December 2005 Indicant Weekly Stock Market Report

Dec 25, 2005 Indicant Weekly Stock Market Report

Volume 12, Issue 04 ISSN 1526 6516 © The Indicant Stock Market Report

Presidential Post Election Year Harmlessly Ending

Using several market indices prior to 1896 and the Dow since then, the market moved bearishly from 1832 through 1980. If stock trading only existed in presidential post election years, the 1832 investor in equities would have lost money over a one-hundred and fifty year period.

The meanderer of 2005 was harmless. That harmless conclusion is actually bullish when considering historical normalcy. So far, the Dow is up 0.9% for the year. That is the epitome of a meandering market. A couple of mild bearish days and a couple of flat days this coming week will result in near historical perfection. A bearish market in the presidential post election year is more common than not.

The last presidential post election year of 2001 was horrendously bearish with the Dow falling 7.1%. The NASDAQ fell significantly worse. That was followed by a severe bear market in 2002, which was the last presidential mid-term election year.

As stated a few weeks ago, you were advised the heart and soul of bullish seasonality would be mild this year. Sure enough, there have been no consecutive bullish spurts in this period of bullish seasonality. That is uncommon behavior during the heart and soul of bullish seasonality. However, the Dow is up 4.2% since October 31, 2005, which was the last day of normal bearish seasonality. The NASDAQ is up 6.1% since then.

As you can see, the Dow would be down if it were not for the profound and consistent execution of bullish seasonality at this time of year. That was also true in 2004 when the only substantive bullish movement occurred late last year.

Weak fundamentals, coupled with non-bearish behavior in 2005, is a testament to the underlying strength of this Mid-term Indicant bull now underway. The Quick-term and Short-term Indicant continue offering bullish support. There will be more about that later in this report in the Exchange Traded Funds section.

The absence of dynamic bullish expressions in this years “heart and soul” of bullish seasonality is discerning. The Indicant Volume Indicator is not robust. There is no bullish support on the basis of simple supply and demand for stocks. That is always a requirement for sustainable bullish expressions. The Indicant Volume Indicator is losing substance for the moment due to holiday lethargy, but will be more revealing in January when traders and investors get back to work.

The heart and soul of bullish seasonality lasts through most of January. So far, there is nothing on the immediate horizon suggesting bearish dominance. Although the Quick-term and Short-term Bull market remains solid, there is nothing suggesting dynamic bullishness. So far, meandering behavior is favored as we close out this year.

The characteristics of a presidential mid-term election year favor the market finding a cyclical bottom. Unfortunately, the market has not yet offered cyclical bearishness to find a bottom. There is an increasing probability of bearish expressions at the conclusion of the heart and soul of bullish seasonality or maybe sooner. The Quick-term and Short-term Indicant will keep you posted so you are not surprised.

Bearish behavior in the first half of 2006 would support historically normalcy. Fundamental bearishness supports bearish expressions in the first half of 2006, as well. Rising interest rates and inflationary threats are not bullish configurations. Political rhetoric rises in these mid-term election years and any non-business savvy candidate finding popularity in the poles could wreak havoc to bullish ambition.

However, there is no real need to speculate. Keep your eye on the various Indicant models. They will advise of bullishness and bearishness on a Quick-term, Short-term, Mid-term, and Long-term basis.

Weekly Buy/Sell Summary

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

In addition to the sell signal, the Mid-term Indicant is avoiding 49-stocks and funds of the 320 tracked by the Indicant. The avoided stocks and funds are down an average of 15.0% since the Mid-term Indicant signaled sell an average of 26.6-weeks ago.

There were only 16-stocks and funds avoided at this time last year. The avoided stocks and funds one year ago were down an average of 39.6% since their respective sell signals an average of 58.2-weeks earlier. Two years ago, on December 27, 2003, the Mid-term Indicant was avoiding only 10-stocks and funds that were down an average of 26.6% since their respective sell signals an average of 37.2-weeks earlier. Three years ago on December 20, 2002, there were only eight avoided stocks and funds. They were down 27.5% from their respective sell signals an average of 22.7-weeks earlier.

Although there were no buy signals this weekend, the Mid-term Indicant is signaling hold for 270 of the 320 stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 97.4%. That annualizes to 59.9%. The Mid-term Indicant has been signaling hold for these 270-stocks and funds for an average of 84.6-weeks.

One year ago, the Mid-term Indicant was holding 302-stocks and funds out of the 320 tracked at that time for an average of 56.7-weeks. They were up 72.3% (annualized at 66.4%). The Mid-term Indicant was signaling hold for 283-stocks and funds of the 296 tracked two years ago on December 27, 2003. They were up by an average of 55.6% (annualized at 82.9%) since their respective buy signals an average of 35.0-weeks earlier. There were 275-stocks and funds with a hold signal on December 20, 2002 since their buy signals an average of 12.4-weeks earlier. They were up 16.0% (annualized at 67.3%).

Exchange Traded Fund Buy/Sell Summary and Analysis

The SQI (Consolidated Quick-term/Short-term Indicant) generated no buy or sell signals last Friday. Read the daily stock market newsletter for more analysis. The SQI is signaling hold for 30-ETF’s. They are up by an average of 56.4%, which is up by 0.4% from last week. This is annualized at 32.1% since their respective buy signals an average of 90.4-weeks ago. The SQI is not avoiding any ETF’s at this time.

Remember, the SQI model signals buy or sell when both the Short-term and Quick-term Indicant are signaling the same. Keep in mind the Quick-term Indicant is the most volatile, but it will help you with successive buying opportunities during various stages of an advancing bull. It also shows Force Vectors and Vector Pressure, providing you greater insight of the ETF’s quick-term bias.

The Short-term Indicant generated no buy signals and no sell signals last Friday. Although there were no buy signals, the Short-term Indicant is signaling hold for 30-Exchange Traded Funds. They are up by an average of 58.2%, which is up by 0.4% from last week. This is annualized at 34.5% since their respective buy signals an average of 86.9-weeks ago. The Short-term Indicant is not avoiding any of the 30-ETF’s tracked at this time.

The Quick-term Indicant generated no buy signals and no sell signals last Friday. Although there were no buy signals, the Quick-term Indicant is signaling hold for 29-Exchange Traded Funds (ETF’s). They are up by an average of 31.4%, which is up by 0.2% from last week. This annualizes at 35.4% since their respective buy signals an average of 45.6-weeks ago. Although there were no sell signals, the Quick-term Indicant is avoiding one ETF. It is up 2.9% since its sell signal 8.3-weeks ago.

Twenty-seven ETF’s are Quick-term Indicant Red Bulls. That is up by three since last weekend. That reflects a slight strengthening in the Quick-term Bull. Much of that is due to a natural cooling off period. The ETF’s are above their respective bullish red curves by an average of 2.1%, which is down by 0.1% since last week. Although there was a slight increase in bearishness last week, this attribute remains exceedingly bullish.

None of the ETF’s are below their respective bearish yellow curves, highlight absolute non-bearishness on a Quick-term Indicant basis. Overall, they are above bearish yellow by 9.6%, which is exceedingly non-bearish on a quick-term basis.

The Short-term Indicant reveals individual Indicant Volume Indicators. Although the ETF’s Indicant Volume Indicators are not as conclusive as that of the major market indices, it sometimes obviates the market’s short-term intentions. Look for robustness in the individual Indicant Volume Indicators, coupled with dynamic behavior. Robust volume cycles during dynamic bearish or bullish cycles indicate the breadth of the continuation of that cycle. The more pronounced they are, the greater the lingering effect of the underlying bullish or bearish direction.

The Short-term Indicant also identifies the breakout lines and breakdown lines for Exchange Traded Funds. Three of the 30-ETF’s are contacting their breakout lines, which remains bullish. That is up by two from last week, supporting a bullish bias on a Short-term basis. However, that is down by 20 funds from four weeks ago when the current Quick-term Bull last pinnacled. Since then the overall market has been cooling. There was no Santa Clause rally this year, which was not surprising.

The average distance of all 30-ETF’s between their current price and their respective breakout lines is a mere 2.7%, which is 0.1% higher than last week. Although a little bullish steam was lost last week, this attribute remains significantly with a bullish bias. It is significantly bullish when even just one ETF is contacting its breakout down other than those of a contrarian nature.

The average distance between the current price and the ETF’s breakdown lines is a whopping 19.5%, which is flat from last week. Although meandering this past week, this configuration remains exceedingly non-bearish.

The overall relationship between breakout and breakdown lines remains with a significant bullish bias on a Short-term basis. Contact with breakdown lines is extremely bearish and contact with the breakout lines are extremely bullish. As you can see, there is absolutely no threat of breakdown contact in the near future. Thus, there is little opportunity for the bear to dominate market behavior on a short-term basis.

There is only one conflict between the Quick-term and Short-term Indicant at this time. It is ETF#14 that was discussed in the past two weekly stock market reports.

There were no option buy signals for ETF options this past Friday. There were a few put option buy signals throughout this past week. As indicated in the daily stock market reports, conditions were not ripe for profitability. Meandering markets are not good for options traders. Volatility is a requirement for profitability and that missing right now.

Not much has changed from last week. ETF Force Vectors are directionally mixed with some moving south and some moving north. Many are now inside bearish domains, but Vector Pressure remains positive (bullish).

As sated last week, there is no bullish or bearish convergence, which supports meandering behavior. This configuration continues its support of a quick-term bullish bias. Never buy a put option when the underlying security is a red bull. Therefore, there are no Robust Force Vector option buying opportunities at this time even though some are configured with bearish robustness.

