August 26,
2007 Indicant Weekly Stock Market Report
Volume 08, Issue 04 ISSN 1526 6516 © The
Indicant Stock Market 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, which
still offered significant bullish bias. By July 26, red bulls became the
minority and non-bearish support was reported as being threatened.
On August 9,
2007, the Quick-term red bull attributes stated this attribute no longer
supported bullish bias. Since then, the bear has dominated the market with
a mild interruption two weeks ago.
Now, let’s
return to a broader perspective, which is where we started.
http://www.indicant.net/Members/Updates/STI-Mkts/IVI.htm
Keep your eye
on the lower band of the older trading range limits. That is the blue
line. This has been demonstrated as a floor to the more aggressive bearish
expressions since 2004. If the market falls below this lower band of the
trading range, even the longer-term and mid-term investor should consider
selling. Notice the word, consider. It is possible for the market to pass
through the lower trading range limit and then rebound. That depends on
several other Quick-term attributes. Vector Pressure can rise during such
a bearish expression. Force Vectors and Vector Pressure are eight
dimensional algorithms and quite often recognize fake market behavior.
Friday’s bullish bounce appears to be fake, as Force Vectors declined on
that bounce. In other words, the near-term bias still favors the bear.
It is
important to anticipate what you may or may not do before doing it. A
professional golfer practices before playing and while playing thinks
about what he is about to do before striking the ball. Weekend duffers are
like the emotional-based stock market trader. They swing without proper
preparation with random results. Without anticipation, your execution will
most likely be emotionally-biased. That invites irrational perspectives
and inconsistent results.
Keep your eye
on the Daily Stock Market Report. It will keep you informed of the
underlying bias relative to the near-term, quick-term, and short-term
horizons. The near term only has a four to seven day horizon. The
Quick-term Indicant is influenced by the age of the hold signal and its
profit position in addition to Force Vectors and Vector Pressure. The
Short-term Indicant is significantly more patient and seldom signals sell
with a high double digit gain position. The combined Short-term and
Quick-term Consolidate Indicant requires same signaling from both the
Quick-term and Short-term models.
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 one buy signal and six-sell signals.
In addition
to the sell signals, the Mid-term
Indicant is avoiding 82-stocks and funds of the 345- tracked by the
Indicant. The avoided stocks and funds are down an average of 7.3% since
the Mid-term Indicant signaled sell an average of 14.5-weeks ago.
There were
124-stocks and funds avoided at this time last year. Those avoided stocks
and funds were down an average of 6.2% since their respective sell signals
an average of 16.0-weeks earlier.
Two years ago,
on Aug 19, 2005, the Mid-term Indicant was avoiding 87-stocks and funds
that were down an average of 8.3% since their respective sell signals an
average of 20.6-weeks earlier. Three years ago on Aug 20, 2004 there were
120-avoided stocks and funds. They were down by an average of 26.3% from
their respective sell signals an average of 42.2-weeks earlier. On Aug 16,
2003, the Mid-term Indicant was avoiding 60-stocks and funds out of
296-tracked at that time. They were down by an average of 7.1% since their
sell signals an average of 8.6-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 16, 2002, there were 102-avoided stocks and
funds. They were down an average of 42.9% since their respective sell
signals an average of 18.7-weeks earlier.
In addition
to the buy signal, the Mid-term
Indicant is signaling hold for 256 of the 345-stocks and funds tracked by
the Indicant. The stocks and funds with hold signals are up an average of
137.7%. That annualizes to 59.2%. The Mid-term Indicant has been signaling
hold for these 256-stocks and funds for an average of 121.0-weeks.
One year ago,
on Aug 18, 2006, the Mid-term Indicant was holding 175-stocks and funds
out of the 345 tracked for an average of 113.9-weeks. Those 175-stocks and
funds were up by an average of 149.1% (annualized at 68.1%). The Mid-term
Indicant was signaling hold for 227-stocks and funds of the 320-tracked
two years ago on Aug 19, 2005. They were up by an average of 102.3%
(annualized at 58.7%) since their respective buy signals an average of
90.6-weeks earlier. There were 157-stocks and funds with hold signals on
Aug 20, 2004 since their buy signals an average of 65.4-weeks earlier.
They were up by an average of 83.0% (annualized at 66.0%).
The Indicant
was only tracking 296-stocks and funds in 2002-2003, and early 2004. On
Aug 16, 2003, the Mid-term Indicant was signaling hold for 197-stocks and
funds out of 296-tracked. They were up by an average of 52.6% (annualized
at 88.2%) since their buy signals an average of 31.0-weeks earlier. Five
years ago, on Aug 16, 2002, there were only 66-hold signals for stocks and
funds out of the 295 tracked by the Mid-term Indicant. They were up 14.4%
(annualized at 84.6%) since their respective buy signals an average of
8.9-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
79.5% since it secular low on October 9, 2002. The NASDAQ is up 124.8% and
S&P500 up 86.2%. The small cap index, S&P600, is up 141.5%. The underlying
bull that originated on October 9, 2002 remains a solid performer.
The NASDAQ is
down 50.4% since its last weekly secular peak on March 9, 2000. The S&P500
is down 5.3% 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 11.6%
since January 13, 2000 when it peaked from the 1990’s roaring bull. It has
had no timidity in roaming around the new peak area. The NASDAQ needs to climb
another 101.5% to achieve a new record high.
The Dow is up
4.9% so far this year. The S&P500 is up 1.9% and the NASDAQ up 3.7%. At
this time last year, the Dow was up 5.8%, with the S&P500 up 3.9% and the
NASDAQ down 2.2%. Even with recent bearish behavior, the major indices are
performing slightly worse this year than last year. The market will never
deliver a straight line to desired results.
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 24.4%. It was down a whopping
30.2% through this week of 2002. It recovered by 27.4% by this weekend of
2003. It was again down 10.4% in 2004 on this weekend. At this time of
year in 2005, it was down slightly by 1.4%. Last year at this time, it was
again down 2.2%. This year, it is up 3.7%.
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 5.1% on this weekend in 2001. It was down significantly in
2002 by 12.4%, but with less severity than the NASDAQ’s 30.2% drop in 2002
on this weekend. In the last presidential election year of 2003, the
NASDAQ’s 27.4% rise delivered more excitement than the Dow’s humble 11.7%
increase. Many of your recall the meandering bear market in 2004 where the
Dow was down 4.6% 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 4.9%, 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 3.6%, while the NASDAQ is up 1.7% and the S&P500 is up
by 0.5%. 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. 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 held flat last week, even though the Federal Reserve
Board recognized their excessive focus on status quo and relaxed rates in
the face of bearish expressions.
