%. The market could stay flat from now until the end of October without violating historical standards for this rolling quarter.

In summary, there is little reason for the market to express bullishness. However, the market shifts direction well before the reasons for the shift becomes well known. That is why most traders lag the shifts. Remember, the market is typically positioned today where it believes fundamentals will be six to nine from now. In late 2000, Dell was reporting year-over-year profit increases in excess of 20%, much like the late 1990’s. However, the market started its nosedive then, ignoring that sort of news. It was focused on 2001 when Dell was reporting record profits in 2000. The market was correct in its assertion that GNP generated profits would not be available to corporate America.

The market continues its attempt to address rising worldwide capitalism, rising record low interest rates, terrorism, and voodoo bookkeeping. Deep bearish seasonality is upon us following a long period of bearish expressions since February 2004. Although the bearish behavior has been more lateral than deep, the concern for deep bearish is always ever-present at this time of year. Market normalcy suggests continuing lateral behavior with a slight bearish bias over the next few months. Strong bullish expressions beginning sometimes in October of this year should follow this period of bearish lethargy if in fact the market continues in bearish mode. The fact that six of the eight major indices are still Mid-term Indicant Bulls supports this prognosis. The market seldom allows crashes from Mid-term Bull configurations. Also, it is common for lengthy bulls to engage in fluttering at the conclusion of long bullish legs. Fluttering means the market will bounce violently around its bullish red curve before shifting to a strong bearish leg or resuming its bullish path.

Weekly Buy/Sell Summary

The Mid-term Indicant generated no buy signals and two sell signals for stocks.

In addition to the sell signals, the Mid-term Indicant is avoiding one-hundred and twenty-nine stocks and funds of the 296 tracked by the Indicant. The avoided stocks and funds are down an average of 13.6% since the Mid-term Indicant signaled sell an average of 21.8 weeks ago.

There were only twenty-seven stocks and funds avoided at this time last year in addition to eight sell signals. The avoided stocks and funds one year ago were down an average of 23.3% since their respective sell signals an average of 27.1 weeks earlier. This contrasts strongly with the avoided stocks and funds two years ago. On August 2, 2002, the Mid-term Indicant was avoiding two-hundred and sixty stocks and funds that were down an average of 32.00% since their respective sell signals an average of 9.3 weeks earlier.

Although there were no buy signals this weekend, the Mid-term Indicant is currently signaling hold for 165 of the 296 stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 82.9%. That annualizes to 68.3%, which is down from 124.1% reported on June 7, 2003, but up from 50.2% reported over a year ago on February 15, 2003. The Mid-term Indicant has been signaling hold for these 165 stocks and funds for an average of 63.2 weeks.

One year ago, the Mid-term Indicant was holding 260 stocks and funds for an average of 27.1 weeks. They were up 44.8% (annualized at 85.9%). That contrasts significantly with the Mid-term Indicant signaling hold for only 21 stocks and funds two years ago on August 2, 2002. They were up by an average of 63.1% since their respective buy signals an average of 50.6 weeks earlier.

This paragraph is a repeat from last several weeks with a few modifications. The current bull market and buying barrage in late 2002 followed the predicted market bottom in 2002. The mid-term presidential election year phenomenon was consistent with history. Even more impressive was how the market synchronized with near perfection with normal seasonality in 2002. The Dow30 found bottom on October 9, 2002 at 7286.27. The NASDAQ found bottom on the same day at 1114.11. 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. Some of you recall the Short-term Indicant Bear for the NASDAQ was the longest in history. It even exceeded the Dow’s 1929-1932 Short-term Indicant Bear in breadth. The good news is that the NASDAQ’s decline did not lead to a depression, which is a clear indication of how little influence the tech stocks have on the economy. Remember, real economic wealth is delivered in only three ways; manufacturing, agriculture, and extraction. All other industries are merely transfer agents of wealth.

This paragraph is repeated from the past several weeks, but it does not hurt to reread it each week during bearish seasonality. You will notice many of the mutual fund buy signals occurred in March 2003. Many of you recall how the market did not synchronize very well with the heart and soul of bullish seasonality from November 2002 through February 2003. After that asynchronous performance in 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 during bearish seasonality during most of 2003. It is unlikely we will enjoy back-to-back asynchronous market behavior with seasonal normalcy in 2004. Bearish expressions on a Mid-term basis in 2004 between May and October should not be surprising. So far, this year has been consistent with normal bearish seasonality. Unfortunately, bearish expressions started ahead of schedule.

The second most bullish year along the presidential election cycle is the election year, which is underway in 2004. We are anticipating enjoyment of that as well, but its bullish fervor may not unfold until just before the election this year. The following link will take you to charts that explain this phenomenon, which is currently underway. It is in a “members only” section. This paragraph will repeat throughout this year.

