August 2006 Indicant Weekly Stock Market Report

Aug 27, 2006 Indicant Weekly Stock Market Report

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

Deep Bearish Seasonality Starts This Week, But….

This is not saying the market will become decidedly bearish during the next few weeks. This is simply highlighting the fact that a $10,000 investment only during this period since 1900 would now be less than $5,000.

Click the following link to view the Quick-term Indicant’s Chart to review the challenges underway.

http://www.indicant.net/Members/Updates/QTI-ETF-Charts/QTI-ETF1-Charts.htm#1

You will notice the downward moving Force Vector. It is the golden line on the bottom of the chart. This downward or southerly moving cycle is approaching maturity. In other words, this southerly cycle is nearing it conclusion, which suggests an increasing bullish bias in the immediate future. This is supported by positive Vector Pressure (the green line on the bottom of the chart). Notice that it is above the light blue line on the bottom of the chart.

These configurations are contrary, relative to deep bearish seasonality, which has been somewhat passive the past three years. The shift from bearish to bullish bias the past few weeks on a Quick-term Indicant basis was based, in part, on the most recent Force Vector cyclical peak. Notice that is the highest peak on the chart. In other words, Force Vector behavior has not been that bullishly enthusiastic in the past year and two-thirds.

Look to the left on the chart until you see Sep-05. You will notice a rising Force Vector leading into September of last year. You will notice that Force Vector peaked somewhat lower than prior peaks. You will also notice that deep bearish seasonality unleashed its torment shortly thereafter, although mildly. Although the chart does not do justice to the dramatics of last year’s deep bearish seasonality, the unknowing most likely endured some sleepless evenings as there were some significant bearish days following this declining Force Vector.

As you can see, the QQQQ moved solidly to the north in late October, right on cue with the beginning of the heart and soul of bullish seasonality. As you can see, neither deep bearish seasonality and the heart and soul of bullish seasonality were both somewhat lame.

It remains possible for deep bearish seasonality to inflict significant bearishness in the next eight weeks. However, such behavior is not likely with the current Force Vector and Vector Pressure configurations. Although the current configurations are not necessarily bullish, they are supportive of non-bearishness.

Force Vector and Vector Pressure configurations will shift over the next few weeks. The nature of that configuration should obviate any intention of deep bearish seasonality. The problem with the recent Quick-term Indicant shift from bearish to bullish bias is the recent Force Vector increases were without volume support.

Keep your eye on the Daily Stock Market Report as it will lend insight of the market’s intention in the face of deep bearish seasonality, which begins this coming week.

Weekly Buy/Sell Summary – Stocks and Funds

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

Although there were no sell signals, the Mid-term Indicant is avoiding 116-stocks and funds of the 345 tracked by the Indicant. The avoided stocks and funds are down an average of 7.6% since the Mid-term Indicant signaled sell an average of 17.2-weeks ago.

There were 90-stocks and funds avoided at this time last year. The avoided stocks and funds one year ago were down an average of 7.6% since their respective sell signals an average of 20.9-weeks earlier. Two years ago, on August 27, 2004, the Mid-term Indicant was avoiding 109-stocks and funds that were down an average of 26.3% since their respective sell signals an average of 43.3-weeks earlier. Three years ago on August 23, 2003, there were only 36-avoided stocks and funds. They were down 8.4% from their respective sell signals an average of 9.6-weeks earlier. On August 23, 2002, the Mid-term Indicant was avoiding 69-stocks and funds out of 295-tracked. They were down by an average of 47.3% since their sell signals an average of 25.0-weeks earlier.

In addition to the buy signals, the Mid-term Indicant is signaling hold for 221 of the 345-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 118.7%. That annualizes to 66.6%. The Mid-term Indicant has been signaling hold for these 221-stocks and funds for an average of 92.7-weeks.

One year ago on August 26, 2005, the Mid-term Indicant was holding 225-stocks and funds out of the 320 tracked at that time for an average of 92.7-weeks. Those 225-stocks and funds were up by an average of 101.5% (annualized at 58.4%). The Mid-term Indicant was signaling hold for 176-stocks and funds of the 296 tracked two years ago on August 27, 2004. They were up by an average of 77.0% (annualized at 67.1%) since their respective buy signals an average of 59.7-weeks earlier. There were 231-stocks and funds with hold signals on August 23, 2003 since their buy signals an average of 28.3-weeks earlier. They were up 49.5% (annualized at 90.8%). The Indicant was only tracking 296 stocks and funds in 2002-2004. On August 23, 2002, the Mid-term Indicant was signaling hold for only 189-stocks and funds out of 295-tracked. They were up by an average of 11.4% (annualized at 81.1%) since their buy signals 7.3-weeks earlier.

The Quick/Short-term Indicant Stock Market Report

The Indicant website maintains the last twelve months of daily reports on an annual basis. The weekly reports are maintained for much longer periods. Beginning in March 2006, the daily stock market report for the last trading day of each week is imbedded in this weekly report. This allows retention records of the daily report for much longer than the last twelve months.

The Daily Indicant Stock Market Report for the last trading day of the current week is near the conclusion of this weekly stock market report.

The Indicant Stock Market Report’s Secular Market Blend

This section is a repeated each week with a few modifications, reflecting recent secular influences and performance data. Although appearing redundant at times, it is important to read this section to keep abreast of secular market shifts. Quantifications and qualifications are updated weekly. Remember, secular shifts can last twenty-five or more years. Fortunately, secular market movements do not deter mid-term, short-term, and quick-term profit opportunities. However, they can wreak havoc to the long-term investors’ plans and those that buy and hold.

The current Mid-term Bull market and buying barrage started nearly in late 2002. The last mid-term election year of 2002 conformed perfectly to historical standards with deep bearish expressions. Will it be consistent in 2006? Bearish behavior before October 2006 will be required for historical conformance. Until the past two weeks, the market appeared to be positioning itself for this bearish compliance. Bearish expressions in four of the past eight weeks demonstrated this historical conformance. However, bullish expressions two weeks ago were preceded by a Quick-term shift from bearish to bullish bias. It is possible the historical conformance of mid-term election year bearishness has already occurred. On the other hand, there is plenty of time for deep bearish seasonality to configure a more pronounced market low ahead of the heart and soul of bullish seasonality.

The market synchronized with near perfection to normal seasonality in 2002. The rolling half of May-October is typically bearish. The 2002 seasonal bear leg was dynamic and configured perfectly to historical standards. The current mid-term election year of 2006, fundamentally, supports historical standards. As stated since late 2005, expect no bullish enthusiasm in the first half of 2006 with rising interest rates and rising energy costs, and based on these historical standards. As you can see, there was absolutely no bullish enthusiasm in the first half of 2006. The S&P500 was up 1.8% for the year on June 30, 2006 and the NASDAQ was down 1.5%.

Sell/avoid signals are now higher than 2003, 2004, and 2005, which is a testament to this historical phenomenon. The bear signals for the S&P400 and S&P600 on July 21, 2006 were the first signals since their October 25, 2002 bull signals, providing further evidence of this historical congruence. The resiliency of this bull market is indeed impressive with war, inflationary pressures, and rising interest rates. Fundamentally, there is tremendous support for the bear. The meandering nature of this market is indeed impressive. A Quick-term Indicant shift to a bullish bias two weeks ago was even more impressive.

Until recently, the current Mid-term Bull has been surprisingly strong with weak fundamentals and the normal political threat of post-election-year traditions. The market was mixed in 2005 with some bearishness and bullishness in the broader indices. That lack of dynamic presidential post-election -year bearishness in 2005 imposes a historical need to induce bearishness in the first half of 2006. The aforementioned statement manifested. Fortunately, that expected bearishness was mild with a minor impact on the market’s position.

Keep in mind, the heart and soul of bullish seasonality (Nov-Jan) is historically bullish regardless of fundamental reason or political cycle. The market can find a cyclical bottom in this year’s mid-term election year since the heart and soul of bullish seasonality elevated the market right on cue. The market accommodated with typical bullishness from October 2005 through January 2006. As stated consistently since early October 2005, it would not be surprising for a nice rise during the heart and soul of bullish seasonality only to be followed with bearish expressions after January 2006. That configuration has been occurring with some minor disruptive bullish spurts in nine of the last twenty-four weeks.

The heart and soul of bullish seasonality, ending January 31, 2006, demonstrated bullish normalcy. The market had been more or less a meanderer, but recently succumbed to bearish influences on both a fundamental basis and historical conformance basis; that is until two weeks ago. Since January 31, 2006, the S&P500 is up 1.2%, the NASDAQ is down 7.2%, and the Dow is up 3.9%. The S&P500 had been in negative territory most of the year until two weeks ago.

The heart and soul of bullish seasonality, which ended on January 31, 2006 produced gains of 2.8%, 4.2%, and 7.2% for the Dow, S&P500, and NASDAQ, respectively. Historical standards suggest those gains will be wiped out before October of this year. As you can see from the aforementioned paragraph, this mid-term election year had wiped out the NASDAQ’s gains from the heart and soul of bullish seasonality. As stated most of this year, the market meandered with a slight bearish bias since the conclusion of the last period of the heart and soul of bullish seasonality.

The Dow30 found bottom in the last presidential mid-term election year on October 9, 2002 at 7,286.27. The NASDAQ found bottom on the same day at 1114.11. Finding cyclical bottoms in mid-term election years is common. The Dow is up 54.9% from the last mid-term presidential election year bottom. The NASDAQ is up 92.1% since October 9, 2002. The S&P600, small caps, is up even more by 111.2% since October 9, 2002.

The NASDAQ is down 57.6% from its historical high of 5048.62 on March 9, 2000. The Dow is down 3.7% from its historical high of 11723 on January 13, 2000. The S&P500 is down 15.2% since its all time high of March 23, 2000. So far, the new century, 2000 inclusive, has not been kind to long-term investors. Historical standards suggest the NASDAQ will not return to historical high until 2025 or so. A 2000 buyer and holder will not be back to break-even until then, assuming zero inflation. Including inflation, a thirty-year-old investor will be in his or her eighties before the NASDAQ profits from 2000 investment dollars.

Economic or corporate earnings fundamentals did not support the stock market’s meteoric rise since 1990. Unprecedented demand for stocks skewed the supply-demand ratio and thus the powerful bull leg of the 1990’s enjoyed sustainability. The simple law of supply and demand propelled stock prices dynamically to the north in the 1990’s. The great bear leg of 2001 and 2002 has depressed those prior sources of demand for at least one generation of investors. The market now has to wait for a new generation of investors to enjoy dynamic secular bullishness. The great bull leg of 2003 was a relatively short bull cycle that has not enjoyed follow-on bullish behavior due to this lack of demand with the exception of normal bullish expressions during the heart and soul of bullish seasonality in 2004 and 2005.

The market has been slightly bullish since late 2003 with pronounced meandering behavior. The only significant bullish expressions not followed by bearish expressions occurred in the heart and soul of bullish seasonality (Nov-Jan) in 2003, 2004, and 2005. Other than those “heart and soul” bullish cycles, the market has been relatively flat since early 2004.

For example, the Dow fell 4.4% from January 31, 2004 through October 31, 2004. The NASDAQ fell by the same amount. The Dow fell 0.5% from January 31, 2005 through October 31, 2005, while the NASDAQ was up only 2.8%. Since January 31, 2006, the Dow is up 3.9% and the NASDAQ is down 7.2%. Right now, the major indices has offered the mid-term election year to find a bottom since it is now properly depressed since the last heart and soul of bullish seasonality concluded on January 31, 2006. The Quick-term Indicant is currently suggesting the mid-term election year bottom may be behind us, but that suggestion from two weeks ago is losing momentum.

As earlier stated, the Indicant began its buying barrage in October – November 2002 just after the market bottomed from the severe 2000-2002 Bear Market. There were 239 buy signals between October 5, 2002 and November 9, 2002 out of the 296 stocks and funds tracked by the Mid-term Indicant at that time. Even badly managed companies received a buy signal, which is a common attribute of sustainable new bull markets. As many of you noticed, those companies eventually dipped back to the south after the euphoria of new bullishness.

Some of you recall the Indicant Stock Market Report tracking the Short-term Indicant Bear for the NASDAQ in 2002. It was the longest in history. It even exceeded the Dow’s 1929-1932 Short-term Indicant Bear in breadth and approached it in magnitude. The good news is that the NASDAQ’s decline did not lead to a depression, which is a clear indication of how little influence tech stocks have on the economy.

There are two important axioms to remember and are always repeated in this report. 1) Real economic wealth is created in only three ways - manufacturing, agriculture, and extraction. 2) The only positive influence politicians have on the economy is to undo their prior damage. They are now doing their damage, some of which will be undone in 2007; the next presidential pre-election year. That is why the market typically finds a bottom in the mid-term election year. That is also why the presidential pre-election year is historically the most bullish on the four-year cycle. If the strength of the current Mid-term Bull can be subjected only to meandering behavior, like 2004 and 2005, then it is possible for the current Mid-term Bull to be a record setting one in terms of duration.

Political institutions reduce wealth. Politicians continually attempt to redistribute wealth, which flies in the face of the laws of nature. They promote “middle class” attainment. The larger the middle class, the more power politicians and their academic brethren have. The communists tried that, resulting 99% poverty, while the ruling 1% lived like kings. In other words, socialism rewards an ability to intellectualize, while capitalism rewards the results of appealing effort.

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

You will notice many of the mutual fund buy signals occurred in March 2003. Many of them endured sell signals for the first time since early 2003 the past few weeks. However, recent bullish spurts and the bull’s resiliency have minimized selling activity.