Commodity
prices continued softening last week. As stated last week, that supports
recessionary perceptions. Historical standards suggest that presidential
pre-election years suggest recessions are not preferred in presidential
pre-election years. The Federal Reserve Board reacted to recessionary
threats with some gusto after aggressive bearish stock market behavior
last week.
http://www.indicant.net/Members/Updates/Economic/E03.htm
Overall, hard
economic indicators are not performing to desired intentions for those who
favor bullish stock market behavior. However, you can look forward to the
heart and soul of bullish seasonality, which should start late third
quarter or early fourth quarter this year. The bullish expression then
should be dynamic, given bearish behavior the past few weeks.
Fear
Metrics: Economics and Terrorism
Vanguard Gold and Precious Metals (VGPMX) - #19 is up 298.5% since the
April 13, 2001 buy signal. Its annualized growth since that buy signal is
46.4%. It moved to the north in 29 of the past 45-weeks. This fund was
solidly bearish last week. That is five consecutive weeks of bearish
behavior.
The Mid-term
Indicant signaled sell for
Fidelity Gold, Fund #28, last week. This fund was bought on August 26,
2005 and sold this weekend for a pre-commission gain of 26.9%.
State Street Research Global #9, SSGRX, which is isolated in the
energy sector, is up 262.8% since the Mid-term Indicant signaled buy on
August 16, 2002. It is annualizing at 51.8%.
Vanguard Energy #18, VGENX, is up 202.0% (annualized at 45.6%) since
the Mid-term Indicant signaled buy on April 5, 2003.
Fidelity Energy Services #40, FSESX, is up 180.2% (annualized at
48.0%) since the Mid-term Indicant signaled buy on December 6, 2003.
Fidelity Energy #39, FSENX, is up 155.5% since the Mid-term Indicant
signaled buy on August 16, 2003. It is annualized at 38.3%.
These energy
related funds were solidly bearish 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 49.3% since then. It is
annualized at 23.9%. This ETF has been bearish in eight of the past
fourteen weeks. It was solidly bearish last week.
The SQI
signaled buy for
ETF#03 – Energy and Natural Resources on March 26, 2003. It is up
214.0% (annualized at 48.0%). This fund was also bearish 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 25.1% since the Mid-term
Indicant signaled bull an average of 109-weeks ago. That annualizes to
12.0%, 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 $39,619,819.
That beats buy
and hold performance of $1,999,819 on a $10,000 investment in the Dow
stocks in 1900. The
MTI S&P500 is at $186,691. That beats buy and hold’s $141,634 on a
December 31, 1971 $10,000 investment. The
MTI-NASDAQ is at $209,598. That beats buy and hold’s $86,860 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
Bearish
convergence returned last week. That is four weeks out of the last five
weeks with bearish convergence. The model holds that four consecutive
weeks of bearish convergence is predecessor to a sustainable bear. The
prior week’s bullish divergence disrupted that configuration, but the
intensity of these bearish convergent configurations should be considered
in your anticipation of protecting your portfolio.
As stated last
week, the underlying bullish bias is maintained even though the near-term
outlook favors bearish influence.
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 29.3% 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
351.8% (annualized at 22.2%) since the Long-term Indicant signaled bull
824-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: None of thirty; this
attribute no longer supports bullish bias.
Quick-term
Yellow Bears: Six; non-bearish
support barely continues.
Quick-term
Non-Bearishness: No longer
configured in support of non-bearish expressions
Short-term
Non-Bearishness: Continues
supporting non-bearish behavior by a small differential.
Force
Vectors: Southerly (bearish
support) resumed on Friday, August 17, 2007.
Vector
Pressure: Only two in bullish
domains; threatening bullish bias. Bull/bear battles tend to rage with
this configuration.
Long-term
Hold Positions: Safe, but no
longer solidly safe.
Immediate
Tactics: Preserve Cash and
Write Covered Call Options
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 with a
slight edge favoring bearish behavior.
Comment
from August 3, 2007
As stated
since late July 2007, several configurations shifted in favor of near-term
bearishness even though the Quick-term bullish bias remains.
For the first
time in over three years, the only red bulls on Friday August 3, 2007 were
contrarian ones. Negative Vector Pressure, along with the absolute absence
of strong non-contrarian bullish configurations, enhances bearish
opportunities. That enhancement suggests an increased probability of
sustainable bearish behavior.
The
Quick-term bullish bias has not expired since the majority of the 30-ETF’s
are not yellow bears, while the near-term suggests increasing bearish
dominance.
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 2.9% and down 3.6%, respectively, since then.
Please read
on. Click here to see the
Short-term Indicant’s history.
Both
Indicant Volume Indicator’s are nearing the completion of their
respective robust cycles. However, as stated the past several days, the
robustness favors bearish behavior.
Comment from
August 16, 2007-Thursday Repeated: Bearish aggressions this week crashed
below the newly forming floor of the lower trading limit last Wednesday.
It is now obsolete as a floor. The new floor is yet to be determined. The
old floor of the lower trading limit, which is still displayed on the
charts, is the next major milestone. If the major indices fall below that
floor, it is very likely the Quick-term Indicant will signal sell for your
longer term holdings.
August 17,
2007 - Friday’s bullish expression was not accompanied with higher volume.
It was significantly less than volume related to bearish aggressions the
prior two days. This suggests Friday’s bullish response was orchestrated
and/or emotionally based.
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 26-ETF’s. They are up 60.2% (annualized at
24.1%) since their respective buy signals an average of 128.3-weeks ago.
Although there were no sell signals, the SQI is avoiding four ETF’s. They
are down by an average of 0.5% since their sell signals an average of
5.6-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 26-ETF’s. They are up an average
of 71.0% (annualized 29.3%) since the STI signaled, buy, an average of
124.5-weeks ago. Although there were no sell signals, there are four
avoid signals. They are down by an average 0.5% since their sell signals
an average of 5.5-weeks ago.
The
Short-term Indicant is more active in buying/selling than the Consolidated
model. The Quick-term Indicant, which follows, is even more active.
Quick-term Report Card, Status, and Charts
There were no
buy signals and no sell signals. Although there were no buy signals, the
Quick-term Indicant is signaling hold for 13-ETF’s. They are up by an
average of 21.1% (annualized at 19.6%) since the QTI signaled buy an
average of 55.3-weeks ago. Although there were no sell signals, the
Quick-term Indicant is avoiding 17-ETF’s. They are up by an average of
0.2% since their sell signals an average of 2.2-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
fifteen 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, though the
past few weeks, there is an increasing bearish bias on the immediate
horizon.
