August 26,
2007 Indicant Weekly Stock Market Report
Volume 08, Issue 04 ISSN 1526 6516 © The
Indicant Stock Market Report
This Week’s
Report
The Bullish
Bias Threatened – Part 5
Two weeks ago,
several Quick-term Indicant attributes were no longer supporting the
bullish bias. The market dropped significantly after the attribute shift
from solid bullish support to minimal support. However, the market, as
predicted, did not shift into deep and sustainable bearish behavior. The
bull has since responded, albeit meekly.
Last week,
several Quick-term Indicant attributes shifted back into bullish bias
support mode. Unfortunately, that shift was and is not with convergent
configurations. (You will later read that bullish convergence returned on
a Mid-term Indicant basis). Several ETF’s retained Quick-term Indicant
attributes with residual bearish support, while others are expressing
bullish support. This divergent configuration suggests market
indecisiveness, money rotation (sector positioning), and a potential
inflection point.
Market
indecisiveness occurs when Indicant attributes are not obviating the
market’s directional intention. This is common when big-money traders
shift their money from one sector to another sector in rapid fashion. That
means they are having difficulty spotting microeconomic dynamics that
influence financial gain in specific sectors. In essence, they have lost
strategic direction and more or less panic into a flavor of the day mode.
That suggests a lack of conviction in their models. Big money, when
confused, influences fluttering and market divergence.
Market
indecisiveness and sector rotation promulgate inflection points. An
inflection point is when the underlying bias is about to shift cyclical or
trend direction. The stock market’s underlying trend is bullish, but the
cycle is bearish. The impending inflection point can influence future
trend and certainly influence current cycle.
Inflection
points can last for several weeks. This is especially true when big money
traders are not coalescing their trading from strategic direction. When
one is without strategic direction, they are subjected to emotional
influence. The cold and calculating are usually victorious in any sort of
exchange with one engaged in emotional trauma, so to speak.
The market’s
near-term bearish cycle that began in late July invoked emotionalism.
Although the fundamentals with sub-prime leading justified a perception of
recessionary results, the market responded appropriately with a bearish
onslaught to those weak fundamentals and a status quo Federal Reserve
Board. However, that appropriate bearish response did not generate an
excessive number of sell signals for healthy holdings. Sure, the bear
attacked some “hold” positions, but many of them retained their double and
triple digit growth performance since their buy signals.
The market is
going to get jittery from time to time when confronted with economic and
industrial stupidity. The market does not forgive upside thinking. It will
react with solid bearish expressions every time. Sometimes this induces
the stupid to straighten up and discontinue their stupidity. At other
times, the stupid react too late and the bear’s tenacity continues its
punishment to complete eradicate the stupid from participation.
Bearish spurts
occur from time to time against an underlying bullish trends and cycles,
just as bearish spurts occur from time to time against underlying bearish
trends and cycles. The decision to participate is always a personal one;
the Indicant attempts to differentiate spurts from trend/cyclical
continuation when those spurts occur. It has done that successfully many
times in the past. It identified bullish spurts in the face of the
2002-bear. It identified several fake Wall Street manipulations many times
in the past.
The recent
bearish spurt was anticipated by the Indicant and the use of a term, not
preferred, had to be used. That unpleasant term was near-term, which
identified the bearish spurt before it occurred in early August without
the panic that is commonly associated with emotional reaction. Many hold
signals were maintained, while the weaker configurations did endure sell
signals.
Keep up with
the Daily Stock Market Report, as weak Vector Pressure continues to
threaten the underlying bullish bias.
Weekly
Buy/Sell Summary – Stocks and Funds
Click this sentence for a graphical summary of what follows. Simply
scroll down the page to see detail content of this section.
The Mid-term
Indicant generated no buy signals and no-sell signals.
Although
there were no sell signals, the Mid-term Indicant is avoiding 88-stocks and funds of the 345-
tracked by the Indicant. The avoided stocks and funds are down an average
of 5.0% since the Mid-term Indicant signaled sell an average of 14.7-weeks
ago.
There were
116-stocks and funds avoided at this time last year. Those avoided stocks
and funds were down an average of 7.6% since their respective sell signals
an average of 17.2-weeks earlier.
Two years ago,
on Aug 26, 2005, the Mid-term Indicant was avoiding 90-stocks and funds
that were down an average of 9.4% since their respective sell signals an
average of 20.9-weeks earlier. Three years ago on Aug 27, 2004 there were
109-avoided stocks and funds. They were down by an average of 26.3% from
their respective sell signals an average of 43.3-weeks earlier. On Aug 23,
2003, the Mid-term Indicant was avoiding only 36-stocks and funds out of
296-tracked at that time. They were down by an average of 8.4% since their
sell signals an average of 9.8-weeks earlier. As you can see, there were
very few avoided stocks in the previous presidential election year of
2003. Five years ago on Aug 23, 2002, there were 69-avoided stocks and
funds. They were down an average of 47.3% since their respective sell
signals an average of 25.0-weeks earlier.
Although
there were no buy signals, the Mid-term Indicant is signaling hold for 257 of the 345-stocks and
funds tracked by the Indicant. The stocks and funds with hold signals are
up an average of 145.5%. That annualizes to 62.2%. The Mid-term Indicant
has been signaling hold for these 257-stocks and funds for an average of
121.7-weeks.