Many of you recall how the market did not synchronize with the heart and soul of bullish seasonality from November 2002 through February 2003. December 2002 was the most bearish since 1931, but not nearly as dynamic as the 1931 bearish expression. After the asynchronous behavior in the November 2002 rolling third of the year, the market turned bullish in March 2003 and again did not synchronize with normal seasonality. The Mid-term Indicant continued signaling bull during bearish seasonality in 2003. The market continued moving north during that time, contrary to historical standards. As stated in most of 2004, bearish expressions on a Mid-term basis between May and October 2004 should not be surprising. That is exactly what occurred. The result was a meandering market with a slight bearish bias during most of 2004 and 2005 and the first third of 2006.

As stated since late October 2005 and early November 2005, do not be surprised at increasing quick-term and short-term bullish expressions in the immediate future, followed by increased bearish expressions early next year. That prognosis occurred with those expectations with the normal bullish cycle that began in October 2005. However, each bearish cycle since January 31, 2006 has been followed by a bullish response and thus the reason for a meandering conclusion. The market turned bearish as expected, although mild.

The magnitude of 2006 bearishness is not predictable. Simply wait for the various Indicant model’s advisement of bull/bear status, as forecasting the market is a waste of time. However, it is appropriate to anticipate fundamental shifts before they happen. Keep a close eye on the Fed. It can damage the underlying bull. Keep in mind, the bull market is in tact from both a Mid-term and Quick-term basis. The Indicant models are not sensitive to tradition or fundamentals. They simply read the market and find its directional propensity. Right now, that propensity remains a bull.

The Quick-term Indicant’s bearish bias most of this year was replaced with a bullish bias two weeks ago. Since then, that bias has lost momentum with somewhat of an unusual neutral bias.

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

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

Stop Loss Management

The Mid-term Indicant recommends a stop loss of 5% on recent buys because of the Short-term Indicant’s continuing bear signal, the high probability of bearishness in the current political cycle, and threatening economic fundamentals.

Use a 10% trailing stop loss or the yellow or green values you will find on the tables for your longer-term hold positions. If your stock or fund is above the bearish yellow curve and below the green curve, set your stop loss equal to the greater of the yellow curve and the trailing stop loss. If your stock or fund is above the green curve, set your stop loss at no less the value of the green curve or 10% trailing, whichever is greater. If your stock or fund is above the red curve and you bought at the Mid-term Buy signal, you should use the 10% trailing stop loss.

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

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

Do not short on stocks if they are up from an avoid signal. Stocks go up more often than they go down. Stocks have a tendency to march to their own drumbeat when rising. Some stocks rise and continue to rise in the most severe of bear markets. Short selling opens up an opportunity for the snakes on Wall Street to take everything you own. They can cause a stock to rise at their whim and without any regard to fundamental reason. It usually does not make sense to bet against the sweat and toil of hard-working people.

Stock and Fund Update

Click the following link to see sorted performance of stocks and funds with hold/avoid signals. In the past, they were included in this email message but now display them on the website. This is available to the public, while the specific buy and sell transactions are limited to members only.

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

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

Economic Conditions – Inflation, Currency, Interest Rates

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

As stated the past two weeks, interest rates appear to have peaked. The longer-term rates have moved from bearish to neutral in terms of stock market impact. The shorter-term rates appear to be shifting south, but have not yet crossed below their red bullish curves.

Commodity prices appear to be at a pinnacle, but too early to tell if a new cyclical configuration supporting a stock market bull will unfold.

The U.S. Dollar remains weak, providing the Federal Reserve Board some latitude with interest rate reductions.

Oil prices have cooled recently, but not shifted to a cyclical reversal. However, this is now in a neutral position. Oil prices have a history of being extremely volatile.

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% two-hundred and sixteen weeks ago since the MTI buy signal on April 13, 2001. Last week it closed up 296.6%. The current annualized growth rate since the April 13, 2001 buy signal is 54.5%. After falling sharply 62-weeks ago, it bounced north in 45-weeks of the past 62-weeks. This fund moved north the past two weeks.

Fidelity Gold, Fund #28, is up 39.4% since the Mid-term Indicant signaled buy on August 26, 2005. That annualizes to 39.0%. This fund should do well in the event this market turns into a 1970’s type of market. This fund moved north last week.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 269.7% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 66.1%. This fund moved north the past two weeks.

Vanguard Energy #18, VGENX, is up 177.9% (annualized at 51.7%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 130.8% (annualized at 47.4%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 130.5% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 42.5%. These energy related funds moved north last week.

Investors in these funds are supporting a 1970’s type of market with high inflation and high oil prices. Energy and gold always do well during such times. Fundamentals continue to support holding these.

These funds should do well even if the market turns extremely bearish. Continue to hold them until the Mid-term Indicant signals sell.

The SQI (Consolidated Short-term and Quick-term Indicant) model signaled buy for the GLD-ETF#11 on August 3, 2005. It is up 41.9% since then. It is annualized at 39.0%. This ETF continues to be bullishly biased. It moved mildly north last week.

The SQI signaled buy for ETF#03 – Energy and Natural Resources on March 26, 2003. It is up 170.8% (annualized at 49.3%).

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

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

All ten major indices are bulls. They are up by an average of 15.5% since the Mid-term Indicant signaled bull an average of 72-weeks ago. That annualizes to 11.2%, which is down significantly from the past three years. This is due to the bear signals for the S&P400 and S&P600 Indexes on July 21, 2006, which had been receiving a bull signal since October 25, 2002. Those two indices endured some fluttering after the expiration of the tremendous bull leg that lasted nearly four years. A new bull leg is underway, but vulnerable to bearish ambition.

The Mid-term Indicant Dow Jones Industrial Average performance is now at $34,182,092. That beats buy and hold performance of $1,726,728 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $167,214. That beats buy and hold’s $126,858 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $179,080 that beats buy and hold’s $74,213 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 1,879.0%, 31.8%, and 141.3%, respectively, for these indices as of this past week.

The Indicant’s percentage advantage over buy and hold does not change during bull signals. The advantage changes only during bear signals. That is because the buy and hold model has to keep holding, while the MTI-RYS model avoids bear markets. The only purpose of the MTI-RYS model is to avoid the bear markets. That is why it beat buy and hold by nearly 2,000% over the past 100+ years.

Click here to go to the current Mid-term Indicant assessment of the ten major indices.

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

Divergence versus Convergence

Mild divergent market behavior unfolded last week with energy and inflation related securities moved mildly to the north and general equities moved mildly to the south. This configuration supports a meandering market.

Mid-term Indicant Positions - NASDAQ100 Stocks

Click here to see NASDAQ100 report card history.

Click here for Mid-term Indicant Table of NASDAQ 100 Stocks.

Mid-term Indicant Positions - Dow Jones 30 Industrial Stocks

Click here to see Dow 30 report card history.

Click here for Mid-term Indicant - Table of Dow Jones Industrial Average Stocks.

Mid-term Indicant Positions - Dow Jones 15 Utility Stocks

Click here to see Dow Utilities Report Card history.

Click here for Mid-term Indicant - Dow Jones Utility Stocks Table.

Mid-term Indicant Positions - Indicant Selected Stocks

Click here to see Indicant Select Stock Report Card history.

Click here for Mid-term Indicant Table of Indicant Selected Stocks.

Mid-term Indicant Positions - Mutual Funds

Click here to see Mutual Fund Report Card history.

The Mid-term Indicant signaling hold for ProFunds Ultra Short due, in part, to the Quick-term Indicant’s avoid signal of QQQQ. This fund is up 7.4% since the Mid-term Indicant signaled buy on June 2, 2006. It is annualizing at 31.7%. A rough plan suggests holding onto it through September. Detailed execution of its sell is when the Quick-term Indicant announces the bullish cycle that is incumbent to the heart and soul of bullish seasonality.

This fund moved mildly to the north last week, as the market dipped slightly to the south. As we near September, monitor the daily stock market report, as the Quick-term and Short-term Indicant models. They will announce the birth of the heart and soul of bullish seasonality. Detailed specific action will be displayed on the daily report and the Mid-term Indicant.

Click here for Mid-term Indicant Table of Mutual Funds.

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

Long Term Indicant Positions - Dow Jones Industrial Average

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

The Dow is up 278.9% (annualized at 19.5%) since the Long-term Indicant signaled bull 773-weeks ago. Economic data is the primary influence on the Long-term Indicant. The recession, deflation, and inflation have not been strong enough to signal bear. A link to the Long-term Indicant is below:

http://www.indicant.net/Members/Updates/LTI-Markets-DJIA/DJIA.htm

Quick/Short-term Indicant Stock Market Report - Summary

Quick-term Red Bulls: Twelve; supports bullish bias, but no longer increasing support.

Short-term/Quick-term Non-Bearishness: Countering “sustainable” deep bearish ambition.

Force Vectors: Bullish/non-bearish configurations manifesting, but declining values are of concern.

Vector Pressure: Showing significant resistance to bearish dominance.

Long-term Hold Positions: Solidly safe.

Current Quick-term Bias: Shifting mildly from bullish support to neutral.

Overall Market Status: Bullish on a Quick-term basis.

Profit Potential from Naked Options: Declining volatility and absence of obvious direction minimizes profit potential.

Special Comments Continued from Tuesday, August 15, 2006 – Bias Shift to Bullish

Force Vector support for bullish dominance waned the past few days. Their decline is sharper than desired. However, Vector Pressure buoys against bearish dominance. Meandering behavior is favored by these configurations, which occurred last week with a mild bearish bias. Deep bearish seasonality looms ahead. Vector Pressure is critical to monitor at this point.

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

As stated the past few days, passive volume for several days has not been supportive of either bullish or bearish direction. Both Indicant Volume Indicator’s continue lethargically. This configuration supports your longer-term hold positions. The recent bullish cycle was not supported by volume, raising questions about bullish sustainability. Today’s flat behavior is consistent with the underlying Quick-term and Short-term configurations; a meanderer.

The Dow Jones Industrial Average is up 5.0% since the Short-term Indicant signaled bear on February 8, 2006. The NASDAQ is down 5.4% since the Short-term Indicant signaled bear February 3, 2006. The Short-term Indicant for the two major indices is no longer bearishly biased but the Short-term Indicant is still unable to signal bull for these two major indices in the face of impending deep bearish seasonality. Click here to see the Short-term Indicant’s history.

SQI Report Card (Consolidated Short/Quick), Status, and Charts

There were no buy signals and no sell signals. Although there were no buy signals, the SQI is signaling hold for 22-ETF’s. They are up 45.5% (annualized at 22.3%) since their respective buy signals an average of 104.9-weeks ago. Although there were no sell signals, the SQI is avoiding eight ETF’s. They are up by an average of 1.6% since their sell signals an average of 11.1-weeks ago.

The SQI model is the one that most of you will prefer for your trading decisions. It generates fewer signals than the other two models and represents consistencies in the Quick-term and Short-term outlooks for the specific ETF’s. It also beats buy and hold on a regular basis, although there is only seven years of proof. The quality of that proof is high since this period includes a powerful bull and bear. The model sours a little during meandering markets with an excessive number of signals from time to time. Research toward perfecting continues.

Short-term Indicant Report Card, Status, and Charts

There were no buy signals and no sell signals. Although there were no buy signals, the Short-term Indicant is signaling hold for 28-ETF’s. They are up an average of 49.3% (annualized 32.2%) since the STI signaled, buy, an average of 78.7-weeks ago. Although there were no sell signals, the Short-term Indicant is avoiding two ETF’s. They are up by an average of 0.4% since their sell signals an average of 19.2-weeks ago.

Keep in mind, the Short-term Indicant is much more active in buying/selling than the Consolidated model. The Quick-term Indicant, which follows, is even more active.

Quick-term Report Card, Status, and Charts

There were no buy signals and no sell signals. Although there were no buy signals, the Quick-term Indicant is signaling hold for 21-ETF’s. They are up by an average of 13.1% (annualized at 28.6%) since the QTI signaled buy an average of 23.5-weeks ago. Although there were no sell signals, the Quick-term Indicant is avoiding nine ETF’s. They are flat since their respective sell signals an average of 11.0-weeks ago.

Conflicts Between the Short-term and Quick-term Indicants

Unanimous bullish consensus between the Short-term Indicant and the Quick-term Indicant remains absent. However, a bullish majority prevails, albeit weak. There are nine conflicts, where the Short-term Indicant and the Quick-term Indicant are in disagreement between hold and avoid status. This is typical of meandering behavior. The bias remains in favor of the bull, but it is weak. The various configurations barely support a bullish bias.

There remains a conflict in market direction. There are seventy-seven total hold signals out of a possible 90, while there are thirteen avoid signals. This ratio still supports the life of the bull. The pronounced bearish bias that pervaded the market most of the year is no longer present.

Quick-term Indicant Bull/Bear Health Report

The Quick-term Bull is now showing strength, contrary to its weakening since early February. Only one of the 30-ETF’s is below its bearish yellow curves. The average position of all thirty ETF’s is above bearish yellow by 4.9%, which is down significantly the past several months, but up from the past few days, highlighting an increased bullish bias, although not as strongly as last week on a quick-term basis.

Twelve ETF’s are above their respective bullish red curves. Support for the bull weakened today and remains minor in both volume and magnitude. The good news is that it is difficult for the market to crash as long as just one non-contrarian ETF is a red bull.

All thirty ETF average positions are 1.4% below their bullish red curves. This is the seventy-third consecutive trading-day where the average relative position to bullish red is negative. This is not necessarily a bearish configuration, while it is certainly a non-bullish.

Short-term Indicant Bull/Bear Health Report for ETF’s

The above heading is linked to the Short-term Indicant table. This paragraph is repeated daily as a reminder of accurately interpreting the charts. By clicking the charts on the table you can review potential contact with the breakdown lines (bearish) and potential contact with breakout lines (bullish). It is extremely bearish when several ETF’s are contacting their respective breakdown lines. The breakdown lines are the yellow lines (bearish). The breakout lines are the red ones (bullish). Close proximity to breakout implies an increased probability of an actual breakout occurring. It is certainly bullish and you will want to be in a hold position for those few days a year when the breakout occurs. Conversely, significant contact with yellow (breakdown) suggests “avoid” positions are best.

