Aug 28, 2005 Indicant.Net Weekly Update

Volume 08, Issue 04 ISSN 1526 6516 © The Indicant Stock Market Report

Deep Bearish Seasonality Is Nearing – Part III

Deep bearish seasonality begins this week. A $10,000 1900 investment in the Dow30 only during deep bearish seasonality has resulted in loss of over 80%, leaving a balance of $1,509. The average depth of the bearish expressions are only 1.4%. The problem is that most deep bearish moves occur during deep bearish seasonality. The Dow fell last year by 437.20 points or by 4.3% during deep bearish seasonality. That was an above average drop. The Dow moved north by 1.3% during the great bull market of 2003 during deep bearish seasonality. As you can see, deep bearish seasonality cannot kill a burgeoning bull, but it can mutes its ambition somewhat. Deep bearish seasonality is horrendously bearish during bear markets. It is mixed during historical meandering markets. The Quick-term Indicant attributes support bearish tendencies over the next few weeks.

There are some fundamental reasons supporting a bearish bias in the market during the next few weeks. Oil continues bouncing around record setting prices. Interest rates continue to rise. Greenspan talk is increasingly economically bearish. The Mid-term Bull has withstood this with surprising resilience. However, the dog days of summer have historically dealt deathblows to once powerful bulls.

Although the Mid-term Bull has resisted bearish influences, its meandering nature the past year and a half is increasingly exposing an inability to resist bearish desires. The market obviously has no strong commitment for either a bullish or bearish direction. The Quick-term Indicant continues its bias in favor of bearish expressions. However, there has been no gusto offered in support of bearish behavior. That is, until recently.

The Quick-term Indicant continues with mixed attributes, but there is an increasing bearish bias. The weaker index is the S&P100. Click the following link and scroll down to see the S&P100 chart.

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

You can see it approaching its bearish yellow curve. That can invoke a bullish response, but historical performance suggests a bearish victory during deep bearish seasonality.

Although the Quick-term Indicant is covered in more detail in the daily reports, Friday’s bearish behavior resulted in significant events. Only one index is now above its bullish red curve. It is the S&P400 Mid-cap index. All the other indices have fallen at or below their bullish red curves. That buffer of protection against a deep market drop will be lost in the event the S&P400 also succumbs to Quick-term bearish influences. The S&P400 is only 1.4% above its bullish red curve.

If the S&P100 succumbs by falling below bearish yellow, it will drag the other indices with it. Force Vector and Vector Pressure will keep us posted as to the significance of the bearish influence in the event the bear becomes dominant. Read your daily reports.

Weekly Buy/Sell Summary

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

In addition to the sell signals, the Mid-term Indicant is avoiding 90-stocks and funds of the 320 tracked by the Indicant. The avoided stocks and funds are down an average of 9.4% since the Mid-term Indicant signaled sell an average of 20.9-weeks ago.

There were 109-stocks and funds avoided at this time last year. The avoided stocks and funds one year ago were down an average of 26.3% since their respective sell signals an average of 43.3-weeks earlier. Two years ago, on August 30, 2003, the Mid-term Indicant was avoiding only 29-stocks and funds that were down an average of 9.4% since their respective sell signals an average of 10.5-weeks earlier.

In addition to the buy signal, the Mid-term Indicant is signaling hold for 225 of the 320 stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 101.5%. That annualizes to 58.4%. The Mid-term Indicant has been signaling hold for these 225-stocks and funds for an average of 90.3-weeks.

One year ago, the Mid-term Indicant was holding 176-stocks and funds out of the 296 tracked at that time for an average of 59.7-weeks. They were up 77.0% (annualized at 67.1%). The Mid-term Indicant was signaling hold for 259-stocks and funds two years ago on August 30, 2003. They were up by an average of 48.2% (annualized at 92.4%) since their respective buy signals an average of 20.9-weeks earlier.

Secular Market Blend

This section is a repeat from the last several months with a few modifications, reflecting recent secular influences. The current Mid-term 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 to 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. There were 239 buy signals between October 5, 2002 and November 9, 2002 out of the 296 stocks and funds tracked by the Mid-term Indicant.

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 and approached it in magnitude. The good news is that the NASDAQ’s decline did not lead to a depression, which is a clear indication of how little influence 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. The only positive political influence on the economy is to undo its prior damage.

The remainder of this section, Secular Market Blend, is repeated, in part, from the past several months, but it does not hurt to reread it each week. As time progresses and conditions change, there will be modifications to it to maintain a balanced frame of reference.

You will notice many of the mutual fund buy signals occurred in March 2003. Many of you recall how the market did not synchronize with the heart and soul of bullish seasonality from November 2002 through February 2003. After the asynchronous behavior in the November 2002 rolling third of the year, the market turned bullish in March 2003 and again did not synchronize with normal seasonality. The Mid-term Indicant continued signaling bull during bearish seasonality during most of 2003. The market continued moving north during that time, contrary to historical standards. As stated in most of 2004, bearish expressions on a Mid-term basis between May and October 2004 should not be surprising. That is exactly what occurred.

The year, 2004, was consistent with normal bearish seasonality. Unfortunately, bearish expressions started ahead of schedule in 2004. However, the bullish expressions, which solidified in October 2004, synchronized beautifully with historical standards with a bullish outburst. The Quick-term Indicant accurately revealed an early start to bullish seasonality in late 2004.

Bullish seasonality ended on April 30, 2005. The market remains firmly situated into bearish seasonality. The market continues to configure itself to support historical standards by expressing bearish behavior. However, recent bullish spurts have pushed some indices up during this bearish seasonal period. That is expected to change in the upcoming weeks and reinforce the standards of bearish seasonality. As stated the last several weeks in this report, continued meandering behavior is expected to resume in August. That suggested August would be bearish. And that is exactly what happening so far this month. For example, the Dow is down over 300 so far this month.

Although not surprising, 2005 began with unfavorable performance to bullish seasonality standards. The Quick-term Indicant signaled bear in early January 2005. Bearish expressions followed. At first, these bearish expressions were mild, but 29-weeks ago, bearish behavior revealed greater aggression. However, that aggression was muted with several bullish spurts. Those bullish spurts were weak but possessed enough bullish steam to thwart increasing bearish behavior. However, residual components of the prior Quick-term Bull and the constitution of the current Mid-term Bull are exhausted from having to thwart bearish ambition.

The July bullish spurt propelled many stocks to catapult their bullish red curves. That is indeed non-bearish. On the contrary, this is not necessarily bullish. However, it does provide a forum for a relaxed view of your hold positions. Stocks and funds seldom endure deep bearish behavior while they reside above their respective bullish red curves. Also, the most recent bullish spurt shifted the Quick-term Indicant from a bearish bias to nearly neutral. Although, the Quick-term attributes still did not signal bull, the mild bearish bias is reason for continued relaxation with respect to your longer-term hold positions. However, the past three weeks have increased many of the Quick-term attributes to expand support for bearish influences.

All the Quick-term attributes remain biased with bearish tendencies even though the Mid-term Bull continues to demonstrate significant resistance to bearish ambition. As stated the past few weeks, there were some quick-term attributes shifting in support of even more bearish expressions. However, the recent bullish spurts have been strong enough to shift those attributes to neutrality. However, they are again shifting from neutrality to increased bearish bias.

The presidential post election year is, historically, the most bearish year on the four-year presidential election cycle. Like all things, there are exceptions to historical normalcy. As this year progresses, the various Indicant models will advise if 2005 is an exception or normal. So far, this year appears normal; that is bearish. The Quick-term and Short-term Indicant continue signaling bear, as they have been doing since early January 2005. The Mid-term and Long-term Indicant models continue to signal bull. The mid-term and long-term trends exerted their authority over the shorter cycles in the last three weeks of July, while the first three weeks of August demonstrated a mild bearish bias. Fortunately, these safe positions were supported with a bullish spurt during the month of May. June followed with mild bearishness and July concluded with a bullish result. It appears as if August is going to close on a down note.

As previously stated, these bullish spurts and the uncharacteristic bullish May and July added continued life to the Mid-term Bulls. This has deferred massive selling that will unfold at the expiration of these Mid-term Bull markets. As stated the past few months, do not be surprised with increased bearish behavior over the next few weeks. Of course, you have noticed bearish dominance the past four weeks.

http://www.indicant.net/Members/Updates/History-Seasonal/HS0001.htm

Make certain you read the entire pages on the above link. You will see there are exceptions.

Stop Loss Management

The Mid-term Indicant continues recommending a stop loss of 5% because of the Quick-term Bear. This stop loss was changed from 8% several month’s ago because of the expectation of increased bearish influence and at best, meandering behavior.

If you are up by 50% or more, you may find it advantageous to set your stop-loss at 15% 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 a 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 10% trailing, whichever is greater. If your stock or fund is above the red curve and you bought at the Mid-term Buy signal, you should use the 10% trailing stop loss. If you are up by triple digit amounts and enjoy your ownership of the stock or fund, then use a 20% trailing stop loss or the slow moving blue curve price. If you really enjoy holding the stock, keep a close eye on the management. Dilettante managers have a way of worming into the business. Watch closely for cronyism and lazy-hazy management dialog. Keep your eye on lavish spending and excessive concerns about social issues. Those types are more interested in burning your money for their pleasures, as opposed to making you money. High performing companies remain focused on honoring the investments made by their shareholders.

In a few instances, you will see a hold signal for a stock or fund that is down from its buy signal or below one of the above conditions for selling. If you are more of a trader than an investor, feel free to buy stocks and funds with those “bearish” attributes. They are configured for a possible rebound, while at the same time, it is important to set the stop losses mentioned in this report. Use the Quick-term Indicant as a guide in your decision-making processes. If the stock price is falling in a Quick-term Bear market, it is not advisable to buy.