One year ago,
on Aug 25, 2006, the Mid-term Indicant was holding 221-stocks and funds
out of the 345 tracked for an average of 92.7-weeks. Those 221-stocks and
funds were up by an average of 118.7% (annualized at 66.6%). The Mid-term
Indicant was signaling hold for 225-stocks and funds of the 320-tracked
two years ago on Aug 26, 2005. They were up by an average of 101.5%
(annualized at 58.4%) since their respective buy signals an average of
90.3-weeks earlier. There were 176-stocks and funds with hold signals on
Aug 27, 2004 since their buy signals an average of 59.7-weeks earlier.
They were up by an average of 77.0% (annualized at 67.1%).
The Indicant
was only tracking 296-stocks and funds in 2002-2003, and early 2004. On
Aug 23, 2003, the Mid-term Indicant was signaling hold for 231-stocks and
funds out of 296-tracked. They were up by an average of 49.5% (annualized
at 90.8%) since their buy signals an average of 28.3-weeks earlier. Five
years ago, on Aug 23, 2002, there were 189-hold signals for stocks and
funds out of the 295 tracked by the Mid-term Indicant. They were up 11.4%
(annualized at 81.1%) since their respective buy signals an average of
7.3-weeks earlier.
Summary of
Stocks and Funds with Buy and Sell Signals This past Week
To maintain
appropriate security, you can see the Mid-term Indicant "buy/sell" signals
for stocks and funds for this week by clicking the following link. It is
in the member’s only section.
http://www.indicant.net/Members/Updates/All%20Update%20Forms/Buy-Sell%20Summary%20This%20Week.htm
As repeatedly
stated, do not hold more than 10% of your investment resources in a single
stock and do not hold more than 20% of your investment resources into a
single mutual fund. Also, never fall in love with a stock or fund. Only
love the value of your portfolio. Never love its contents. Management
stupidity can wreak havoc on any stock or fund at any time.
All updated
information can be found from a single page at Indicant.Net. Click the
below link to that page. You will need your login ID and password.
http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20Summary.htm
The
Quick/Short-term Indicant Stock Market Report
The Indicant website maintains the last twelve months of daily reports on
an annual basis. These weekly reports are maintained on the website
for much longer periods. Beginning in March 2006, the daily stock market
report for the last trading day of each week is imbedded in this weekly
report. This allows web-based retention records of the daily report for
much longer than the last twelve months.
The Daily
Indicant Stock Market Report for the last trading day of the current week
is near the conclusion of this weekly stock market report. It is emailed
each weekend, separately, so you can read it, either as a separate
document, or in this document.
The
Indicant Stock Market Report’s Secular Market Blend
The Dow is up
83.6% since it secular low on October 9, 2002. The NASDAQ is up 131.3% and
the S&P500 is up 90.5%. The small cap index, S&P600, is up 146.3%. The
underlying bull that originated on October 9, 2002 remains a solid
performer.
The NASDAQ is
down 49.4% since its last weekly secular peak on March 9, 2000. The S&P500
is down 3.1% since its similar secular peak on March 23, 2000. The S&P500
recently set a new peak, but did not find comfort there. It has since
pivoted back to the south off the new peak price. The Dow is up 14.1%
since January 13, 2000 when it peaked from the 1990’s roaring bull. It has
had no timidity in roaming in the new peak area. The NASDAQ needs to climb
another 95.5% to achieve a new record high.
The Dow is up
7.3% so far this year. The S&P500 is up 4.7% and the NASDAQ up 6.7%. At
this time last year, the Dow was up 5.5%, with the S&P500 up 3.8% and the
NASDAQ down 3.1%.
With the
exception of 2003, the last presidential pre-election year, the major
indices are performing better this year than any year this century. The
NASDAQ through this week of 2001 was down 22.4%. It was down 29.2% through
this week of 2002. It recovered with a gain of 32.2% by this weekend of
2003. It was again down 8.3% in 2004 on this weekend. At this time of year
in 2005, it was down slightly by 2.1%. Last year at this time, it was
again down 3.1%. This year, it is up 6.7%.
As you can
see, the only years the NASDAQ has been up at this time of year has been
the presidential pre-election years (2003 and 2007).
You will
notice the Dow endured less volatility than the NASDAQ this century. The
Dow was down 3.4% on this weekend in 2001. It was down more in 2002 by
11.5%, but with less severity than the NASDAQ’s 29.2% drop in 2002 on this
weekend. In the last presidential election year of 2003, the NASDAQ’s
32.2% rise delivered more excitement than the Dow’s humble 12.1% increase.
Many of your recall the meandering bear market in 2004 where the Dow was
down 3.2% as the market neared deep bearish seasonality. The meandering
bear continued through 2005 with the Dow dropping by 2.2% for the year. On
this weekend, the Dow was up 5.5% in 2006, which conflicted with
historical standards and seasonal normalcy. So far, this year the Dow is
up 7.3%, which is the second most bullish year-to-date performance this
century. It is second only to the previous presidential election year of
2003.