The Short-term Bull for ETF’s, although not expired, remain severely weakened. None of the 30-ETF’s are contacting their breakout lines, offering zero probability of supporting a sustainable bullish breakout.

The average distance from breakout contact is 7.7%, which is no longer increasingly bullish.

The average distance from the price and breakdown is 15.9%. Although down significantly the past several months, this configuration still provides non-bearish support. The probability of immediate contact remains low and thus a non-bearish bias is maintained on a short-term basis.

Although the non-bearish baseline (yellow) can rise in a declining market, keep in mind that a 15.9% drop would leave early 2003 buyers in healthy hold positions, while new in-the-market-money would be painful to hold.

None of the ETF’s are contacting their bearish breakdown lines, which offers minimal probability of an immediate crash. Overall, there remains a strong bottom point, but new-in-the-market money would not delight in finding that. Early 2003 investment money is still in good shape with solid earnings and can tolerate bearish behavior without nervously dumping their holdings during such a decline. However, if contact with the breakdown becomes dominant, expect an increased threat of dynamic bearishness and be prepared to sell.

You will notice significant bearish drops on the Short-term Indicant charts. However, prices remain higher than the breakdown lines. Severe and sustainable bearish drops occur when contact with bearish yellow occurs.

ETF Force Vector Configurations

You can scan the Quick-term Indicant for Exchange Traded Funds table and click on the charts to observe Force Vector configurations. Scroll down each of the charts, where a quick link has been added to take you to the next series of Quick-term ETF charts. Use you back arrow on your browser to return to the previous page.

Five of the ETF Force Vectors are in bullish domains, which is down by seventeen from last Thursday. Recent increased bullish influence on the market is now waning as Force Vectors are shifting back to the south with the majority in bearish domains. This is enhancing potential for a return to bearish bias.

Force Vectors are now moving to the south for the most part. This was not unexpected. Their movement is sharper than desired for those who prefer bullish behavior. However, Vector Pressure remains positive, which is discussed later.

To understand potential financial opportunities, click here to learn to identify Robust Force Vectors. They are visible on the Quick-term Indicant charts.

ETF Force Vectors/Vector Pressure Crossings/Option Signals

Remember, the links contained herein are more visible when reading this on the website.

Click this sentence for Vector Pressure Option Signals. There were six put option buy signals today, bringing the total to eight the past two days.

Twenty-eight ETF Vector Pressures are in bullish domains, which is up by five from last week. Positive Vector Pressure helps guard against dominance by the bear. If Vector Pressure holds positive, then bullish to non-bearish support will remain.

This market remains a bull due to the majority of ETF’s with hold positions from the consolidated Short-term and Quick-term model. This bull/hold dominance minimizes the probability of profit potential from aggressive put option plays.

Make certain you sell naked options when the Force Vectors shift direction or within two days of the purchase, whichever occurs first. If you are unfamiliar with this, take the options tour.

Remember options trading is risky. Never offer “market prices.” Always bid low in hopes of an intraday contrarian movement to the underlying assumption of directional behavior. Always place day-orders only. That keeps the floor folks out of your pocket book. Do not despair if your order does not take. There are plenty of opportunities throughout the course of the year. Remember, stalking is the key to success here. Although not necessary for stock market success, those of you who have a gambling instinct will enjoy this. For those of you with a longer-term perspective, it does not hurt to see what the short-term folks are thinking. The Indicant indicates both perspectives.

Quick-term and Short-term Indicant Summary

The shift from bearish bias to bullish bias started on Tuesday, August 15, 2006. Although historical standards, economic fundamentals, and the political election cycle favor a bearish dip before November, the Quick-term and Short-term Indicant models are suggesting bullish bias. That strengthening is being threatened by declining Force Vectors.

Based on Vector Pressure configurations, do not write covered call options at this time.

The Quick-term Bull remains in tact but is shifting from strong to neutral.

ProFunds Ultra Short mutual fund moves inversely to the QQQQ by exponential amounts. The Consolidated Indicant model is avoiding QQQQ, which supports holding contrarian fund, ProFunds Ultra Short. As stated on August 16, 2006, you may want to sell this fund, given the increasing bullish bias by the various Quick/Short-term Indicant models. The Mid-term Indicant signaled buy for ProFunds Ultra Short after the market close on June 2, 2006. The Consolidated model has yet to signal buy for QQQQ, due to an uncooperative Quick-term Indicant. Continued holding of the ProFunds Ultra Short is increasingly risking your current profit position. The Mid-term Indicant did not signal sell the past two weekends due to the Quick-term Indicant’s continued avoid signal.

To familiarize yourself with viewing the market from an ETF perspective, click the following update links.

Quick-term ETF Options

Quick-term Indicant for ETF’s

Short-term Indicant for ETF’s

Consolidated Quick-term/Short-term Indicant for ETF’s

Click here to the report card, which is updated weekly, to link to related tours.

Links to the Short-term Indicant and Indicant Volume Indicator are below:

Short-term Indicant for DJIA and NASDAQ

Short-term Indicant Tables for the Dow Jones Industrial Average Index

Short-term Indicant Table for the NASDAQ Composite Index

Indicant Volume Indicator

Indicant Conclusion

Deep bearish seasonality remains a threat to the stock market. The recent Quick-term and Short-term Indicant shift from bearish to bullish bias has now` shifted to neutral, which is unusual for the Quick-term Indicant. The Quick-term Indicant had been signaling a bearish bias from February until mid-August.

The market enters into deep bearish seasonality this week. Its duration is unknown, but the average approximates eight weeks. You will know when it ends by the behavior cited from the Quick-term and Short-term Indicant models. Deep bearish seasonality may not even happen this year, but the historical standard will be tracked.

Read your daily stock market reports, as quick-term attributes can shift quickly.

Do not get lazy and set those stop losses for those stocks and funds that continue to enjoy hold signals.

The daily updates are on the following link.

http://www.indicant.net/Non-Members/Back%20Issues/QT.htm

Hyperlinks

To access all major markets, stocks, funds, economic data, charts, statuses, etc, click the following hyperlink:

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

In addition, once you are inside the website, click on "members update" or simply log in. It is on the top of every page in the web site so you can always find your way back.

Happy Investing,

www.indicant.net

08/27/06

Aug 20, 2006 Indicant Weekly Stock Market Report

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

Dear Indicant Members:

This Week’s Report

One Week Remaining to Deep Bearish Seasonality, But..

Last week’s bullishness was not an uncommon behavioral pattern ahead of deep bearish seasonality. This occurred in the last mid-term election year in 2002. Click the following link to see that phenomenon.

http://www.indicant.net/Non-Members/Tours/MTIRYS-Mkts-US/MTIRYS-01-DJI-2000-2004.htm

Deep bearish seasonality is the second white line segment for each year on each chart. You will notice it has deep bearish expressions in 2000, 2001 and 2002.

You can see that bullishness was followed by a precipitous drop in stock prices during deep bearish seasonality. Deep bearish seasonality has performed to expectations each year this century. 2000, 2001, and 2002 produced dynamic bearish expressions, while the drops in 2003 and 2004 were minor.

A $10,000 investment in 1900 only during deep bearish seasonality would now be less than $5,000. It is the most consistent time of year with bearish expressions. It also contains the deepest of bearish expressions. However, the stock market is not so kind to produce a consistent behavioral pattern with 100% confidence. There are always exceptions to any pattern.

It is exceptions that cause concern. The longer-term investor does not too concerned about such nuances during bull markets. Deep bearish seasonality is always followed by the heart and soul of bullish seasonality. During bull markets, the relationship between the two is a wash with a bias favoring a bullish conclusion.

The problem with these two seasonal periods is that they butt right up to each other. Sometimes they overlap in timing, but not behavior. During strong bull markets, deep bearish seasonality is meek in behavior. As you can see, following a strict historical pattern is not mistake proof. That is why the Indicant has other models to guide through the mistakes of sound patterns.

The Mid-term Indicant generated quite a few buy signals this weekend. Some of them will not hold up as we approach deep bearish seasonality. Others will. That is why you want to spread your buys around. You also will want to maintain a mindset that some of these buys may not manifest to long-term hold positions like those buy signals in late 2002 and early 2003.

The Quick-term Indicant supports these buys. That is because several Quick-term attributes shifted from a bearish bias to a bullish bias last week. That is the nature of the Quick-term Indicant; it can shift very quickly. This particular shift is interesting in that most of this year’s bias has favored the bear. The Quick-term Indicant properly spotted each bullish expression as a mere bullish spurt that was always followed by deeper bearish expressions, albeit mild ones. This has resulted in somewhat of a meandering market this year, which has been a boringly common theme for the past two and a half years.

Click the following link to put the recent market’s behavior in a Quick-term Indicant perspective.

http://www.indicant.net/Non-Members/Tours/ETF-Tours/QTI-ETF-Tour/QTI-ETF-02.htm

Scroll down on the above link until you see a chart containing 2002, which was the last presidential mid-term election year. You will notice that Vector Pressure was negative during the late August/September period. In other words, the Quick-term Indicant, using the QQQQ as a gauge, supported a reasonable expectation that deep bearish seasonality would manifest its historical pattern.

Click the following link to view the current Quick-term Indicant for the QQQQ. You can see a rapidly rising Force Vector. You will also notice that Vector Pressure is about to shift to positive (above the line). That configuration contrasts with that of 2002, where there was configurations were obviously bearish.

Click the following link to view the NASDAQ with a Mid-term Indicant perspective.

http://www.indicant.net/Members/Updates/MTIRYS-Mkts-US/MTI-RYS-03-NASDAQ%20Curr.htm

As you can see, last week’s rise was wildly bullish. You will notice even a stronger bullish rise in the previous year, 2005, where deep bearish seasonality nearly eroded the preceding bullish expression. The NASDAQ is still down for the year, even after last week’s pronounced bullish expression.

The problem is this. Do not be surprised to see deep bearish seasonality exert its influence on the market this year. Maybe it will be mild and maybe it will be dynamic. It is especially important to monitor the Daily Stock Market Report over the next few weeks. If the Quick-term and other related Indicant models shift bias back in favor of the bear, be prepared to sell your recent purchases.

As long there is little or no contact with the Short-term Indicant’s breakdown lines, a dynamic bear has little chance of unfolding, thereby protecting your longer-term hold positions. Configurations clearly do not support any dynamic and sustainable bear on the near term horizon. The only problem confronting you is the recent buy signals in the face of deep bearish seasonality. Historical standards suggest the heart and soul of bullish seasonality will be dynamically bullish with classical pre-election year bullishness in 2007.

Recent Quick-term configurations shifted to a bullish bias early last week for the first time since late last January. As long as this bullish bias holds up, there should be no problems leading into the heart and soul of bullish seasonality. The bullish Force Vector cycle underway is already mature and near its peak. That means there will be little bullish follow-on this coming week. The market’s behavior on the impending decline in Force Vector behavior should obviate the market’s immediate intention in terms of supporting deep bearish seasonality or showing complete disrespect for this historical record.

Weekly Buy/Sell Summary – Stocks and Funds

The Mid-term Indicant generated 46-buy signals and no sell signals. Much of this was stimulated by the recent shift in the Quick-term and Short-term Indicant shift from bearish bias to bullish bias.

Although there were no sell signals, the Mid-term Indicant is avoiding 124-stocks and funds of the 345 tracked by the Indicant. The avoided stocks and funds are down an average of 6.2% since the Mid-term Indicant signaled sell an average of 16.0-weeks ago.

There were 87-stocks and funds avoided at this time last year. The avoided stocks and funds one year ago were down an average of 8.3% since their respective sell signals an average of 20.6-weeks earlier. Two years ago, on August 20, 2004, the Mid-term Indicant was avoiding 120-stocks and funds that were down an average of 26.3% since their respective sell signals an average of 42.2-weeks earlier. Three years ago on August 16, 2003, there were only 60-avoided stocks and funds. They were down 7.1% from their respective sell signals an average of 8.6-weeks earlier. On August 16, 2002, the Mid-term Indicant was avoiding 102-stocks and funds out of 294-tracked. They were down by an average of 42.9% since their sell signals an average of 18.7-weeks earlier.

In addition to the buy signals, the Mid-term Indicant is signaling hold for 175 of the 345-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 149.1%. That annualizes to 68.1%. The Mid-term Indicant has been signaling hold for these 175-stocks and funds for an average of 113.9-weeks.

One year ago on August 19, 2005, the Mid-term Indicant was holding 227-stocks and funds out of the 320 tracked at that time for an average of 90.6-weeks. Those 227-stocks and funds were up by an average of 102.3% (annualized at 58.7%). The Mid-term Indicant was signaling hold for 157-stocks and funds of the 296 tracked two years ago on August 20, 2004. They were up by an average of 83.0% (annualized at 66.0%) since their respective buy signals an average of 65.4-weeks earlier. There were 197-stocks and funds with hold signals on August 16, 2003 since their buy signals an average of 31.0-weeks earlier. They were up 52.6% (annualized at 88.2%). The Indicant was only tracking 296 stocks and funds in 2002-2004. On August 16, 2002, the Mid-term Indicant was signaling hold for only 125-stocks and funds out of 295-tracked. They were up by an average of 14.4% (annualized at 84.6%) since their buy signals 18.7-weeks earlier.

The Quick/Short-term Indicant Stock Market Report

The Daily Indicant Stock Market Report for the last trading day of the current week is near the conclusion of this weekly stock market report.