Do not short on stocks if they are up from an avoid signal. Stocks go up more often than they go down. Stocks have a tendency to march to their own drumbeat when rising. Some stocks rise and continue to rise in the most severe of bear markets. Short selling opens up an opportunity for the snakes on Wall Street to take everything you own. They can cause a stock to rise at their whim and without any regard to fundamental reason. It usually does not make sense to bet against the sweat and toil of hard-working people. There are some instances where stocks rise during bear markets due to legitimate fundamental reasons. If the market emulates a 1970’s configuration, most stocks will plummet, but energy related stocks will skyrocket. It is unusual that energy has been skyrocketing the past three years, of which two of those years enjoyed bullish market behavior. The coexistence of a bullish energy sector and general equities does not make much fundamental sense, but the underlying economic fundamentals have supported this phenomenon. There is good reason to expect an abandonment of this phenomenon with record setting oil prices and rising interest rates.

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.

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 can be found from a single page at Indicant.Net. Click the below link to that page. You will need your login ID and password.

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

Divergence versus Convergence

The expected bearish response to bullish convergence five weeks ago occurred the past four weeks, but very mildly. There was solid bearish convergence last week. There is an increasing bearish bias due to these bearish convergent configurations.

As stated the past 15-weeks, the Mid-term Bull still has some fight in it. However, it continues expending too much energy in a defensive posture. There is not enough bullish convergence to ignite strong bullish behavior by the major indices.

Economic Conditions – Inflation, Currency, Interest Rates

The U.S. Dollar continues to weaken, but the underlying cyclical configuration suggests a stronger dollar will continue to unfold. As stated the past ten weeks, the U.S. Dollar continues building a base rising from its most recent cyclical minimum. The European Dollar remained in bearish domains for the twelfth consecutive week.

As stated the past eleven weeks, there remains no cyclical shift in direction on the U.S. Dollars recent strengthening. Cyclically, it is still weak, but the cyclical shift in foreign currencies expresses increasing potential for a new trend in the greenbacks strengthening. The continued rise in interest rates, of which no end is in sight, supports continuing strength in the U.S. Dollar.

This paragraph will remain unchanged until such time conditions change. Rising interest rates tend to strengthen the dollar. That will damage export business and eventually hurt the U.S. economy. This is consistent with historical “political management” of the U.S. Economy. In other words, the political community understands power retention is a function of economic health on Election Day. After presidential elections, there is no immediate concern for economic health. That is the case right now. That sort of thing is typically more pronounced in a lame duck term, which is underway.

Commodity prices continue what appears to be a resumption of bullish commitment from already stratospheric levels. This recent movement is dynamic. As stated the last several weeks, the trend in commodity prices will continue north as long as oil prices continue in that direction. The Mid-term Indicant Bull’s resilience in the face of this inflationary threat is indeed impressive. It is only a matter of time before this unrelenting pricing pressure on commodities produces unacceptable inflationary behavior.

This paragraph remains unchanged from the past 37-weeks with a few modifications. Interest rates continue their rise, but still from historically low levels. The stock market is now obviously being bothered by these unfavorable relationships. The bearish bias by the Quick-term Indicant may be an early indication of the market’s intolerance to these unfavorable trends. There is some point where equities will not like the “position” of interest rates if Greenspan continues his northward trek. It is not uncommon to over-cool the economy in post election years, which is now underway.

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 sixty-six weeks ago since the MTI buy signal in April 2001. One-hundred and fifty-nine weeks ago, it closed up 30.1%. Last week it closed up 167.8%, which is higher than the 75.9% reported 110-weeks ago. The current annualized growth rate since the April 13, 2001 buy signal is 38.0%, which is higher than 23.1% reported 110-weeks ago. After falling sharply ten weeks ago, it bounced north the past nine weeks, but endure a slight drop last week.

The Mid-term Indicant signaled by for Fidelity Gold, Fund #28. This fund should do well in the event this market turns into a 1970’s type of market. This fund moved strongly to the south the past two weeks.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 233.6% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 76.0%. Vanguard Energy #18, VGENX, is up 128.0% (annualized at 52.7%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 90.3% (annualized at 51.7%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 99.1% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 48.2%.

These funds should do well even if the market turns extremely bearish. Continue to hold them.

The Mid-term Indicant signaled bull for the Gold/Silver Index.

Quick-term and Short-term Indicant Update

The Quick-term Indicant Bear that was born on January 4, 2005 has now survived for 33.4-weeks. As stated the past several weeks, that is a long period of survival spanning four months of the six months of bullish seasonality. The market is now mired inside bearish seasonality. The most bearish rolling quarter on a historical basis begins in August. Nothing has changed in the past few weeks. Do not be surprised at increased bearish activity in the next few weeks. The impending bearishness will most likely be mild. As stated last week, the market is configured for increased bearishness in the next few days, which occurred last week. Nothing is different. Expect more quick-term bearishness.

The indices continue determining any potential comfort zones around bullish red. As stated the past 14-weeks, such comfort around their respective bullish red curves should not be expected. Fourteen weeks ago all eight indices were above bullish red. Thirteen weeks ago, six were above bullish red. Twelve weeks ago, only three were above bullish red. Six weeks ago, three were above bullish red and three were below bearish yellow. Four weeks ago, all eight were above bullish red. Last week, six were above bullish red. Last Friday, only one index remains above the bullish red curve. As stated last week, the Quick-term is now configuring into supporting increased bearish bias. Nothing is different.

The eight major indices are up by an average of 2.0% since the Quick-term Indicant signaled bear on January 4, 2005. Expect the Quick-term Indicant to be accurate with overall bearish performance by mid September when the market should be down from the January 4, 2005 bear signal.

Read the daily emails for more about the Quick-term Indicant. It is still a Quick-term Bear.

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 last week, the Indicant Volume Indicator has resumed a lethargic pattern. That configuration does not support dynamic bearish behavior, even though the Quick-term Indicant remains biased in favor of bearish expressions. Keep your eye on this indicator as it from time to time obviates the market’s mid-term and quick-term intentions.

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

The Dow is down 0.7% since the Short-term Indicant signaled bear on January 20, 2005. The NASDAQ is up 2.0% since the Short-term Indicant signaled bear on January 11, 2005. Both indices are Short-term Bears.

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

Nothing has changed in the past several weeks. Six of the eight major indices continue to threaten contact with their respective breakdown lines. Contact with them will support increased bearish behavior. As stated last week, the S&P400 and S&P600 discontinued contacting their breakout lines, suggesting non-bullish desires at this time on a quick-term basis. The other indices continue threatening contact with their breakdown lines, which supports a bearish bias. Overall, this meanderer continues to pester desires of rampant bullish or bearish expressions. Please read the daily reports, as this element will offer greater insight in the next few weeks.

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.

The eight major indices are up an average of 29.6% since the Mid-term Indicant signaled bull an average of 96.8-weeks ago. That annualizes to 15.9%. The Dow Utilities is the strongest bull. It is up 68.4% since the Mid-term Indicant signaled bull on August 16, 2003. The Dow Jones Industrial Average is up 22.0% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Composite is up 43.7% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Transports Index is up 62.0% since the Mid-term Indicant bull signal on March 23, 2003.

Four of the eight major indices remain as red bull, which is down by three from four weeks ago and down by two from last week.

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

Mid-term Indicant Positions - International Markets

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

Although there were no new bull signals, twenty-one of the twenty-two foreign indexes tracked by the Indicant are Mid-term Bulls. They are up an average of 121.7% since the Mid-term Indicant signaled bull an average of 127.7-weeks ago for an annualized gain of 50.0%, which is less than the 72.9% reported 123-weeks ago. International indices moved slightly south last week for the second consecutive week. As stated the past eleven weeks, do not be surprised at increased bearish behavior in the next few weeks.

The lone bear is down5.9% since the Mid-term Indicant signaled bear 33.0-weeks ago.

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

Aug 21, 2005 Indicant.Net Weekly Update

Volume 08, Issue 03 ISSN 1526 6516 © The Indicant Stock Market Report

Dear Indicant Members:

This Week’s Report

Deep Bearish Seasonality Is Nearing – Part II

This weeks buy signals, although very few, were technical only as two stocks crossed above their bullish red curves. The Mid-term Indicant had to signal buy. Do not be surprised if those buy signals are reversed to sell signals in the next few weeks. This is because we are entering deep bearish seasonality, which becomes effective week after next.

Deep bearish seasonality lasts for about eight weeks from late August through late October on a historical basis. The Dow fell 437.20 or by 4.3% last year during deep bearish seasonality. Deep bearish seasonality does not have any impact during great bull legs on a Mid-term Indicant basis. For example, the market did not fall in the great bull leg of 2003 or those in the late 1990’s.

We are not enjoying a great bull leg right now, even though the market remains a bull on a Mid-term Indicant basis. As you know, the market has been meandering since early 2004 with the exception of the seasonal bullish move in late 2004. Since the market is meandering, there is an increased probability of deep bearish seasonality exerting its influence.

Supply and demand for stocks have more influence on stock prices than any other parameter. The Indicant Volume Indicator helps identify this. If the Indicant Volume Indicator is rising during bearish expressions, you can expect increased bearish dominance in the market. Right now, the Indicant Volume Indicator is expressing a lethargic pattern. Although the market can swing wildly in either direction on low volume, the underlying trend of bullish or bearish movement can be easily detected during high volume. A falling market on high volume is increasing the supply of stocks and thus depressing their price.