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. So far, we do not expect 2004 to be an exception. If it becomes an exception, the Quick-term Indicant and the other Indicant models will let you know.

Right now, the Mid-term Indicant continues to signal bull. There is more about that later in this report.

Stop Loss Management

The Mid-term Indicant continues recommending a stop loss of 5% because of bearish seasonality. If you are up by 50% or more you may find it advantageous to set your stop loss at 10% from your current hold position. If you sold a stock on the stop loss and the Indicant continues to signal hold, do not buy the stock unless the Quick-term Indicant is signaling bull.

Use either a 5% (or 10%) trailing stop loss or the yellow or green values you will find on the tables. 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 8% 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 8% trailing stop loss. If you are up by triple digit amounts and enjoy your ownership of the stock or fund, then use a 15% 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.

Stock and Fund Update

Click the following link to see sorted performance of stocks and funds with hold/avoid signals. In the past, we included them 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. Be patient with this download. It takes a few minutes.

http://www.indicant.net/Non-Members/Performance/Top-Bot.htm

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 update information is on a single page in the web site. 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

Divergence versus Convergence

Last weeks rebound stimulated minor convergence in most sectors. However, commodity related sectors also moved north, which does not support bullish aspirations.

As stated two weeks ago, it would not be surprising to see a technical rebound in the next few weeks, as many funds and stocks fell below their long-term blue curve. Typically, there is at least once bounce back to the north before outright bearish dominance. At least the bearish convergence was stymied by last weeks rebound in stock prices. That shows some fight in the remaining Mid-term Bull markets.

Economic Outlook

Although the price of oil continues to skyrocket, other commodities are moving south. Well, one should not say Gold is moving south, as it continues to meander in the neutral zone. But Gold remains below its most recent peak and is below the Red curve.

Reuter U.K. continues to express aggressive bearish behavior. Even the CRB Bridge Futures turned below its bullish red curve this past week. It is now in the neutral zone for the first time since mid-2003. This is a closely watched inflation indicator by most economists, including Greenspan.

Overall, other than the price of oil, most commodity prices have been softening, just as Greenspan and his boss, George W. Bush, are wanting just before the election.

The three-month Treasure Bill is moving north from still historically low levels. This same configuration exists in all the other interest rates. The market does not have much experience with increasing cycles from historically low levels.

The U.S. Dollar continues to strengthen on a cyclical basis, but still remains weak. However, it shows no signs of breaching its recent cyclical peaks. A strengthening dollar could be construed as bullish on the stock market, as foreign capital could re-enter the U.S. markets. Foreign investors would hope for the double profits from a rising U.S. dollar and a bull market. The problem is that the bull market may not accommodate them in the immediate future.

http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20Econ.htm

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% one-hundred and ten weeks ago since the MTI buy signal in April 2001. One-hundred and three weeks ago, it closed up 30.1%. Last week it closed up 93.8%, which is higher than the 75.9% reported fifty-four weeks ago. The current annualized growth rate since the April 13, 2001 buy signal is 28.1%, which is slightly higher than 23.1% reported fifty-four weeks ago. This fund is also down considerably since its most recent peak on December 5, 2003 when it was up 117.3%. This fund was up modestly last week.

The Fidelity Gold Fund #28 is up 2.4% since the Mid-term Indicant signaled sell on April 30, 2004. The last buy/sell cycle was from December 7, 2001 to April 30, 2004 resulted in a 52.7% profit. This fund was also up modestly last week but still receiving the avoid signal.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 107.7% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 54.3%. Vanguard Energy #18, VGENX, is up 48.4% (annualized at 36.2%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 24.4% (annualized at 37.1%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 31.9% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 32.9%. All of these funds were up last week due to the market’s rebound.

There is more about mutual funds later in this report and the links to the mutual fund tables can be found there.

The Gold Index is down 5.3% since the bull signal three weeks ago. This bull is only three weeks old and is very vulnerable. Fundamentally, it should rise if other commodities do not fall. The index was up last week as commodity prices stiffened and have not yet fallen prey to Greenspan’s attack on them.

As repeatedly stated in this weekly report, gold prices will tumble if terrorism and inflationary threats subside. There is a “perception” that inflationary threats will subside, as demonstrated by the plummeting gold prices of the recent past.

These funds and the gold and silver index should convey the market’s perception of terrorism, inflation, and the economy. As long as they are in solid hold positions, there remains some pessimism regarding the future of the economy.

http://www.indicant.net/Members/Updates/MTI-Mkts-Index%20Options/I05.htm#25

Quick-term and Short-term Indicant Update

The eight major indices are up 0.7% since the Quick-term Indicant signaled bear on July 21, 2004. Seven of the eight major indices are up since the bear signal. The only one that is down is the S&P400 index.