Secular Market Blend

This section is a repeat from the last several months with a few modifications, reflecting recent secular influences. Although appearing redundant at times, it is important to read this section each week to keep abreast of secular market shifts. Remember, secular shifts can last twenty-five or more years. Fortunately, secular market movements do not deter mid-term, short-term, and quick-term profit opportunities.

The current Mid-term Bull market and buying barrage started over three years ago in late 2002. It followed the predicted market bottom in 2002, which was a mid-term election year. The mid-term presidential election year phenomenon was consistent with history in 2002. It found a cyclical bottom, which is a common attribute in presidential mid-term election years.

Even more impressive was how the market synchronized with near perfection to normal seasonality in 2002. The April-October period was typically bearish. That bear leg was a deep one in 2002. The upcoming mid-term election year of 2006, fundamentally, supports historical standards. In other words, expect no bullish enthusiasm with rising interest rates and rising energy costs as we head into the mid-term election year. The political establishment and its ugly influence on economic activity are typically at its worse in the presidential post election year, which is now nearing an end. The current Mid-term Bull has been surprisingly strong with weak fundamentals and the normal political threat in this post election year. The market so far this year is up, although ever so slightly.

Keep in mind, the heart and soul of bullish seasonality (Nov-Jan) is historically bullish regardless of fundamental reason. The market can find a cyclical bottom in next year’s mid-term election year after the heart and soul of bullish seasonality elevates it. It would not be surprising for a nice rise during this year’s heart and soul of bullish seasonality only to be followed with bearish expressions after January 2006. The current heart and soul of bullish seasonality has demonstrated normalcy so far with an extremely bullish November. December is now up slightly in the face of this napping bull. The omission of a solid Santa Claus rally this year is somewhat ominous.

The Dow30 found bottom over three years ago on October 9, 2002 at 7286.27. The NASDAQ found bottom on the same day at 1114.11.Finding cyclical bottoms in mid-term election years is common. As earlier stated, the Indicant began its buying barrage in October – November 2002 just after the market bottomed from the severe 2000-2002 Bear Market. There were 239 buy signals between October 5, 2002 and November 9, 2002 out of the 296 stocks and funds tracked by the Mid-term Indicant at that time. Even badly managed companies received a buy signal, which is a common attribute of sustainable new bull markets.

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

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

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

You will notice many of the mutual fund buy signals occurred in March 2003. Many of you recall how the market did not synchronize with the heart and soul of bullish seasonality from November 2002 through February 2003. December 2002 was the most bearish since 1931. After the asynchronous behavior in the November 2002 rolling third of the year, the market turned bullish in March 2003 and again did not synchronize with normal seasonality. The Mid-term Indicant continued signaling bull during bearish seasonality in 2003. The market continued moving north during that time, contrary to historical standards. As stated in most of 2004, bearish expressions on a Mid-term basis between May and October 2004 should not be surprising. That is exactly what occurred. The result was a meandering market with a slight bearish bias during most of 2004. This year has been a near carbon copy of 2004, except the heart and soul of bullish seasonality was a little slower starting this year.

As stated since late October and early November, do not be surprised at increasing quick-term and short-term bullish expressions in the immediate future, followed by increased bearish expressions early next year. So far, this prognosis is at par with those expectations. Fundamentals and historical standards support that scenario. The magnitude of early 2006 bearishness is not predictable. Also, simply wait for the various Indicant model’s advisement of bull/bear status, as forecasting the market is a waste of time.

November was exceedingly bullish and consistent with historical normalcy. The November – January rolling quarter is the heart and soul of bullish seasonality. Unless the Quick-term and Short-term Indicant suggests otherwise, enjoy.

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

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

Stop Loss Management

The Mid-term Indicant recommends a stop loss of 8% on recent buys because of the Quick-term Bull.

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.

There are some instances where stocks rise during bear markets due to legitimate fundamental reasons. If the market emulates a 1970’s configuration, most stocks will plummet, but energy related stocks will skyrocket. It is unusual that energy has been skyrocketing the past three years, of which two of those years enjoyed bullish market behavior. The coexistence of a bullish energy sector and general equities does not make much fundamental sense, but the underlying economic fundamentals have supported this phenomenon. There is good reason to expect an abandonment of this phenomenon with record setting oil prices and rising interest rates. However, the heart and soul of bullish seasonality, more often than not, excludes fundamental reason in its normally bullish behavioral patterns. You are enjoying that now.

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 them in this email message but now display them on the website. This is available to the public, while the specific buy and sell transactions are limited to members only.

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

Summary of Stocks and Funds with Buy and Sell Signals This past Week

To maintain appropriate security, you can see the Mid-term Indicant "buy/sell" signals for stocks and funds for this week by clicking the following link. It is in the member’s only section.

http://www.indicant.net/Members/Updates/All%20Update%20Forms/Buy-Sell%20Summary%20This%20Week.htm

As repeatedly stated, do not hold more than 10% of your investment resources in a single stock and do not hold more than 20% of your investment resources into a single mutual fund. Also, never fall in love with a stock or fund. Only love the value of your portfolio. Never love its contents. Management stupidity can wreak havoc on any stock or fund at any time.

All 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

Divergence versus Convergence

As stated the past six weeks, there is no bullish convergence. That is a common attribute with meandering behavior. However, the current Quick-term and Short-term Bull markets are solid. This lack of bullish convergence suggests an increasing possibility the current Quick-term and Short-term bulls will peter out early next year, if not sooner. Such a scenario would result in political normalcy, when the market finds a bottom in the mid-term election year.

Economic Conditions – Inflation, Currency, Interest Rates

There is nothing different from the last few weeks. Most world currencies continue in their cyclical shift in support of a strengthening U.S. Dollar. Some currencies are actually collapsing, which fosters an increasing probability of further drops in interest rates. There was some contrarian corrections in the middle of last week, but the cyclical direction has not shifted.

There is nothing new. This paragraph remains unchanged from the past few weeks. As repeatedly stated, the only exception to this is the Canadian Dollar. It has not yet made this cyclical mid-term commitment to weaken against the greenback. It continues to strengthen against the U.S. Dollar. As stated the past several weeks, the Athabasca Tar Sand Oil potential continues to threaten the Canadian cost advantage. The perception of huge imports to the U.S. will provide increased difficulty for the Canadian Dollar to continue weakening. This should hurt Canadian manufacturing. The Canadian government is going to attempt to weaken the Canadian dollar, most likely at the request of General Motors, but $60 oil will make that difficult. Detroit may learn the economic benefits of elevating carburetor efficiency. General Motors can benefit tremendously with a weaker Canadian dollar with their massive manufacturing capacity in Oshawa, Ontario, Canada. Unfortunately, the strengthening Canadian dollar has hurt GM’s bottom line and consequently, much of the Canadian capacity is earmarked for closure.

Commodity prices continue holding at near cyclical peaks. Some are falling due to profit-taking, but their cyclical nature remains bullish. That does not bode well for general equities.

As stated the past few weeks, OPEC does not want encourage Athabasca Tar Sand Oil competitiveness. They also do not want to see dynamic energy conservation measures in the Western Hemisphere. OPEC will not consider a long-term strategy due to their inherent incapability to do so. Consequently, it is possible, although not likely, OPEC will force oil price reductions to mitigate growing competitiveness. Even OPEC cannot alter the dynamics of supply/demand laws. Keep your eye on this, as rapidly declining oil prices will catapult the market into another strong bull leg. Equally, do not be surprised at a dynamic bear in the event that high oil prices penetrate the consumer price index.

The Quick-term Indicant is keeping a daily eye on Gold. Its recent quick-term bullishness suggests increasing expectations of inflationary threats. Read your daily stock market newsletters to closely monitor this dynamic.

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

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% one-hundred and eighty-three weeks ago since the MTI buy signal on April 13, 2001. One-hundred and seventy-six weeks ago, it closed up 30.1%. Last week it closed up 226.7%. The current annualized growth rate since the April 13, 2001 buy signal is 47.6%. After falling sharply 27-weeks ago, it bounced north in 22-weeks of the past 27-weeks. This fund moved north last week after falling sharply in the prior week.

Fidelity Gold, Fund #28, is up 29.6% since the Mid-term Indicant signaled buy on August 26, 2005. That annualizes to 89.4%, which is not an impossible performance level if oil prices resume their advance. This fund should do well in the event this market turns into a 1970’s type of market. This fund was up last week, after moving south last week. As stated after last week’s bearish expression, fundamentals remain in tact for this fund to perform well in the months ahead.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 243.9% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 71.7%. This fund was up slightly last week after some severe dips in the previous three weeks.

Vanguard Energy #18, VGENX, is up 139.9% (annualized at 50.7%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 122.5% (annualized at 59.0%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 115.0% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 48.2%. All energy related funds were up slightly last week.

These funds should do well even if the market turns extremely bearish. Continue to hold them until the Mid-term Indicant signals sell. If litigation and voodoo brokering brings these funds down, the Mid-term Indicant will advise of appropriate actions.

The SQI (Consolidated Short-term and Quick-term Indicant) model signaled buy for the GLD-ETF#11 on August 3, 2005. It is up 15.1% since then. It is annualized at 38.4%. It was flat last week.

The SQI signaled buy for ETF#03 – Energy and Natural Resources on March 26, 2003. It is up 138.4% (annualized at 49.7%).

The contrarian sector, commodities and petroleum, were up last week while general equities were also up slightly. One does not want to see declines in general equities and contrarian industries at the same time. That suggests a sour economic outlook. However, last weeks divergence between the contrarian sector and general equities suggests a slight increase in bearish expectations for general equities. There is simply not enough optimism to propel a dynamic bullish spurt on a quick-term basis at this time.