As long as the Indicant Volume Indicator remains lethargic, deep bearish seasonality will not be as influential. The Indicant Volume Indicator rose sharply into a robust cycle in early 2003 obviating the market’s bullish intentions. This was more pronounced by the NASDAQ’s Indicant Volume Indicator. The next robust cycle occurred in late 2004, which paralleled a solid bullish move by the market.

The NASDAQ’s Indicant Volume Indicator has been expressing a lethargic pattern since early 2005. It continues to do so. This lethargic cycle appears to be maturing. That supports a reversal to a robust cycle. If that occurs, the market’s intention will then become obvious on a Mid-term and Quick-term basis.

Deep bearish seasonality in the great bull leg of 2003 was a non-issue. There were very few sell signals during deep bearish seasonality in 2003. The Indicant Volume Indicator continued supporting bullish expressions during 2003’s deep bearish seasonality.

A $10,000 investment in 1900 only during deep bearish seasonality would amount to less than $1,500 as of the end of 2003. Those kind of numbers reveal an obvious seasonal cycle that has been consistent for over 100-years. There has been no deterioration in this pattern in the last 105-years. The Dow has fallen 57-times during deep bearish seasonality and increased 46 times. The problem is the bearish expressions when it does fall are not insignificant.

Keep your eye on the Indicant Volume Indicator. The Indicant Daily Reports will keep you posted on this. If the Indicant Volume Indicator continues a cycle of lethargy, then meandering behavior will continue. Deep bearish seasonality will most likely not be influential. If the Indicant Volume Indicator begins a robust cycle, expect the market to continue in the underlying pattern; bullish or bearish. The odds favor a bearish influence at this time.

Weekly Buy/Sell Summary

The Mid-term Indicant generated two buy signals and four sell signals for stocks and funds. Again, the buy signals were driven by the stock moving above their respective bullish red curves, which is heavily weighted in the buying algorithm. It overrides bearish seasonality and the Quick-term Indicant. As stated the past three weeks, do not be surprised if many of these same securities receive sell signals before the end of September.

In addition to the sell signals, the Mid-term Indicant is avoiding 87-stocks and funds of the 320 tracked by the Indicant. The avoided stocks and funds are down an average of 8.3% since the Mid-term Indicant signaled sell an average of 20.6-weeks ago.

There were 120-stocks and funds avoided at this time last year. The avoided stocks and funds one year ago were down an average of 26.3% since their respective sell signals an average of 42.2-weeks earlier. Two years ago, on August 23, 2003, the Mid-term Indicant was avoiding only 36-stocks and funds that were down an average of 8.4% since their respective sell signals an average of 9.6-weeks earlier.

In addition to the buy signals, the Mid-term Indicant is signaling hold for 227 of the 320 stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 102.3%. That annualizes to 58.7%, which is down from 124.1% reported on June 7, 2003, but up from 50.2% reported over two years ago on February 15, 2003. The Mid-term Indicant has been signaling hold for these 230-stocks and funds for an average of 90.6-weeks.

One year ago, the Mid-term Indicant was holding 157-stocks and funds out of the 296 tracked at that time for an average of 65.4-weeks. They were up 83.0% (annualized at 66.0%). The Mid-term Indicant was signaling hold for 231-stocks and funds two years ago on August 23, 2003. They were up by an average of 49.5% (annualized at 90.8%) since their respective buy signals an average of 28.3-weeks earlier.

Secular Market Blend

This section is a repeat from the last several months with a few modifications, reflecting recent secular influences. The current Mid-term 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 to 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. There were 239 buy signals between October 5, 2002 and November 9, 2002 out of the 296 stocks and funds tracked by the Mid-term Indicant.

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 and approached it in magnitude. The good news is that the NASDAQ’s decline did not lead to a depression, which is a clear indication of how little influence 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. The only positive political influence on the economy is to undo its prior damage.

The remainder of this section, Secular Market Blend, is repeated, in part, from the past several months, but it does not hurt to reread it each week. As time progresses and conditions change, there will be modifications to it to maintain a balanced frame of reference.

You will notice many of the mutual fund buy signals occurred in March 2003. Many of you recall how the market did not synchronize with the heart and soul of bullish seasonality from November 2002 through February 2003. After the asynchronous behavior in the November 2002 rolling third of the year, the market turned bullish in March 2003 and again did not synchronize with normal seasonality. The Mid-term Indicant continued signaling bull during bearish seasonality during most of 2003. The market continued moving north during that time, contrary to historical standards. As stated in most of 2004, bearish expressions on a Mid-term basis between May and October 2004 should not be surprising. That is exactly what occurred.

The year, 2004, was consistent with normal bearish seasonality. Unfortunately, bearish expressions started ahead of schedule in 2004. However, the bullish expressions, which solidified in October 2004, synchronized beautifully with historical standards with a bullish outburst. The Quick-term Indicant accurately revealed an early start to bullish seasonality in late 2004.

Bullish seasonality ended on April 30, 2005. The market remains firmly situated into bearish seasonality. The market continues to configure itself to support historical standards by expressing bearish behavior. However, recent bullish spurts have pushed some indices up during this bearish seasonal period. That is expected to change in the upcoming weeks and reinforce the standards of bearish seasonality. Although May is historically one of the most bearish months, it expressed significant bullish behavior in 2005. That was a bullish spurt based on the Quick-term Indicant attributes. A bullish spurt is a micro-burst that has no sustainability. This is where day traders and herky-jerky market players typically lose their money. June 2005 followed May with bearish behavior. July followed June with uncharacteristic bullish behavior. Continuing meandering behavior is expected to resume in August. As stated in this report since early August, that suggests August will be bearish. And that is exactly what happening so far this month. August’s first two weeks were mildly bearish, but last week, the market revealed its decreasing resistance to bearish ambition.

Although not surprising, 2005 began with unfavorable performance to bullish seasonality standards. The Quick-term Indicant signaled bear in early January 2005. Bearish expressions followed. At first, these bearish expressions were mild, but 28-weeks ago, bearish behavior revealed greater aggression. However, that aggression was muted with several bullish spurts. Those bullish spurts were weak but possessed enough bullish steam to thwart increasing bearish behavior. However, residual components of the prior Quick-term Bull and the constitution of the current Mid-term Bull are exhausted from having to thwart bearish ambition. The bullish spurt in July has positioned the Mid-term Indicant bull to have minimal threats from potential bearish ambitions.

The July bullish spurt propelled many stocks to catapult their bullish red curves. That is indeed non-bearish. On the contrary, this is not necessarily bullish. However, it does provide a forum for a relaxed view of your hold positions. Stocks and funds seldom endure deep bearish behavior while they reside above their respective bullish red curves. Also, the most recent bullish spurt shifted the Quick-term Indicant from a bearish bias to nearly neutral. Although, the Quick-term attributes still did not signal bull, the mild bearish bias is reason for continued relaxation with respect to your longer-term hold positions. However, the past two weeks have increased many of the Quick-term attributes to expand support for bearish influences.

All the Quick-term attributes remain biased with bearish tendencies even though the Mid-term Bull continues to demonstrate significant resistance to bearish ambition. As stated the past few weeks, there were some quick-term attributes shifting in support of even more bearish expressions. However, the recent bullish spurts have been strong enough to shift those attributes to neutrality. However, they are again shifting from neutrality to increased bearish bias.

The presidential post election year is, historically, the most bearish year on the four-year presidential election cycle. Like all things, there are exceptions to historical normalcy. As this year progresses, the various Indicant models will advise if 2005 is an exception or normal. So far, this year appears normal; that is bearish. The Quick-term and Short-term Indicant continue signaling bear, as they have been doing since early January 2005. The Mid-term and Long-term Indicant models continue to signal bull. The mid-term and long-term trends exerted their authority over the shorter cycles in the last three weeks of July, while the first three weeks of August demonstrated a mild bearish bias. Fortunately, these safe positions were supported with a bullish spurt during the month of May. June followed with mild bearishness and July concluded with a bullish result.

As previously stated, these bullish spurts and the uncharacteristic bullish May and July added continued life to the Mid-term Bulls. This has deferred massive selling that will unfold at the expiration of these Mid-term Bull markets. As stated the past few weeks, do not be surprised with increased bearish behavior over the next few weeks. Of course, you have noticed during the past few weeks, the bullish spurt has disallowed bearish behavior. However, this comment, although not completely accurate the past few weeks, will remain until such time it is appropriate to delete it.

http://www.indicant.net/Members/Updates/History-Seasonal/HS0001.htm

Make certain you read the entire pages on the above link. You will see there are exceptions.

Stop Loss Management

The Mid-term Indicant continues recommending a stop loss of 5% because of the Quick-term Bear. This stop loss was changed from 8% several month’s ago because of the expectation of increased bearish influence and at best, meandering behavior.

If you are up by 50% or more, you may find it advantageous to set your stop-loss at 15% 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 a 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 10% trailing, whichever is greater. If your stock or fund is above the red curve and you bought at the Mid-term Buy signal, you should use the 10% trailing stop loss. If you are up by triple digit amounts and enjoy your ownership of the stock or fund, then use a 20% trailing stop loss or the slow moving blue curve price. If you really enjoy holding the stock, keep a close eye on the management. Dilettante managers have a way of worming into the business. Watch closely for cronyism and lazy-hazy management dialog. Keep your eye on lavish spending and excessive concerns about social issues. Those types are more interested in burning your money for their pleasures, as opposed to making you money. High performing companies remain focused on honoring the investments made by their shareholders.

In a few instances, you will see a hold signal for a stock or fund that is down from its buy signal or below one of the above conditions for selling. If you are more of a trader than an investor, feel free to buy stocks and funds with those “bearish” attributes. They are configured for a possible rebound, while at the same time, it is important to set the stop losses mentioned in this report. Use the Quick-term Indicant as a guide in your decision-making processes. If the stock price is falling in a Quick-term Bear market, it is not advisable to buy.