Since the
expiration of the heart and soul of bullish seasonality in late January
2007, the Dow is up 6.0%, while the NASDAQ is up 4.6% and the S&P500 is up
by 2.9%. Even with recent bearish behavior, all the major indices are up
since the expiration of the heart and soul of bullish seasonality.
Where is the
market headed for the remainder of this year? As stated the past several
weeks, do not be surprised at meandering to bearish behavior for the next
few weeks ahead of the heart and soul of bullish seasonality. The heart
and soul of bullish seasonality can start within a few weeks, but
configurations are suggesting late September or early October. The market
still has to pass through deep bearish seasonality, which starts in a few
days. Keep in mind, deep bearish seasonality did not inflict influence in
2006 and the last presidential pre-election year (2003). Please read on
and keep up with the Daily Stock Market Report.
Stop Loss
Management
The Mid-term
Indicant recommends a stop loss of 8% on recent buys because of the
Quick-term Indicant’s bullish bias.
Use a 10%
trailing stop loss or the yellow or green values you will find on the
tables for your longer-term hold positions. If your stock or fund is above
the bearish yellow curve and below the green curve, set your stop loss
equal to the greater of the yellow curve and the trailing stop loss. If
your stock or fund is above the green curve, set your stop loss at no less
the value of the green curve or 10% trailing, whichever is greater. If
your stock or fund is above the red curve and you bought at the Mid-term
Buy signal, you should use the 10% trailing stop loss.
If you are up
by triple digit amounts and enjoy your ownership of the stock or fund,
then use a 20% trailing stop loss or the slow moving blue curve price. If
you really enjoy holding the stock, keep a close eye on the management.
Dilettante managers have a way of worming into the business. Watch closely
for cronyism and lazy-hazy management dialog. Keep your eye on lavish
spending and excessive concerns about social issues. Those types are more
interested in burning your money for their pleasures, as opposed to making
you money. High performing companies remain focused on honoring the
investments made by their shareholders.
In a few
instances, you will see a hold signal for a stock or fund that is down
from its buy signal or below one of the above conditions for selling. If
you are more of a trader than an investor, feel free to buy stocks and
funds with those “bearish” attributes. They are configured for a possible
rebound, while at the same time, it is important to set the stop losses
mentioned in this report. Use the Quick-term Indicant as a guide in your
decision-making processes. If the stock price is falling in a Quick-term
Bear market, it is not advisable to buy.
Do not short
on stocks if they are up from an avoid signal. Stocks go up more often
than they go down. Stocks have a tendency to march to their own drumbeat
when rising. Some stocks rise and continue to rise in the most severe of
bear markets. Short selling opens up an opportunity for the snakes on Wall
Street to take everything you own. They can cause a stock to rise at their
whim and without any regard to fundamental reason. It usually does not
make sense to bet against the sweat and toil of hard-working people.
Stock and
Fund Update
Click the
following link to see sorted performance of stocks and funds with
hold/avoid signals. In the past, they were included in this email message
but now display them on the website. This is available to the public,
while the specific buy and sell transactions are limited to members only.
The below table is public information and not updated on a frequent basis.
http://www.indicant.net/Non-Members/Performance/Top-Bot.htm
Economic Conditions – Inflation, Currency, Interest Rates
Click the
above heading for a summary of hard economic indicators.
The
3-Month T-Bill yield is plummeting. That is weakening the U.S. Dollar.
The free markets loudly expressed displeasure at the Federal Reserve
Board’s status quo policy with respect to interest rates. The Federal
Reserve acquiesced and pumped more money.
The market can
enjoy a bullish response to the Fed’s recent action of relaxing rates, but
do not believe the market will keep a blind eye on commodity prices and
other inflationary threats. A bullish stock market demands economic
robustness, low interest rates, and low inflation. If anyone of those
three dynamics gets out of line, the bear dominates and punishes for the
irresponsibility that drives unfavorability in economy, borrowing cost,
and inflation.
Fear
Metrics: Economics and Terrorism
Vanguard Gold and Precious Metals (VGPMX) - #19 is up 322.6% since the
April 13, 2001 buy signal. Its annualized growth since that buy signal is
50.0%. It moved to the north in 30 of the past 46-weeks. This fund was
solidly bullish last week after five consecutive weeks of bearish
behavior.
Fidelity Gold, Fund #28, is up 5.6% since the Mid-term Indicant
signaled sell last week.
State Street Research Global #9, SSGRX, which is isolated in the
energy sector, is up 274.6% since the Mid-term Indicant signaled buy on
August 16, 2002. It is annualizing at 53.9%.
Vanguard Energy #18, VGENX, is up 213.7% (annualized at 48.0%) since
the Mid-term Indicant signaled buy on April 5, 2003.
Fidelity Energy Services #40, FSESX, is up 197.2% (annualized at
52.3%) since the Mid-term Indicant signaled buy on December 6, 2003.
Fidelity Energy #39, FSENX, is up 165.0% since the Mid-term Indicant
signaled buy on August 16, 2003. It is annualized at 40.4%.