Quick-term Indicant Bull/Bear Health Report
Six 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 1.8%. This is no
longer configured in support of the market’s non-bearish posture. There is
no longer minimal support for sustainable bearish assertions. However,
this attribute is not configured with support for sustainable bearish
behavior at this time, but the threat is increasing.
None of the
ETF’s are above their respective bullish red curves. As originated last
Friday, this configuration no longer supports underlying bullish bias.
This bullish bias loss is most likely temporary, but as of this writing
the red bull status is no longer supporting the underlying bullish bias.
All thirty ETF average positions are 5.9% below their bullish red curves.
The next
major Quick-term Indicant milestone is the population of yellow bears. If
this becomes the majority, sustainable bearish behavior will become
increasingly probable. Notice exactly one-half of the ETF’s are below
bearish yellow.
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 solidly supported the
underlying bullish bias until the recent dry-spell started. Non-contact
with the breakout lines the past 17-consecutive trading-days fuels bearish
confidence.
As stated the
past several days, the bear has the edge on the immediate horizon.
The average
distance from breakout contact is 9.7%. This remains in support of the
bullish bias, but weakening.
None of the
ETF’s is contacting its breakdown line, providing some non-bearish
support.
The average
distance from the price and breakdown is 15.7%. This configuration
provides non-bearish support, which has been the case since March 2003.
Breakout/breakdown differential are closing with a mere 4.0%-age point
variance. Bearish ambition can accelerate if the breakdown differential
exceeds the breakout differential.
As stated the
past several days, consider bullish bounces as spurts against the
near-term bearish bias.
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.
Only one of the thirty ETF Force Vectors continue toward bullish domains.
As stated a few days ago, if they continue drifting south the next few
days, the near-term contains a bearish advantage. The market responded
with deep bearish aggressions earlier this past week. There was a slight
shift to the north after Thursday’s close, but they again shifted south
after Friday’s close. The bear again has an edge over the bull with this
shift.
Force Vector
cycles are extremely fast, seldom lasting more than six days. If this
“bearish cycle” continues through the norm, expect bearish expressions
throughout that cycle. Keep your eye on this attribute.
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 after Friday’s close, following 15-put option buy
signals from last Friday, August 9, through Wednesday night. The preferred
intra-day contrarian movement against the underlying cycle on the day
after the signal was not sufficient for the put option to transact into a
buy. That contrarian movement facilitates your discounted offer price.
Although aggressive bearish behavior was favorable for put options
throughout this past week, the market did not provide the desired
contrarian expressions to the underlying near-term bearish cycle.
Only two
ETF Vector Pressures are in bullish
domains. This is exceedingly low and not offering bullish support. As
stated the past few days, the current configurations remain in support the
Quick-term bullish bias shift from August 15, 2006, although favoring
increasing bearish spurt activity against this underlying bullish bias. As
stated the past several days, several Quick-term and Short-term attributes
have weakened in favor of bearish behavior on the near-term horizon.
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.
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 few days, the Quick-term and Short-term Indicant
models continue suggesting a bullish bias for longer term holdings, even
though a micro-bearish cycle (bearish spurt) is underway.
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.
Writing
covered call options from the August 3, 2007 signal to do so remains safe,
but keep your eye on Force Vectors. If they shift back to the north in the
next few days, discontinue writing covered call options.
Although
there was a bullish bounce on Friday, August 17, 2007, it remains
configured as a bullish spurt against near-term bearish bias.
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
Bearish
convergence has occurred in four of the past five weeks. There were not
four consecutive weeks of bearish convergence, but four out of the last
five weeks is somewhat ominous.
Force Vectors
dipped back to the south on last Friday’s bullish aggressions, which
suggests a near-term bearish bias. Keep in mind, the Force Vector cycles
are fast with only a three to seven day cycle on average.
Vector
Pressure is at its lowest in several months favoring bearish behavior on a
near-term cycle.
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
08/19/07
August 12, 2007 Indicant Weekly Stock
Market Report
Volume 08, Issue 02 ISSN 1526 6516 © The
Indicant Stock Market Report
This Week’s Report
The Bullish Bias Threatened –
Part 3
After three consecutive weeks of bearish
convergence, the market rebounded last week. That configured with bullish
divergence, which suggests the underlying bullish bias remains in tact.
Those of you desiring bullish behavior are pleased with last week’s
bullish divergence, even though the bullish bounce was mild and included
significant volatility.
Although the market was volatile last week
with significant bearish influence, the bull countered just enough to
maintain its underlying dominance. The Mid-term Indicant did not generate
any bear signals for the major indices. Unfortunately, the bullish bounce
was extremely mild and without conviction.
The primary concern now is the configuration
of Force Vectors. They shifted back to the north last week and helped the
market fend off severe bearish influences. A similar configuration
occurred last March. Rather than shifting back to the south last March,
Force Vectors configured robustly to the north. That fueled additional
bullish behavior and a continuation of the underlying bullish bias. Will
this happen in the next few days?
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.
Recent economic reports suggests the
sub-prime debt and related problems should not produce significant
economic impact if defaults accelerate, as expected. Keep in mind this is
a presidential pre-election year, which is the most bullish on the
four-year cycle. Corporate earnings continue to increase, which should
offer Mid-term market bullishness. The problem is the Quick-term,
Short-term and Near-term influences. Right now, the Near-term bias favors
the bear.
The market has to endure deep bearish
seasonality, which did not occur last year. That omission has a tendency
to offer payback. So, do not be surprised at deep bearish seasonality's
influence in a few days/weeks. However, the heart and soul of bullish
seasonality is the immediate successor to the phenomenon of deep bearish
seasonality. In this presidential post election year, do not be surprised
if the heart and soul of bullish seasonality more than offsets the
punishment dished out by the bear.
Keep your eye on Force Vectors and other
Quick-term attributes. The daily stock market report will keep you posted.
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 four-sell signals.
In addition to the sell signals, the Mid-term
Indicant is avoiding 79-stocks and funds of the 345- tracked by the
Indicant. The avoided stocks and funds are down an average of 6.0% since
the Mid-term Indicant signaled sell an average of 14.0-weeks ago.
There were 168-stocks and funds avoided at
this time last year. Those avoided stocks and funds were down an average
of 5.7% since their respective sell signals an average of 16.7-weeks
earlier.
Two years ago, on Aug 12, 2005, the Mid-term
Indicant was avoiding 86-stocks and funds that were down an average of
17.3% since their respective sell signals an average of 20.9-weeks
earlier. Three years ago on Aug 13, 2004 there were 133-avoided stocks and
funds. They were down by an average of 29.1% from their respective sell
signals an average of 41.4-weeks earlier. On Aug 9, 2003, the Mid-term
Indicant was avoiding only 33-stocks and funds out of 296-tracked at that
time. They were down by an average of 11.0% since their sell signals an
average of 15.0-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 9, 2002, there were 168-avoided stocks and funds. They were down an
average of 37.2% since their respective sell signals an average of
15.5-weeks earlier.