Do not short on stocks if they are up from an avoid signal. Stocks go up more often than they go down. Stocks have a tendency to march to their own drumbeat when rising. Some stocks rise and continue to rise in the most severe of bear markets. Short selling opens up an opportunity for the snakes on Wall Street to take everything you own. They can cause a stock to rise at their whim and without any regard to fundamental reason. It usually does not make sense to bet against the sweat and toil of hard-working people. There are some instances where stocks rise during bear markets due to legitimate fundamental reasons. If the market emulates a 1970’s configuration, most stocks will plummet, but energy related stocks will skyrocket. It is unusual that energy has been skyrocketing the past three years, of which two of those years enjoyed bullish market behavior. The coexistence of a bullish energy sector and general equities does not make much fundamental sense, but the underlying economic fundamentals have supported this phenomenon. There is good reason to expect an abandonment of this phenomenon with record setting oil prices and rising interest rates.

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.

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 can be found from a single page at Indicant.Net. Click the below link to that page. You will need your login ID and password.

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

Divergence versus Convergence

The expected bearish response to bullish convergence four weeks ago occurred the past three weeks, but very mildly. There was solid bearish convergence last week. There is an increasing bearish bias due to these bearish convergent configurations.

As stated the past 14-weeks, the Mid-term Bull still has some fight in it. However, it continues expending too much energy in a defensive posture. There is not enough bullish convergence to ignite strong bullish behavior by the major indices.

Economic Conditions – Inflation, Currency, Interest Rates

The U.S. Dollar continues to weaken, but the underlying cyclical configuration suggests a stronger dollar will continue to unfold. As stated the past nine weeks, the U.S. Dollar continues building a base rising from its most recent cyclical minimum. As stated the last twelve weeks, this is not a Greenspan objective, but a fallout from his primary focus of fending off inflationary threats. The European Dollar remained in bearish domains for the eleventh consecutive week.

As stated the past ten weeks, there remains no cyclical shift in direction on the U.S. Dollars recent strengthening. Cyclically, it is still weak, but the cyclical shift in foreign currencies expresses increasing potential for a new trend in the greenbacks strengthening. The continued rise in interest rates, of which no end is in sight, supports continuing strength in the U.S. Dollar.

This paragraph will remain unchanged until such time conditions change. Rising interest rates tend to strengthen the dollar. That will damage export business and eventually hurt the U.S. economy. This is consistent with historical “political management” of the U.S. Economy. In other words, the political community understands power retention is a function of economic health on Election Day. After presidential elections, there is no immediate concern for economic health. That is the case right now. That sort of thing is typically more pronounced in a lame duck term, which is underway.

Commodity prices continue what appears to be a resumption of bullish commitment from already stratospheric levels. This recent movement is dynamic. As stated the last several weeks, the trend in commodity prices will continue north as long as oil prices continue in that direction. The Mid-term Indicant Bull’s resilience in the face of this inflationary threat is indeed impressive. It is only a matter of time before this unrelenting pricing pressure on commodities produces unacceptable inflationary behavior. There is a single day out there in the future whereby the stock market will let you know it finds commodity prices at unacceptable levels.

This paragraph remains unchanged from the past 36-weeks with a few modifications. Interest rates continue their rise, but still from historically low levels. The stock market is now obviously being bothered by these unfavorable relationships. The bearish bias by the Quick-term Indicant may be an early indication of the market’s intolerance to these unfavorable trends. There is some point where equities will not like the “position” of interest rates if Greenspan continues his northward trek. It is not uncommon to over-cool the economy in post election years, which is now underway.

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 sixty-five weeks ago since the MTI buy signal in April 2001. One-hundred and fifty-eight weeks ago, it closed up 30.1%. Last week it closed up 167.7%, which is higher than the 75.9% reported 109-weeks ago. The current annualized growth rate since the April 13, 2001 buy signal is 38.0%, which is higher than 23.1% reported 109-weeks ago. After falling sharply nine weeks ago, it bounced north the past eight weeks, but again fell sharply this past week.

Fidelity Gold, Fund #28, is up 15.0% since the Mid-term Indicant signaled sell on April 15, 2005. The last buy/sell cycle was short-lived and resulted in a small loss. This fund should do well in the event this market turns into a 1970’s type of market. The Mid-term Indicant is near signaling buy for it, but continues resisting until meandering behavior expires. This fund moved also south last week.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 230.1% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 75.4%. Vanguard Energy #18, VGENX, is up 128.3% (annualized at 53.3%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 90.9% (annualized at 52.6%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 98.8% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 48.4%.

These energy related funds moved south last week after moving sharply to the north in the prior two weeks. These funds should do well even if the market turns extremely bearish. Continue to hold them.

The Gold/Silver Index is up 11.4% since the Mid-term Indicant signaled bear on April 15, 2005. This index also should express bullish behavior with a 1970’s influence on the market. However, the Mid-term Indicant does not forecast the market. The configurations support a bearish influence on precious metals. That should change before the year is out, but until then, wait for the bull signal. This index moved south last week.

Quick-term and Short-term Indicant Update

The Quick-term Indicant Bear that was born on January 4, 2005 has now survived for 32.4-weeks. As stated the past several weeks, that is a long period of survival spanning four months of the six months of bullish seasonality. The market is now mired inside bearish seasonality. The most bearish rolling quarter on a historical basis begins in August. Nothing has changed in the past few weeks. Do not be surprised at increased bearish activity in the next few weeks. The impending bearishness will most likely be mild. The market is configured for increased bearishness in the next few days.

The indices continue determining any potential comfort zones around bullish red. As stated the past 13-weeks, such comfort around their respective bullish red curves should not be expected. Thirteen weeks ago all eight indices were above bullish red. Twelve weeks ago, six were above bullish red. Eleven weeks ago, only three were above bullish red. Five weeks ago, three were above bullish red and three were below bearish yellow. Three weeks ago, all eight were above bullish red for the fourth consecutive week. The past three weeks six of the major indices have enjoyed red bull status. That is a testament to the strength of this Mid-term Bull market. The Quick-term is now configuring into supporting increased bearish bias.

The eight major indices are up by an average of 3.0% since the Quick-term Indicant signaled bear on January 4, 2005. Expect the Quick-term Indicant to be accurate with overall bearish performance by mid September where the market should be down from the January 4, 2005 bear signal.

Read the daily emails for more about the Quick-term Indicant. It is still a Quick-term Bear.

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 last week, the Indicant Volume Indicator has resumed a lethargic pattern. That configuration does not support dynamic bearish behavior, even though the Quick-term Indicant remains biased in favor of bearish expressions. Keep your eye on this indicator as it from time to time obviates the market’s mid-term and quick-term intentions.

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

The Dow is up 0.8% since the Short-term Indicant signaled bear on January 20, 2005. The NASDAQ is up 2.7% since the Short-term Indicant signaled bear on January 11, 2005. Both indices are Short-term Bears.

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

Nothing has changed in the past several weeks. Six of the eight major indices continue to threaten contact with their respective breakdown lines. Contact with them will support increased bearish behavior. As stated last week, the S&P400 and S&P600 discontinued contacting their breakout lines, suggesting non-bullish desires at this time on a quick-term basis. The other indices continue threatening contact with their breakdown lines, which supports a bearish bias. Overall, this meanderer continues to pester desires of rampant bullish or bearish expressions. Please read the daily reports, as this element will offer greater insight in the next few weeks.

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.

The eight major indices are up an average of 30.6% since the Mid-term Indicant signaled bull an average of 95.8-weeks ago. That annualizes to 16.6%. The Dow Utilities is the strongest bull. It is up 66.1% since the Mid-term Indicant signaled bull on August 16, 2003. The Dow Jones Industrial Average is up 23.9% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Composite is up 44.9% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Transports Index is up 64.3% since the Mid-term Indicant bull signal on March 23, 2003.

Six of the eight major indices remain as red bull, which is down by one from three weeks ago and flat from last week. Bullish spurts since the Quick-term Bear signal last January provided support for the longevity of these Mid-term Bulls. The two non red-bull indices are the Dow30 and the S&P100, where dilettante management is more pronounced. The S&P100 is the weakest index at this time with little hope of rebounding in the immediate future.

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

Mid-term Indicant Positions - International Markets

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

Although there were no new bull signals, twenty-one of the twenty-two foreign indexes tracked by the Indicant are Mid-term Bulls. They are up an average of 121.9% since the Mid-term Indicant signaled bull an average of 126.7-weeks ago for an annualized gain of 50.0%, which is less than the 72.9% reported 122-weeks ago. International indices moved slightly south last week for the second consecutive week. As stated the past ten weeks, do not be surprised at increased bearish behavior in the next few weeks.

The lone bear is down 7.6% since the Mid-term Indicant signaled bear 32.0-weeks ago. It is the Chinese market that endures this bear signal. As stated the past several weeks, the Chinese continue cooling their economy. They also recently strengthened their currency. That may dampen the demand for natural resources on a cyclical basis, but the long-term trend is obvious. The Chinese economy will most likely not start heating up again until after the mid-term elections next year.

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

Aug 14, 2005 Indicant.Net Weekly Update

Volume 08, Issue 02 ISSN 1526 6516 © The Indicant Stock Market Report

Dear Indicant Members:

This Week’s Report

Deep Bearish Seasonality Is Nearing

Meandering markets can lull one to sleep. Although life should be enjoyed, remaining alert to threats is important. The market takes delight in surprising those who yawn a lot. Capital markets and true capitalists have no respect to yawners. Both view it as a waste of time and time is money.