The Indicant Stock Market Report’s Secular Market Blend

This section is a repeated each week with a few modifications, reflecting recent secular influences and performance data. Although appearing redundant at times, it is important to read this section to keep abreast of secular market shifts. Quantifications are updated each week. Remember, secular shifts can last twenty-five or more years. Fortunately, secular market movements do not deter mid-term, short-term, and quick-term profit opportunities. However, they can wreak havoc to the long-term investors’ plans and those that buy and hold.

The current Mid-term Bull market and buying barrage started nearly in late 2002. The last mid-term election year of 2002 conformed perfectly to historical standards with deep bearish expressions. Will it be consistent in 2006? Bearish behavior before October 2006 will be required for historical conformance. Until last week, the market appeared to be positioning itself for this bearish compliance. Bearish expressions in four of the past seven weeks have demonstrated this historical conformance. However, bullish expressions last week were preceded by a Quick-term shift from bearish to bullish bias. It is possible the historical conformance of mid-term election year bearishness has already occurred. On the other hand, there is plenty of time for deep bearish seasonality to configure a more pronounced market low ahead of the heart and soul of bullish seasonality.

Sell/avoid signals are now higher than 2003, 2004, and 2005, which is a testament to this historical phenomenon. The bear signals for the S&P400 and S&P600 on July 21, 2006 were the first signals since their October 25, 2002 bull signals, providing further evidence of this historical congruence. The resiliency of this bull market is indeed impressive with war, inflationary pressures, and rising interest rates. Fundamentally, there is tremendous support for the bear. The meandering nature of this market is indeed impressive. Last week’s bullishness was even more impressive.

Keep in mind, the heart and soul of bullish seasonality (Nov-Jan) is historically bullish regardless of fundamental reason or political cycle. The market can find a cyclical bottom in this year’s mid-term election year since the heart and soul of bullish seasonality elevated the market right on cue. The market accommodated with typical bullishness from October 2005 through January 2006. As stated consistently in early October 2005, it would not be surprising for a nice rise during the heart and soul of bullish seasonality only to be followed with bearish expressions after January 2006. That configuration has been occurring with some minor disruptive bullish spurts in nine of the last twenty-three weeks. However, last week’s bullishness was not minor and has not been followed with the bearish responses that have occurred throughout this year.

The heart and soul of bullish seasonality, ending January 31, 2006, demonstrated bullish normalcy. The market had been more or less a meanderer, but recently succumbed to bearish influences on both a fundamental basis and historical conformance basis; that is until last week. Since January 31, 2006, the S&P500 is up 1.7%, the NASDAQ is down 6.2%, and the Dow is up 4.8%. The S&P500 had been in negative territory until this past week.

The heart and soul of bullish seasonality, which ended on January 31, 2006 produced gains of 2.8%, 4.2%, and 7.2% for the Dow, S&P500, and NASDAQ, respectively. Historical standards suggest those gains will be wiped out before October of this year. As you can see from the aforementioned paragraph, this mid-term election year had wiped out the NASDAQ’s gains from the heart and soul of bullish seasonality; that is until last week. The NASDAQ has a minor gain relative to the conclusion of the last heart and soul of bullish seasonality.

Historical standards also suggest the market should be down from September 30, 2005 by early October of this year so it can advance during the 2006 heart and soul of bullish seasonality. The Dow is up 7.7% since September 30, 2005. The S&P500 is up by 6.0% and the NASDAQ is down by 0.6%. Although still up slightly from then, historical standards suggest you should expect this result in the next two months (August and September). However, as earlier stated watch the daily stock market reports to determine reasonability with respect to this expectation.

The Dow30 found bottom in the last presidential mid-term election year on October 9, 2002 at 7,286.27. The NASDAQ found bottom on the same day at 1114.11. Finding cyclical bottoms in mid-term election years is common. The Dow is up 56.2% from the last mid-term presidential election year bottom. The NASDAQ is up 94.2% since October 9, 2002. The S&P600, small caps, is up even more by 115.8% since October 9, 2002.

The NASDAQ is down 57.1% from its historical high of 5048.62 on March 9, 2000. The Dow is down 2.9% from its historical high of 11723 on January 13, 2000. The S&P500 is down 14.7% since its all time high of March 23, 2000. So far, the new century, 2000 inclusive, has not been kind to long-term investors. Historical standards suggest the NASDAQ will not return to historical high until 2025 or so. A 2000 buyer and holder will not be back to break-even until then, assuming zero inflation. Including inflation, a thirty-year-old investor will be in his or her eighties before the NASDAQ profits from 2000 investment dollars.

For example, the Dow fell 4.4% from January 31, 2004 through October 31, 2004. The NASDAQ fell by the same amount. The Dow fell 0.5% from January 31, 2005 through October 31, 2005, while the NASDAQ was up only 2.8%. Since January 31, 2006, the Dow is up 4.8% and the NASDAQ is down 6.2%. Right now, the major indices has offered the mid-term election year to find a bottom since it is now properly depressed since the last heart and soul of bullish seasonality concluded on January 31, 2006. The Quick-term Indicant is currently suggesting the mid-term election year bottom may be behind us.

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

Stock and Fund Update

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

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

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

Economic Conditions – Inflation, Currency, Interest Rates

As stated last week, you will notice a significant directional shift in some interest rates. Market driven interest rates continue their embryonic movement to the south. If this policy holds for the next few months, the heart and soul of bullish seasonality could be stimulated with a dynamic bullish cycle later this year.

However, there is one problem. Commodity prices continue to rise as capitalism has accelerated increasing demands against finite resources. The problem with the capitalists right now is the lag of capitalization. In other words, extraction, conversion, and delivery of product is not increasing as rapidly as the demand. The imposes upward pricing pressures.

As stated last week, the stock market does not like inflation (or deflation), just as much as it does not like high interest rates. After a bearish response to the Fed’s posturing status quo on interest rates the week before last, last week’s bullish response contains substantive configurations that support an increasing probability of sustainability.

Oil prices have cooled recently, but not shifted to a cyclical reversal. Oil prices have a history of being extremely volatile.

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% two-hundred and fifteen weeks ago since the MTI buy signal on April 13, 2001. Last week it closed up 294.4%. The current annualized growth rate since the April 13, 2001 buy signal is 54.3%. After falling sharply 61-weeks ago, it bounced north in 44-weeks of the past 61-weeks. This fund moved north last week.

Fidelity Gold, Fund #28, is up 37.8% since the Mid-term Indicant signaled buy on August 26, 2005. That annualizes to 38.1%. This fund should do well in the event this market turns into a 1970’s type of market. This fund fell slightly last week.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 263.3% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 64.8%. This fund moved slightly north last week.

Vanguard Energy #18, VGENX, is up 176.2% (annualized at 51.5%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 129.1% (annualized at 47.1%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 128.7% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 42.2%. Some of these energy related funds were basically flat last week.

These funds should do well even if the market turns extremely bearish. Continue to hold them until the Mid-term Indicant signals sell.

The SQI (Consolidated Short-term and Quick-term Indicant) model signaled buy for the GLD-ETF#11 on August 3, 2005. It is up 40.2% since then. It is annualized at 38.1%. This ETF continues to be bullishly biased. It moved mildly south the past two weeks.

The SQI signaled buy for ETF#03 – Energy and Natural Resources on March 26, 2003. It is up 167.3% (annualized at 48.5%).

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

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

All ten major indices are bulls. They are up by an average of 17.1% since the Mid-term Indicant signaled bull an average of 71-weeks ago. That annualizes to 12.5%, which is down significantly from the past three years. This is due to the bear signals for the S&P400 and S&P600 Indexes on July 21, 2006, which had been receiving a bull signal since October 25, 2002. Those two indices received new bull signals a few weeks later, which are still holding up.

The Mid-term Indicant Dow Jones Industrial Average performance is now at $34,477,201. That beats buy and hold performance of $1,741,549 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $168,145. That beats buy and hold’s $127,564 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $181,060 that beats buy and hold’s $75,033 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 1,879.0%, 31.8%, and 141.3%, respectively, for these indices as of this past week.

Click here to go to the current Mid-term Indicant assessment of the ten major indices.

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

Divergence versus Convergence

Inflation sensitive securities were flat to slightly south last week. The energy sector was equally flat, while general equities moved north. That is market divergence, which supports somewhat of a meandering posture. However, the Quick-term and Short-term Indicant shifted from several months of bearish bias to bullish bias early last week.

Mid-term Indicant Positions - NASDAQ100 Stocks

Click here to see NASDAQ100 report card history.

Click here for Mid-term Indicant Table of NASDAQ 100 Stocks.

Mid-term Indicant Positions - Dow Jones 30 Industrial Stocks

Click here to see Dow 30 report card history.

Click here for Mid-term Indicant - Table of Dow Jones Industrial Average Stocks.

Mid-term Indicant Positions - Dow Jones 15 Utility Stocks

Click here to see Dow Utilities Report Card history.

Click here for Mid-term Indicant - Dow Jones Utility Stocks Table.

Mid-term Indicant Positions - Indicant Selected Stocks

Click here to see Indicant Select Stock Report Card history.

Click here for Mid-term Indicant Table of Indicant Selected Stocks.

Mid-term Indicant Positions - Mutual Funds

Click here to see Mutual Fund Report Card history.

The Mid-term Indicant signaling hold for ProFunds Ultra Short due, in part, to the Quick-term Indicant’s avoid signal of QQQQ. This fund is up 4.6% since the Mid-term Indicant signaled buy on June 2, 2006. It is annualizing at 21.6%. A rough plan suggests holding onto it until September.

This fund was down considerably last week on the market’s aggressive bullishness. As we near September, monitor the daily stock market report, as the Quick-term and Short-term Indicant models shifted from a bearish to bullish bias. Detailed specific action will be displayed on the daily report and the Mid-term Indicant.

Click here for Mid-term Indicant Table of Mutual Funds.

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

Long Term Indicant Positions - Dow Jones Industrial Average

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

The Dow is up 293.2% (annualized at 19.7%) since the Long-term Indicant signaled bull 772-weeks ago. Economic data is the primary influence on the Long-term Indicant. The recession, deflation, and inflation have not been strong enough to signal bear. A link to the Long-term Indicant is below:

http://www.indicant.net/Members/Updates/LTI-Markets-DJIA/DJIA.htm

Quick/Short-term Indicant Stock Market Report - Summary

Quick-term Red Bulls: Thirteen; supports increased bullish bias.

Short-term/Quick-term Non-Bearishness: Countering “sustainable” deep bearish ambition.

Force Vectors: Bullish/non-bearish configurations manifesting and increasing bullish bias.

Vector Pressure: Showing significant resistance to bearish dominance.

Long-term Hold Positions: Solidly safe.

Current Quick-term Bias: Increasing bullish bias.

Overall Market Status: Bullish on a Quick-term basis.

Profit Potential from Naked Options: Still mild due to threat of deep bearish seasonality, coupled with increasing bullish bias.

Special Comments Continued from Tuesday, August 15, 2006 – Bias Shift to Bullish

As stated since last Tuesday, the Quick-term Indicant configurations suddenly discontinued their bearish bias support. This triggered quite a few ETF buy signals early this week.

The various Quick-term and Short-term Indicant models have shifted from bearish bias to bullish bias. This is in the face of impending deep bearish seasonality. The market sometimes delights in deviant behavior to historical and fundamental expectations. There is a high probability this market is going to be deviant and not show respect to deep bearish seasonality. However, the Quick-term Indicant will advise you if the market does decide to conform to patterned expectations.

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

Both Indicant Volume Indicator’s continue moving lethargically. This lethargic configuration supports your longer-term hold positions.

The Dow Jones Industrial Average is up 5.9% since the Short-term Indicant signaled bear on February 8, 2006. The NASDAQ is down 4.4% since the Short-term Indicant signaled bear February 3, 2006. The Short-term Indicant is no longer bearishly biased but the Short-term Indicant is still unable to signal bull for these two major indices in the face of impending deep bearish seasonality. Click here to see the Short-term Indicant’s history.

SQI Report Card (Consolidated Short/Quick), Status, and Charts

There was one buy signal and no sell signals. In addition to the buy signal, the SQI is signaling hold for 21-ETF’s. They are up 49.2% (annualized at 23.3%) since their respective buy signals an average of 108.8-weeks ago. Although there were no sell signals, the SQI is avoiding eight ETF’s. They are up by an average of 3.0% since their sell signals an average of 10.1-weeks ago.

Short-term Indicant Report Card, Status, and Charts

There were no buy signals and no sell signals. Although there were no buy signals, the Short-term Indicant is signaling hold for 28-ETF’s. They are up an average of 51.6% (annualized 34.1%) since the STI signaled, buy, an average of 77.7-weeks ago. Although there were no sell signals, the Short-term Indicant is avoiding two ETF’s. They are down by an average of 0.2% since their sell signals an average of 18.2-weeks ago.

Keep in mind, the Short-term Indicant is much more active in buying/selling than the Consolidated model. The Quick-term Indicant, which follows, is even more active.

Quick-term Report Card, Status, and Charts

There was one buy signal and no sell signals. In addition to the buy signal, the Quick-term Indicant is signaling hold for 20-ETF’s. They are up by an average of 14.7% (annualized at 32.0%) since the QTI signaled buy an average of 23.7-weeks ago. Although there were no sell signals, the Quick-term Indicant is avoiding nine ETF’s. They are up by an average of 1.9% since their respective sell signals an average of 10.0-weeks ago.

Conflicts Between the Short-term and Quick-term Indicants

Unanimous bullish consensus between the Short-term Indicant and the Quick-term Indicant remains absent. However, a bullish majority prevails, albeit weak. There are ten conflicts, where the Short-term Indicant and the Quick-term Indicant are in disagreement between hold and avoid status. This is typical of meandering behavior. The bias has now shifted in favor of the bull. The various configurations are no longer supporting a bearish bias.