Quick-term and Short-term Indicant Update

Read your daily reports. The Quick-term Indicant signaled bull 7.2-weeks ago after signaling bear since January 4, 2005. The eight major indices are up 4.5% since the Quick-term Indicant’s bull signal on November 2, 2005. The Dow is up 3.9% since the Short-term Indicant signaled bull on November 3, 2005. The NASDAQ is up 4.9% since the Short-term Indicant signaled bull on November 2, 2005. Several major indices were slightly bearish last week.

The NYSE Indicant Volume Indicator is no longer expressing an embryonic interest in resuming a robust advance. Both indices have fallen victim to light holiday volume. This indicator should resurface into a meaningful observation the first week of January 2006.

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

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 42.6% since the MTI-RYS signaled bull an average of 95-weeks ago. That annualizes to 23.3%, which is the same as last week. The strongest bull is the Dow Utilities. It is up 116.3% since the October 25, 2002 bull signal. The utilities moved south last week after moving north in the prior two weeks. Your utility hold positions remain safe, but keep your eye on this particular index. Severe bears show little mercy, regardless of dividend yields.

The Mid-term Indicant Dow Jones Industrial Average performance is now at $32,968,033. That beats buy and hold performance of $1,655,754 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $163,802. That beats buy and hold’s $124,269 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $188,211. That beats buy and hold’s $77,997 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 1,879.2%, 31.8%, and 141.3%, respectively, for these indices as of this past week.

The Indicant’s percentage advantage over buy and hold does not change during bull signals. The advantage changes only during bear signals. That is because the buy and hold model has to keep holding, while the MTI-RYS model avoids bear markets. The only purpose of the MTI-RYS model is to avoid the bear markets. That is why it beat buy and hold by nearly 2000% over the past 100+ years.

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

Mid-term Indicant Positions - NASDAQ100 Stocks

Click here to see NASDAQ100 report card history.

Click the following link to view this group of stocks:

http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20MTI-NAS100-STKS.htm

Mid-term Indicant Positions - Dow Jones 30 Industrial Stocks

Click here to see Dow 30 report card history.

Click the following hyperlink to view this group of stocks:

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

Mid-term Indicant Positions - Dow Jones 15 Utility Stocks

Click here to see Dow Utilities Report Card history.

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

Mid-term Indicant Positions - Indicant Selected Stocks

Click here to see Indicant Select Stock Report Card history.

Click the following hyperlink to view this group of stocks:

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

Mid-term Indicant Positions - Mutual Funds

Click here to see Mutual Fund Report Card history.

The Mid-term Indicant continues avoiding ProFunds Ultra Short due, in part, to the Quick-term Indicant’s bull signal and the heart and soul of bullish seasonality. The SQI (Consolidated Quick-term and Short-term Indicant) is signaling hold for the QQQQ, which is why ProFunds Ultra Short is avoided. It is down 5.6% since the Mid-term Indicant signaled sell on November 11, 2005. This fund may show some significant promise early next year. The last time this fund was very profitable was in the first half of 2002, which was also a mid-term election year. This fund disappointed in the meandering markets of 2004 and 2005.

Click here to see all Mutual Funds tracked by the Mid-term Indicant.

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 276.0% (annualized at 19.4%) since the Long-term Indicant signaled bull 738-weeks ago. Economic data is the primary influence on the Long-term Indicant. The recession, deflation, and inflation have not been strong enough to signal bear. A link to the Long-term Indicant is below:

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

Indicant Conclusion

The Quick-term Indicant and Short-term Indicant continues signaling bull. Quick-term and Short-term attributes remain with a significant bullish bias. The heart and soul of bullish seasonality is now here and should last through January. Keep your eye on the daily stock market reports, as the market from time to time aborts historical standards. Fundamentals and volume lethargy threaten a bullish conclusion to the month of January 2006.

Keep in mind that next year is the mid-term election year, which historically finds a market bottom. Since predecessor years leading up to the upcoming presidential mid-term election year have not demonstrated dynamic bearishness, do not be surprised at a bearish cycle in early 2006. As always, await guidance from the various Indicant models. They will let you know when or if this expected bearishness will occur.

The current Quick-term and Short-term Bulls remains possessed with strong bullish configurations. Last week’s performance was mildly bearish. That has now occurred for two consecutive weeks. Although the market has demonstrated no bullish expressions the past two weeks, there is no dynamic bearish threat on the immediate horizon. None of the Quick-term, Short-term, and Mid-term attributes suggest bearish influence.

Read your daily reports, as quick-term attributes can shift quickly. As stated last week, the market lacks bullish convergence, which suggests bearish influences can occur quickly. Too many sectors are not participating in the current heart and soul of bullish seasonality. Gold’s strong bullish presence with mounting commodity prices, if continued, will slap this bull out of influence.

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

12/25/05

Dec 18, 2005 Indicant Weekly Stock Market Report

Volume 12, Issue 03 ISSN 1526 6516 © The Indicant Stock Market Report

Dear Indicant Members:

This Week’s Report

The Problem with Snakes – Part II

Investors in reputable mutual funds have enjoyed one favorable attribute over the past fifty years. None of them have gone bankrupt. Many former NASDAQ100 companies have endured the process of closing down in the last five years. None of the mutual funds provided investors quadruple rate gains, while several NASDAQ100 companies did, including some of those that are now defunct. It is all about risk/reward. Mutual fund investors favor a low risk, low reward ratio, but are not content with the near zero risk of other investment instruments, such as CD’s.

Another favorable attribute enjoyed by reputable mutual fund investors is minimal pricing volatility. Those investors have enjoyed more consistency in their portfolios over the long haul.

Yet, another favorable attribute is how well general funds track the overall stock market. All one has to do to monitor their funds with little effort is to simply monitor the overall stock market. That is not true with certain sector funds though. The industry sector has to be monitored, which takes a little more work on the part of the investor.

Who can you trust? No one; absolutely no one can be trusted, except you when it comes to your investment dollar. Only you can be trusted because your investment dollars are yours. No one cares about your money than you. You are the one who has the highest trust factor in self.

Since the late 1990’s stock market bubble, we have seen many collapses and embarrassing events for major institutions. A Dow Utility stock, Enron, collapsed from nearly $100/share to pennies per share. Merrill Lynch was embarrassed by biasing corporate revenues in their management behavior over the best interest of their clients. Remember, it is your money; not theirs.

You have all heard the old saying, “use someone else’s money rather than your own” at every opportunity. Mutual fund managers need your money before they can invest. When interviewed in television, they are commonly asked, “Do you own any of the stocks in the fund that you manage?” Quite often, many say “no.” Those that say “yes” can buy a share or two just before the interview so they can say “yes.” They all now know they are going to be asked that stupid question.

As you can imagine, that question and the entire process is pretty stupid. The only reason a fund manager gets on television is to market their funds. In other words, they want your money and in many cases when they are not using their own money.

It took some time, but mutual funds are expressing increasing volatility, when compared to a lengthy history of stability. It has been difficult for the “snakes” to penetrate the mutual fund industry since they have been guarded by so-called professionals. Let’s take a look at MF#45, FSVLX, Fidelity Select Home Finance. It crashed last week.

http://www.indicant.net/Members/Updates/MTI-Mutual%20Funds/MF08.htm#45

This fund’s crash was not as severe as a typical stock crash, but it was unusually severe for a reputable fund. Non-reputable funds crash and burn all the time, but rarely does a reputable one.

Real estate is a pretty boring subject and very slow moving. The only related news that ties to this fund, is litigation.

This funds investment portfolio appears fairly diversified with 6.2% of its largest contribution in a single holding. The Fannie Mae and Freddie Mac holdings are underperforming so far this year while other holdings are at double-digit growth rates.

One holding is Wells Fargo, which is connected to the class action lawsuit. This lawsuit is expanding to other fund families. Naturally, the prices will go down. The concern is how wide spread this is. As most of you know, class action lawsuits do very little for you. It is more about lawyer revenue streams.

Keep your eye on the daily reports, as it does not take much courtroom commentary to cascade throughout the stock market. Just one negative comment at the right time can make it crash. Rest assured such comments are planned for economic selective benefit, as opposed to sincerity, most of the time. Plotting and planning on shorting the market, spreading rumors, etc. is a common practice on Wall Street. The snakes lurk. It took them fifty years to penetrate the funds and they will continue to work hard at getting something for nothing, regardless of the source. A snake is a snake and they will slither anywhere.

On a brighter side, after years of bearish and lethargic performance, NAS#05, ABGX, Abgenix, is skyrocketing in price. Look at its chart on the following link.

http://www.indicant.net/Members/Updates/MTI-Stks-NAS100/NS01.htm#5

Sometimes stock prices rapidly rise and fall on company’s fundamental performance. At other times, it rises and falls on simple laws of supply and demand for that particular stock. Occasionally, it rises and falls on manipulation. This particular stock has been somewhat of a disappointment since it was overpriced with the stock market bubble late last century.

Regardless of the reasons for that rapid bullish price movement, you must be enjoying it if you bought on the Mid-term buy signal last month. It is up 64.3% since the November 4, 2005 buy signal. This rapid price movement is supported by extremely high volume, which suggests fundamental soundness, as opposed to the influence of snakes. Most of the snakes on Wall Street do not enjoy many shares in any thing. Their dishonesty will, over the long-run, stand in the way of their desired wealth.