These energy
related funds were solidly bullish 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 appear to be shifting in favor of selling the above funds
(09/10/06). Do not sell until the Mid-term Indicant signals sell. They
continue to rebound and from time to time endure fluttering. As long as
capitalism remains in vogue around the globe and alternative sources of
energy continue to lag exponentially increasing demand, a long-term
perspective on holding strategy is appropriate.
The SQI
(Consolidated Short-term and Quick-term Indicant) model signaled buy for
the
GLD-ETF#11 on August 3, 2005. It is up 52.0% since then. It is
annualized at 24.9%. This ETF has been bearish in eight of the past
fifteen weeks. It was solidly bullish last week.
The SQI
signaled buy for
ETF#03 – Energy and Natural Resources on March 26, 2003. It is up
223.3% (annualized at 49.9%). This fund was also bullish 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 28.4% since the Mid-term
Indicant signaled bull an average of 110-weeks ago. That annualizes to
13.5%, which is down significantly from the past three years. This is due
to the bear signals for the S&P400 and S&P600 Indexes on July 21, 2006,
which had been receiving a bull signal since October 25, 2002. Those two
indices endured some fluttering after the expiration of the tremendous
bull leg that lasted nearly four years. A new bull leg is underway and may
proceed just as vigorously for these two indices as the bull leg from
October 2002 through July 2006, where the S&P400 and S&P600 increased by
66.3% and 79.3%, respectively.
Dynamic
bullish statistics were also eliminated due to the Dow Transports bear
signal and a new bull signal on January 19, 2007. The Dow Transports
enjoyed a 23.1% gain from its March 21, 2003 bull signal until its bear
signal on March 19, 2004. It fluttered with a new bull signal one week
later on March 26, 2004 and enjoyed an 80.0%-gain until a new bear signal
on December 22, 2006.
The Dow
Utilities increased by 104.4% from its October 25, 2002 bull signal to the
March 21, 2006 bear signal. After some fluttering, it received a new bull
signal on June 2, 2006. Interestingly, the Dow Utilities was the best
performing index since the October 25, 2002 Mid-term Indicant bullish bias
shift. Utility stocks have been consistent high performers since the bull
market’s birth on October 25, 2002.
The Mid-term Indicant Dow Jones Industrial Average performance is now
at $40,527,804.
That beats buy
and hold performance of $2,045,028 on a $10,000 investment in the Dow
stocks in 1900. The
MTI S&P500 is at $191,008. That beats buy and hold’s $144,908 on a
December 31, 1971 $10,000 investment. The
MTI-NASDAQ is at $215,594. That beats buy and hold’s $89,344 on an
October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy
and hold by 1,881.4%, 31.8%, and 141.3%, respectively, for these indices
as of this past week.
The Indicant’s
percentage advantage over buy and hold does not change during bull
signals. The advantage changes only during bear signals. That is because
the buy and hold model has to keep holding, while the MTI-RYS model avoids
bear markets. The only purpose of the Mid-term Indicant model is to avoid
the bear markets. That is why it beat buy and hold by nearly 2,000% over
the past 100+ years.
Click here to go to the current Mid-term Indicant assessment of the ten
major indices.
Click here for a tour of the Mid-term Indicant for major market indices.
Divergence
versus Convergence
After four of
five weeks of bearish convergence, the market responded soundly with
bullish convergence last week. That is a tremendous relief for those
desiring a bullish stock market.
As stated for
several weeks, the underlying bullish bias is maintained.
However,
near-term bearishness remains threatening.
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 continues avoiding
ProFunds Ultra Short. It is down 29.5% since the Mid-term
Indicant signaled sell on September 15, 2006. Historical norms of market
cyclicality suggest the next buying opportunity for this fund may not
occur until 2009.
Click here for
Mid-term Indicant Table of Mutual Funds
Always
remember never to keep more than 20% of your investment resources into a
single mutual fund. Sector investing in mutual funds is an extremely good
way to mix your investments.
Long Term
Indicant Positions - Dow Jones Industrial Average
The blue-chip
Long-term Indicant Bull signal was at 2895 for the DJIA in November 1991.
Keep in mind the Long-term Indicant generated only five bull/bear cycles
since 1920.
The Dow is up
362.2% (annualized at 22.8%) since the Long-term Indicant signaled bull
825-weeks ago. Economic data is the primary influence on the Long-term
Indicant. Recessions, deflation, and inflation have not been strong enough
to signal bear since that bull signal. A link to the Long-term Indicant is
below:
http://www.indicant.net/Members/Updates/LTI-Markets-DJIA/DJIA.htm
Quick/Short-term Indicant Stock Market Report - Summary
Quick-term
Red Bulls: Two of thirty; only
one non-contrarian red bull is required for bullish support. The increase
last Thursday by one more red bull prevents the bull from complete
withdrawal.
Quick-term
Yellow Bears: Four; non-bearish
support barely continues.
Quick-term
Non-Bearishness: Improving
slightly to minimal non-bearish support.
Short-term
Non-Bearishness: Continues
supporting non-bearish behavior by an improved differential from the prior
day.
Force
Vectors: The mature cycle that
started shifting north six trading days ago stifled immediate bearish
ambition. The next cycle, which is imminent, should obviate the markets’
intentions.
Vector
Pressure: Only one in bullish
domains; threatening bullish bias. Bull/bear battles tend to rage with
this configuration. This remains a threat on behalf of the bear.