Although there were no buy signals, the
Mid-term Indicant is signaling hold for 262 of the 345-stocks and funds
tracked by the Indicant. The stocks and funds with hold signals are up an
average of 139.4%. That annualizes to 60.8%. The Mid-term Indicant has
been signaling hold for these 262-stocks and funds for an average of
119.2-weeks.
One year ago, on Aug 11, 2006, the Mid-term
Indicant was holding 175-stocks and funds out of the 345 tracked for an
average of 112.9-weeks. Those 175-stocks and funds were up by an average
of 141.8% (annualized at 65.3%). The Mid-term Indicant was signaling hold
for 230-stocks and funds of the 320-tracked two years ago on Aug 12, 2005.
They were up by an average of 102.4% (annualized at 60.4%) since their
respective buy signals an average of 88.2-weeks earlier. There were
155-stocks and funds with hold signals on Aug 13, 2004 since their buy
signals an average of 65.1-weeks earlier. They were up by an average of
77.0% (annualized at 61.5%).
The Indicant was only tracking 296-stocks and
funds in 2002-2003, and early 2004. On Aug 9, 2003, the Mid-term Indicant
was signaling hold for 199-stocks and funds out of 296-tracked. They were
up by an average of 48.9% (annualized at 82.9%) since their buy signals an
average of 30.6-weeks earlier. Five years ago, on Aug 9, 2002, there were
only 51-hold signals for stocks and funds out of the 295 tracked by the
Mid-term Indicant. They were up 26.7% (annualized at 71.0%) since their
respective buy signals an average of 19.6-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 81.7% since it secular low on
October 9, 2002. The NASDAQ is up 128.4% and S&P500 up 87.1%. The small
cap index, S&P600, is up 142.1%. So, the underlying bull that originated
on October 9, 2002 remains as a solid performer.
The NASDAQ is down 49.6% since its last
weekly secular peak on March 9, 2000. The S&P500 is down 4.8% 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 12.9% since January 13, 2000
when it peaked from the 1990’s roaring bull. It has had no timidity is
roaming in the new peak area. The NASDAQ needs to climb another 98.4% to
achieve a new record high.
The Dow is up 6.2% so far this year. The
S&P500 is up 2.5% and the NASDAQ up 5.4%. At this time last year, the Dow
was up 3.8%, with the S&P500 up 1.9% and the NASDAQ down 6.1%. Even with
recent bearish behavior, the major indices are performing better this year
than last year. The market will never deliver a straight line to desired
results.
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 20.8%. It was down a whopping 33.0% through this week of 2002. It
recovered by 23.1% by this weekend of 2003. It was again down 9.7% in 2004
on this weekend. At this time of year in 2005, it was down slightly by
0.8%. Last year at this time, it was again down 6.1%. This year, it is up
5.0%.
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 significantly in 2002 by 12.7%, but with less
severity than the NASDAQ’s 33.0% drop in 2002 on this weekend. In the last
presidential election year of 2003, the NASDAQ’s 23.1% rise delivered more
excitement than the Dow’s humble 10.2% increase. Many of your recall the
meandering bear market in 2004 where the Dow was down 4.9% as the market
neared deep bearish seasonality. The meandering bear continued through
2005 with the Dow dropping by 1.7% for the year. On this weekend, the Dow
was up 3.8% in 2006, which conflicted with historical standards and
seasonal normalcy. So far, this year the Dow is up 6.2%, 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 4.9%, while the
NASDAQ is up 3.3% and the S&P500 is up by 1.1%. 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 few 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. 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 rebounded to the north last week succeeding two
consecutive weeks of bearish behavior. Interest rates remain amazingly
flat. The Fed is biased with status quo, while the stock market obviously
supports a reduction in interest rates.
Commodity prices softened last week
supporting recessionary perceptions. However, they continue hovering at or
near new record highs. Even though a presidential pre-election year is not
a favorite time to induce economic slowness, the Federal Reserve will bias
in favor of fending off inflation. You saw that last week and the gap is
growing between the free market’s views and policy makers.
As stated the past twelve weeks, the Fed is
“maintaining” prevailing rates. The problem is a tough one. Rising
capitalism should invoke rising productivity. Will this productivity
potential offset the inflationary threats of rising commodity prices?
Oil prices plummeted the past few days,
offering additional recessionary perceptions.
http://www.indicant.net/Members/Updates/Economic/E03.htm
As stated the past three weeks, the CRB
Bridge Futures is configuring similarly to oil. That configuration
continues to threaten the bullish stock market bias. The Fed keeps a close
eye on this barometer. Its chart is on the same link. Just scroll down a
little to view it.
Overall, hard economic indicators are not
performing to desired intentions for those who favor bullish stock market
behavior. However, you can look forward to the heart and soul of bullish
seasonality, which should start late third quarter or early fourth quarter
this year. The bullish expression then should be dynamic, given bearish
behavior the past few weeks.
Fear Metrics: Economics and Terrorism
Vanguard Gold and Precious Metals (VGPMX) - #19 is up 325.2% since the
April 13, 2001 buy signal. Its annualized growth since that buy signal is
50.7%. It moved to the north in 29 of the past 44-weeks. This fund was
mildly bearish last week, after expressing solid bearishness in the
previous three weeks. That is four consecutive weeks of bearish behavior.
Fidelity Gold, Fund #28, is up 42.2% since the Mid-term Indicant
signaled buy on August 26, 2005. That annualizes to 21.3%. This fund was
again slightly bullish last week. That is two consecutive weeks of bullish
behavior, which is an inconsistent configuration with its cousin, Vanguard
Gold and Precious Metals fund. Vanguard traditionally outperforms
Fidelity, but that has not been the case the past two weeks.
State Street Research Global #9, SSGRX, which is isolated in the
energy sector, is up 283.9% since the Mid-term Indicant signaled buy on
August 16, 2002. It is annualizing at 56.2%.
Vanguard Energy #18, VGENX, is up 210.3% (annualized at 47.7%) since
the Mid-term Indicant signaled buy on April 5, 2003.
Fidelity Energy Services #40, FSESX, is up 191.2% (annualized at
51.3%) since the Mid-term Indicant signaled buy on December 6, 2003.
Fidelity Energy #39, FSENX, is up 163.3% 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 with the exception of State Street. That is a reversal
from last week’s solid bearish expression for all these energy related
funds.