Each week, the Indicant Stock Market report reminds you keep your investment allocations to no more than 10% in any single stock. Those nearing retirement that had 100% of their investments allocated in Enron know what this means. They did not get to retire in the comfort they believed they would. Although this model or any other model can be wrong from time to time, the Indicant is designed to prevent retirement planning from not occurring to your desires. Many hold on too long in hopes of a turnaround. Wishing and hoping on a wing and prayer usually invokes grief.

NAS#94, APOL, Apollo, has not performed so well since its buy signal. It is down 9.8% since the November 11, 2005 buy signal. If you had stuck to the 10% rule on the Abgenix buy signal and Apollo buy signal, you are still ahead and by quite a bit. The Mid-term Indicant did not signal sell for Apollo this weekend due to technical reasons, one of which is the underlying Quick-term Indicant Bull. The technology sector is significantly weighted with bullish sentiment.

If Apollo fell below your automated stop loss, it would be appropriate to avoid it. The current Quick-term Bull is stalling somewhat and it is not expected to be as robust as those of the past few years during the heart and soul of bullish seasonality.

http://www.indicant.net/Members/Updates/MTI-Stks-NAS100/NS16.htm#94

Your primary focus should be on the Quick-term and Short-term Indicant as we near the end of the year. Historical standards favor a bearish 2006 – at least through the first half of the year. Also, economic fundamentals are not favorable to a bullish outlook for next year.

Weekly Buy/Sell Summary

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

In addition to the sell signals, the Mid-term Indicant is avoiding 48-stocks and funds of the 320 tracked by the Indicant. The avoided stocks and funds are down an average of 15.8% since the Mid-term Indicant signaled sell an average of 28.3-weeks ago.

There were only 16-stocks and funds avoided at this time last year. The avoided stocks and funds one year ago were down an average of 40.2% since their respective sell signals an average of 58.0-weeks earlier. Two years ago, on December 20, 2003, the Mid-term Indicant was avoiding only 10-stocks and funds that were down an average of 26.6% since their respective sell signals an average of 36.6-weeks earlier. Three years ago on December 13, 2002, there were only eight avoided stocks and funds. They were down 27.3% from their respective sell signals an average of 28.3-weeks earlier.

Although there were no buy signals this weekend, the Mid-term Indicant is signaling hold for 270 of the 320 stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 98.0%. That annualizes to 61.0%. The Mid-term Indicant has been signaling hold for these 270-stocks and funds for an average of 83.5-weeks.

One year ago, the Mid-term Indicant was holding 298-stocks and funds out of the 320 tracked at that time for an average of 56.4-weeks. They were up 70.8% (annualized at 65.3%). The Mid-term Indicant was signaling hold for 277-stocks and funds of the 296 tracked two years ago on December 20, 2003. They were up by an average of 55.4% (annualized at 83.1%) since their respective buy signals an average of 34.7-weeks earlier. There were 283-stocks and funds with a hold signal on December 13, 2002 since their buy signals an average of 11.5-weeks earlier. They were up 14.8% (annualized at 67.4%).

Exchange Traded Fund Buy/Sell Summary and Analysis

The SQI (Consolidated Quick-term/Short-term Indicant) generated no buy or sell signals last Friday. Read the daily stock market newsletter for more analysis. The SQI is signaling hold for 30-ETF’s. They are up by an average of 56.0%, which is down by 0.2% from last week. This is annualized at 32.7% since their respective buy signals an average of 89.4-weeks ago. The SQI is not avoiding any ETF’s at this time.

The Short-term Indicant generated no buy signals and no sell signals last Friday. Although there were no buy signals, the Short-term Indicant is signaling hold for 30-Exchange Traded Funds. They are up by an average of 57.8%, which is down 0.3% from last week. This is annualized at 34.6% since their respective buy signals an average of 85.9-weeks ago. The Short-term Indicant is not avoiding any of the 30-ETF’s tracked at this time.

The Quick-term Indicant generated no buy signals and no sell signals last Friday. Although there were no buy signals, the Quick-term Indicant is signaling hold for 29-Exchange Traded Funds (ETF’s). They are up by an average of 31.2%, which is down 0.1% from last week. This is annualized at 35.9% since their respective buy signals an average of 44.6-weeks ago. Although there were no sell signals, the Quick-term Indicant is avoiding one ETF. It is up 1.7% since its sell signal 7.3-weeks ago.

Twenty-five ETF’s are Quick-term Indicant Red Bulls. That is down by two from last weekend. That reflects a slight weakening in the Quick-term Bull. Much of that is due to a natural cooling off period and the propensity to meander. The ETF’s are above their respective bullish red curves by an average of 1.9%, which is down by 0.2% since last week. Although there was a slight increase in bearishness the past two weeks, this attribute remains exceedingly bullish.

None of the ETF’s are below their respective bearish yellow curves, highlight absolute non-bearishness on a Quick-term Indicant basis. Overall, they are above bearish yellow by 9.4%, which is exceedingly non-bearish on a quick-term basis. That is down by 0.2% from last week and highlights a slight increase in bearish expressions.

The Short-term Indicant also identifies the breakout lines and breakdown lines for Exchange Traded Funds. Only one of the 30-ETF’s is contacting its breakout line, which remains bullish, although a drop from the exceedingly bullish classification reported last week. However, that is down by 20 funds from three weeks ago when the current Quick-term Bull last pinnacled. Since then the overall market has been cooling. The lone exceedingly bullish ETF is EWJ, Japan, ETF#06.

The average distance of all 30-ETF’s between their current price and their respective breakout lines is a mere 2.6%, which is 0.4% lower than last week. Although a little bullish steam was lost last week, this attribute remains significantly with a bullish bias. It is significantly bullish when even just one ETF is contacting its breakout down other than those of a contrarian nature.

The average distance between the current price and the ETF’s breakdown lines is a whopping 19.5%, which is down by only 0.2% from last week. Although slightly bearish this past week, this configuration remains exceedingly non-bearish.

There is only one conflict between the Quick-term and Short-term Indicant at this time. It is ETF#14 that was discussed in last week’s stock market report. By clicking the link, you will notice on the chart the gravitational forces of the bearish yellow curve are more influential than the bullish red curve. You will also notice bearish Force Vectors and Vector Pressure. Conflicts suggest inconsistencies on a Short-term and Quick-term basis.

There was one put option buy signal for ETF options this past Friday. There were a few put option buy signals throughout this past week. As indicated in the daily stock market reports, conditions were not ripe for profitability. Although the overall market was in fact bearish last week, the magnitude of that bearishness did not support the reward/risk factor. In other words, the market was more of a meandering bear last week, as opposed to a harsh one. Naked option players do not make money during meandering periods.

ETF Force Vectors are directionally mixed with some moving south and some moving north. There is no bullish or bearish convergence, which supports meandering behavior. However, most of that movement is occurring in bullish domains and coupled with positive (bullish) Vector Pressure. That configuration continues its support of a quick-term bullish bias. A quick review of the Quick-term Indicant charts reveals GLD, ETF#11, is robust to the south, but it is a red bull. Never buy a put option when the underlying security is a red bull. Therefore, there are no Robust Force Vector option buying opportunities at this time.

Secular Market Blend

As stated since late October and early November, do not be surprised at increasing quick-term and short-term bullish expressions in the immediate future, followed by increased bearish expressions early next year. So far, this prognosis is at par with expectations. Fundamentals and historical standards support that scenario. The magnitude of early 2006 bearishness is not predictable. Also, simply wait for the various Indicant model’s advisement of bull/bear status, as forecasting the market is a waste of time.

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

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

Stop Loss Management

The Mid-term Indicant recommends a stop loss of 8% on recent buys because of the Quick-term Bull.

Stock and Fund Update

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

Summary of Stocks and Funds with Buy and Sell Signals This past Week

To maintain appropriate security, you can see the Mid-term Indicant "buy/sell" signals for stocks and funds for this week by clicking the following link. It is in the member’s only section.

http://www.indicant.net/Members/Updates/All%20Update%20Forms/Buy-Sell%20Summary%20This%20Week.htm

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

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

Divergence versus Convergence

As stated the past five weeks, there is no bullish convergence. That is a common attribute with meandering behavior. However, the current Quick-term and Short-term Bull markets are solid. This lack of bullish convergence suggests an increasing possibility the current Quick-term and Short-term bulls will peter out early next year, if not sooner. Such a scenario would result in political normalcy, when the market finds a bottom in the mid-term election year.

Economic Conditions – Inflation, Currency, Interest Rates

As repeatedly stated, the only exception to this is the Canadian Dollar. It has not yet made this cyclical mid-term commitment to weaken against the greenback. It continues to strengthen against the U.S. Dollar. As stated the past several weeks, the Athabasca Tar Sand Oil potential continues to threaten the Canadian cost advantage. The perception of huge imports to the U.S. will provide increased difficulty for the Canadian Dollar to continue weakening. This should hurt Canadian manufacturing. The Canadian government is going to attempt to weaken the Canadian dollar, most likely at the request of General Motors, but $60 oil will make that difficult. Detroit may learn the economic benefits of elevating carburetor efficiency. General Motors can benefit tremendously with a weaker Canadian dollar with their massive manufacturing capacity in Oshawa, Ontario, Canada. Unfortunately, the strengthening Canadian dollar has hurt GM’s bottom line and consequently, much of the Canadian capacity is earmarked for closure.

Commodity prices continue holding at near cyclical peaks. Some are even setting new cyclical highs and the trend continues moving north as the increasing number of capitalists suck natural resources from the ground. Although inflationary in the short-term, this is the best system. It is better for capitalists to solve their problems than any other institution. No government can solve this particular problem. Only the capitalists have the solution to the problem they created.