There remains a conflict in market direction. There are seventy-six total hold signals out of a possible 90, while there are thirteen avoid signals. This ratio still supports the life of the bull. The pronounced bearish bias that pervaded the market most of the year is no longer present.

Quick-term Indicant Bull/Bear Health Report

The Quick-term Bull is now showing strength, contrary to its weakening since early February. Only one of the 30-ETF’s is below its bearish yellow curves. The average position of all thirty ETF’s is above bearish yellow by 6.3%, which is down significantly the past several months, but up from the past few days, highlighting an increased bullish bias.

Thirteen ETF’s are above their respective bullish red curves. There is increasing support for the bull, but remains minor in both volume and magnitude. The good news is that it is difficult for the market to crash as long as just one non-contrarian ETF is a red bull.

All thirty ETF average positions are 0.2% below their bullish red curves. This is the sixty-eighth consecutive trading-day where the average relative position to bullish red is negative. This is not necessarily a bearish configuration, while it is certainly a non-bullish, but changing rapidly to support a sustainable bullish direction.

Short-term Indicant Bull/Bear Health Report for ETF’s

The Short-term Bull for ETF’s, although not expired, remain severely weakened. Four of the 30-ETF’s is contacting its breakout line, offering a significant increase in probability of supporting a sustainable bullish breakout. This is still a small number, contacting breakout, but it is the first time in several months that many have contacted their respective breakout lines.

The average distance from breakout contact is 6.5%. The is increasingly bullish.

The average distance from the price and breakdown is 17.5%. Although down significantly the past several months, this configuration still provides non-bearish support. The probability of immediate contact remains low and thus a non-bearish bias is maintained on a short-term basis.

Although the non-bearish baseline (yellow) can rise in a declining market, keep in mind that a 17.5% drop would leave early 2003 buyers in healthy hold positions, while new in-the-market-money would be painful to hold.

None of the ETF’s are contacting their bearish breakdown lines, which offers minimal probability of an immediate crash. Overall, there remains a strong bottom point, but new–in-the-market money would not delight in finding that. Early 2003 investment money is still in good shape with solid earnings and can tolerate bearish behavior without nervously dumping their holdings during such a decline. However, if contact with the breakdown becomes dominant, expect an increased threat of dynamic bearishness and be prepared to sell.

ETF Force Vector Configurations

Twenty-eight of the ETF Force Vectors are in bullish domains, which is up by twenty from last Tuesday. This suggests an increased bullish influence on the market. That is a significant transfer from bearish to bullish domains in the past few days.

You will notice the majority are now heading north. As stated yesterday that supports a renewing bullish bias. There is one little problem, though. The Force Vectors are maturing their bullish cycle. However, many of them established new peaks. The bear very rarely can refute such achievement by the bull. Any bearish response to this phenomenon is typically mild and a not sustainable.

To understand potential financial opportunities, click here to learn to identify Robust Force Vectors. They are visible on the Quick-term Indicant charts.

ETF Force Vectors/Vector Pressure Crossings/Option Signals

Remember, the links contained herein are more visible when reading this on the website.

Click this sentence for Vector Pressure Option Signals. There was one call option buy signal. That is the first call option buy signal since last winter.

Twenty-three ETF Vector Pressures remain in bullish domains. You will notice that Vector Pressures are near the neutral zone, where great bull/bear battles quite often occur. Configurations no longer support a bearish bias. On the contrary, support has shifted to support a bullish bias.

Remember this market remains a bull due to the majority of ETF’s with hold positions from the consolidated Short-term and Quick-term model, but weakening. This bull/hold dominance minimizes the probability of profit potential from aggressive put option plays.

Make certain you sell naked options when the Force Vectors shift direction or within two days of the purchase, whichever occurs first. If you are unfamiliar with this, take the options tour.

Quick-term and Short-term Indicant Summary

Message shift from bearish bias to bullish bias started on Tuesday, August 15, 2006. Although historical standards, economic fundamentals, and the political election cycle favor a bearish dip before November, the Quick-term and Short-term Indicant models are suggesting sustainable bullish behavior. They are configured in a manner that suggests the expected dip before November is behind us.

Based on Force Vector configurations, discontinue writing covered call options.

The Quick-term Bull remains in tact and now growing stronger.

ProFunds Ultra Short mutual fund moves inversely to the QQQQ by exponential amounts. The Consolidated Indicant model is avoiding QQQQ, which supports holding contrarian fund, ProFunds Ultra Short. As stated on August 16, 2006, you may want to sell this fund, given the increasing bullish bias by the various Quick/Short-term Indicant models. The Mid-term Indicant signaled buy for ProFunds Ultra Short after the market close on June 2, 2006. The Consolidated model has yet to signal buy for QQQQ, due to an uncooperative Quick-term Indicant. Continued holding of the ProFunds Ultra Short is increasingly risking your current profit position. The Mid-term Indicant did not signal sell this weekend due to the Quick-term Indicant’s continued avoid signal.

To familiarize yourself with viewing the market from an ETF perspective, click the following update links.

Quick-term ETF Options

Quick-term Indicant for ETF’s

Short-term Indicant for ETF’s

Consolidated Quick-term/Short-term Indicant for ETF’s

Click here to the report card, which is updated weekly, to link to related tours.

Links to the Short-term Indicant and Indicant Volume Indicator are below:

Short-term Indicant for DJIA and NASDAQ

Short-term Indicant Tables for the Dow Jones Industrial Average Index

Short-term Indicant Table for the NASDAQ Composite Index

Indicant Volume Indicator

Indicant Conclusion

Deep bearish seasonality remains a real threat to the stock market. However, the Quick-term and Short-term Indicant shifted from bearish to bullish bias last Tuesday. This is the first bias shift since early February 2006.

The Mid-term Indicant generated several buy signals this weekend due to this shift in bias. This was done in the face of impending deep bearish seasonality, which will be followed by the heart and soul of bullish seasonality.

Read your daily stock market reports, as quick-term attributes can shift quickly.

Do not get lazy and set those stop losses for those stocks and funds that continue to enjoy hold signals.

The daily updates are on the following link.

http://www.indicant.net/Non-Members/Back%20Issues/QT.htm

Hyperlinks

To access all major markets, stocks, funds, economic data, charts, statuses, etc, click the following hyperlink:

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

In addition, once you are inside the website, click on "members update" or simply log in. It is on the top of every page in the web site so you can always find your way back.

Happy Investing,

www.indicant.net

08/20/06

Aug 13, 2006 Indicant Weekly Stock Market Report

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

Dear Indicant Members:

This Week’s Report

Two Weeks Remaining to Deep Bearish Seasonality

As stated last week, the current meandering market with a slight bearish bias is impressive. Record high oil prices, rising interest rates, war, terrorism, a cooling economy, inflationary threats, leaking pipelines, vestiges of voodoo bookkeeping, etc. are reasons for what could be more pronounced bearish expressions.

This market’s performance is impressive as its primary response to ugly news and conditions has been a mere meandering bear. One could only imagine how high this market would be without those constraints. Equally, one can only imagine how low this market could be without robust economic activity. This meandering bear is impressive in the face of fundamental support for dynamic bearish expressions.

Deep bearish seasonality will start on the week of August 28, 2006. Deep bearish seasonality is the predecessor to the heart and soul of bullish seasonality, the latter of which historically generates dynamic bullish behavior. That bullish behavior is more of a function of the depressed market behavior that occurs during deep bearish seasonality. In other words after the market finds a bottom, it can only move up. Deep bearish seasonality, quite often, contains the year’s bottom.

Deep bearish seasonality is the second white line segment on the charts within each year. You will notice that it does not always go down, but it is the most consistent time of the year where the market is bearishly biased.

Click the following link to see the S&P600 Chart.

http://www.indicant.net/Members/Updates/MTIRYS-Mkts-US/MTI-RYS-10-S&P600-Curr.htm

You will notice deep bearish seasonality occurred last year. Notice how the second white line segment moved south during that time. When you look at this chart, which is the Mid-term Indicant, that bearish expression appears harmless. From a Mid-term Indicant perspective, that bearish expression was harmless as this index simply endured a mild correction. No damage of inflicted on this power Mid-term Indicant bull leg.

However, many of you recall the deep bearish expression on a Quick-term and Short-term basis late last year. From a Quick-term and Short-term perspective, that short-period last year offered some intense wonderment about your long-term hold positions. Many of you recall several put option buy signals during that time that performed well.

Sour fundamentals, such as rising energy costs, the corresponding threat of inflation, and rising interest rates, alone, support a pronounced bearish expression in this year’s deep bearish seasonality. However, the Indicant does not attempt to forecast magnitude. It only advises of direction.

Of course, the stock market delights in periodic aberrations from the expected normalcy. The Mid-term Indicant did not generate many sell signals this past weekend, but more noticeably, there were no buy signals. Some of the stocks and funds are configured in favor of buy signals, but the impending deep bearish seasonality prevented the execution of those buy signals.

You can quickly scan over 100 years of deep bearish seasonality on the charts by clicking the following link. You will notice exceptions when deep bearish seasonality is not executed. However, you will be impressed with the degree of consistency and also several deep bearish expressions during this period of the year.

http://www.indicant.net/Non-Members/Tours/MTIRYS-Mkts-US/MTIRYS-0005-01-DJI.htm

The Mid-term Indicant has sensed that deep bearish seasonality will be executed in the next few weeks. After it is over, be prepared for robust bullishness during the heart and soul of bullish seasonality. This risk to buy now is too high, given the high probability of the impending execution of deep bearish seasonality.

Weekly Buy/Sell Summary – Stocks and Funds

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

In addition to the sell signals, the Mid-term Indicant is avoiding 175-stocks and funds of the 345 tracked by the Indicant. The avoided stocks and funds are down an average of 5.7% since the Mid-term Indicant signaled sell an average of 16.7-weeks ago.

There were 86-stocks and funds avoided at this time last year. The avoided stocks and funds one year ago were down an average of 17.3% since their respective sell signals an average of 20.9-weeks earlier. Two years ago, on August 13, 2004, the Mid-term Indicant was avoiding 133-stocks and funds that were down an average of 29.1% since their respective sell signals an average of 41.4-weeks earlier. Three years ago on August 9, 2003, there were only 33-avoided stocks and funds. They were down 11.0% from their respective sell signals an average of 15.0-weeks earlier. On August 9, 2002, the Mid-term Indicant was avoiding 168-stocks and funds out of 294-tracked. They were down by an average of 37.2% since their sell signals an average of 15.5-weeks earlier.

Although there were no buy signals, the Mid-term Indicant is signaling hold for 175 of the 345-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 141.8%. That annualizes to 65.3%. The Mid-term Indicant has been signaling hold for these 175-stocks and funds for an average of 112.9-weeks.

One year ago on August 12, 2005, the Mid-term Indicant was holding 230-stocks and funds out of the 320 tracked at that time for an average of 88.2-weeks. Those 230-stocks and funds were up by an average of 102.4% (annualized at 60.4%). The Mid-term Indicant was signaling hold for 155-stocks and funds of the 296 tracked two years ago on August 13, 2004. They were up by an average of 77.0% (annualized at 61.5%) since their respective buy signals an average of 65.1-weeks earlier. There were 199-stocks and funds with hold signals on August 9, 2003 since their buy signals an average of 30.6-weeks earlier. They were up 48.9% (annualized at 82.9%). The Indicant was only tracking 296 stocks and funds in 2002-2004. On August 9, 2002, the Mid-term Indicant was signaling hold for only 51-stocks and funds out of 295-tracked. They were up by an average of 26.7% (annualized at 71.0%) since their buy signals 19.6-weeks earlier.

The Quick/Short-term Indicant Stock Market Report

The Daily Indicant Stock Market Report for the last trading day of the current week is near the conclusion of this weekly stock market report.

The Indicant Stock Market Report’s Secular Market Blend

This section is a repeated each week with a few modifications, reflecting recent secular influences and performance data. Although appearing redundant at times, it is important to read this section to keep abreast of secular market shifts. Quantifications are updated each week. Remember, secular shifts can last twenty-five or more years. Fortunately, secular market movements do not deter mid-term, short-term, and quick-term profit opportunities. However, they can wreak havoc to the long-term investors’ plans and those that buy and hold.

Keep in mind, the heart and soul of bullish seasonality (Nov-Jan) is historically bullish regardless of fundamental reason or political cycle. The market can find a cyclical bottom in this year’s mid-term election year since the heart and soul of bullish seasonality elevated the market right on cue. The market accommodated with typical bullishness from October 2005 through January 2006. As stated consistently since October 2005, it would not be surprising for a nice rise during the heart and soul of bullish seasonality only to be followed with bearish expressions after January 2006. That configuration has been occurring with some minor disruptive bullish spurts in eight of the last twenty-two weeks.

The heart and soul of bullish seasonality, ending January 31, 2006, demonstrated bullish normalcy. The market had been more or less a meanderer, but recently succumbed to bearish influences on both a fundamental basis and historical conformance basis. Since January 31, 2006, the S&P500 is down 1.0%, the NASDAQ is down 10.8%, and the Dow is up 2.1%.

The heart and soul of bullish seasonality, which ended on January 31, 2006 produced gains of 2.8%, 4.2%, and 7.2% for the Dow, S&P500, and NASDAQ, respectively. Historical standards suggest those gains will be wiped out before October of this year. As you can see, from the aforementioned paragraph this mid-term election year has already wiped out the NASDAQ’s gains from the heart and soul of bullish seasonality.

Historical standards also suggest the market should be down from September 30, 2005 by early October of this year so it can advance during the 2006 heart and soul of bullish seasonality. The Dow is up 4.9% since September 30, 2005. The S&P500 is up by 3.1% and the NASDAQ is down by 4.4%. Although still up slightly from then, expect this result in the next two months (August and September).