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 53.0% since then. It is
annualized at 25.9%. This ETF has been bearish in seven of the past
thirteen weeks. It was mildly bearish last week.
The SQI signaled buy for
ETF#03 – Energy and Natural Resources on March 26, 2003. It is up
215.2% (annualized at 48.5%). This fund was also solidly 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 26.8% since the Mid-term Indicant signaled bull an
average of 108-weeks ago. That annualizes to 13.0%, 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 $40,105,740.
That beats buy and hold performance of
$2,024,231 on a $10,000 investment in the Dow stocks in 1900. The
MTI S&P500 is at $187,685. That beats buy and hold’s $142,388 on a
December 31, 1971 $10,000 investment. The
MTI-NASDAQ is at $212,933. That beats buy and hold’s $88,242 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 three consecutive weeks of bearish
convergence, several indices rebounded last week. Remember, four
consecutive weeks of bearish convergence is a typical predecessor to
bearish sustainability. Last week was volatile with a slight bullish
divergence configuration. That suggests a continuation of the underlying
bullish bias even though the near-term outlook favors bearish influence.
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 29.3% 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 357.4% (annualized at 22.6%)
since the Long-term Indicant signaled bull 823-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: None of thirty;
this attribute no longer supports bullish bias.
Quick-term Yellow Bears: Six;
non-bearish support continues, but diminishing.
Short-term/Quick-term Non-Bearishness:
Countering sustainable bearish ambition.
Force Vectors: Appears to have
pinnacled and shifting back to the south favoring near-term bearishness.
Vector Pressure: Only five in bullish
domains; threatening bullish bias.
Long-term Hold Positions: Safe, but no
longer solidly safe.
Immediate Tactics: Preserve Cash and
Write Covered Call Options
Current Quick-term Bias: Bullish, but
in a battle with the bear.
Overall Market Status: Bullish bias
prevailing, but weakening.
Profit Potential from Naked Options:
Increasing volatility is favorable.
Volume: Configurations mixed with a
slight edge favoring bearish behavior.
Comment from August 3, 2007
As stated last week (late July 2007), several
configurations were shifting in favor of near-term bearishness even though
the Quick-term bullish bias remains.
For the first time in over three years, the
only red bulls on Friday August 3, 2007 were contrarian ones. Negative
Vector Pressure, along with the absolute absence of strong non-contrarian
bullish configurations, enhances bearish opportunities. That enhancement
suggests an increased probability of sustainable bearish behavior.
The Quick-term bullish bias has not expired
since the majority of the 30-ETF’s are not yellow bears, while the
near-term suggests increasing bearish dominance.
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 1.7% and down 2.1%, respectively, since then.
Please read on. Click here to see the
Short-term Indicant’s history.
The message is the same, as the past several
days. Both
Indicant Volume Indicator’s are configuring robustly, favoring
near-term bearishness.
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
26-ETF’s. They are up 64.7% (annualized at 25.2%) since their respective
buy signals an average of 127.3-weeks ago. Although there were no sell
signals, the SQI is avoiding four ETF’s. They are down by an average of
1.8% since their sell signals an average of 4.6-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 26-ETF’s. They are up an average of 76.5% (annualized
31.9%) since the STI signaled, buy, an average of 123.5-weeks ago.
Although there were no sell signals, there are four avoid signals. They
are down by an average 1.8% since their sell signals an average of
4.5-weeks ago.
The Short-term Indicant is more active in
buying/selling than the Consolidated model. The Quick-term Indicant, which
follows, is even more active.
Quick-term Report Card, Status, and Charts
There were no buy signals and no sell
signals. Although there were no buy signals, the Quick-term Indicant is
signaling hold for 19-ETF’s. They are up by an average of 21.8%
(annualized at 21.0%) since the QTI signaled buy an average of 53.3-weeks
ago. Although there were no sell signals, the Quick-term Indicant is
avoiding eleven ETF’s. They are down by an average of 0.8% since their
sell signals an average of 2.2-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 nine 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, while there is an increasing bearish bias on
the immediate horizon.
Quick-term Indicant Bull/Bear Health Report
Six 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 a mere 3.5%. This remains configured in support of the
market’s non-bearish posture, but losing intensity for that support. There
is no longer minimal support for sustainable bearish assertions. However,
this attribute is not configured with support for sustainable bearish
behavior at this time, but the threat is increasing.
None of the ETF’s are above their respective
bullish red curves. This configuration no longer supports underlying
bullish bias. This bullish bias loss is most likely temporary, but as of
this writing the red bull status is no longer supporting the underlying
bullish bias. All thirty ETF average positions are 4.5% below their
bullish red curves.
The next major Quick-term Indicant milestone
is the population of yellow bears. If this becomes the majority,
sustainable bearish behavior will become increasingly probable.
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 solidly supported the underlying bullish bias. Non-contact with
the breakout lines the past thirteen consecutive trading-days fuels
bearish confidence..
As stated the past several days, the bear has
the edge on the immediate horizon.
The average distance from breakout contact is
8.3%. This remains in support of the bullish bias, but weakening.
None of the ETF’s are contacting their
respective breakdown lines providing some non-bearish support.
The average distance from the price and
breakdown remains a healthy 19.2%. This configuration provides non-bearish
support, which has been the case since March 2003. Consider bullish
bounces as spurts against the near-term bearish bias.
ETF Force Vector Configurations
You can scan the
Quick-term Indicant for Exchange Traded Funds table and click on the
charts to observe Force Vector configurations. Scroll down each of the
charts, where a quick link has been added to take you to the next series
of Quick-term ETF charts. Use you back arrow on your browser to return to
the previous page.
Twenty-nine of the thirty ETF Force Vectors continue toward bullish
domains. Force Vectors have been moving bullishly the past few days, but
that cycle is mature. A shift back to the south would invigorate the bear
to express yet more dominance. As stated last Wednesday, a reversal back
to the south in the next day or two will trigger either non-bullish
behavior or bearish behavior. You saw that with Thursday’s dynamic bearish
expression. Also, as stated last Wednesday, if they drop and then pivot
back to the north like last March’s configuration, then expect this bull
to regain dominance. The edge right now favors the bear with the maturing
of the current cycle.
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
put option signal after Friday’s close. Last Wednesday’s bullish spurt
performed nicely for last Tuesday’s put option buy signal. Dynamic bearish
behavior Thursday produced a nice profit on that put option.
Friday’s market did not express the desired
contrarian (bullish behavior) to depress the prices on Thursday’s seven
put option signals. The late Friday bullish surge may have allowed some
discounted offers to take. Unfortunately, the market finished with a
bearish conclusion and thus elevated put option prices. Although the
market behaved in accordance to the desired expectations of put option
buyers with its bearish expression, it was not friendly to the discounted
prices you offered. It is better to be patience and enjoy those few days a
year where contrarian behavior allows discounted prices to be transacted
from your stalked option candidates.