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

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% one-hundred and eighty-two weeks ago since the MTI buy signal on April 13, 2001. One-hundred and seventy-five weeks ago, it closed up 30.1%. Last week it closed up 220.1%. The current annualized growth rate since the April 13, 2001 buy signal is 46.4%. After falling sharply 26-weeks ago, it bounced north in 21-weeks of the past 26-weeks. This fund moved south last week for the first time in eight weeks.

Fidelity Gold, Fund #28, is up 25.8% since the Mid-term Indicant signaled buy on August 26, 2005. That annualizes to 82.9%, which is not an impossible performance level if oil prices resume their advance. This fund should do well in the event this market turns into a 1970’s type of market. This fund was down significantly last week, after moving north in the previous five weeks. Last week’s bearish expression had nothing to do with economic dynamics and everything to do with potential litigation.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 242.4% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 71.6%. This fund was down slightly last week after falling sharply two weeks ago.

Vanguard Energy #18, VGENX, is up 139.5% (annualized at 50.9%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 120.5% (annualized at 58.6%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 114.4% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 48.3%. All energy related funds were down slightly last week.

The SQI (Consolidated Short-term and Quick-term Indicant) model signaled buy for the GLD-ETF#11 on August 3, 2005. It is up 15.1% since then. It is annualized at 40.2%. It was down significantly last week.

The SQI signaled buy for ETF#03 – Energy and Natural Resources on March 26, 2003. It is up 137.5% (annualized at 49.7%).

The contrarian sector, commodities and petroleum, were down last week while general equities were up slightly. One does not want to see declines in general equities and contrarian industries at the same time. That suggests a sour economic outlook. However, last weeks divergence among each contrarian’s fundamentals suggests economic optimism.

Quick-term and Short-term Indicant Update

Read your daily reports. The Quick-term Indicant signaled bull six weeks ago after signaling bear since January 4, 2005. The eight major indices are up 4.7% since the Quick-term Indicant’s bull signal on November 2, 2005. The Dow is up 3.9% since the Short-term Indicant signaled bull on November 3, 2005. The NASDAQ is up 6.5% since the Short-term Indicant signaled bull on November 2, 2005.

The NYSE Indicant Volume Indicator is expressing embryonic interest in resuming a robust advance, as opposed to its recent lethargic pattern. The lethargy was due to holiday distractions.

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

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 42.2% since the MTI-RYS signaled bull an average of 94-weeks ago. That annualizes to 23.3%. The strongest bull is the Dow Utilities. It is up 119.6% since the October 25, 2002 bull signal. The utilities moved north the past two weeks. Your utility hold positions remain safe, but keep your eye on this particular index. Severe bears show little mercy, regardless of dividend yields, while this index would be the mildest in the event a dynamic bearish cycle unfolds.

The Mid-term Indicant Dow Jones Industrial Average performance is now at $32,944,769. That beats buy and hold performance of $1,944,769 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $163,629. That beats buy and hold’s $124,138 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $188,467. That beats buy and hold’s $78,103 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 1,879.1%, 31.8%, and 141.3%, respectively, for these indices as of this past week.

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

Mid-term Indicant Positions - NASDAQ100 Stocks

Click here to see NASDAQ100 report card history.

Click the following link to view this group of stocks:

http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20MTI-NAS100-STKS.htm

Mid-term Indicant Positions - Dow Jones 30 Industrial Stocks

Click here to see Dow 30 report card history.

Click the following hyperlink to view this group of stocks:

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

Mid-term Indicant Positions - Dow Jones 15 Utility Stocks

Click here to see Dow Utilities Report Card history.

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

Mid-term Indicant Positions - Indicant Selected Stocks

Click here to see Indicant Select Stock Report Card history.

Click the following hyperlink to view this group of stocks:

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

Mid-term Indicant Positions - Mutual Funds

Click here to see Mutual Fund Report Card history.

The Mid-term Indicant continues avoiding ProFunds Ultra Short due, in part, to the Quick-term Indicant’s bull signal and the heart and soul of bullish seasonality. The SQI (Consolidated Quick-term and Short-term Indicant) is signaling hold for the QQQQ, which is why ProFunds Ultra Short is avoided. It is down 6.5% since the Mid-term Indicant signaled sell on November 11, 2005. This fund may show some significant promise early next year. The last time this fund was very profitable was in the first half of 2002, which was also a mid-term election year.

Click here to see all Mutual Funds tracked by the Mid-term Indicant.

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 275.7% (annualized at 19.5%) since the Long-term Indicant signaled bull 737-weeks ago. Economic data is the primary influence on the Long-term Indicant. The recession, deflation, and inflation have not been strong enough to signal bear. A link to the Long-term Indicant is below:

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

Indicant Conclusion

Keep in mind that next year is the mid-term election year, which historically finds a market bottom. Since predecessor years leading up to the upcoming mid-term election year have not demonstrated dynamic bearishness, do not be surprised at a bearish cycle in early 2006. As always, await guidance from the various Indicant models. They will let you know when or if this expected bearishness will occur.

The current Quick-term and Short-term Bulls remains possessed with strong bullish configurations. Last week’s performance was mildly bearish. There is no dynamic bearish threat on the immediate horizon. None of the Quick-term, Short-term, and Mid-term attributes suggest bearish influence.

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

12/18/05

Dec 11, 2005 Indicant Weekly Stock Market Report

Volume 12, Issue 02 ISSN 1526 6516 © The Indicant Stock Market Report

Dear Indicant Members:

This Week’s Report

The Problem with Snakes

Unusual behavior in mutual funds last Friday is cause for concern. Several took a deep dive. Although not unusual, the magnitude of some of these bearish expressions and the lack of sector convergence are the causes of concern. These bearish expressions appear related to impending litigation against Wells Fargo brokers.

This sort of activity can be a conduit to igniting a bearish influence. It appears this bearishness is limited to Fidelity Funds. Links to those funds are embedded in the next few paragraphs. Some email programs may not make them visible, while they are clearly visible on the website.

MF#28, Fidelity Gold; fell sharply last Friday, while competing MF#19 Vanguard Gold and Precious Metals, continued setting record highs. That is a fundamental conflict, as well as a technical one. These two funds have diverged several times in the past, but not at this depth of differences. The only explanation rests in the snakes of Wall Street or their periphery.

The significant bearish expression by MF#09, State Street Energy, was not congruent with general bullish behavior in the energy sector. State Street also fell significantly, but information relating to litigation is missing. Maybe it was just a bearish movement with sympathetic undertones. Most energy funds were up last week, but MF#39, Fidelity Energy, performed significantly worse than MF#40, Fidelity Energy Services. The latter held its hold position very well, while the former appears as if oil had dropped to forty-five dollars per barrel.

Interestingly, MF#31, Fidelity Brokerage and Investments, held its strong bullish configuration, while MF#42, Fidelity Financial Services, took it on the chin with a solid bearish expression last Friday. MF#43, Fidelity Food and Agriculture, also fell sharply last Friday.

Even, fundamentally strong MF#44, Fidelity Health, moved deeply to the south on the litigious news. It dropped nearly 9% last Friday. That magnitude is a huge drop in the face of a Quick-term Bull. Huge declines, such as the one last Friday, in reputable mutual funds are usually related to major bear market influences. Fundamentally, few funds are as sound as this one on a long-term basis. Aging baby boomers are sissy or unlucky enough to act as a buoyant to this fund. A fundamental long-term portfolio strongly supports not selling any respectable health related mutual fund. The salient point here is the word, respectable. Keep your eye on this. Regardless of how fundamentally sound a fund is, capitalistic doctrines never support the dishonest for long periods.

Even some of Fidelity foreign funds were not granted immunity from Friday’s bearish behavior. MF#68, Fidelity Europe, endured a deep bearish expression, although not enough for the Mid-term Indicant to signal bear.

Even MF#67, Fidelity Capital Appreciation, and MF#54, Fidelity Retailing, also fell victim to this unseasonable behavior. There were several others expressing divergent bearish behavior, while a few in the Fidelity family stood their ground.

There was not enough bearish behavior to signal sell. The Mid-term Indicant continues to signal hold for the funds mentioned above.

The problem with snakes is that you, quite often, step on them first. It is better to see them first. That way you can avoid the unpleasant consequences of stepping on them. Even if non-venomous, it is still unpleasant. Although this is not new news, the impending litigation is believed it will expose the number of snakes lurking. If there is a vast number of snakes, this Quick-term and Short-term bull market will perish. If isolated to just a few and without venom, then the heart and soul of bullish seasonality should continue/resume its normal path to the north

The easy bull market dollars have already been made. Most of the easy bull-market money was made in 2003. The meandering market since early 2004 has made making bull-market money more difficult. The harder earnings environment tends to corrupt those without solid principles. That is a characteristic common to dying bull markets.

Although fun for many, there is absolutely no need to speculate. The Quick-term, Short-term, and Mid-term Indicant will monitor the stock market’s interpretation of these lurking snakes. Although mutual fund/brokerage house mismanagement do not influence corporate earnings, it is the lack of trust in equity institutions that can alter the dynamics of supply and demand. That can result in a steep bearish response. So, keep your eye on the Quick-term and Short-term Indicant next week. Regardless of cause, it will appropriately signal bull, bear, buy, hold, sell, or avoid.

The market may reduce all this to ridiculous or it may offer a nasty bearish response based on the trust factor.