All of the major indices are again configuring in what appears to be a cyclical peak. The last time that happened a solid bullish spurt obliterated bearish desires. As we approach deep bearish seasonality, which starts on September 1, do not be surprised if those heroic bullish spurts remain absent.

The buy signals the past few weeks are not performing well, which is not surprising. The Mid-term Indicant never avoids any security that is above bullish red and that is the reason for those recent buy signals. Strong bullish commitment disallows stocks from rising above bullish red and then quickly retreating below the bullish red curve. Many of those non-bullish type configurations were introduced this past week. That highlights the growing influence of the Quick-term Bear.

Fortunately, the meandering market has minimized the impact of bearish desires. Unfortunately, there is an increasing probability sell signals will be generated over the next few weeks. The most vulnerable stocks and funds are those that received buy signals since the Quick-term Bear market began in January 2005.

Many falsely believe the best stocks to buy are those beaten down to low prices. They figure that those stocks are so low they are bound to go up. Bear markets are never friendly to beaten down stocks. The lower the stock is, relative to the major indices, the lower it goes during a bearish cycle. On the other hand, bear markets sometimes have little or no influence on a stock that has risen to new heights. So, if the recent buys were for stocks well off their all time highs, do not be surprised at their sell signals in the next few weeks.

However, there is time for a bullish spurt before deep bearish seasonality arrives on September 1. Such a spurt would minimize sell signals. It could offset the mid and long-term effects of any manifesting deep bearish expression during September.

Keep your eye on the Indicant daily reports. In a few weeks, the Short-term Indicant and Quick-term Indicant will be tracking the top thirty Exchange Traded Funds on a daily basis. This will offer greater perspectives and moneymaking opportunities in the stock market.

Weekly Buy/Sell Summary

The Mid-term Indicant generated one buy signal and three sell signals for stocks and funds. Again, the buy signal was driven by moving above its bullish red curve, which is heavily weighted in the buying algorithm. It overrides bearish seasonality and the Quick-term Indicant. As stated the past two weeks, do not be surprised if many of these same securities receive sell signals before the end of September.

Although there were no sell signals, the Mid-term Indicant is avoiding 86-stocks and funds of the 320 tracked by the Indicant. The avoided stocks and funds are down an average of 17.3% since the Mid-term Indicant signaled sell an average of 20.9-weeks ago.

There were 133-stocks and funds avoided at this time last year. The avoided stocks and funds one year ago were down an average of 29.1% since their respective sell signals an average of 41.4-weeks earlier. Two years ago, on August 16, 2003, the Mid-term Indicant was avoiding only 31-stocks and funds that were down an average of 7.1% since their respective sell signals an average of 8.6-weeks earlier.

In addition to the buy signal, the Mid-term Indicant is signaling hold for 230 of the 320 stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 102.4%. That annualizes to 60.4%, which is down from 124.1% reported on June 7, 2003, but up from 50.2% reported over two years ago on February 15, 2003. The Mid-term Indicant has been signaling hold for these 230-stocks and funds for an average of 88.2-weeks.

One year ago, the Mid-term Indicant was holding 155-stocks and funds out of the 296 tracked at that time for an average of 65.1-weeks. They were up 77.0% (annualized at 61.5%). The Mid-term Indicant was signaling hold for 197-stocks and funds two years ago on August 16, 2003. They were up by an average of 52.6% (annualized at 88.2%) since their respective buy signals an average of 31.0-weeks earlier.

Secular Market Blend

This section is a repeat from the last several months with a few modifications, reflecting recent secular influences. The current Mid-term 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 to 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. There were 239 buy signals between October 5, 2002 and November 9, 2002 out of the 296 stocks and funds tracked by the Mid-term Indicant.

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 and approached it in magnitude. The good news is that the NASDAQ’s decline did not lead to a depression, which is a clear indication of how little influence 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. The only positive political influence on the economy is to undo its prior damage.

The remainder of this section, Secular Market Blend, is repeated, in part, from the past several months, but it does not hurt to reread it each week. As time progresses and conditions change, there will be modifications to it to maintain a balanced frame of reference.

You will notice many of the mutual fund buy signals occurred in March 2003. Many of you recall how the market did not synchronize with the heart and soul of bullish seasonality from November 2002 through February 2003. After the asynchronous behavior in the November 2002 rolling third of the year, the market turned bullish in March 2003 and again did not synchronize with normal seasonality. The Mid-term Indicant continued signaling bull during bearish seasonality during most of 2003. The market continued moving north during that time, contrary to historical standards. As stated in most of 2004, bearish expressions on a Mid-term basis between May and October 2004 should not be surprising. That is exactly what occurred.

The year, 2004, was consistent with normal bearish seasonality. Unfortunately, bearish expressions started ahead of schedule in 2004. However, the bullish expressions, which solidified in October 2004, synchronized beautifully with historical standards with a bullish outburst. The Quick-term Indicant accurately revealed an early start to bullish seasonality in late 2004.

Bullish seasonality ended on April 30, 2005. The market remains firmly situated into bearish seasonality. The market continues to configure itself to support historical standards by expressing bearish behavior. However, recent bullish spurts have pushed some indices up during this bearish seasonal period. That is expected to change in the upcoming weeks and reinforce the standards of bearish seasonality. Although May is historically one of the most bearish months, it expressed significant bullish behavior in 2005. That was a bullish spurt based on the Quick-term Indicant attributes. A bullish spurt is a micro-burst that has no sustainability. This is where day traders and herky-jerky market players typically lose their money. June 2005 followed May with bearish behavior. July followed June with uncharacteristic bullish behavior. Continuing meandering behavior is expected to resume in August. As stated in the last two weekly reports, that suggests August will be bearish. And that is exactly what happening so far this month, but mildly.

Although not surprising, 2005 began with unfavorable performance to bullish seasonality standards. The Quick-term Indicant signaled bear in early January 2005. Bearish expressions followed. At first, these bearish expressions were mild, but 27-weeks ago, bearish behavior revealed greater aggression. However, that aggression was muted with several bullish spurts. Those bullish spurts were weak but possessed enough bullish steam to thwart increasing bearish behavior. However, residual components of the prior Quick-term Bull and the constitution of the current Mid-term Bull are exhausted from having to thwart bearish ambition. The bullish spurt in July has positioned the Mid-term Indicant bull to have minimal threats from potential bearish ambitions.

The July bullish spurt propelled many stocks to catapult their bullish red curves. That is indeed non-bearish. On the contrary, this is not necessarily bullish. However, it does provide a forum for a relaxed view of your hold positions. Stocks and funds seldom endure deep bearish behavior while they reside above their respective bullish red curves. Also, the most recent bullish spurt shifted the Quick-term Indicant from a bearish bias to nearly neutral. Although, the Quick-term attributes still did not signal bull, the mild bearish bias is reason for continued relaxation with respect to your longer-term hold positions.

All the Quick-term attributes remain biased with bearish tendencies even though the Mid-term Bull continues to demonstrate significant resistance to bearish ambition. As stated the past few weeks, there were some quick-term attributes shifting in support of even more bearish expressions. However, the recent bullish spurts have been strong enough to shift those attributes to neutrality. That is when the market typically turns bearish during bearish seasonality. As stated the past few weeks, the Quick-term attributes remain poised in neutrality and that threatens the continuation of the bullish spurt underway. On the other hand, those attributes are not yet encouraging the bear to express its desired dominance. In other words, meandering behavior continues as the underlying market theme. Do not be surprised at increased bearish expressions in the next few weeks. The purpose of these expressions is to merely offset the recent bullish spurts as opposed to becoming an outright bear market. Thus, meandering behavior continues.

The presidential post election year is, historically, the most bearish year on the four-year presidential election cycle. Like all things, there are exceptions to historical normalcy. As this year progresses, the various Indicant models will advise if 2005 is an exception or normal. So far, this year appears normal; that is bearish. The Quick-term and Short-term Indicant continue signaling bear, as they have been doing since early January 2005. The Mid-term and Long-term Indicant models continue to signal bull. The mid-term and long-term trends exerted their authority over the shorter cycles in the last three weeks of July, while the first two weeks of August demonstrated a mild bearish bias. Fortunately, these safe positions were supported with a bullish spurt during the month of May. June followed with mild bearishness and July concluded with a bullish result.

As previously stated, these bullish spurts and the uncharacteristic bullish May and July added continued life to the Mid-term Bulls. This has deferred massive selling that will unfold at the expiration of these Mid-term Bull markets. As stated the past few weeks, do not be surprised with increased bearish behavior over the next few weeks. Of course, you have noticed during the past few weeks, the bullish spurt has disallowed bearish behavior. However, this comment, although not completely accurate the past few weeks, will remain until such time it is appropriate to delete it.

http://www.indicant.net/Members/Updates/History-Seasonal/HS0001.htm

Make certain you read the entire pages on the above link. You will see there are exceptions.

Stop Loss Management

The Mid-term Indicant continues recommending a stop loss of 5% because of the Quick-term Bear. This stop loss was changed from 8% several month’s ago because of the expectation of increased bearish influence and at best, meandering behavior.

If you are up by 50% or more, you may find it advantageous to set your stop-loss at 15% 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 a 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 10% trailing, whichever is greater. If your stock or fund is above the red curve and you bought at the Mid-term Buy signal, you should use the 10% trailing stop loss. If you are up by triple digit amounts and enjoy your ownership of the stock or fund, then use a 20% trailing stop loss or the slow moving blue curve price. If you really enjoy holding the stock, keep a close eye on the management. Dilettante managers have a way of worming into the business. Watch closely for cronyism and lazy-hazy management dialog. Keep your eye on lavish spending and excessive concerns about social issues. Those types are more interested in burning your money for their pleasures, as opposed to making you money. High performing companies remain focused on honoring the investments made by their shareholders.