Only five ETF Vector Pressures are in bullish
domains, which is a reduction by one from last Thursday. As stated the
past few days, the current configurations remain in support the Quick-term
bullish bias shift from August 15, 2006, although favoring increasing
bearish spurt activity against this underlying bullish bias. As stated the
past few days, several Quick-term and Short-term attributes have weakened
in favor of bearish behavior on the near-term horizon.
It is common for bull/bear battles when
Vector Pressure is being threatened from its support of the prevailing
bias.
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 few days,
the Quick-term and Short-term Indicant models continue suggesting a
bullish bias for longer term holdings, even though a micro-bearish cycle
is underway at this time.
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.
Writing covered call options from the August
3, 2007 signal is again safe, but keep your eye on Force Vectors. If they
shift back to the north in the next few days, discontinue writing covered
call options.
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
Bearish convergence did not occur last week,
which suggests a continuation of the underlying bullish bias. Keep in mind
the Quick-term Indicant suggests near-term bearishness on the immediate
horizon. Much depends on Force Vector behavior, which has been rising. If
it starts to turn south again, do not be surprised at bearish expressions
on the immediate horizon. The Quick-term Indicant has very few attributes
supporting bullish behavior on the immediate horizon.
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
08/12/07
August 5,
2007 Indicant Weekly Stock Market Report
Volume 08, Issue 01 ISSN 1526 6516 © The
Indicant Stock Market Report
This Week’s
Report
The Bullish
Bias Threatened – Part 2
The stock
market has now endured three consecutive weeks of bearish convergence. As
stated the past few weeks, fundamental problems in the home mortgage
industry are contributing to this bearish behavior.
Technically,
we are within a few weeks of entering deep bearish seasonality, which is
an annual phenomenon. The bearish period is the annual predecessor to the
heart and soul of bullish seasonality. The market’s most aggressive
bullish expressions typically occur from early autumn through late
January. That phenomenon is due to the immediate predecessor’s deep
bearish seasonality. In other words, the market moves dynamically to the
north due, for the most part, to the deep bearish period that occurs
immediately before. What goes down must come up; and that generally occurs
sometimes during the fourth calendar quarter.
There are some
fundamentals supporting seasonal normalcy this year. As earlier stated the
sub-prime lending institutions are facing an uphill battle. With the
so-called housing bubble, the stock market is sensing a reduction in cash
flows to buy stocks. Those two dynamics are prime contributors to recent
bearish expressions.
However,
another economic fundamental is shaping up to support the heart and soul
of bullish seasonality later this year. Rising unemployment is typically a
bullish stimulant. The markets reason that the Federal Reserve will soften
interest rates with a weakening economy. Southerly moving interest rates
are the favorite fuel of bulls.
Unemployment
was reported to have worsened last week. Rather than responding bullishly,
the market continued its bearish behavior. The connection here is that the
rising unemployed will default on their mortgages. The increasing supply
of houses will dampen the pricing and thus the lending institutions may be
faced with re-possessing negative home equities. That coupled with the
perception of reduced cash infusions into the stock market is sound
fundamental thinking in support of continuing bearish behavior.
On the other
hand, corporate profits continue to increase. That is the second favorite
fuel of the bull. As long as the general economy does not falter too
deeply, corporate profits should not become an additional issue in support
of the bear. However, if the unemployment continues to rise in the face of
rising commodity prices and other inflationary elements, the stock market
will most definitely turn deeply to the south.
The bull
refuses to co-exist with inflation. It refuses to coexist with recessions.
It refuses to coexist with deflation, which is has not been an issue since
late 1999 and early 2000. It refuses to coexist with high interest rates.
It refuses to coexist with declining corporate profits.
However, the
bullish elements are rising corporate profits and rising unemployment. A
soft economy with rising unemployment should support normalcy for the
upcoming heart and soul of bullish seasonality in a few weeks. However, it
may be necessary to first endure deep bearish seasonality, which is due to
start in about two weeks.
Keep you eye
on the daily stock market report, as the Quick-term Indicant and
Short-term Indicant will detect major bias shifts.
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 three buy signals and 20-sell signals.
In addition
to the sell signals, the Mid-term
Indicant is avoiding 59-stocks and funds of the 345- tracked by the
Indicant. The avoided stocks and funds are down an average of 11.5% since
the Mid-term Indicant signaled sell an average of 17.7-weeks ago.
There were
165-stocks and funds avoided at this time last year. Those avoided stocks
and funds were down an average of 4.7% since their respective sell signals
an average of 15.9-weeks earlier.
Two years ago,
on Aug 5, 2005, the Mid-term Indicant was avoiding 87-stocks and funds
that were down an average of 17.2% since their respective sell signals an
average of 19.9-weeks earlier. Three years ago on Aug 6, 2004 there were
130-avoided stocks and funds. They were down by an average of 27.8% from
their respective sell signals an average of 40.5-weeks earlier. On Aug 2,
2003, the Mid-term Indicant was avoiding only 27-stocks and funds out of
296-tracked at that time. They were down by an average of 23.3% since
their sell signals an average of 28.0-weeks earlier. Five years ago on Aug
2, 2002, there were 241-avoided stocks and funds. They were down an
average of 32.0% since their respective sell signals an average of
9.3-weeks earlier.
Although
there were no buy signals, the Mid-term Indicant is signaling hold for 266 of the 345-stocks and
funds tracked by the Indicant. The stocks and funds with hold signals are
up an average of 138.7%. That annualizes to 67.7%. The Mid-term Indicant
has been signaling hold for these 266-stocks and funds for an average of
118.2-weeks.
One year ago,
on Aug 4, 2006, the Mid-term Indicant was holding 173-stocks and funds out
of the 345 tracked for an average of 114.8-weeks. Those 173-stocks and
funds were up by an average of 149.5% (annualized at 67.7%). The Mid-term
Indicant was signaling hold for 229-stocks and funds of the 320-tracked
two years ago on Aug 5, 2005. They were up by an average of 102.6%
(annualized at 60.2%) since their respective buy signals an average of
88.7-weeks earlier. There were 160-stocks and funds with hold signals on
Aug 6, 2004 since their buy signals an average of 64.5-weeks earlier. They
were up by an average of 75.8% (annualized at 61.1%).