Weekly Buy/Sell Summary

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

In addition to the sell signal, the Mid-term Indicant is avoiding 47-stocks and funds of the 320 tracked by the Indicant. The avoided stocks and funds are down an average of 16.2% since the Mid-term Indicant signaled sell an average of 27.7-weeks ago.

There were 17-stocks and funds avoided at this time last year. The avoided stocks and funds one year ago were down an average of 43.7% since their respective sell signals an average of 57.3-weeks earlier. Two years ago, on December 13, 2003, the Mid-term Indicant was avoiding only 15-stocks and funds that were down an average of 25.1% since their respective sell signals an average of 35.9-weeks earlier. Three years ago on December 07, 2002, there were only nine avoided stocks and funds. They were down 30.0% from their respective sell signals an average of 22.4-weeks earlier.

In addition to the buy signal this weekend, the Mid-term Indicant is signaling hold for 271 of the 320 stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 92.7%. That annualizes to 58.7%. The Mid-term Indicant has been signaling hold for these 271-stocks and funds for an average of 82.1-weeks.

One year ago, the Mid-term Indicant was holding 300-stocks and funds out of the 320 tracked at that time for an average of 55.2-weeks. They were up 68.6% (annualized at 64.6%). The Mid-term Indicant was signaling hold for 279-stocks and funds of the 296 tracked two years ago on December 13, 2003. They were up by an average of 53.1% (annualized at 82.6%) since their respective buy signals an average of 33.5-weeks earlier. There were 286-stocks and funds with a hold signal on December 07, 2002 since their buy signals an average of 10.4-weeks earlier. They were up 16.2% (annualized at 81.0%).

Exchange Traded Fund Buy/Sell Summary and Analysis

The SQI (Consolidated Quick-term/Short-term Indicant) generated no buy or sell signals last Friday. Read the daily stock market newsletter for more analysis. The SQI is signaling hold for 30-ETF’s. They are up by an average of 56.2% (annualized at 32.7%) since their respective buy signals an average of 88.4-weeks ago. The SQI is not avoiding any ETF’s at this time.

The Short-term Indicant generated no buy signals and no sell signals last Friday. Although there were no buy signals, the Short-term Indicant is signaling hold for 30-Exchange Traded Funds. They are up by an average of 58.1% (annualized at 35.2%) since their respective buy signals an average of 84.9-weeks ago. The Short-term Indicant is not avoiding any of the 30-ETF’s tracked at this time.

The Quick-term Indicant generated no buy signals and no sell signals last Friday. Although there were no buy signals, the Quick-term Indicant is signaling hold for 29-Exchange Traded Funds (ETF’s). They are up by an average of 31.3% (annualized at 36.9%) since their respective buy signals an average of 44.6-weeks ago. Although there were no sell signals, the Quick-term Indicant is avoiding one ETF. It is up 0.4% since its sell signal 6.3-weeks ago.

Twenty-four of the ETF’s are Quick-term Indicant Red Bulls. That is down by three since last weekend. That reflects a slight weakening in the Quick-term Bull. Much of that is due to a natural cooling off period. The ETF’s are above their respective bullish red curves by an average of 2.5%, which is down by 0.6% since last week. Although there was a slight increase in bearishness last week, this attribute remains exceedingly bullish.

None of the ETF’s are below their respective bearish yellow curves, highlight absolute non-bearishness on a Quick-term Indicant basis.

The Short-term Indicant also identifies the breakout lines and breakdown lines for Exchange Traded Funds. Three of the 30-ETF’s are contacting their breakout lines, which is exceedingly bullish. However, that is down by 18 from two weeks ago when the current Quick-term Bull pinnacled.

The average distance of all 30-ETF’s between their current price and their respective breakout lines is a mere 2.2%, which is 0.4% lower than last week. Although a little bullish steam was lost last week, this attribute remains significantly bullish bias.

The average distance between the current price and the ETF’s breakdown lines is a whopping 19.7%, which is down by only 0.3% from last week. Although slightly bearish this past week, this configuration is exceedingly non-bearish.

There is only one conflict between the Quick-term and Short-term Indicant at this time. It is ETF#14 that was discussed in last week’s stock market report. By clicking the link, you will notice on the chart the gravitational forces of the bearish yellow curve are more influential than the bullish red curve. You will also notice bearish Force Vectors and Vector Pressure. This ETF was up last week, while the overall market was down slightly. Conflicts suggest inconsistencies on a Short-term and Quick-term basis.

There was one put option buy signal for ETF options this past Friday. Click the link on the preceding sentence. Again, it is not recommended to execute put option buy signals during underlying quick-term and short-term bullishness.

ETF Force Vectors are directionally mixed with some moving south and some moving north. However, most of that movement is occurring in bullish domains and coupled with positive (bullish) Vector Pressure. That configuration continues its support of a quick-term bullish bias. A quick review of the Quick-term Indicant charts suggests none are robust. There are no Robust Force Vector option buying opportunities at this time.

You will notice that ETF#14, GLD, Force Vector has resumed its northerly path. That is exceedingly bullish. In one of last week’s daily stock market reports, it was noted that this ETF was the only one of the thirty contacting its breakout (bullish) line. That configured relationship is of some concern. That supports a 1970’s type of stock market.

Secular Market Blend

Keep in mind, the heart and soul of bullish seasonality (Nov-Jan) is historically bullish regardless of fundamental reason. The market can find a cyclical bottom in next year’s mid-term election year after the heart and soul of bullish seasonality elevates it. It would not be surprising for a nice rise during this year’s heart and soul of bullish seasonality only to be followed with bearish expressions after January 2006. The current heart and soul of bullish seasonality has demonstrated normalcy so far with an extremely bullish November. December is off to a slow start, but configurations suggests the bull is simply taking a nap right now.

The Dow30 found bottom over three years ago on October 9, 2002 at 7286.27. The NASDAQ found bottom on the same day at 1114.11. As earlier stated, the Indicant began its buying barrage in October – November 2002 just after the market bottomed from the severe 2000-2002 Bear Market. There were 239 buy signals between October 5, 2002 and November 9, 2002 out of the 296 stocks and funds tracked by the Mid-term Indicant at that time. Even badly managed companies received a buy signal, which is a common attribute of sustainable new bull markets.

As stated since late October and early November, do not be surprised at increasing quick-term and short-term bullish expressions in the immediate future, followed by increased bearish expressions early next year. So far, this prognosis is at par with expectations. Fundamentals and historical standards support that scenario. The magnitude of early 2006 bearishness is not predictable. Also, simply wait for the various Indicant model’s advisement of bull/bear status, as forecasting the market is a waste of time.

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

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

Stop Loss Management

The Mid-term Indicant recommends a stop loss of 8% on recent buys because of the Quick-term Bull.

Stock and Fund Update

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

Summary of Stocks and Funds with Buy and Sell Signals This past Week

To maintain appropriate security, you can see the Mid-term Indicant "buy/sell" signals for stocks and funds for this week by clicking the following link. It is in the member’s only section.

http://www.indicant.net/Members/Updates/All%20Update%20Forms/Buy-Sell%20Summary%20This%20Week.htm

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

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

Divergence versus Convergence

As stated the past four weeks, there is no bullish convergence. However, the current Quick-term and Short-term Bull markets are solid. This lack of bullish convergence suggests an increasing possibility the current Quick-term and Short-term bulls will peter out early next year, if not sooner. Such a scenario would result in political normalcy, when the market finds a bottom in the mid-term election year.

Economic Conditions – Inflation, Currency, Interest Rates

Well, last week’s comment about declining interest rates was a waste of time. That was simple hopeful thinking, which is always a waste of time. Interest rates resumed their advance last week and continue along their obvious unfavorable cyclical direction.

Commodity prices with the exception of gold were believed to be past their peak and heading south. However, they resumed their nasty looking advances last week. CRB Bridge Futures and other commodities resumed their bullish position and added a bearish variable to equities.

As stated the past few weeks, OPEC does not want encourage Athabasca Tar Sand Oil competitiveness. They also do not want to see dynamic energy conservation measures in the Western Hemisphere. OPEC will not consider a long-term strategy due to their inherent incapability. Consequently, it is possible, although not likely, OPEC will force oil price reductions to mitigate growing competitiveness. Even OPEC cannot alter the dynamics of supply/demand laws. Keep your eye on this, as rapidly declining oil prices will catapult the market into another strong bull leg. Equally, do not be surprised at a dynamic bear in the event that high oil prices penetrate the consumer price index. Last week’s stock market performance biased the latter (bearish) scenario.

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

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% one-hundred and eighty-one weeks ago since the MTI buy signal on April 13, 2001. One-hundred and seventy-four weeks ago, it closed up 30.1%. Last week it closed up 223.6%. The current annualized growth rate since the April 13, 2001 buy signal is 47.3%. After falling sharply 25-weeks ago, it bounced north in 21-weeks of the past 25-weeks. This fund moved north for the seventh consecutive week. Last week behavior was dynamically bullish.

Fidelity Gold, Fund #28, is up 27.6% since the Mid-term Indicant signaled buy on August 26, 2005. That annualizes to 94.8%, which is not an impossible performance level if oil prices resume their advance. This fund should do well in the event this market turns into a 1970’s type of market. This fund was down significantly last week, after moving north in the previous five weeks. Last week’s bearish expression had nothing to do with economic dynamics and everything to do with potential litigation.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 248.7% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 73.9%. This fund fell sharply last week in contrasts to continued bullishness in the other energy related funds that follow in this stock market report.

Vanguard Energy #18, VGENX, is up 147.5% (annualized at 54.2%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 125.1% (annualized at 61.4%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 116.5% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 49.6%. The Vanguard energy related funds rose significantly the past four weeks after falling sharply five weeks ago. However, Fidelity energy related funds were mixed last week with bearish bias.