Long-term
Hold Positions: Safe, but no
longer solidly safe.
Immediate
Tactics: Preserve
Cash/Discontinue writing covered call options at this time due to threat
of increased volatility (and/or bullish bounce) with rising Force Vectors,
even though peaking.
Current
Quick-term Bias: Bullish, but
in a battle with the bear.
Overall
(Long-term) Market Status:
Bullish bias prevailing, but weakening.
Profit
Potential from Naked Options:
Increasing volatility is favorable.
Volume:
Configurations mixed.
Comment
from August 22, 2007
Several ETF
Force Vectors are configuring in support of the bull, while others remain
configured in support of the bear. The divergence suggests an indecisive
market. However, the near-term bearish configurations, although still
threatening, are not as committed to bearish expressions as they were in
late July and early August.
Quick-term/Short-term Indicant Stock Market Report Details
The
Short-term Indicant signaled bear on July 26, 2007 for both the Dow
and NASDAQ. They are down 0.7% and down 0.9%, respectively, since then.
Please read
on. Click here to see the
Short-term Indicant’s history.
The NYSE
Indicant Volume Indicator’s has quickly shifted into a lethargic
cycle, while the NASDAQ’s robustness appears to have peaked. Friday’s
aggressive bullish expression was accompanied with light volume,
suggesting limited conviction in that bullishness. As stated last Monday,
configurations are shaping up to support market stability. As stated last
Wednesday, other attributes are mixed with a few favoring increased
bullish bias. Please read on.
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 25-ETF’s. They are up by an average of 65.0%
(annualized at 26.6%) since their respective buy signals an average of
125.8-weeks ago. Although there were no sell signals, the SQI is avoiding
five ETF’s. They are up by an average of 1.6% since their sell signals an
average of 5.4-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 eight years of proof. The quality of that proof is high
since this period includes a powerful bull and bear. The model sours a
little during meandering markets with an excessive number of signals from
time to time. Research toward perfecting continues.
Short-term Indicant Report Card, Status, and Charts
There were no
buy signals and no sell signals. Although there were no buy signals, the
Short-term Indicant is signaling hold for 28-ETF’s. They are up an average
of 70.4% (annualized 33.2%) since the STI signaled, buy, an average of
109.0-weeks ago. Although there were no sell signals, there are two avoid
signals. They are down by an average 1.3% since their sell signals an
average of 9.2-weeks ago.
The
Short-term Indicant is more active in buying/selling than the Consolidated
model. The Quick-term Indicant, which follows, is even more active.
Quick-term Report Card, Status, and Charts
There were no
buy signals and no sell signals. In addition to the buy signals, the
Quick-term Indicant is signaling hold for 17-ETF’s. They are up by an
average of 20.4% (annualized at 24.3%) since the QTI signaled buy an
average of 43.1-weeks ago. Although there were no sell signals, the
Quick-term Indicant is avoiding 13-ETF’s. They are up by an average of
2.2% since their sell signals an average of 3.4-weeks ago.
The
Quick-term Indicant is yet more active with buy and sell signals.
Conflicts
Between the Short-term and Quick-term Indicants
There are
thirteen conflicts, whereby the Short-term Indicant and the Quick-term
Indicant are in disagreement between hold and avoid status. Although less
harmonious in support of directional intensity, the Quick-term bias shift
on August 15, 2006 remains in favor of the bull. As stated, yesterday, the
near-term bearish bias is stabilizing. Watch for jittery behavior on the
near-term horizon. Please read on.
Quick-term Indicant Bull/Bear Health Report
Four of the
30-ETF’s are below their bearish yellow curves. The average relative
position of all thirty ETF’s is above bearish yellow by 5.3%. The indices
are departing from the threatening bearish yellow configuration. After an
absence of non-bearish support, this is again configuring in support of
the market’s non-bearish posture. This attribute is not configured with
support for sustainable bearish behavior at this time and the threat is
subsiding.
Two of the
ETF’s are above their respective bullish red curves. The increase from one
last Wednesday is encouraging to those desiring bullish behavior. All
thirty ETF average positions are 2.6% below their bullish red curves,
which continues to show minimal bullish support.
Short-term Indicant Bull/Bear Health Report for ETF’s
The above
heading is linked to the Short-term Indicant table. This paragraph is
repeated daily as a reminder of accurately interpreting the charts. By
clicking the charts on the table you can review potential contact with the
breakdown lines (bearish) and potential contact with breakout lines
(bullish). It is extremely bearish when several ETF’s are contacting their
respective breakdown lines. The breakdown lines are the yellow lines
(bearish). The breakout lines are the red ones (bullish). Close proximity
to breakout implies an increased probability of an actual breakout
occurring. It is certainly bullish and you will want to be in a hold
position for those few days a year when the breakout occurs. Conversely,
significant contact with yellow (breakdown) suggests “avoid” positions are
best.
None of the
thirty ETF’s are contacting their breakout lines. As stated the past
several months, the high concentration of breakout-contact since August
2006 was solidly bullish. This repeated contact supported the underlying
bullish bias until the recent dry-spell. Non-contact with the breakout
lines the past 22-consecutive trading-days fueled bearish confidence,
which was expressed, but without gaining complete dominance.