In a few instances, you will see a hold signal for a stock or fund that is down from its buy signal or below one of the above conditions for selling. If you are more of a trader than an investor, feel free to buy stocks and funds with those “bearish” attributes. They are configured for a possible rebound, while at the same time, it is important to set the stop losses mentioned in this report. Use the Quick-term Indicant as a guide in your decision-making processes. If the stock price is falling in a Quick-term Bear market, it is not advisable to buy.

Do not short on stocks if they are up from an avoid signal. Stocks go up more often than they go down. Stocks have a tendency to march to their own drumbeat when rising. Some stocks rise and continue to rise in the most severe of bear markets. Short selling opens up an opportunity for the snakes on Wall Street to take everything you own. They can cause a stock to rise at their whim and without any regard to fundamental reason. It usually does not make sense to bet against the sweat and toil of hard-working people. There are some instances where stocks rise during bear markets due to legitimate fundamental reasons. If the market emulates a 1970’s configuration, most stocks will plummet, but energy related stocks will skyrocket. It is unusual that energy has been skyrocketing the past three years, of which two of those years enjoyed bullish market behavior. The coexistence of a bullish energy sector and general equities does not make much fundamental sense, but the underlying economic fundamentals have supported this phenomenon. There is good reason to expect an abandonment of this phenomenon with record setting oil prices and rising interest rates.

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.

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 can be found from a single page at Indicant.Net. Click the below link to that page. You will need your login ID and password.

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

Divergence versus Convergence

The expected bearish response to bullish convergence three weeks ago occurred the past two weeks, but very mildly. However, there was no solid bearish convergence the past two weeks. Last week was the first time in over a year, there was no shift in the divergence/convergence algorithm. That supports continuing meandering behavior. There is an increased bearish bias though on a quick to short-term basis in most sectors.

As stated the past 13-weeks, the Mid-term Bull still has some fight in it. However, it continues expending too much energy in a defensive posture. There is not enough bullish convergence to ignite strong bullish behavior by the major indices.

Economic Conditions – Inflation, Currency, Interest Rates

The U.S. Dollar weakened last week, but not enough to indicate a cyclical shift. The current strengthening cycle remains in tact. The Canadian dollar is expressing the greatest resistance to the US dollar’s current cycle of strength.

As stated the past eight weeks, the U.S. Dollar continues building a base rising from its most recent cyclical minimum. As stated the last eleven weeks, this is not a Greenspan objective, but a fallout from his primary focus of fending off inflationary threats. The European Dollar remained in bearish domains for the tenth consecutive week, but last week’s rise is approaching a position of relative neutrality. As stated five weeks ago, the other currencies seem bent on following that pattern of accelerating weakness.

As stated the past nine weeks, there remains no cyclical shift in direction on the U.S. Dollars recent strengthening. Cyclically, it is still weak, but the cyclical shift in foreign currencies expresses increasing potential for a new trend in the greenbacks strengthening. The continued rise in interest rates, of which no end is in sight, supports continuing strength in the U.S. Dollar.

This paragraph will remain unchanged until such time conditions change. Rising interest rates tend to strengthen the dollar. That will damage export business and eventually hurt the U.S. economy. This is consistent with historical “political management” of the U.S. Economy. In other words, the political community understands power retention is a function of economic health on Election Day. After presidential elections, there is no immediate concern for economic health. That is the case right now. That sort of thing is typically more pronounced in a lame duck term, which is underway.

Commodity prices continue what appears to be a resumption of bullish commitment from already stratospheric levels. This recent movement is dynamic. As stated the last several weeks, the trend in commodity prices will continue north as long as oil prices continue in that direction. The Mid-term Indicant Bull’s resilience in the face of this inflationary threat is indeed impressive. It is only a matter of time before this unrelenting pricing pressure on commodities produces unacceptable inflationary behavior. There is a single day out there in the future whereby the stock market will let you know it finds commodity prices at unacceptable levels.

This paragraph remains unchanged from the past 35-weeks with a few modifications. Interest rates continue their rise, but still from historically low levels. The stock market is now obviously being bothered by these unfavorable relationships. The bearish bias by the Quick-term Indicant may be an early indication of the market’s intolerance to these unfavorable trends. There is some point where equities will not like the “position” of interest rates if Greenspan continues his northward trek. It is not uncommon to over-cool the economy in post election years, which is now underway.

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 sixty-four weeks ago since the MTI buy signal in April 2001. One-hundred and fifty-seven weeks ago, it closed up 30.1%. Last week it closed up 177.4%, which is higher than the 75.9% reported 108-weeks ago. The current annualized growth rate since the April 13, 2001 buy signal is 40.4%, which is higher than 23.1% reported 108-weeks ago. After falling sharply eight weeks ago, it bounced north the past seven weeks. This fund moved sharply to the north the last two weeks.

Fidelity Gold, Fund #28, is up 17.9% since the Mid-term Indicant signaled sell on April 15, 2005. The last buy/sell cycle was short-lived and resulted in a small loss. This fund should do well in the event this market turns into a 1970’s type of market. The Mid-term Indicant is near signaling buy for it, but continues resisting until meandering behavior expires. This fund moved also north last week.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 243.1% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 80.2%. Vanguard Energy #18, VGENX, is up 137.1% (annualized at 57.4%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 97.4% (annualized at 57.0%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 106.9% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 52.9%.

These energy related funds have moved sharply to the north the last two weeks, after moving bearishly four weeks ago. These funds should do well even if the market turns extremely bearish. Continue to hold them.

The Gold/Silver Index is up 15.7% since the Mid-term Indicant signaled bear on April 15, 2005. This index also should express bullish behavior with a 1970’s influence on the market. However, the Mid-term Indicant does not forecast the market. The configurations support a bearish influence on precious metals. That should change before the year is out, but until then, wait for the bull signal. This index moved up slightly last week.

Quick-term and Short-term Indicant Update

The Quick-term Indicant Bear that was born on January 4, 2005 has now survived for 31.4-weeks. As stated the past several weeks, that is a long period of survival spanning four months of the six months of bullish seasonality. The market is now mired inside bearish seasonality. The most bearish rolling quarter on a historical basis begins in August. Do not be surprised at increased bearish activity in the next few weeks. The impending bearishness will most likely be mild. The market is not configured for strong bullish movements in the next few days.

The indices continue determining any potential comfort zones around bullish red. As stated the past 12-weeks, such comfort around their respective bullish red curves should not be expected. Twelve weeks ago all eight indices were above bullish red. Eleven weeks ago, six were above bullish red. Ten weeks ago, only three were above bullish red. Four weeks ago, three were above bullish red and three were below bearish yellow. Two weeks ago, all eight were above bullish red for the fourth consecutive week. The past two weeks six of the major indices have enjoyed red bull status. That is a testament to the strength of this Mid-term Bull market. The Quick-term is now configuring into supporting increased bearish bias.

The eight major indices are up by an average of 4.0% since the Quick-term Indicant signaled bear on January 4, 2005. Expect the Quick-term Indicant to be accurate with overall bearish performance by mid September where the market should be down from the January 4, 2005 bear signal.

Read the daily emails for more about the Quick-term Indicant. It is still a Quick-term Bear.

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 last week, the Indicant Volume Indicator has resumed a lethargic pattern. That configuration does not support dynamic bearish behavior, even though the Quick-term Indicant remains biased in favor of bearish expressions. Keep your eye on this indicator as it from time to time obviates the market’s mid-term and quick-term intentions.

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

The Dow is up 1.2% since the Short-term Indicant signaled bear on January 20, 2005. The NASDAQ is up 3.7% since the Short-term Indicant signaled bear on January 11, 2005. Both indices are Short-term Bears.

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

Nothing has changed in the past several weeks. Six of the eight major indices continue to threaten contact with their respective breakdown lines. Contact with them will support increased bearish behavior. However, the S&P400 and S&P600 discontinued contacting their breakout lines, suggesting non-bullish desires at this time on a quick-term basis. The other indices continue threatening contact with their breakdown lines, which supports a bearish bias. Overall, this meanderer continues to pester desires of rampant bullish or bearish expressions. Please read the daily reports, as this element will offer greater insight in the next few weeks.

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.

The eight major indices are up an average of 31.5% since the Mid-term Indicant signaled bull an average of 94.8-weeks ago. That annualizes to 17.4%. The Dow Transports is the strongest bull. It is up 65.6% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Jones Industrial Average is up 24.4% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Composite is up 45.6% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Utilities is up 66.8% since the Mid-term Indicant bull signal on August 16, 2003.

Six of the eight major indices remain as red bull, which is down by one from two weeks ago and flat from last week. Bullish spurts since the Quick-term Bear signal last January provided support for the longevity of these Mid-term Bulls. The two non red-bull indices are the Dow30 and the S&P100, where dilettante management is more pronounced.

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

Mid-term Indicant Positions - International Markets

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

Although there were no new bull signals, twenty-one of the twenty-two foreign indexes tracked by the Indicant are Mid-term Bulls. They are up an average of 122.1% since the Mid-term Indicant signaled bull an average of 125.7-weeks ago for an annualized gain of 50.7%, which is less than the 72.9% reported 121-weeks ago. International indices moved slightly north last week after a slight dip last week. As stated the past nine weeks, do not be surprised at increased bearish behavior in the next few weeks.

The lone bear is down 6.2% since the Mid-term Indicant signaled bear 31.0-weeks ago. It is the Chinese market that endures this bear signal. As stated the past several weeks, the Chinese continue cooling their economy. They also recently strengthened their currency. That may dampen the demand for natural resources on a cyclical basis, but the long-term trend is obvious. The Chinese economy will most likely not start heating up again until after the mid-term elections next year.