The Indicant
was only tracking 296-stocks and funds in 2002-2003, and early 2004. On
Aug 2, 2003, the Mid-term Indicant was signaling hold for 260-stocks and
funds out of 296-tracked. They were up by an average of 44.8% (annualized
at 85.9%) since their buy signals an average of 27.1-weeks earlier. Five
years ago, on Aug 2, 2002, there were only 24-hold signals for stocks and
funds out of the 295 tracked by the Mid-term Indicant. They were up 63.1%
(annualized at 64.8%) since their respective buy signals an average of
50.6-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
80.9% since its secular low on October 9, 2002. The NASDAQ is up 125.4% and
S&P500 up 84.5%. The small cap index, S&P600, is up 134.5%. The NASDAQ is
down 50.3% since it last weekly secular peak on March 9, 2000. The S&P500
is down 6.2% since it last weekly secular peak on March 23, 2000, while
the Dow is up 12.4% since January 13, 2000 when it peaked from the 1990’s
roaring bull. The NASDAQ needs to climb another 101.0% to achieve a new
record high.
The Dow is up
5.8% so far this year. The S&P500 is up 1.0% and the NASDAQ up 4.0%. At
this time last year, the Dow was up 4.9% for 2006, with the S&P500 up 2.6%
and the NASDAQ down 5.1%. Even with bearish behavior the past two weeks,
the major indices are performing better this year than last year.
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 16.4%. It was down a whopping
36.0% through this week of 2002. It recovered by 28.5% by this weekend of
2003. It was again down 7.2% in 2004 on this weekend. At this time of year
in 2005, it was up slightly by 1.9%. Last year at this time, it was again
down 5.1%. This year, it is up 4.0%.
Since the
expiration of the heart and soul of bullish seasonality in late January
2007, the Dow is up 4.4%, while the NASDAQ is up 1.9% and the S&P500 is down
by 0.4%. Even with last week’s 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? 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. 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 has now moved south for two consecutive weeks. The
six-month certificate of deposit moved into neutrality after being in
stock market bearish domains for quite some time.
Unfortunately,
commodity prices continue expressing new record highs. Even though a
presidential pre-election year is not a favorite time to induce economic
slowness, the Federal Reserve will bias in favor of fending off inflation.
As stated the
past eleven weeks, the Fed is “maintaining” prevailing rates. The problem
is a tough one. Commodity prices continue to rise and the inflation battle
is underway. Rising capitalism should invoke rising productivity. Will
this productivity potential offset the inflationary threats of rising
commodity prices?
As stated the
past five weeks, the oil’s bearish yellow curve has shifted back to the
north. Although its recent northerly cycle has not produced the same
dramatic bearishness of the 1970’s, it consumed bullish energy from the
stock market. If it resumes another cyclical rise, the result should be
unfavorable to the stock market bull. Two bad results will manifest.
Either inflation becomes more than a nuisance or interest rates rise or
both. The bull will be weakened in the event either unfolds. Click the
below link to view the oil charts.
http://www.indicant.net/Members/Updates/Economic/E03.htm
As stated the
past two weeks, the CRB Bridge Futures is configuring similarly to oil.
That configuration continues to threaten the bullish stock market bias.
The Fed keeps a close eye on this barometer. Its chart is on the same
link. Just scroll down a little to view it.
All in all,
hard economic indicators are not performing to desired intentions for
those who favor bullish stock market behavior. However, you can look
forward to the heart and soul of bullish seasonality, which should start
late third quarter or early fourth quarter this year.
Fear
Metrics: Economics and Terrorism
Vanguard Gold and Precious Metals (VGPMX) - #19 is up 326.4% since the
April 13, 2001 buy signal. Its annualized growth since that buy signal is
51.0%. It moved to the north in 29 of the past 43-weeks. This fund has
been solidly bearish the last three weeks.
Fidelity Gold, Fund #28, is up 40.1% since the Mid-term Indicant
signaled buy on August 26, 2005. That annualizes to 20.9%. This fund was
slightly bullish last week after aggressive bearishness in the prior week.
State Street Research Global #9, SSGRX, which is isolated in the
energy sector, is up 287.6% since the Mid-term Indicant signaled buy on
August 16, 2002. It is annualizing at 57.1%.
Vanguard Energy #18, VGENX, is up 206.1% (annualized at 46.9%) since
the Mid-term Indicant signaled buy on April 5, 2003.
Fidelity Energy Services #40, FSESX, is up 180.7% (annualized at
48.7%) since the Mid-term Indicant signaled buy on December 6, 2003.
Fidelity Energy #39, FSENX, is up 153.5% since the Mid-term Indicant
signaled buy on August 16, 2003. It is annualized at 38.2%.
These energy
related funds were solidly bearish last week, following bearishness in the
previous 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 53.6% since then. It is
annualized at 26.4%. This ETF has been bearish in six of the past twelve
weeks. It was mildly bullish last week.
The SQI
signaled buy for
ETF#03 – Energy and Natural Resources on March 26, 2003. It is up
208.3% (annualized at 47.1%). This fund was also solidly bearish 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 24.9% since the Mid-term
Indicant signaled bull an average of 107-weeks ago. That annualizes to
12.2%, 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 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 $39,921,165.
That beats buy
and hold performance of $2,015,463 on a $10,000 investment in the Dow
stocks in 1900. The
MTI S&P500 is at $185,028. That beats buy and hold’s $140,372 on a
December 31, 1971 $10,000 investment. The
MTI-NASDAQ is at $210,118. That beats buy and hold’s $87,075 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
Bearish
convergence occurred for three consecutive weeks. Nearly all sectors moved
bearishly to the south. As stated last week, this is somewhat ominous for
the stock market. Four consecutive weeks of bearish convergence, quite
often, is predecessor to dynamic bearish behavior. Keep your eye on the
daily stock market report.
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 26.2% 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
355.4% (annualized at 22.5%) since the Long-term Indicant signaled bull
822-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; this
offers no support for bullish bias since both are contrarian funds.
Quick-term
Yellow Bears: Ten; non-bearish
support continues, but diminishing.
Short-term/Quick-term Non-Bearishness:
Countering sustainable bearish ambition.
Force
Vectors: Now shifting north,
but from deep inside bearish domains. Although this should dampen bearish
enthusiasm, bullish responses are vulnerable to bearish influence.
Vector
Pressure: Nine in bullish
domains; threatening bullish bias.
Long-term
Hold Positions: Safe, but no
longer solidly safe.
Immediate
Tactics: Preserve Cash and
Write Covered Call Options
Current
Quick-term Bias: Bullish, but
in a battle with the bear.
Overall
Market Status: Bullish bias
prevailing, but weakening.
Profit
Potential from Naked Options:
Increasing volatility is favorable.
Volume:
Configurations mixed with a
slight edge favor bearish behavior.