The average
distance from breakout contact is 6.8%. This remains in support of the
quick-term bullish bias. This attribute is gaining support for the bullish
bias after about four weeks of non-bullish support.
None of the
ETF’s are contacting breakdown lines, providing non-bearish support.
The average
distance from the price and breakdown is 19.4%. This configuration
provides non-bearish support, which has been the case since March 2003.
Breakout/breakdown differential point variance is 12.8%, which is
improving in favor of the bull and maintaining your longer-term holdings.
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.
Thirty of the thirty ETF Force Vectors continue toward bullish domains. As
stated last Wednesday, some of the Force Vectors are shaping with bullish
configurations for the first time in a few weeks, which suggest an
inflection point is imminent. That does not necessarily mean bullish
dominance is about to resume, but encouraging nonetheless. Please read
on.
Force Vector
cycles are extremely fast, seldom lasting more than six days.
As stated in
last Wednesday’s daily stock market report, Force Vectors appear to be
peaking. Several ETF Force Vectors are configured with longer-term bullish
support, but not all of them. Some are configured with bearish support on
the immediate horizon. This conflict should add to market stabilization,
which also invites fluttering (jittery) behavior. Please read on.
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 fourth consecutive day. Stalked put
options have a high probability of success with peaking Force Vectors with
limited bullish support from Vector Pressure. Friday’s aggressive bullish
behavior may have facilitated trades at deeply discounted prices.
Only one
ETF Vector Pressure remains in
bullish domains. This is exceedingly low and not offering bullish support.
This attribute is very near bearish support. Force Vectors haven risen the
past few days while Vector Pressure held constant. There is little reason
to expect bullish dominance with peaking Force Vectors and negative
(bearish) Vector Pressure.
It is common
for bull/bear battles when Vector Pressure is being threatened from its
support of the prevailing bias. This should enhance volatility, which is
favorable for naked option plays.
The bull
would face a major defeat if all Vector Pressure falls into bearish
domains. The recently rising Force Vectors should elevate more Vector
Pressure in the next few days, providing relief to the bull. It is common
for increased volatility around inflection points, where the bull and bear
battle. Recent Force Vector movement is encouraging to those desiring
bullish behavior since they should enhance the volume of Vector Pressure
in bullish domains. If that happens, there may be some bearish spurts but
no sustainable bearish behavior.
On the other
hand, Force Vectors appear to be peaking. As earlier stated, that
configuration, coupled with mostly negative Vector Pressure, is fueling an
increased probability of bearish behavior. It is possible for Force
Vectors to decline without dragging the market down. That combination of
attributes favors, at worse, market stability.
Make certain
you sell naked options when the Force Vectors shift direction or within
two days of the purchase, whichever occurs first. If you are unfamiliar
with this, take the
options tour.
Remember
options trading is risky. Never offer “market prices.” Always bid low in
hopes of an intraday contrarian movement to the underlying assumption of
directional behavior. Always place day-orders, only. That keeps the floor
folks out of your pocketbook. Do not despair if your order does not take.
There are plenty of opportunities throughout the course of the year.
Remember, stalking is the key to success here. Although not necessary for
stock market success, those of you who have a gambling instinct will enjoy
this. For those of you with a longer-term perspective, it does not hurt to
see what the short-term folks are thinking. The Indicant indicates both
perspectives.
Quick-term
and Short-term Indicant Summary
The shift
from bearish bias to bullish bias started on Tuesday, August 15, 2006
after maintaining a bearish bias from early February 2006 until August 15,
2006. As stated the past several days, the Quick-term and Short-term
Indicant models continue suggesting a bullish bias for longer term
holdings. The micro-bearish spurt behavior in the face of the bullish bias
remains threatening but several attributes are shifting their favor away
from the bear, but not yet offering significant support to the bull. The
market is wishy-washy, right now. Do not be surprised at fluttering
behavior. If Force Vectors continue to rise, which is not likely, expect
complete domination by the bull.
Vector
Pressure is a major concern and that coupled with peaking Force Vectors
suggests the market is battling through an inflection point. Inflection
points occur when the market is directionally non-committal.
This
paragraph is repeated from June 26, 2007 daily stock market report. Depth
is a relative term. For those of you who bought several months ago,
holding until bearish yellow is achieved will be accomplished with ease.
For those of you who bought in the past few weeks may not prefer to wait
for the victor of the bear/bull battle that typically occurs at the
bearish yellow curve.
Message from
August 21, 2007. It is recommended to discontinue writing covered call
options due to rising Force Vectors. Although Vector Pressure supports
that, the probability of increased market volatility warrants passivity.
The
Quick-term Bull remains in tact.
ProFunds Ultra Short mutual fund moves inversely to the QQQQ by
exponential amounts. The Consolidated Indicant model is not avoiding QQQQ,
which does not support holding contrarian fund, ProFunds Ultra Short.
To
familiarize yourself with viewing the market from an ETF perspective,
click the following update links.
Quick-term ETF Options
Quick-term Indicant for ETF’s
Short-term Indicant for ETF’s
Consolidated Quick-term/Short-term Indicant for ETF’s
Click here to the report card, which is updated weekly, to link to related
tours.