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

Aug 07, 2005 Indicant.Net Weekly Update

Volume 08, Issue 01 ISSN 1526 6516 © The Indicant Stock Market Report

Dear Indicant Members:

This Week’s Report

Mid-term Indicant Bulls Remain Strong, but It Flinched Last Week

The Mid-term Indicant Bulls remain strong, but the Quick-term Indicant is expressing an increased bearish bias. The bullish spurt in late July neutralized the Quick-term Indicant’s attributes. That removed the bearish bias and threatened the existence of the Quick-term Bear.

Many underlying securities, ranging from stocks, funds, and exchange traded funds continue to reside above their respective bullish red curves. Several of the major indices are doing the same. These type of configurations justify a relaxed posture with respect to your hold positions. The market rarely crashes from these elevated positions.

The daily reports have been consistently suggesting you should be expecting increased bearish behavior over the next few weeks. This is supported by the Quick-term attributes in addition to historical standards, such as bearish seasonality, deep bearish seasonality, and the normally bearish post presidential election year. This message has been consistently delivered even in the face of impressive bullish spurts in May and again in July.

These anticipated bearish expressions are not meant to cause excessive alarm. As long as the major indices, several stocks, and funds remain above their respective red bullish curves, the anticipated bearish expressions will not be deep.

The immediate purpose of these anticipated bearish expressions are to simply wipe out the gains from the recent bullish spurts. In other words, investments since the beginning of year should have no profit in them after these bullish spurts are purged from the market averages.

It would not be surprising to see many of the buy signals that have been generated since April of this year fall below bullish red. That would not damage your longer term hold positions, but it would frustrate your more recent investments in equities.

If you see increased bearish activity over the next several weeks, do not be too alarmed with respect to the late 2002 early 2003 buy signals. Those investments have generated you significant profit. Even if the market returns your longer term securities to the bullish red position, you are still well ahead of most investors.

The market continues to be mired in its meandering configuration. For that to continue, bearish expressions must follow bullish spurts. That has been the theme for well over a year now and there is nothing on the immediate horizon to suggest any other expectation.

Weekly Buy/Sell Summary

The Mid-term Indicant generated four buy signals and no sell signals for stocks and funds. Again, these buy signals were driven by moving above their bullish red curves, which is heavily weighted in the buying algorithm. It overrides bearish seasonality and the Quick-term Indicant. As stated last week, do not be surprised if many of these same securities receive sell signals before the end of September.

Although there were no sell signals, the Mid-term Indicant is avoiding 87-stocks and funds of the 320 tracked by the Indicant. The avoided stocks and funds are down an average of 17.2% since the Mid-term Indicant signaled sell an average of 19.9-weeks ago.

There were 130-stocks and funds avoided at this time last year. The avoided stocks and funds one year ago were down an average of 27.8% since their respective sell signals an average of 40.5-weeks earlier. Two years ago, on August 9, 2003, the Mid-term Indicant was avoiding only 33-stocks and funds that were down an average of 11.0% since their respective sell signals an average of 15.0-weeks earlier.

In addition to the buy signals, the Mid-term Indicant is signaling hold for 229 of the 320 stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 102.6%. That annualizes to 60.2%, which is down from 124.1% reported on June 7, 2003, but up from 50.2% reported over two years ago on February 15, 2003. The Mid-term Indicant has been signaling hold for these 229-stocks and funds for an average of 89.1-weeks.

One year ago, the Mid-term Indicant was holding 160-stocks and funds out of the 296 tracked at that time for an average of 64.5-weeks. They were up 75.8% (annualized at 61.1%). The Mid-term Indicant was signaling hold for 199-stocks and funds two years ago on August 9, 2003. They were up by an average of 48.9% (annualized at 82.9%) since their respective buy signals an average of 30.6-weeks earlier.

Secular Market Blend

This section is a repeat from the last several months with a few modifications, reflecting recent secular influences. The current Mid-term 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 to 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 and approached it in magnitude. The good news is that the NASDAQ’s decline did not lead to a depression, which is a clear indication of how little influence 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. The only positive political influence on the economy is to undo its prior damage.

The remainder of this section, Secular Market Blend, is repeated, in part, from the past several months, but it does not hurt to reread it each week. As time progresses and conditions change, there will be modifications to it to maintain a balanced frame of reference.

You will notice many of the mutual fund buy signals occurred in March 2003. Many of you recall how the market did not synchronize with the heart and soul of bullish seasonality from November 2002 through February 2003. After the asynchronous behavior in the November 2002 rolling third of the year, the market turned bullish in March 2003 and again did not synchronize with normal seasonality. The Mid-term Indicant continued signaling bull during bearish seasonality during most of 2003. The market continued moving north during that time, contrary to historical standards. As stated in most of 2004, bearish expressions on a Mid-term basis between May and October 2004 should not be surprising. That is exactly what occurred.

The year, 2004, was consistent with normal bearish seasonality. Unfortunately, bearish expressions started ahead of schedule in 2004. However, the bullish expressions, which solidified in October 2004, synchronized beautifully with historical standards with a bullish outburst. The Quick-term Indicant accurately revealed an early start to bullish seasonality in late 2004.

Bullish seasonality ended on April 30, 2005. The market remains firmly situated into bearish seasonality. The market continues to configure itself to support historical standards by expressing bearish behavior. However, recent bullish spurts have pushed some indices up during this bearish seasonal period. That is expected to change in the upcoming weeks and reinforce the standards of bearish seasonality. Although May is historically one of the most bearish months, it expressed significant bullish behavior in 2005. That was a bullish spurt based on the Quick-term Indicant attributes. A bullish spurt is a micro-burst that has no sustainability. This is where day traders and herky-jerky market players typically lose their money. June 2005 followed May with bearish behavior. July followed June with uncharacteristic bullish behavior. Continuing meandering behavior is expected to resume in August. As stated in last week’s report, that suggests August will be bearish. And that is exactly what happened last week.

Although not surprising, 2005 began with unfavorable performance to bullish seasonality standards. The Quick-term Indicant signaled bear in early January 2005. Bearish expressions followed. At first, these bearish expressions were mild, but 26-weeks ago, bearish behavior revealed greater aggression. However, that aggression was muted with several bullish spurts. Those bullish spurts were weak but possessed enough bullish steam to thwart increasing bearish behavior. However, residual components of the prior Quick-term Bull and the constitution of the current Mid-term Bull are exhausted from having to thwart bearish ambition. The bullish spurt in July has positioned the Mid-term Indicant bull to have minimal threats from potential bearish ambitions.

The July bullish spurt propelled many stocks to catapult their bullish red curves. That is indeed non-bearish. On the contrary, this is not necessarily bullish. However, it does provide a forum for a relaxed view of your hold positions. Stocks and funds seldom endure deep bearish behavior while they reside above their respective bullish red curves. Also, the most recent bullish spurt shifted the Quick-term Indicant from a bearish bias to nearly neutral. Although, the Quick-term attributes still did not signal bull, the mild bearish bias is reason for continued relaxation with respect to your longer-term hold positions.

All the Quick-term attributes remain biased with bearish tendencies even though the Mid-term Bull continues to demonstrate significant resistance to bearish ambition. As stated the past few weeks, there were some quick-term attributes shifting in support of even more bearish expressions. However, the recent bullish spurts have been strong enough to shift those attributes to neutrality. That is when the market typically turns bearish during bearish seasonality. The Quick-term attributes remain poised in neutrality and that threatens the continuation of the bullish spurt underway. On the other hand, those attributes are not yet encouraging the bear to express its desired dominance. In other words, meandering behavior continues as the underlying market theme. Do not be surprised at increased bearish expressions in the next few weeks. The purpose of these expressions is to merely offset the recent bullish spurts as opposed to become an outright bear market. Thus, meandering behavior continues.

The presidential post election year is, historically, the most bearish year on the four-year presidential election cycle. Like all things, there are exceptions to historical normalcy. As this year progresses, the various Indicant models will advise if 2005 is an exception or normal. So far, this year appears normal; that is bearish. The Quick-term and Short-term Indicant continue signaling bear, as they have been doing since early January 2005. The Mid-term and Long-term Indicant models continue to signal bull. The mid-term and long-term trends exerted their authority over the shorter cycles in the last three weeks of July, while the first week of August demonstrated a bearish bias. Fortunately, these safe positions were supported with a bullish spurt during the month of May. June followed with mild bearishness and July concluded with a bullish result.

As previously stated, these bullish spurts and the uncharacteristic bullish May and July added continued life to the Mid-term Bulls. This has deferred massive selling that will unfold at the expiration of these Mid-term Bull markets. As stated the past few weeks, do not be surprised with increased bearish behavior over the next few weeks. Of course, you have noticed during the past few weeks, the bullish spurt has disallowed bearish behavior. However, this comment, although not completely accurate the past few weeks, will remain until such time it is appropriate to delete it.

http://www.indicant.net/Members/Updates/History-Seasonal/HS0001.htm

Make certain you read the entire pages on the above link. You will see there are exceptions.

Stop Loss Management

The Mid-term Indicant continues recommending a stop loss of 5% because of the Quick-term Bear. This stop loss was changed from 8% several weeks ago because of the expectation of increased bearish influence.

If you are up by 50% or more, you may find it advantageous to set your stop-loss at 15% 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 a 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 10% trailing, whichever is greater. If your stock or fund is above the red curve and you bought at the Mid-term Buy signal, you should use the 10% trailing stop loss. If you are up by triple digit amounts and enjoy your ownership of the stock or fund, then use a 20% trailing stop loss or the slow moving blue curve price. If you really enjoy holding the stock, keep a close eye on the management. Dilettante managers have a way of worming into the business. Watch closely for cronyism and lazy-hazy management dialog. Keep your eye on lavish spending and excessive concerns about social issues. Those types are more interested in burning your money for their pleasures, as opposed to making you money. High performing companies remain focused on honoring the investments made by their shareholders.