The Dow30 found bottom in the last presidential mid-term election year on October 9, 2002 at 7,286.27. The NASDAQ found bottom on the same day at 1114.11. Finding cyclical bottoms in mid-term election years is common. The Dow is up 52.2% from the last mid-term presidential election year bottom. The NASDAQ is up 84.7% since October 9, 2002. The S&P600, small caps, is up even more by 107.1% since October 9, 2002.

The NASDAQ is down 59.2% from its historical high of 5048.62 on March 9, 2000. The Dow is down 5.4% from its historical high of 11723 on January 13, 2000. The S&P500 is down 17.1% since its all time high of March 23, 2000. So far, the new century, 2000 inclusive, has not been kind to long-term investors. Historical standards suggest the NASDAQ will not return to historical high until 2025 or so. A 2000 buyer and holder will not be back to break-even until then, assuming zero inflation. Including inflation, a thirty-year-old investor will be in his or her eighties before the NASDAQ profits from 2000 investment dollars.

For example, the Dow fell 4.4% from January 31, 2004 through October 31, 2004. The NASDAQ fell by the same amount. The Dow fell 0.5% from January 31, 2005 through October 31, 2005, while the NASDAQ was up only 2.8%. Since January 31, 2006, the Dow is up 2.1% and the NASDAQ is down 10.8%. Right now, the major indices has offered the mid-term election year to find a bottom since it is now properly depressed since the last heart and soul of bullish seasonality concluded on January 31, 2006.

As stated since late October 2005 and early November 2005, do not be surprised at increasing quick-term and short-term bullish expressions in the immediate future, followed by increased bearish expressions early next year. That prognosis occurred with those expectations with the normal bullish cycle that began in October 2005. However, each bearish cycle since January 31, 2006 has been followed by a bullish response and thus the reason for a meandering conclusion. As stated the past several months, it is time for the market to turn bearish. Fundamentals and historical standards support bearish behavior. That has indeed occurred in seven of the past eleven 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

Stock and Fund Update

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

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

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

Economic Conditions – Inflation, Currency, Interest Rates

You will notice a significant directional shift in some interest rates. Several CD’s moved south last week after the Federal Reserve Board decided to hold interest rates steady. If this policy holds for the next few months, the heart and soul of bullish seasonality could be stimulated with a dynamic bullish cycle later this year.

However, there is one problem. Commodity prices continue to rise as capitalism has accelerated increasing demands against finite resources. The problem with the capitalists right now is the lag of capitalization. In other words extraction, conversion, and delivery of product is not increasing as rapidly as the demand. The imposes upward pricing pressures.

The stock market does not like inflation (or deflation), just as much as it does not like high interest rates. The euphoria of the Fed’s recent decision hold rates steady was short-lived and did not excite the stock market as much as many had hoped. If the Fed continues not hiking rates with a rising consumer price index, expect bearish behavior. If the Fed decides to hike rates, expect slower capitalization and continuing inflationary pressures. The Fed can only stifle the demand part of the supply demand ratio. Only capitalists can influence the supply portion of that dynamic.

Amazingly, the Canadian dollar demonstrated weakness with the flat rate policy in the U.S. That runs contrary to traditional patterns. The Canadian government does not want a strong Canadian dollar and will exert as much influence as it can, but as long as oil prices continue to rise. When trading currencies, never fight the trend. The trick is to differentiate a shift in trend from a cyclical spurt. A few data points here and there are meaningless and only the losers chase those. The Canadian dollar trend continues with strengthening.

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% two-hundred and fourteen weeks ago since the MTI buy signal on April 13, 2001. Last week it closed up 290.0%. The current annualized growth rate since the April 13, 2001 buy signal is 53.6%. After falling sharply 60-weeks ago, it bounced north in 43-weeks of the past 60-weeks. This moved mildly south last week, after two bullish weeks.

Fidelity Gold, Fund #28, is up 38.7% since the Mid-term Indicant signaled buy on August 26, 2005. That annualizes to 39.8%. This fund should do well in the event this market turns into a 1970’s type of market. This fund also fell slightly last week.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 263.7% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 65.2%. This fund moved slightly south last week after two bullish weeks.

Vanguard Energy #18, VGENX, is up 178.9% (annualized at 52.6%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 126.7% (annualized at 46.6%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 128.7% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 42.5%. Some of these energy related funds were slightly down last week.

These funds should do well even if the market turns extremely bearish. Continue to hold them until the Mid-term Indicant signals sell.

The SQI (Consolidated Short-term and Quick-term Indicant) model signaled buy for the GLD-ETF#11 on August 3, 2005. It is up 44.1% since then. It is annualized at 42.5%. This ETF continues to be bullishly biased. It moved mildly south last week.

The SQI signaled buy for ETF#03 – Energy and Natural Resources on March 26, 2003. It is up 170.5% (annualized at 49.7%).

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

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

All ten major indices are bulls. They are up by an average of 12.8% since the Mid-term Indicant signaled bull an average of 70-weeks ago. That annualizes to 9.5%, which is down significantly from the past three years. This is due to the bear signals for the S&P400 and S&P600 Indexes on July 21, 2006, which had been receiving a bull signal since October 25, 2002. Those two indices received new bull signals a few weeks later, which are still holding up.

The Mid-term Indicant Dow Jones Industrial Average performance is now at $33,588,300. That beats buy and hold performance of $1,696,906 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $163,554. That beats buy and hold’s $124,081 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $172,170 that beats buy and hold’s $71,349 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 1,879.0%, 31.8%, and 141.3%, respectively, for these indices as of this past week.

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

Divergence versus Convergence

No pattern was detectable last week. There was flat behavior. Bearish seasonality and deep bearish seasonality is lurking. However, the attributes are not showing any pattern at this time.

Mid-term Indicant Positions - NASDAQ100 Stocks

Click here to see NASDAQ100 report card history.

Click here for Mid-term Indicant Table of NASDAQ 100 Stocks.

Mid-term Indicant Positions - Dow Jones 30 Industrial Stocks

Click here to see Dow 30 report card history.

Click here for Mid-term Indicant - Table of Dow Jones Industrial Average Stocks.

Mid-term Indicant Positions - Dow Jones 15 Utility Stocks

Click here to see Dow Utilities Report Card history.

Click here for Mid-term Indicant - Dow Jones Utility Stocks Table.

Mid-term Indicant Positions - Indicant Selected Stocks

Click here to see Indicant Select Stock Report Card history.

Click here for Mid-term Indicant Table of Indicant Selected Stocks.

Mid-term Indicant Positions - Mutual Funds

Click here to see Mutual Fund Report Card history.

The Mid-term Indicant signaling hold for ProFunds Ultra Short due, in part, to the Quick-term Indicant’s avoid signal of QQQQ. This fund is up 18.0% since the Mid-term Indicant signaled buy on June 2, 2006. It is annualizing at 92.5%. A rough plan suggests holding onto it until September. Detailed specific action will be displayed on the daily report and the Mid-term Indicant.

Click here for Mid-term Indicant Table of Mutual Funds.

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

Long Term Indicant Positions - Dow Jones Industrial Average

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

The Dow is up 283.0% (annualized at 19.1%) since the Long-term Indicant signaled bull 771-weeks ago. Economic data is the primary influence on the Long-term Indicant. The recession, deflation, and inflation have not been strong enough to signal bear. A link to the Long-term Indicant is below:

http://www.indicant.net/Members/Updates/LTI-Markets-DJIA/DJIA.htm

Quick/Short-term Indicant Stock Market Report - Summary

Quick-term Red Bulls: Five; Limited non-bearish support.

Short-term/Quick-term Non-Bearishness: Countering “sustainable” deep bearish ambition.

Force Vectors: Favoring a bearish influence, but with some timidity.

Vector Pressure: Near full bearish support, but showing some resistance.

Long-term Hold Positions: Safe, but weakening.

Current Quick-term Bias: Increasing bearish bias.

Overall Market Status: Bearish on a Quick-term basis.

Profit Potential from Naked Options: Mild volatility is not supportive of dynamic profits.

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

The NASDAQ Indicant Volume Indicator continues moving lethargically. The Big Board’s Indicant Volume Indicator recent miniature robust cycle pinnacled and is also renewing a lethargic pattern. If this configuration persists, your longer-term hold positions should be safe. Keep your eye on the Indicant Volume Indicator. A robust cycle coupled with dynamic bearishness will favor sustainable and dynamic bearish behavior.

The Dow Jones Industrial Average is up 3.1% since the Short-term Indicant signaled bear on February 8, 2006. The NASDAQ is down 9.1% since the Short-term Indicant signaled bear February 3, 2006. The Short-term Indicant for these two major market indices continues with a bearish bias. Click here to see the Short-term Indicant’s history.

SQI Report Card (Consolidated Short/Quick), Status, and Charts

There were no buy signals and no sell signals. Although there were no buy signals, the SQI is signaling hold for 20-ETF’s. They are up 43.8% (annualized at 19.9%) since their respective buy signals an average of 113.2-weeks ago. Although there were no sell signals, the SQI is avoiding ten ETF’s. They are down by an average of 0.7% since their sell signals an average of 9.4-weeks ago.

Short-term Indicant Report Card, Status, and Charts

There were no buy signals and no sell signals. Although there were no buy signals, the Short-term Indicant is signaling hold for 21-ETF’s. They are up an average of 64.3% (annualized 32.3%) since the STI signaled, buy, an average of 102.5-weeks ago. Although there were no sell signals, the Short-term Indicant is avoiding nine ETF’s. They are down by an average of 1.3% since their sell signals an average of 8.3-weeks ago.

Keep in mind, the Short-term Indicant is much more active in buying/selling than the Consolidated model. The Quick-term Indicant, which follows, is even more active.

Quick-term Report Card, Status, and Charts

There were no buy signals and no sell signals. Although there were no buy signals, the Quick-term Indicant is signaling hold for 13-ETF’s. They are up by an average of 20.4% (annualized at 29.8%) since the QTI signaled buy an average of 35.2-weeks ago. Although there were no sell signals, the Quick-term Indicant is avoiding 17-ETF’s. They are down by an average of 0.7% since their respective sell signals an average of 9.2-weeks ago.

Conflicts Between the Short-term and Quick-term Indicants

Unanimous bullish consensus between the Short-term Indicant and the Quick-term Indicant remains absent. However, a bullish majority prevails, albeit weak. There are eight conflicts, where the Short-term Indicant and the Quick-term Indicant are in disagreement between hold and avoid status. This is typical of meandering behavior, although with a bearish bias. The various configurations continue to suggest increasing bearishness.

There remains a conflict in market direction. There are fifty-five total hold signals out of a possible 90, while there are thirty-five avoid signals. This ratio still supports the life of the bull, but the bearish bias continues to persist. Historical seasonal, political cycles, etc. support this in addition to bearish Short-term Indicant and Quick-term Indicant configurations and related attributes.

Quick-term Indicant Bull/Bear Health Report

The Quick-term Bull continues to weaken, as stated since early February. Eleven of the 30-ETF’s are below their respective bearish yellow curves. The average position of all thirty ETF’s is above bearish yellow by a meager 3.4%, which is down significantly the past several weeks/months.

Only five ETF’s are above their bullish red curves. That means there is some support for the bull, but remains minor in both volume and magnitude.

All thirty ETF average positions are 3.2% below their bullish red curves. This is the sixty-third consecutive trading-day where the average relative position to bullish red is negative. This is not necessarily a bearish configuration, while it is certainly a non-bullish.

Short-term Indicant Bull/Bear Health Report for ETF’s

As stated over ten weeks ago, the Short-term Bull for ETF’s has not expired but severely weakened. None of the 30-ETF’s are contacting their breakout lines, offering zero probability of a broad-based bullish breakout on a short-term horizon.

The average distance from breakout contact is 9.2%. The market would require tremendous energy just to climb back up to breakout. By the time it got there with current configurations, exhaustion would set in and the bear would resume control. As stated off and on since February, bullish expressions should be interpreted as a mere bullish spurt.

The average distance from the price and breakdown is 14.2%. Although down significantly the past few weeks, this configuration still provides some non-bearish support. The probability of immediate contact remains low and thus a non-bearish bias is maintained on a short-term basis. However, this non-bearish protection has been weakening for several months.

Although the non-bearish baseline (yellow) can rise in a declining market, keep in mind that a 14.2% drop would leave early 2003 buyers in healthy hold positions, while new in-the-market-money would be painful to hold.

ETF Force Vector Configurations

Only two of the ETF Force Vectors is in bullish domains, which is down significantly since late last week. That is a significant transfer from bullish to bearish domains in the past few days. Although there is no obvious robust bearish cycle underway, they have peaked from their last upward cycle. Watch out if this impending bearish cycle becomes robust.

You will notice the majority are heading south, which supports a bearish bias. Their configuration, though, is not constructed with bearish aggressiveness, although still in support of the bearish bias.

To understand potential financial opportunities, click here to learn to identify Robust Force Vectors. They are visible on the Quick-term Indicant charts.

ETF Force Vectors/Vector Pressure Crossings/Option Signals

Remember, the links contained herein are more visible when reading this on the website.

Click this sentence for Vector Pressure Option Signals. There were six put option buy signals today, bringing the total to thirty-six. That is the fifth consecutive day of put option buy signals. Many of these were triggered by a shift from positive to negative vector pressure.

Eighteen ETF Vector Pressures remain in bullish domains. You will notice that Vector Pressures are near the neutral zone, where great bull/bear battles quite often occur. Configurations continue to support a bearish bias.

Volatility continues to be subsiding and not friendly to naked option plays. The market is too committed to a meandering and mildly bearish influence for sustainable volatility.

Make certain you sell naked options when the Force Vectors shift direction or within two days of the purchase, whichever occurs first. If you are unfamiliar with this, take the options tour.