Links to the
Short-term Indicant and Indicant Volume Indicator are below:
Short-term Indicant for DJIA and NASDAQ
Short-term Indicant Tables for the Dow Jones Industrial Average Index
Short-term Indicant Table for the NASDAQ Composite Index
Indicant Volume Indicator
Indicant
Conclusion
Bullish
convergence returned last week, after significant threats from bearish
convergence in four of five weeks, preceding last week. This is
significant and at worse, should stabilize the stock market. Last week’s
bullishness should not be viewed as a bullish spurt against near-term
bearishness
Force Vectors
appear to be peaking, which could invite some bearishness, but their
recent bullish cycle was robust. That suggests some bullish confidence.
Vector
Pressure remains at its lowest in several months. This remains a concern.
Rising Force Vectors should elevate Vector Pressure in the next day or
two. This Quick-term Indicant attribute remains discerning to the
underlying bullish bias. However, as long as one non-contrarian ETF
remains a red-bull, sustainable bearish behavior is not possible.
Keep up with
the daily stock market report as the Quick-term attributes can shift
quickly.
Do not get
lazy and set those stop losses for those stocks and funds that continue to
enjoy hold signals.
The daily
updates are on the following link.
http://www.indicant.net/Non-Members/Back%20Issues/QT.htm
Hyperlinks
To access all
major markets, stocks, funds, economic data, charts, statuses, etc, click
the following hyperlink:
http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20Summary.htm
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
08/26/07
August 19,
2007 Indicant Weekly Stock Market Report
Volume 08, Issue 03 ISSN 1526 6516 © The
Indicant Stock Market Report
This Week’s
Report
The Bullish
Bias Threatened – Part 4
The remainder
of this paragraph is repeated from last week’s report. Several Quick-term
attributes are not supporting the Quick-term bullish bias. That contrasts
to a similar bearish onslaught last March when red bulls maintained
dominance and without yellow bears. None of the 30-ETF’s contacted their
breakdown lines last March. There has been some recent contact with a few
of them. Such contact increases the probability of bearish dominance.
Let us take a
scientific view of the market. Eliminate any emotional bias you may have.
Emotions, both positive and negative, mean nothing to the stock market.
Your happiness or sadness is irrelevant to the stock market. Your
emotions, both positive and negative, are counter productive when it comes
to investing.
Before
embarking on a scientific overview of the stock market, one must
understand a few reality points. The stock market is driven by several
factors; economy, corporate fundamentals, emotion, and some corruption.
What follows
is not a complete scientific overview of the market. It addresses some
pertinent elements that relate to some irrational commentary last week.
Keep in mind that most journalists and press folks are not scientific.
Most of them are out of their element when discussing the stock market. (I
suspect most have journalism degrees where differential equations in not
in the curriculum). Keep that in mind when the loud hype types are
expressing themselves to the next commercial.
Secondly,
recognize that management in any organization consists of dilettantes.
They are fake; more than half lied on their resume to get the job they
have. They submitted their resume to another “liar” who read it and hired
them. Although not proven, many of you recognize those empty souls where
you work and their absence of substance.
When an entire
industry, such as the sub-prime lenders, gets into trouble, you are
witnessing the dilettante influence. The dilettante never anticipates
anything. They live in the “right now.” They quite often reason, “things
are okay, right now.” They are incapable of anticipating what may go
wrong. They merely react to what goes wrong when it goes wrong and their
reaction is typically weak and non-substantive due to their inability to
solve and prevent problems. That is because they are mere dilettantes.
They have never done anything substantive in their working careers.
Although many made good grades in school, all they have proven is an
ability to recite what they have read or heard on examinations. That has
nothing to do with problem solving and developing anticipatory skills.
Those dilettantes are imbedded in some of the securities you own.
Former CEO of
Intel, Andrew Grove, wrote an excellent book several years ago, entitled
“Only the Paranoid Survive.” A minority of managers in large organizations
are not dilettantes. Unfortunately, those with sophisticated political
skills rise to the top of large organizations and many of them are
dilettantes. They learned what was going on around them. They learn to
elaborate, quite elegantly, about that and impress board types who know
very little about the business and other dilettantes they work for. When
it comes to making a difference in organizational results, they express
their incapability, but sound good doing it. The real problem solvers are
left in the organizational dungeons since they are “getting the job done”
and most often go unrecognized by their corporate leaders.
Cost cutters
are a classic example of dilettantes. Anyone can do that. It is easy. Just
look at a process or organization and direct its elimination. Anyone who
does that for a living should not be paid more than $50,000 per year.
Unfortunately, those idiots are paid millions. So, there will be a few
folks paid millions to cut costs in the sub-prime lending industry with
their hand out to the government. Unfortunately, the damage was done by
the dilettantes. Their ability to anticipate and tactically employ
corrective actions is nil.
Relate this to
your holdings with a clinical scientific perspective. This is not
complicated science. It is simple. Click the following link.
http://www.indicant.net/Members/Updates/STI-Mkts/IVI.htm
Look at both
charts. As you can see, the stock market seldom moves in a nice convenient
direction to the northeast, as many would like. If it always did that,
there would be no stock market, as it is. It would be like a bank, paying
2.0% interest. For those who cannot stomach the stock market for what it
is should put their money in safe interest baring accounts.