As stated the past five weeks, the indices continue to move laterally with little chance of robust bullish expressions on a Quick-term basis. The Quick-term bias remains in favor of the bear.

All eight indices have recently moved above the bearish yellow curve. Last week all eight were below the bearish yellow curve. Battles around bearish can help determine if the yellow curve will act as a ceiling to upward price movement. Now that all eight are above bearish yellow, next week’s performance will determine if yellow is going to be a ceiling.

Force Vectors are moving north for all eight major indices, which was the exact opposite of last weekend when they were moving south.  This recent northerly movement is not robust. Six of the eight Force Vectors reside in bearish domains, adding to a bearish bias.

All eight Vector Pressures are in bearish domains. Four weeks ago, all eight were in bullish domains. Three weeks ago, two were in bearish domains. It is encouraging that seven of the eight Vector Pressures are rising. That adds some fuel to the Mid-term Bull, although weakened, which is battle valiantly to continue its domination.

Keep in mind Force Vectors and Vector Pressure are eight dimensional and cannot be plotted. We continue to research methods to convert to two-dimensional arrays so you can see them. About a year ago, one of our members, a Mechanical Engineer, made some suggestions that appear to be promising for plotting. Until then, we will continue to use words to describe them.

Please review the daily reports for more details regarding the Quick-term Indicant.

To view the Quick-term Indicant charts, please click the following hyperlink:

http://www.indicant.net/Members/Updates/STI-Mkts/QT.htm

As stated in daily reports the past three weeks, the NASDAQ’s Indicant Volume Indicator’s recent increase with bearish market expressions is ominous. Although the market rose last week, the volume on the up days did not match the volume on the down days. If the Indicant Volume Indicator begins to decline, then deep bearish seasonality should be mild.

http://www.indicant.net/Members/Updates/STI-Mkts/IVI.htm

The Dow Jones Industrial Index is down 0.3% since the Short-term Indicant signaled bear on July 8, 2004. The NASDAQ is down 2.5% since the Short-term Indicant signaled bear on July 8, 2004.

To view the Short-term Indicant charts, please click the following hyperlink:

http://www.indicant.net/Members/Updates/STI-Mkts/STI.htm

A link to the Dow’s Short-term Indicant table is as follows:

http://www.indicant.net/Non-Members/Tours/STI%20Tour/ST-Table%20DJIA1995-2002.htm

A link to the NASDAQ’s Short-term Indicant table is as follows:

http://www.indicant.net/Non-Members/Tours/STI%20Tour/ST-Table%20NAS1995-2002.htm

Perspectives

There is nothing different to report here. The remainder of this paragraph remains unchanged from the last ten weeks. As you can see, the major indices have hit cyclical peaks on a Quick-term basis. Look at the charts. It is encouraging the breakdown curves are increasing. That means any potential bearish expressions will begin at a higher magnitude, which solidifies your hold positions.

You can also see that the breakdown curve and the market are headed for a collision course. Contact should be made by early October. Expect a nice sustainable bounce to the north shortly after that collision, as it should harmonize with bullish seasonality.

To view the Perspective Charts (Quick-term Indicant, please click the following.

http://www.indicant.net/Members/Updates/STI-Mkts/QTP.htm

Refer to the daily reports for more information about the Quick-term Indicant.

For more information about the Quick-term Indicant, refer to last week’s daily reports.

Mid-term Indicant Positions - Major U.S. Market Indices

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

Six of the eight major indices are bulls. They are up an average of 18.6% since the Mid-term Indicant signaled bull an average of 57.4 weeks ago. The Dow Transports is the strongest bull. It is up 37.5% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Jones Industrial Average is up 19.0% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Composite is up 26.1% since the Mid-term Indicant signaled bull on March 22, 2003. Only the Transports and Utilities are Mid-term Red Bulls. That provides some comfort against any nasty crashes. The market seldom crashes when any index is a Red Bull.

Four weeks ago, all eight major indices were Mid-term Red Bulls. Bearish expressions the past five weeks destroyed parts of the current Mid-term Bull, which as born on March 22, 2003.

The Mid-term Indicant signaled Bear for the NASDAQ and NASDAQ100 last weekend. Although those two indices rebounded last week, it was not enough to re-signal bull.

To view Mid-term Indicant charts for U.S. Market Indices, please click the following link.

http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20MTI-Mkts-US.htm

Mid-term Indicant Positions - International Markets

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

Sixteen of the twenty-two foreign indexes tracked by the Indicant are Mid-term Bulls. They are up an average of 101.5% since the Mid-term Indicant signaled bull an average of 95.7 weeks ago for an annualized gain of 55.2%, which is less than the 72.9% reported sixty weeks ago.

Six indices have been bears for an average of 3.8 weeks. They are down an average of 0.1% since then. The International indices were flat last week.

http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20MTI%20Intl%20Mkts.htm

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