In a few instances, you will see a hold signal for a stock or fund that is down from its buy signal or below one of the above conditions for selling. If you are more of a trader than an investor, feel free to buy stocks and funds with those “bearish” attributes. They are configured for a possible rebound, while at the same time, it is important to set the stop losses mentioned in this report. Use the Quick-term Indicant as a guide in your decision-making processes. If the stock price is falling in a Quick-term Bear market, it is not advisable to buy.

Do not short on stocks if they are up from an avoid signal. Stocks go up more often than they go down. Stocks have a tendency to march to their own drumbeat when rising. Some stocks rise and continue to rise in the most severe of bear markets. Short selling opens up an opportunity for the snakes on Wall Street to take everything you own. They can cause a stock to rise at their whim and without any regard to fundamental reason. It usually does not make sense to bet against the sweat and toil of hard-working people. There are some instances where stocks rise during bear markets due to legitimate fundamental reasons. If the market emulates a 1970’s configuration, most stocks will plummet, but energy related stocks will skyrocket. It is unusual that energy has been skyrocketing the past three years, of which two of those years enjoyed bullish market behavior. The coexistence of a bullish energy sector and general equities does not make much fundamental sense, but the underlying economic fundamentals have supported this phenomenon.

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.

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 can be found from a single page at Indicant.Net. Click the below link to that page. You will need your login ID and password.

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

Divergence versus Convergence

The expected bearish response to bullish convergence two weeks ago occurred last week. However, there was no solid bearish convergence this past week. That supports continuing meandering behavior. There is an increased bearish bias though on a quick to short-term basis.

As stated the past 12-weeks, the Mid-term Bull still has some fight in it. However, it continues expending too much energy in a defensive posture. There is not enough bullish convergence to ignite strong bullish behavior.

Economic Conditions – Inflation, Currency, Interest Rates

There is little difference from last week’s report. The U.S. Dollar continues expressing strength. The Canadian dollar is also expressing weakness against the U.S. Dollar. It appears a new cycle has begun in favor of a strengthening dollar. Ignore the news on the Chinese yuan. The dollar should continue to strengthen as long as Greenspan is bent on increasing interest rates.

As stated the past seven weeks, the U.S. Dollar continues building a base rising from its most recent cyclical minimum. As stated the last eleven weeks, this is not a Greenspan objective, but a fallout from his primary focus of fending off inflationary threats. The European Dollar remained in bearish domains for the ninth consecutive week. Its increasing weakness is impressive. As stated four weeks ago, the other currencies seem bent on following that pattern of accelerating weakness.

As stated the past eight weeks, there remains no cyclical shift in direction on the U.S. Dollars recent strengthening. Cyclically, it is still weak, but the cyclical shift in foreign currencies expresses increasing potential for a new trend in the greenbacks strengthening. The continued rise in interest rates, of which no end is in sight, supports continuing strength in the U.S. Dollar.

This paragraph will remain unchanged until such time conditions change. Rising interest rates tend to strengthen the dollar. That will damage export business and eventually hurt the U.S. economy. This is consistent with historical “political management” of the U.S. Economy. In other words, the political community understands power retention is a function of economic health on Election Day. After presidential elections, there is no immediate concern for economic health. That is the case right now. That sort of thing is typically more pronounced in a lame duck term, which is underway.

Commodity prices discontinued nervous configurations last week with a resumption of their bullish expressions. This recent movement is dynamic. As stated the last several weeks, the trend in commodity prices will continue north as long as oil prices continue in that direction. The Mid-term Indicant Bull’s resilience in the face of this inflationary threat is indeed impressive.

This paragraph remains unchanged from the past 34-weeks with a few modifications. Interest rates continue their rise, but still from historically low levels. The stock market is now obviously being bothered by these unfavorable relationships. The bearish bias by the Quick-term Indicant may be an early indication of the market’s intolerance to these unfavorable trends. There is some point where equities will not like the “position” of interest rates if Greenspan continues his northward trek. It is not uncommon to over-cool the economy in post election years, which is now underway.

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 sixty-three weeks ago since the MTI buy signal in April 2001. One-hundred and fifty-six weeks ago, it closed up 30.1%. Last week it closed up 165.3%, which is higher than the 75.9% reported 107-weeks ago. The current annualized growth rate since the April 13, 2001 buy signal is 37.8%, which is higher than 23.1% reported 107-weeks ago. After falling sharply seven weeks ago, the fund bounced north the past six weeks. This fund moved significantly to the north last week.

Fidelity Gold, Fund #28, is up 12.9% since the Mid-term Indicant signaled sell on April 15, 2005. The last buy/sell cycle was short-lived and resulted in a small loss. This fund should do well in the event this market turns into a 1970’s type of market. The Mid-term Indicant is near signaling buy for it, but continues resisting until meandering behavior expires. This fund moved also north last week after falling in the prior week.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 233.8% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 77.6%. Vanguard Energy #18, VGENX, is up 128.6% (annualized at 54.3%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 94.4% (annualized at 55.9%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 101.5% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 50.7%.

These energy related funds again moved significantly to the north last week, after moving bearishly three weeks ago. These funds should do well even if the market turns extremely bearish. Continue to hold them.

The Gold/Silver Index is up 9.8% since the Mid-term Indicant signaled bear on April 15, 2005. This index also should express bullish behavior with a 1970’s influence on the market. However, the Mid-term Indicant does not forecast the market. The configurations support a bearish influence on precious metals. That should change before the year is out, but until then, wait for the bull signal. This index moved up slightly last week.

Quick-term and Short-term Indicant Update

The Quick-term Indicant Bear that was born on January 4, 2005 has now survived for 30.4-weeks. As stated the past several weeks, that is a long period of survival spanning four months of the six months of bullish seasonality. The market is now mired inside bearish seasonality. It is now inside the most bearish rolling quarter on a historical basis. Do not be surprised at increased bearish activity in the next few weeks. The market was surprisingly bullish in the last three weeks of July, but underlying Quick-term attributes suggest there is little substance to those bullish expressions. The impending bearishness will most likely be mild. The market is not configured for strong bullish movements in the next few days.

The indices continue determining any potential comfort zones around bullish red. As stated the past 11-weeks, such comfort around their respective bullish red curves should not be expected. Eleven weeks ago all eight indices were above bullish red. Ten weeks ago, six were above bullish red. Nine weeks ago, only three were above bullish red. Five weeks ago, three were above bullish red and three were below bearish yellow. Last week, all eight were above bullish red for the third consecutive week. Last week, two fell below bullish red, leaving six above their respective bullish red curves. That is a testament to the strength of this Mid-term Bull market. The Quick-term is now configuring into supporting increased bearish bias.

The eight major indices are up by an average of 4.0% since the Quick-term Indicant signaled bear on January 4, 2005. The Quick-term error rate reduced with last week’s bearish behavior. Expect the Quick-term Indicant to be accurate with overall bearish performance by mid September where the market should be down from the January 4, 2005 bear signal.

Read the daily emails for more about the Quick-term Indicant. It is still a Quick-term Bear.

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

The Indicant Volume Indicator has resumed a lethargic pattern. That configuration does not support dynamic bearish behavior. Keep your eye on this indicator as it from time to time obviates the market’s mid-term and quick-term intentions.

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

The Dow is up 0.8% since the Short-term Indicant signaled bear on January 20, 2005. The NASDAQ is up 4.7% since the Short-term Indicant signaled bear on January 11, 2005. Both indices are Short-term Bears.

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

Nothing has changed in the past several weeks. Six of the eight major indices continue to threaten contact with their respective breakdown lines. Contact with them will support increased bearish behavior. However, the S&P400 and S&P600 discontinued contacting their breakout lines, suggesting non-bullish desires at this time. The other indices continue threatening contact with their breakdown lines, which supports a bearish bias. Overall, this meanderer continues to pester desires of rampant bullish expressions. Please read the daily reports, as this element will offer greater insight in the next few weeks.

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.

The eight major indices are up an average of 31.5% since the Mid-term Indicant signaled bull an average of 93.8-weeks ago. That annualizes to 17.5%. The Dow Transports is the strongest bull. It is up 64.9% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Jones Industrial Average is up 23.9% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Composite is up 45.2% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Utilities is up 66.7% since the Mid-term Indicant bull signal on August 16, 2003.

Six of the eight major indices remain as red bull, which is down by one from last week. Bullish spurts the past three weeks continue providing support for the longevity of these Mid-term Bulls. The two non red-bull indices are the Dow30 and the S&P100, where dilettante management is more pronounced.

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

Mid-term Indicant Positions - International Markets

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

Although there were no new bull signals, twenty-one of the twenty-two foreign indexes tracked by the Indicant are Mid-term Bulls. They are up an average of 121.6% since the Mid-term Indicant signaled bull an average of 124.7-weeks ago for an annualized gain of 50.7%, which is less than the 72.9% reported 120-weeks ago. International indices moved slightly south last week after moving solidly to the north the prior three weeks. As stated the past eight weeks, do not be surprised at increased bearish behavior in the next few weeks.

The lone bear is down 9.3% since the Mid-term Indicant signaled bear 30.0-weeks ago. It is the Chinese market that endures this bear signal. As stated the past few weeks, the Chinese continue cooling their economy. They also recently strengthened their currency. That may dampen the demand for natural resources on a cyclical basis, but the long-term trend is obvious. The Chinese economy will most likely not start heating up again until after the mid-term elections next year.

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

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