Very few attributes remain that prevents bearish dominance that is both sustainable and deep, but there are a few. Wait for the obvious.

Quick-term and Short-term Indicant Summary

Nothing has changed for several weeks and will not change until there is a change. Historical standards, economic fundamentals, and the political election cycle favor a bearish dip before November. Wait for the aforementioned attributes in this stock market report to suggest bearish dominance before implementing behavior consistent with obvious bearish dominance.

As stated since July 31, 2006 maturing (and now declining Force Vectors) increased the probability that writing covered call options should yield increasing profitability. You can now be more aggressive at this, as Force Vectors are now moving south. Make certain the expiration date on these options extend to September’s third Friday. Force Vector configurations are not strongly supporting bearish dominance though.

The Quick-term Bull remains in tact. It is cyclically weaker than earlier this year, but a bull nonetheless. The Quick-term Bull is barely hanging on while the Short-term Bull remains stronger, but weakening.

ProFunds Ultra Short mutual fund moves inversely to the QQQQ by exponential amounts. The Consolidated Indicant model is avoiding QQQQ, which supports holding contrarian fund, ProFunds Ultra Short. The Mid-term Indicant signaled buy for ProFunds Ultra Short after the market close on June 2, 2006. Watch this weekend to see how the Mid-term Indicant interprets its behavior.

To familiarize yourself with viewing the market from an ETF perspective, click the following update links.

Quick-term ETF Options

Quick-term Indicant for ETF’s

Short-term Indicant for ETF’s

Consolidated Quick-term/Short-term Indicant for ETF’s

Click here to the report card, which is updated weekly, to link to related tours.

Links to the Short-term Indicant and Indicant Volume Indicator are below:

Short-term Indicant for DJIA and NASDAQ

Short-term Indicant Tables for the Dow Jones Industrial Average Index

Short-term Indicant Table for the NASDAQ Composite Index

Indicant Volume Indicator

Indicant Conclusion

Last week’s bearish expression was not surprising. Deep bearish seasonality is approaching. This is not the time for aggressively investing in the stock market.

Read your daily stock market reports, as quick-term attributes can shift quickly.

Do not get lazy and set those stop losses for those stocks and funds that continue to enjoy hold signals.

The daily updates are on the following link.

http://www.indicant.net/Non-Members/Back%20Issues/QT.htm

Hyperlinks

To access all major markets, stocks, funds, economic data, charts, statuses, etc, click the following hyperlink:

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

In addition, once you are inside the website, click on "members update" or simply log in. It is on the top of every page in the web site so you can always find your way back.

Happy Investing,

www.indicant.net

08/13/06

Aug 6, 2006 Indicant Weekly Stock Market Report

Dear Indicant Members:

This Week’s Report

Meanderer is Impressive; Deep Bearish Seasonality Lurks

The meandering market of 2006 is indeed impressive. Unprecedented rising oil prices and the corresponding threat of inflation or rising interest rates and/or both fundamentally offers significant reasons to expect bearish influences on the market. The presidential post election year of 2005 did not induce the historical normalcy of deep bearish expressions. The current mid-term election year is not producing its historical normalcy of finding a sharp market bottom.

The war in Iraq did not stimulate the normal bearishness that accompanies war. Actually, the current bull market, in terms of Mid-term Indicant buy signals for mutual funds, coincided with the first bombing in 2003 in Iraq. Why would bullish enthusiasm coincide with a war?

Strategically, the economy remains petroleum-based. Although not as a big influence on the economy as in the 1970’s, the world’s economy remains dependent on an available and reliable supply chain of crude oil and gasoline. Western influences in the Middle East depresses OPEC’s independence and propensity of militancy. The dictators, who run the Middle East, understand one and only one thing; power. That is what they seek and when they see something stronger that is nearby, they feel threatened. As long as the U.S. military is in Iraq, oil’s supply chain will be assumed to be reliable. OPEC’s desired militancy will remain depressed as long as they feel threatened.

The stock market apparently finds comfort in knowing of this depressant to OPEC’s potential actions. The stock market senses there is little threat to fueling the international economic engine. The stock market senses a rising number of capitalists around the world. There will be more buyers of goods and services and more producers. With the increasing number of producers, competitiveness will invite higher productivity and lower costs.

The meandering market of 2005 and so far in 2006 is indeed impressive, when considering the fundamental and political justification for increased bearishness.

The problem confronting those of you who desire continuing bullishness is deep bearish seasonality. There is a short period each year where deep bearish seasonality is influential on the market. It typically precedes the heart and soul of bullish seasonality.

Deep bearish seasonality begins on Friday, September 1 this year. Click the following link to view deep bearish seasonality in the current political cycle.

http://www.indicant.net/Members/Updates/MTIRYS-Mkts-US/MTI-RYS-01-DJIA-Curr.htm

Notice the white line segments on the chart. Notice that four of the last five white line segments moved to the south. The second white line segment of each year is deep bearish seasonality. Notice that southerly movement in 2004 and 2005.

Deep bearish seasonality does not mean the market always moves deeply to the south during that period. This discovery by the Indicant is based on the consistency in which the market moves south over the past hundred years or so for a few weeks each year. Sometimes that movement is deep and sometimes not. But, there is generally a southerly movement for a few weeks each year. Remember, the Indicant does not care about magnitude as it discriminates equally against a five percent bear and say a 50% bear. There are many theories to this, but the one that crops up is that simple human fatigue from the summer heat creeps into the market.

To view the historical record and refresh your memories, click the following link:

http://www.indicant.net/Non-Members/Tours/MTIRYS-Mkts-US/MTIRYS-0005-01-DJI.htm

You will notice that no historical model is perfect. That is why the Indicant was invented. That is too spot variance from historical normalcy. That is why Indicant readers enjoyed the dynamic bullishness in 2003 and avoided the bearishness of 2001 and 2002.

Regardless of the reasons why deep bearish seasonality occurs, the historical record and its consistency is worthy of notation. This is not justification for selling all your stocks. However, it is justification for holding your new money in cash until the heart and soul of bullish seasonality introduces itself, which generally follows deep bearish seasonality.

The various Indicant models will inform you of reasons to sell your stocks.

Weekly Buy/Sell Summary – Stocks and Funds

The Mid-term Indicant generated four buy signals and three sell signals. Again, the buy signals were strictly technical. By rule, stocks and funds are not avoided when above their bullish red curve, regardless of market behavior. Some stock prices continue to rise even in the face of dynamic bears. The Mid-term Indicant, although multi-variant, will always signal buy when any security moves above its bullish red curve, regardless of any other variables. That is sole source of these buy signals this weekend. It would not be surprising to see some of them reverse to sell signals next weekend. You may want to track intraweek performance if you choose to buy. Greater buying opportunities will occur later this year.

In addition to the sell signals, the Mid-term Indicant is avoiding 173-stocks and funds of the 345 tracked by the Indicant. The avoided stocks and funds are down an average of 4.7% since the Mid-term Indicant signaled sell an average of 15.9-weeks ago.

There were 87-stocks and funds avoided at this time last year. The avoided stocks and funds one year ago were down an average of 17.2% since their respective sell signals an average of 19.9-weeks earlier. Two years ago, on August 6, 2004, the Mid-term Indicant was avoiding 130-stocks and funds that were down an average of 27.8% since their respective sell signals an average of 40.5-weeks earlier. Three years ago on August 2, 2003, there were only 27-avoided stocks and funds. They were down 23.3% from their respective sell signals an average of 28.0-weeks earlier. On August 2, 2002, the Mid-term Indicant was avoiding 241-stocks and funds out of 294-tracked. They were down by an average of 32.0% since their sell signals an average of 9.3-weeks earlier.

In addition to the buy signals, the Mid-term Indicant is signaling hold for 173 of the 345-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 149.5%. That annualizes to 67.7%. The Mid-term Indicant has been signaling hold for these 173-stocks and funds for an average of 114.8-weeks.

One year ago on August 5, 2005, the Mid-term Indicant was holding 229-stocks and funds out of the 320 tracked at that time for an average of 88.7-weeks. Those 224-stocks and funds were up by an average of 102.6% (annualized at 60.2%). The Mid-term Indicant was signaling hold for 160-stocks and funds of the 296 tracked two years ago on August 6, 2004. They were up by an average of 75.8% (annualized at 61.1%) since their respective buy signals an average of 64.5-weeks earlier. There were 260-stocks and funds with hold signals on August 2, 2003 since their buy signals an average of 27.1-weeks earlier. They were up 44.8% (annualized at 85.9%). The Indicant was only tracking 296 stocks and funds in 2004 and 2003. On August 2, 2002, the Mid-term Indicant was signaling hold for only 21-stocks and funds out of 295-tracked. They were up by an average of 63.1% (annualized at 64.8%) since their buy signals 50.6-weeks earlier.

The Quick/Short-term Indicant Stock Market Report

The Daily Indicant Stock Market Report for the last trading day of the current week is near the conclusion of this weekly stock market report.

The Indicant Stock Market Report’s Secular Market Blend

This section is a repeated each week with a few modifications, reflecting recent secular influences and performance data. Although appearing redundant at times, it is important to read this section to keep abreast of secular market shifts. Quantifications are updated each week. Remember, secular shifts can last twenty-five or more years. Fortunately, secular market movements do not deter mid-term, short-term, and quick-term profit opportunities. However, they can wreak havoc to the long-term investors’ plans and those that buy and hold.

The current Mid-term Bull market and buying barrage started nearly years ago in late 2002. The last mid-term election year of 2002 conformed perfectly to historical standards with deep bearish expressions. Will it be consistent in 2006? Bearish behavior before October 2006 will be required for historical conformance. As stated the past few weeks, the market appears to be positioning itself for this bearish compliance. Bearish expressions in three of the past five weeks have demonstrated this historical conformance.

Keep in mind, the heart and soul of bullish seasonality (Nov-Jan) is historically bullish regardless of fundamental reason or political cycle. The market can find a cyclical bottom in this year’s mid-term election year since the heart and soul of bullish seasonality elevated the market right on cue. The market accommodated with typical bullishness from October 2005 through January 2006. As stated consistently since October 2005, it would not be surprising for a nice rise during the heart and soul of bullish seasonality only to be followed with bearish expressions after January 2006. That configuration has been occurring with some minor disruptive bullish spurts in eight of the last twenty-one weeks.

The heart and soul of bullish seasonality, ending January 31, 2006, demonstrated bullish normalcy. The market had been more or less a meanderer, but recently succumbed to bearish influences on both a fundamental basis and historical conformance basis. Since January 31, 2006, the S&P500 is down 0.1%, the NASDAQ is down 9.6%, and the Dow is up 3.5%.

The heart and soul of bullish seasonality, which ended on January 31, 2006 produced gains of 2.8%, 4.2%, and 7.2% for the Dow, S&P500, and NASDAQ, respectively. Historical standards suggest those gains will be wiped out before October of this year. As you can see, from the aforementioned paragraph this mid-term election year has already wiped out the NASDAQ’s gains from the heart and soul of bullish seasonality.

Historical standards also suggest the market should be down from September 30, 2005 by early October of this year so it can advance during the 2006 heart and soul of bullish seasonality. The Dow is up 6.4% since September 30, 2005. The S&P500 is up by 4.1% and the NASDAQ is down by 3.1%. Although still up slightly from then, expect this result in the next two months (August and September).

The Dow30 found bottom in the last presidential mid-term election year on October 9, 2002 at 7,286.27. The NASDAQ found bottom on the same day at 1114.11. Finding cyclical bottoms in mid-term election years is common. The Dow is up 54.3% from the last mid-term presidential election year bottom. The NASDAQ is up 87.1% since October 9, 2002. The S&P600, small caps, is up even more by 113.1% since October 9, 2002.

The NASDAQ is down 58.7% from its historical high of 5048.62 on March 9, 2000. The Dow is down 4.1% from its historical high of 11723 on January 13, 2000. The S&P500 is down 16.2% since its all time high of March 23, 2000. So far, the new century, 2000 inclusive, has not been kind to long-term investors. Historical standards suggest the NASDAQ will not return to historical high until 2025 or so. A 2000 buyer and holder will not be back to break-even until then, assuming zero inflation. Including inflation, a thirty-year-old investor will be in his or her eighties before the NASDAQ profits from 2000 investment dollars.

For example, the Dow fell 4.4% from January 31, 2004 through October 31, 2004. The NASDAQ fell by the same amount. The Dow fell 0.5% from January 31, 2005 through October 31, 2005, while the NASDAQ was up only 2.8%. Since January 31, 2006, the Dow is up 3.5% and the NASDAQ is down 9.6%. Right now, the major indices has offered the mid-term election year to find a bottom since it is now properly depressed since the last heart and soul of bullish seasonality concluded on January 31, 2006.

Since January 31, 2004, the Dow is up 7.2% and the NASDAQ is down 0.9%. Ninety-percent, plus, of that growth occurred during the heart and soul of bullish seasonality (Nov-Jan) of each year since late 2003. As you can see, the market has been relatively flat, except for the historical normal bullish cycles during the heart and soul of bullish seasonality and some recent contrarian bullish behavior, the latter of which, has been wiped out.

As stated since late October 2005 and early November 2005, do not be surprised at increasing quick-term and short-term bullish expressions in the immediate future, followed by increased bearish expressions early next year. That prognosis occurred with those expectations with the normal bullish cycle that began in October 2005. However, each bearish cycle since January 31, 2006 has been followed by a bullish response and thus the reason for a meandering conclusion. As stated the past several months, it is time for the market to turn bearish. Fundamentals and historical standards support bearish behavior. That has indeed occurred in seven of the past eleven 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

Stock and Fund Update

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

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

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

Economic Conditions – Inflation, Currency, Interest Rates

This paragraph is the same as last week. Interest rates continue to rise, regardless of mumbo-jumbo from the Federal Reserve Board. They will continue to do so, as long as inflation continues to threaten the Fed’s legacy, which has a higher priority than their periodic rhetoric about the contrary. As stated the past few weeks, this fundamental supports a bearish bias.