Comment
from August 3, 2007
As stated
last week (late July 2007), several configurations were shifting in favor
of near-term bearishness even though the Quick-term bullish bias remained.
For the first
time in over three years, the only red bulls on Friday August 3, 2007 were
contrarian ones. Negative Vector Pressure, along with the absolute absence
of strong non-contrarian bullish configurations, enhances bearish
opportunities. That enhancement suggests an increased probability of
sustainable bearish behavior.
The
Quick-term bullish bias has not expired since the majority of the 30-ETF’s
are not yellow bears, while the near-term suggests increasing bearish
dominance.
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 2.2% and 3.4%, respectively since then.
Please read
on. Click here to see the
Short-term Indicant’s history.
This
attribute is the same as the past three days.
Both
Indicant Volume Indicator’s are configuring robustly, which continues
to support underlying bullish bias, while at the same time near-term
bearishness is favored. Friday’s bearish aggression substantiated this
prognosis. 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 26-ETF’s. They are up 63.1% (annualized at
25.7%) since their respective buy signals an average of 126.3-weeks ago.
Although there were no sell signals, the SQI is avoiding four ETF’s. They
are down an average of 3.6% since their sell signals an average of
3.6-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 26-ETF’s. They are up an average
of 74.9% (annualized 31.5%) since the STI signaled, buy, an average of
122.5-weeks ago. Although there were no sell signals, there are four
avoid signals. They are down 3.6% since their sell signals an average of
3.6-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 one sell signal. Although there were no buy signals, the
Quick-term Indicant is signaling hold for 20-ETF’s. They are up by an
average of 20.5% (annualized at 19.3%) since the QTI signaled buy an
average of 54.6-weeks ago. In addition to the sell signal, the Quick-term
Indicant is avoiding nine ETF’s. They are down by an average of 3.9% since
their sell signals an average of 2.9-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 six
conflicts, whereby the Short-term Indicant and the Quick-term Indicant are
in disagreement between hold and avoid status. Although weakened recently,
the bias shift on August 15, 2006 remains in favor of the bull.
Quick-term Indicant Bull/Bear Health Report
Ten 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 2.3%. This
remains configured in support of the market’s non-bearish posture. There
is no longer minimal support for sustainable bearish assertions. However,
this attribute is not configured with support for sustainable bearish
behavior at this time, but the threat is increasing.
Only two
ETF’s are above their respective bullish red curves. That is the lowest
number of red bulls since mid-2004. This configuration supports the
underlying bullish bias, although weakened. All thirty ETF average
positions are 5.5% below their bullish red curves.
The two red
bulls are contrarian ETF’s. There are no non-contrarian red bulls, leaving
the bull severely weakened.
The next
major Quick-term Indicant milestone is the population of yellow bears. If
this becomes the majority sustainable bearish behavior will become
increasingly probable.
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 last
August is solidly bullish. This repeated contact solidly supports the
underlying bullish bias. Contact in sixty of the last eighty-five trading
days remains supportive of bullish bias. Non-contact with the breakout
lines the past eight trading-days provides increasing bearish confidence..
As stated the
past few days, the bear has the edge on the immediate horizon.
The average
distance from breakout contact is 9.5%. This remains in support of the
bullish bias.
Two of the
ETF’s are contacting their respective breakdown lines. That is the first
time in over two years with two making breakdown contact.
The average
distance from the price and breakdown remains a healthy 17.7%. This
configuration provides non-bearish support, which has been the case since
March 2003. Consider bullish bounces as spurts against the near-term
bearish bias.
ETF Force
Vector Configurations
You can scan
the
Quick-term Indicant for Exchange Traded Funds table and click on the
charts to observe Force Vector configurations. Scroll down each of the
charts, where a quick link has been added to take you to the next series
of Quick-term ETF charts. Use you back arrow on your browser to return to
the previous page.
Twenty-one of the thirty ETF Force Vectors continue toward bullish
domains. As stated eleven trading days ago, Force Vectors are now
decreasing, which suggests a pause in bullish expressions. The bearish
Force Vector cycle has now matured and has begun a cycle to the north,
which should dampen bearish enthusiasm, but not eliminate it. Most of
these Force Vectors are deep into bearish domains, making them vulnerable
to bearish influence. Even with the current configuration, the underlying
bias remains bullish. However, do not be surprised at bearish expressions
on the immediate horizon. Bullish bounces should be considered as a
bullish spurt in the face of near-term bearish dominance.
Force Vectors
moved back to the north on Friday, but that movement is nearly irrelevant
due to the depth of their position and the robustness of their recent
bearish cycle.
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
put option buy signal. Last Wednesday’s put option buy signals should have
yielded you tremendous profits on Thursday’s mild bullish expression,
followed with Friday’s aggressive bearish expression. That was the perfect
configuration for making money in options.
As stated the
past several days, with Force Vectors and Vector Pressure moving south,
consider bullish expressions as bullish spurts against a micro-bearish
bias. As stated early last week, Force Vectors are moving robustly to the
south favoring a bearish bias on a near term basis. Plummeting Force
Vectors appear to be reversing the bearish cycle. If the newly evolving
cycle to the north does not cross into bullish domains, expect bearish
dominance to resume. Although the theme continues with a bullish bias,
there is no conflict. Long-term hold positions should be maintained while
new money should remain in cash.
Only nine
ETF Vector Pressures are in bullish
domains. As stated the past few days, the current configurations remain in
support the Quick-term bullish bias shift from August 15, 2006, although
favoring increasing bearish spurt activity. As stated the past few days,
several Quick-term and Short-term attributes have weakened in favor of
bearish behavior.
It is common
for bull/bear battles when Vector Pressure is being threatened from its
support of the prevailing bias.
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.
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. The Quick-term and Short-term Indicant models continue suggesting a
bullish bias for longer term holdings, even though a micro-bearish cycle
is underway at this time.
It is okay to
write covered call options at this time since Vector Pressure is waning
with the absence of Red Bulls.
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 no longer avoiding
QQQQ, which no longer supports 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
The market’s
bearish behavior last week is most likely unsettling for quite a few of
you. Some are asking, is this another bearish spurt or is this the
beginning of a sustainable bearish cycle? The Quick-term Indicant remains
configured with bullish attributes, although they are weakened.
Vector
Pressure continues to support the bullish bias. It has been doing that
since August 15, 2006. However, Vector Pressure is down quite a bit. Force
Vectors have shifted robustly in favor of bearish support.
There are only
9-Red Bulls on a Quick-term basis, while there are seven ETF’s below the
bearish yellow curve.
The Short-term
Indicant signaled bear last week. This could be a sustainable bear until
late September/early October.
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
08/05/07