The SQI (Consolidated Short-term and Quick-term Indicant) model signaled buy for the GLD-ETF#11 on August 3, 2005. It is up 20.2% since then. It is annualized at 56.9%.

The SQI signaled buy for ETF#03 – Energy and Natural Resources on March 26, 2003. It is up 141.0% (annualized at 51.3%).

Quick-term and Short-term Indicant Update

Read your daily reports. The Quick-term Indicant signaled bull five weeks ago after signaling bear since January 4, 2005. The eight major indices are up 4.1% since the Quick-term Indicant’s bull signal on November 2, 2005. The Dow is up 2.4% since the Short-term Indicant signaled bull on November 3, 2005. The NASDAQ is up 5.2% since the Short-term Indicant signaled bull on November 2, 2005.

The NYSE Indicant Volume Indicator is expressing embryonic interest in resuming a robust advance, as opposed to its recent lethargic pattern. The lethargy was due to holiday distractions.

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

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 41.5% since the MTI-RYS signaled bull an average of 93-weeks ago. That annualizes to 23.2%. The strongest bull is the Dow Utilities. It is up 115.4% since the October 25, 2002 bull signal. The utilities moved north last week after moving south last week. Your utility hold positions remain safe, but keep your eye on this particular index. Severe bears show little mercy, regardless of dividend yields, while this index would be the mildest in the event a dynamic bearish cycle unfolds.

The Mid-term Indicant Dow Jones Industrial Average performance is now at $32,650,902. That beats buy and hold performance of $1,649,827 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $162,602. That beats buy and hold’s $123,359 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $188,823. That beats buy and hold’s $78,250 on an October 18, 1985 $10,000 investment. The Mid-term Indicant’s RYS model beats buy and hold by 1,879.1%, 31.8%, and 141.3%, respectively, for these indices as of this past week.

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

Mid-term Indicant Positions - NASDAQ100 Stocks

Click here to see NASDAQ100 report card history.

Click the following link to view this group of stocks:

http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20MTI-NAS100-STKS.htm

Mid-term Indicant Positions - Dow Jones 30 Industrial Stocks

Click here to see Dow 30 report card history.

Click the following hyperlink to view this group of stocks:

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

Mid-term Indicant Positions - Dow Jones 15 Utility Stocks

Click here to see Dow Utilities Report Card history.

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

Mid-term Indicant Positions - Indicant Selected Stocks

Click here to see Indicant Select Stock Report Card history.

Click the following hyperlink to view this group of stocks:

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

Mid-term Indicant Positions - Mutual Funds

Click here to see Mutual Fund Report Card history.

Click here to see all Mutual Funds tracked by the Mid-term Indicant.

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 272.4% (annualized at 19.2%) since the Long-term Indicant signaled bull 736-weeks ago. Economic data is the primary influence on the Long-term Indicant. The recession, deflation, and inflation have not been strong enough to signal bear. A link to the Long-term Indicant is below:

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

Indicant Conclusion

Keep in mind that next year is the mid-term election year, which historically finds a market bottom. Since predecessor years leading up to the mid-term election year have not demonstrated dynamic bearishness, do not be surprised at a bearish cycle in early 2006. As always, await guidance from the various Indicant models. They will let you know when or if this expected bearishness will occur.

The current Quick-term and Short-term Bulls remains possessed with strong bullish configurations even though last week was mildly bearish. There is no dynamic bearish threat on the immediate horizon. None of the Quick-term, Short-term, and Mid-term attributes suggest bearish influence.

Read your daily reports, as quick-term attributes can shift quickly. The market lacks bullish convergence, which suggests bearish influences can occur quickly. Too many sectors are not participating in the current heart and soul of bullish seasonality. Gold’s strong bullish presence with mounting commodity prices, if continued, will slap this bull out of influence.

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

12/11/05

Dec 04, 2005 Weekly Stock Market Report

Dear Indicant Members:

This Week’s Report

The Heart and Soul of Bullish Seasonality Now Has Some Pizzazz – Part 3

We are currently enjoying the heart and soul of bullish seasonality. The odds of enjoying this annual short-term phenomenon are extremely high, year-in and year-out. However, there are some longer-range concerns that require your attention.

Long-range planning always has more error than short-term predictions. Mathematically, the further out one forecasts, the more error that forecast contains. A 1990 stock market investor who has been in a buy and hold mode since that time is still ahead. This is especially true for those who invested in the low risk blue chips and reputable mutual funds. Those who invested in the higher risk equities are still ahead provided those investments were diversified. Some 1991 NASDAQ100 companies are at only a fraction of their 1991 prices. Some are even bankrupt.

The 2000 high-risk investor is out of the money even with a diversified high risk portfolio. A 1929 thirty-year-old stock market investor was over sixty before breaking even. After inflationary discounts, it is likely that investor never did break even in his or her lifetime. That scenario is quite possible for the 2000 high-risk investor, even with a diversified portfolio.

Before discussing the short-term and quick-term market behavior, consider a long-term view of equities. The following link will take you to the Long-term Indicant.

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

As you can see, it remains bullish. It even projects continuing bullishness over the next twelve months. Of course, that bullishness is a relativistic term. Using the phrase, “remains bullish” suggests it is addressed to the 1991 blue chip investor. The 2000-investor would argue, quite violently. Nonetheless, the Long-term Indicant suggests continuing bullishness. It is updated monthly and that can change. Right now, though, enjoy it.

Unfortunately, there are conflicting signals. The market never has nor ever will conform to expected modeling congruencies. That is why the Indicant has several models. It addresses multiple frames of references; quick-term, short-term, mid-term, and long-term. It understands that a 40-year old investor does not want to be a 70-year old before breaking even. It also understands that most do not want to invest in CD’s since that strategy does not support retirement planning for most. It also understands that most Fortune 500 pension plans are not reliable. It is that unreliability that feeds Walmart headcount. Most of you do not want to see your spouse working at Walmart into their seventies.

The first long-term to mid-term concern is the CPI. Equities do not like high inflation or high deflation. They also do not like high interest rates. As you can see from the following link, the CPI cycled north recently, but still remains at a tolerable level of around three percent.

http://www.indicant.net/Members/Updates/Economic/E-CPI.htm

Unfortunately, the Producer Price Index, PPI, is not so encouraging. Look at its chart on the below link.

http://www.indicant.net/Members/Updates/Economic/E-PPI.htm

As you can see, it is pushing extraordinarily high. It is approaching 10%. It is at an unacceptable level in terms of equity market bullishness. If the PPI feeds into the CPI, expect extreme market bearishness. Right now, several lower tiered companies are being confronted by severe profit margin compressions. That is threatening their very existence; while the higher tiered manufacturers, (those selling directly to the consumer) are not passing higher costs onto the consumer. Eventually, the higher tiered companies will be forced to do that or they will endure a collapsed supply chain. Keep your eyes open to increased bankruptcies at the lower tiered companies.

The PPI is a derivative of rising oil prices in addition to normal dilettante management. However, even the most competent management teams cannot find solutions to higher energy costs.

So much for fundamentals. Look at some technical observations. The Dow is up 0.9% this year. That is certainly not extreme bullishness. The Dow was enduring a bearish year before the heart and soul of bullish seasonality emerged in early November. The Dow was up 3.5% in November. Prior to November, the Dow was down for the year. It is still below the 2.0% average growth in presidential post election years since 1832. Remember, blue chip equities endured a negative direction between 1832 and 1980. Supply side economics and rising entrepreneurialism since the 1980 shifted from the normal bearishness of presidential post election years. However, a one-hundred and fifty-plus years of traditional bearishness should never be ignored. That is one reason why the Quick-term Bear of 2005 lasted so long (from early January through October).

The NASDAQ was up a whopping 5.3% in November and even the staid S&P500 was up 3.5% in November. They are up 4.5% and 4.4%, respectively, so far this year. As you can tell, the NASDAQ was down for the year prior to November’s bullishness. The S&P500 was up slightly. The meandering market during normal bearish seasonality prevented 2005 from succumbing to normal presidential post-election-year bearishness. The Mid-term Indicant Bull markets remain in tact, although 2005 was certainly not one to add excitement to your portfolio. However, there is one more month to go before conclusive evidence of this year’s performance.

Weekly Buy/Sell Summary

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

In addition to the sell signal, the Mid-term Indicant is avoiding 47-stocks and funds of the 320 tracked by the Indicant. The avoided stocks and funds are down an average of 17.1% since the Mid-term Indicant signaled sell an average of 27.5-weeks ago.

There were 17-stocks and funds avoided at this time last year. The avoided stocks and funds one year ago were down an average of 44.3% since their respective sell signals an average of 56.3-weeks earlier. Two years ago, on December 6, 2003, the Mid-term Indicant was avoiding 14-stocks and funds that were down an average of 24.9% since their respective sell signals an average of 35.4-weeks earlier. Three years ago on November 30, 2002, there were only seven avoided stocks and funds. They were down 29.8% from their respective sell signals an average of 27.5-weeks earlier.

In addition to the buy signals this weekend, the Mid-term Indicant is signaling hold for 268 of the 320 stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 97.6%. That annualizes to 62.1%. The Mid-term Indicant has been signaling hold for these 268-stocks and funds for an average of 81.7-weeks.