Oil prices continue moving north. Gold continues to rebound. This behavior supports inflationary ambitions. The Fed only has one tool to fend off inflation and that is raising interest rates. The bull in the market does not like that at current levels.

As expected, the U.S. Dollar has resumed its strengthening from its cyclical departure from its recent underlying strengthening trend.

Even the Canadian Dollar weakened against the U.S. Dollar, but do not mistake it underlying trend of strengthening. As repeatedly stated the Canadian dollar should continue to strengthen against the U.S. dollar due to anticipated increasing exports of Athabasca tar sand oil from Alberta. Continue to hold your Canadian dollars, even though it weakened a few cents the past few weeks.

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% two-hundred and thirteen weeks ago since the MTI buy signal on April 13, 2001. Last week it closed up 294.5%. The current annualized growth rate since the April 13, 2001 buy signal is 54.7%. After falling sharply 59-weeks ago, it bounced north in 43-weeks of the past 59-weeks. After falling sharply in the prior two weeks, the fund moved solidly to the north the past two weeks.

Fidelity Gold, Fund #28, is up 39.3% since the Mid-term Indicant signaled buy on August 26, 2005. That annualizes to 41.2%. This fund should do well in the event this market turns into a 1970’s type of market. This fund also moved north the past two weeks.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 268.8% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 66.8%. This fund has moved south in six of the past nine weeks, but it moved solidly to the north the past two weeks.

Vanguard Energy #18, VGENX, is up 179.2% (annualized at 53.0%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 132.5% (annualized at 49.1%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 130.5% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 43.3%. Some of these energy related funds were slightly up last week after a sharp rise week before last.

These funds should do well even if the market turns extremely bearish. Continue to hold them until the Mid-term Indicant signals sell.

The SQI (Consolidated Short-term and Quick-term Indicant) model signaled buy for the GLD-ETF#11 on August 3, 2005. It is up 47.7% since then. It is annualized at 46.9%. This ETF continues to be bullishly biased. It moved mildly to the north the past two weeks.

The SQI signaled buy for ETF#03 – Energy and Natural Resources on March 26, 2003. It is up 169.0% (annualized at 49.6%). It expressed bearishness in thirteen of the last thirty-one weeks. This fund was flat last week.

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

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

All ten major indices are bulls. They are up by an average of 15.2% since the Mid-term Indicant signaled bull an average of 69-weeks ago. That annualizes to 11.4%, which is down significantly from the past three years. This is due to the bear signals for the S&P400 and S&P600 Indexes on July 21, 2006, which had been receiving a bull signal since October 25, 2002.

The Mid-term Indicant Dow Jones Industrial Average performance is now at $34,049,714. That beats buy and hold performance of $1,720,079 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $165,183. That beats buy and hold’s $125,317 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $174,458 that beats buy and hold’s $72,297 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 1,879.0%, 31.8%, and 141.3%, respectively, for these indices as of this past week.

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

Divergence versus Convergence

No pattern was detectable last week. There was flat behavior. Bearish seasonality and deep bearish seasonality is lurking. However, the attributes are not showing any pattern at this time.

Mid-term Indicant Positions - NASDAQ100 Stocks

Click here to see NASDAQ100 report card history.

Click here for Mid-term Indicant Table of NASDAQ 100 Stocks.

Mid-term Indicant Positions - Dow Jones 30 Industrial Stocks

Click here to see Dow 30 report card history.

Click here for Mid-term Indicant - Table of Dow Jones Industrial Average Stocks.

Mid-term Indicant Positions - Dow Jones 15 Utility Stocks

Click here to see Dow Utilities Report Card history.

Click here for Mid-term Indicant - Dow Jones Utility Stocks Table.

Mid-term Indicant Positions - Indicant Selected Stocks

Click here to see Indicant Select Stock Report Card history.

Click here for Mid-term Indicant Table of Indicant Selected Stocks.

Mid-term Indicant Positions - Mutual Funds

Click here to see Mutual Fund Report Card history.

The Mid-term Indicant signaling hold for ProFunds Ultra Short due, in part, to the Quick-term Indicant’s avoid signal of QQQQ. This fund is up 15.2% since the Mid-term Indicant signaled buy on June 2, 2006. It is annualizing at 86.6%. A rough plan suggests holding onto it until September.

Click here for Mid-term Indicant Table of Mutual Funds.

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

Long Term Indicant Positions - Dow Jones Industrial Average

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

The Dow is up 288.3% (annualized at 19.5%) since the Long-term Indicant signaled bull 770-weeks ago. Economic data is the primary influence on the Long-term Indicant. The recession, deflation, and inflation have not been strong enough to signal bear. A link to the Long-term Indicant is below:

http://www.indicant.net/Members/Updates/LTI-Markets-DJIA/DJIA.htm

Quick/Short-term Indicant Stock Market Report - Summary

Quick-term Red Bulls: Ten; Limited non-bearish support.

Short-term/Quick-term Non-Bearishness: Countering “sustainable” deep bearish ambition.

Force Vectors: Favoring a bearish influence, but with some timidity.

Vector Pressure: Dangerously nearing full bearish support, but showing some resistance.

Long-term Hold Positions: Safe, but weakening.

Current Quick-term Bias: Increasing bearish bias.

Overall Market Status: Bearish on a Quick-term basis.

Profit Potential from Naked Options: Mild volatility is not supportive of dynamic profits.

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

As has been the case, volume was a little higher on today’s mild bearish expression. That, coupled with other volume related attributes favors meandering behavior, which is this week’s encounter. The NASDAQ Indicant Volume Indicator continues in an embryonic southerly direction, while the NYSE continues holding a robust configuration. That suggests indecisiveness, which has been a common theme for quite some time, but with an obvious bearish bias. As repeatedly stated, most of the robust volume has been coupled to bearish expressions in the recent past, which cannot disguise the market’s bearish bias. As repeatedly stated for several months, the overall configurations support a bearish bias. As stated in the past few daily stock market reports, keep your eye on Vector Pressure. It is described later in this report.

The Dow Jones Industrial Average is up 4.6% since the Short-term Indicant signaled bear on February 8, 2006. The NASDAQ is down 7.8% since the Short-term Indicant signaled bear February 3, 2006. The Short-term Indicant for these two major market indices continues with a bearish bias. Click here to see the Short-term Indicant’s history.

SQI Report Card (Consolidated Short/Quick), Status, and Charts

There were no buy signals and no sell signals. Although there were no buy signals, the SQI is signaling hold for 20-ETF’s. They are up 46.0% (annualized at 21.1%) since their respective buy signals an average of 112.2-weeks ago. Although there were no sell signals, the SQI is avoiding ten ETF’s. They are up by an average of 0.8% since their sell signals an average of 8.4-weeks ago.

Short-term Indicant Report Card, Status, and Charts

There were no buy signals and no sell signals. Although there were no buy signals, the Short-term Indicant is signaling hold for 21-ETF’s. They are up an average of 66.6% (annualized 33.8%) since the STI signaled, buy, an average of 101.5-weeks ago. Although there were no sell signals, the Short-term Indicant is avoiding nine ETF’s. They are up by an average of 0.6% since their sell signals an average of 7.3-weeks ago.

Keep in mind, the Short-term Indicant is much more active in buying/selling than the Consolidated model. The Quick-term Indicant, which follows, is even more active.

Quick-term Report Card, Status, and Charts

There were no buy signals and no sell signals. Although there were no buy signals, the Quick-term Indicant is signaling hold for 13-ETF’s. They are up by an average of 21.7% (annualized at 32.6%) since the QTI signaled buy an average of 34.2-weeks ago. Although there were no sell signals, the Quick-term Indicant is avoiding 17-ETF’s. They are up by an average of 0.8% since their respective sell signals an average of 8.2-weeks ago.

Conflicts Between the Short-term and Quick-term Indicants

Quick-term Indicant Bull/Bear Health Report

The Quick-term Bull continues to weaken, as stated since early February. Six of the 30-ETF’s are below their respective bearish yellow curves. The average position of all thirty ETF’s is above bearish yellow by a meager 4.9%, which is down significantly the past several weeks/months.

Only ten ETF’s are above their bullish red curves. That means there is some support for the bull, but remains minor in both volume and magnitude.

All thirty ETF average positions are 2.0% below their bullish red curves. This is the fifty-eighth consecutive trading-day where the average relative position to bullish red is negative. This is not necessarily a bearish configuration, while it is certainly a non-bullish.

Short-term Indicant Bull/Bear Health Report for ETF’s

As stated over ten weeks ago, the Short-term Bull for ETF’s has not expired but severely weakened. Two of the 30-ETF’s are contacting their breakout lines, offering minimal probability of a broad-based bullish breakout on a short-term horizon.

The average distance from breakout contact is 7.9%. The market would require tremendous energy just to climb back up to breakout. By the time it got there with current configurations, exhaustion would set in and the bear would resume control. As stated in the past twelve-trading days, any bullish behavior in the immediate future should be interpreted as a mere spurt with no sustainability.

The average distance from the price and breakdown is 16.0%. Although down significantly the past few weeks, this configuration still provides some non-bearish support. The probability of immediate contact remains low and thus a non-bearish bias is maintained on a short-term basis. However, this non-bearish protection has been weakening for several months.

Although the non-bearish baseline (yellow) can rise in a declining market, keep in mind that a 16.0% drop would leave early 2003 buyers in healthy hold positions, while new in-the-market-money would be painful to hold.

None of the ETF’s are contacting their bearish breakdown lines, which supports minimal probability of an immediate crash. Overall, there remains a strong bottom point, but new–in-the-market money would not delight in finding that. Early 2003 investment money is still in good shape with solid earnings and can tolerate bearish behavior without nervously dumping their holdings during such a decline. However, if contact with the breakdown becomes dominant, expect an increased threat of dynamic bearishness and be prepared to sell.

ETF Force Vector Configurations

Six of the ETF Force Vectors are in bullish domains, which is down by eighteen from yesterday. That is a significant transfer from bullish to bearish domains. Although there is no obvious robust bearish cycle underway, they have peaked from their last upward cycle. Watch out if this impending bearish cycle becomes robust.

The newly forming southerly movement is configured with uncertainty. The bull always puts up a battle with these transformations. If not too much bullish energy is consumed in this battle, the bull may induce a continuing meandering cycle until deep bearish seasonality occurs in a few weeks.

To understand potential financial opportunities, click here to learn to identify Robust Force Vectors. They are visible on the Quick-term Indicant charts.

ETF Force Vectors/Vector Pressure Crossings/Option Signals

Remember, the links contained herein are more visible when reading this on the website.

Click this sentence for Vector Pressure Option Signals. There were no option buy signals today for the sixth consecutive day.

Eighteen ETF Vector Pressures remain in bullish domains. You will notice that Vector Pressures are near the neutral zone. Configurations continue to support a bearish bias.

Remember this market remains a bull due to the majority of ETF’s still in a hold position from the consolidated Short-term and Quick-term model, but weakening. This bull/hold position is not favorable to put option plays.

Volatility continues to be subsiding and not friendly to naked option plays, regardless of wild bullish and bearish swings the past few days. The market is too committed to a bearish influence for sustainable volatility.

Make certain you sell naked options when the Force Vectors shift direction or within two days of the purchase, whichever occurs first. If you are unfamiliar with this, take the options tour.

Very few attributes remain that prevents bearish dominance that is both sustainable and deep, but there are a few. Wait for the obvious.

Quick-term and Short-term Indicant Summary

As stated last Monday evening, with maturing Force Vectors, there is an increasing probability that writing covered call options should yield increasing profitability. You can now be more aggressive at this, as Force Vectors are priming for a southerly trip. Make certain the expiration date on these options extend to September’s third Friday.

We understand these comments may be boring to their repetitive nature. That is the nature of meandering markets. The Indicant is not into hype and sensationalizing the stock market. It is what it is. Other sources are available for sensationalism/entertainment.

ProFunds Ultra Short mutual fund moves inversely to the QQQQ by exponential amounts. The Consolidated Indicant model is avoiding QQQQ, which supports holding contrarian fund, ProFunds Ultra Short. The Mid-term Indicant signaled buy for ProFunds Ultra Short after the market close on June 2, 2006. This is an expensive investment so proceed with caution. Watch this weekend to see how the Mid-term Indicant interprets its behavior.

To familiarize yourself with viewing the market from an ETF perspective, click the following update links.

Quick-term ETF Options

Quick-term Indicant for ETF’s

Short-term Indicant for ETF’s

Consolidated Quick-term/Short-term Indicant for ETF’s

Click here to the report card, which is updated weekly, to link to related tours.

Links to the Short-term Indicant and Indicant Volume Indicator are below:

Short-term Indicant for DJIA and NASDAQ

Short-term Indicant Tables for the Dow Jones Industrial Average Index

Short-term Indicant Table for the NASDAQ Composite Index

Indicant Volume Indicator

Indicant Conclusion

Last week’s meanderer was not surprising. Deep bearish seasonality is approaching. This is not the time for aggressively investing in the stock market.

Read your daily stock market reports, as quick-term attributes can shift quickly.

Do not get lazy and set those stop losses for those stocks and funds that continue to enjoy hold signals.

The daily updates are on the following link.

http://www.indicant.net/Non-Members/Back%20Issues/QT.htm

Hyperlinks

To access all major markets, stocks, funds, economic data, charts, statuses, etc, click the following hyperlink:

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

In addition, once you are inside the website, click on "members update" or simply log in. It is on the top of every page in the web site so you can always find your way back.

Happy Investing,

www.indicant.net

08/06/06