The up/down
movement is a scientific observation. In other words, it is a detection of
what is real. That phenomenon will always exist for many reasons with the
predominant emotional one.
Notice the
NYSE on the top of the above link. Several weeks ago, this weekly report
mentioned the upper band of the trading range was breeched. It was stated
this is not an indicator of increasing bullish or bearish bias. It merely
stated a new trading range may be developing. It was stated bearish
influences would manifest if the perceived lower band of the trading range
were breeched.
The older
trading range remains constructed on the charts. As you can see, these two
major indexes remain above the lower band of the old trading range after
the bearish aggressions last week. You can also see that the NYSE got
exceedingly close to the lower trading range before Friday’s bullish
response.
There is no
guarantee the stock market will crash if the older lower trading range
limit is breeched. However, one should not remain blind to that, if it
does happen. The bear will certainly be encouraged by breeching such an
established trend. The bull may react to that, like it did last Friday
when the NYSE was threatened with breeching. The Quick-term Indicant will
identify if bullish responses are mere spurts or sustainable. As stated
for several days in the daily stock market report, bullish expressions
should be considered as bullish spurts in the face of near-term bearish
bias, even though the underlying bullish bias is prevailing. In other
words as long as the stock market remains in a northerly sloping trading
range, the bias is bullish. But cyclical behavior will always exert
supporting and contrarian movements. Few cycles cause a trend shift. It is
the trend that identifies bias, while each cycle provides micro-bias.
Money is
always flowing into the stock market. Investors who plowed money into the
stock market four weeks ago are enduring negative emotions about that. On
July 30, 2007, the daily stock market report added a heading, called
“Immediate Tactic.” It said preserve cash. On August 3, 2007, the Daily
Stock Market Report advised of shifting quick-term attributes favoring
bearish behavior and recommended writing covered call options.
1991-investors
with a long-term stock market interest are not concerned with this dip.
They are up hundreds of percentage points. They slept through the October
1998 bear and did not flinch at the 2000-2002 Dow bear that lost 20%-age
points. The mid-term investors, who for the most part bought on the March
2003 bull/buy signals, are also not concerned with recent bearish
expressions. Their holdings are enjoying double and triple digit gains.
If you look at
your April portfolio statements and compare them to today’s valuations you
will find little difference. The Dow is where it was on April 30. May 1 is
the first day of normal bearish seasonality. When the market is flat
during normal bearish seasonality, one should not be too disappointed.
The bullish
expressions in May and June catapulted your valuations to new highs with
record setting achievements. Only the naïve expected May and June to
continue on that northeasterly trek. If July and August did continue on
that powerful bullish segment, the probability of deep bearish seasonality
of wiping that out would be significant. Recent bearish expressions are
not justification to suggest the bull is dead. It is not, even though the
Daily Stock Market Report recommended cash preservation on July 30, 2007.
Okay, if you
owned Home Depot at the end of April and still holding, you are
disappointed that it is down more than the major indices. Certain sectors
are getting hit worse than others. It is down 8.0% since the Mid-term
Indicant signaled sell on August 3, 2007. The sub-prime dilettantes
penetrate more than just their realm.
http://www.indicant.net/Members/Updates/MTI-Stks-DJIA/DS02.htm#9
Look at the
chart just to the left of Home Depot on above link. You will also notice
that Boeing has also been victimized by recent bearish aggression.
However, you should also notice that the 2003 buyer is not that concerned.
It remains a bullish domains. The October 2003 buyer is up 167.7%. That
buyer was up more than that a few weeks ago, but aware it is not always
going to be constantly moving to the north. You will notice that Boeing
dropped more precipitously in 2006 than what Home Depot dropped so far in
this bearish cycle. Boeing’s drop was in bullish domains while Home
Depot’s drop occurred from neutral domains. Underlying securities within
bullish domains are above or very near bullish red curves. Neutral domains
are between bullish red and bearish yellow.
Mutual funds
sectored to the sub-prime fiasco are not immune to the bearish onslaught.
As you can see, Fidelity’s Home Finance was victimized by overall bearish
behavior and sectored targeting.
http://www.indicant.net/Members/Updates/MTI-Mutual%20Funds/MF08.htm#45
You will
notice it peaked in early 2005. It is down 15.9% since the Mid-term
Indicant sell signal on January 26, 2007. This fund has been configured
bearishly since early 2005, even though it expressed periodic bullish
potential intermittently since early 2005.
Scrolling up,
you will notice Fidelity’s Food and Agriculture has endured some minor
recent bearishness, but from the relative safety offered by bullish
domains. The holder of that fund is enjoying a modest 53.7% gain since the
Mid-term Indicant signaled buy on August 30, 2003.
The Mid-term
Indicant endures some scientific related constraints on funds. That is
because classical funds do not allow excessive trading, as opposed to the
freedom of trade in Exchange Traded Funds. You will notice the Quick-term
Indicant started selling ETF’s in late June. On July 1, it was signaling
hold for 28 out of 30. Red bulls had declined to 20 on that date, w