One year ago, the Mid-term Indicant was holding 301-stocks and funds out of the 320 tracked at that time for an average of 54.1-weeks. They were up 69.8% (annualized at 67.1%). The Mid-term Indicant was signaling hold for 271-stocks and funds of the 296 tracked two years ago on December 6, 2003. They were up by an average of 53.7% (annualized at 84.0%) since their respective buy signals an average of 35.4-weeks earlier. There were 280-stocks and funds with a hold signal on November 30, 2002 since their buy signals an average of 9.6-weeks earlier. They were up 22.2% (annualized at 120.0%).

Exchange Traded Fund Buy/Sell Summary and Analysis

The SQI (Consolidated Quick-term/Short-term Indicant) generated no buy or sell signals last Friday. Read the daily exchange traded fund newsletter and Quick-term Indicant report for more analysis. The SQI is signaling hold for 30-ETF’s. They are up by an average of 56.6% (annualized at 33.3%) since their respective buy signals an average of 87.4-weeks ago. The SQI is not avoiding any ETF’s.

The Short-term Indicant generated no buy signals and no sell signals last Friday. Although there were no buy signals, the Short-term Indicant is signaling hold for 30-Exchange Traded Funds. They are up by an average of 58.4% (annualized at 35.8%) since their respective buy signals an average of 83.9-weeks ago. The Short-term Indicant is not avoiding any of the 30-ETF’s tracked at this time.

The Quick-term Indicant generated no buy signals and no sell signals last Friday. Although there were no buy signals, the Quick-term Indicant is signaling hold for 29-Exchange Traded Funds (ETF’s). They are up by an average of 31.4% (annualized at 37.9%) since their respective buy signals an average of 42.6-weeks ago. Although there were no sell signals, the Quick-term Indicant is avoiding one ETF. It is up 0.3% since its sell signal 5.3-weeks ago.

Twenty-seven of the ETF’s are Quick-term Indicant Red Bulls. All thirty ETF’s are above their respective bullish red curves by an average of 3.1%. That is exceedingly bullish. There is one yellow bear.

http://www.indicant.net/Members/Updates/QTI-ETF-Charts/QTI-ETF3-Charts.htm#14

ETF#14, TLT, has a declining Force Vector and negative Vector Pressure. It is up 0.3% since the Quick-term Indicant signaled sell on October 26, 2005. It fell to yellow bear status with negative Vector Pressure at that time and thus the sell signal. As you can see, it has struggled around its bearish yellow curve and thus one reason for the continuing “avoid” signal.

The Short-term Indicant continues to signal hold for this ETF. If you have been holding since its buy signal of May 14, 2004, you are up 16.0% (annualized at 10.2%). You do not need to sell until the Short-term Indicant signals sell. However, the Quick-term Indicant, as illustrated above, suggests buying should not be considered at this time.

The Short-term Indicant also identifies the breakout lines and breakdown lines for Exchange Traded Funds. Ten of the 30-ETF’s are contacting their breakout lines, which is exceedingly bullish. However, that is down from 15-ETF’s last week. The average distance of all 30-ETF’s between their current price and their respective breakout lines is a mere 1.8%. That is a significant bullish bias. The average distance between the current price and the ETF’s breakdown lines is a whopping 20.0%. That is exceedingly non-bearish. This overall relationship is a significant bullish bias on a Short-term basis. Contact with breakdown lines is extremely bearish and contact with the breakout lines are extremely bullish. As you can see, there is absolutely no threat of breakdown contact in the near future. Thus, there is little opportunity for the bear to dominate market behavior on a short-term basis.

There is only one conflict between the Quick-term and Short-term Indicant at this time. It is ETF#14 that was discussed earlier in this report. Conflicts suggest inconsistencies on a Short-term and Quick-term basis.

There were no buy or sell signals for ETF options this past Friday.

Force Vectors are moving south for most of the ETF’s. However, that movement is occurring in bullish domains and coupled with positive (bullish) Vector Pressure. A quick review of the Quick-term Indicant charts suggests none are robust. Those that are robust are moving conversely to the underlying market bias. Therefore, there are no Robust Force Vector option buying opportunities at this time. Also, there are no Vector Pressure crossings at this time.

Secular Market Blend

Keep in mind, the heart and soul of bullish seasonality (Nov-Jan) is historically bullish regardless of fundamental reason. The market can find a cyclical bottom in next year’s mid-term election year after the heart and soul of bullish seasonality elevates it. It would not be surprising for a nice rise during the heart and soul of bullish seasonality only to be followed with bearish expressions after January 2006. The current heart and soul of bullish seasonality has demonstrated normalcy so far with an extremely bullish November.

Some of you recall the Short-term Indicant Bear for the NASDAQ was the longest in history. It even exceeded the Dow’s 1929-1932 Short-term Indicant Bear in breadth and approached it in magnitude. The good news is that the NASDAQ’s decline did not lead to a depression, which is a clear indication of how little influence tech stocks have on the economy. There are two important axioms to remember. 1) Real economic wealth is created in only three ways - manufacturing, agriculture, and extraction. 2) The only positive influence politicians have on the economy is to undo their prior damage. They are now doing their damage, some of which will be undone in 2007; the next presidential pre-election year. That is why the market typically finds bottom in the mid-term election year. That is also why the presidential pre-election year is historically the most bullish on the four year cycle. If the strength of the current Mid-term Bull can be subjected only to meandering behavior, like 2004 and 2005, then it is possible for the current Mid-term Bull to be a record setting one in terms of duration.

As stated the past few weeks, do not be surprised at increasing quick-term and short-term bullish expressions in the immediate future, followed by increased bearish expressions early next year. So far, this prognosis is at par with expectations. Fundamentals and historical standards support that scenario. The magnitude of early 2006 bearishness is not predictable. Also, simply wait for the various Indicant models advisement of bull/bear status, as forecasting the market is a waste of time.

November was exceedingly bullish and consistent with historical normalcy. The rolling November – January rolling quarter is the heart and soul of bullish seasonality. Unless the Quick-term and Short-term Indicant suggests otherwise, enjoy.

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

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

Stop Loss Management

The Mid-term Indicant recommends a stop loss of 8% on recent buys because of the Quick-term Bull.

Stock and Fund Update

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

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

Summary of Stocks and Funds with Buy and Sell Signals This past Week

To maintain appropriate security, you can see the Mid-term Indicant "buy/sell" signals for stocks and funds for this week by clicking the following link. It is in the member’s only section.

http://www.indicant.net/Members/Updates/All%20Update%20Forms/Buy-Sell%20Summary%20This%20Week.htm

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

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

Divergence versus Convergence

As stated the past three weeks, there is no bullish convergence. However, the current Quick-term and Short-term Bull markets are solid. This lack of bullish convergence suggests an increasing possibility the current Quick-term and Short-term bulls will peter out early next year, if not sooner. Such a scenario would result in political normalcy, when the market finds a bottom in the mid-term election year.

Economic Conditions – Inflation, Currency, Interest Rates

Commodity prices with the exception of gold continue showing signs of being past their peaks. As stated last week, OPEC does not want to see the Athabasca Tar Sand Oil be introduced into the petroleum supply chain in a big way. They also do not want to see dynamic energy conservation measures in the Western Hemisphere. OPEC will not consider a long-term strategy due to their inherent incapability. Consequently, it is possible, although not likely, OPEC will force oil price reductions to mitigate growing competitiveness. Even OPEC cannot alter the dynamics of supply/demand laws. Keep your eye on this, as rapidly declining oil prices will catapult the market into another strong bull leg. Equally, do not be surprised at a dynamic bear in the event that high oil prices penetrate the consumer price index.

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

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% one-hundred and eighty weeks ago since the MTI buy signal on April 13, 2001. One-hundred and seventy-three weeks ago, it closed up 30.1%. Last week it closed up 214.9%. The current annualized growth rate since the April 13, 2001 buy signal is 45.7%. After falling sharply 24-weeks ago, it bounced north in 20-weeks of the past 24-weeks. This fund moved north for the sixth consecutive week.

Fidelity Gold, Fund #28, is up 32.1% since the Mid-term Indicant signaled buy on August 26, 2005. That annualizes to 118.0%, which is not an impossible performance level if oil prices resume their advance. This fund should do well in the event this market turns into a 1970’s type of market. This fund was flat last week, after moving north in the previous five weeks.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 279.0% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 83.4%. Vanguard Energy #18, VGENX, is up 144.4% (annualized at 53.5%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 118.0% (annualized at 58.4%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 120.7% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 51.8%. These energy related funds rose significantly the past three weeks after falling sharply four weeks ago.

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

The SQI (Consolidated Short-term and Quick-term Indicant) model signaled buy for the GLD-ETF#11 on August 3, 2005. It is up 15.6% since then. It is annualized at 46.4%.

The SQI signaled buy for ETF#03 – Energy and Natural Resources on March 26, 2003. It is up 138.0% (annualized at 50.6%).

Quick-term and Short-term Indicant Update

Read your daily reports. The Quick-term Indicant signaled bull four weeks ago after signaling bear since January 4, 2005. The eight major indices are up 4.7% since the Quick-term Indicant’s bull signal on November 2, 2005. The Dow is up 3.4% since the Short-term Indicant signaled bull on November 3, 2005. The NASDAQ is up 6.0% since the Short-term Indicant signaled bull on November 2, 2005.

The NYSE Indicant Volume Indicator has succumbed into a lethargic pattern. Some of this configuration is due to holiday absences and simple lethargy prior to the holiday period.

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

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 41.9% since the MTI-RYS signaled bull an average of 92-weeks ago. That annualizes to 23.6%. The strongest bull is the Dow Utilities. It is up 111.8% since the October 25, 2002 bull signal. The utilities moved slighthly south last week after moving north the previous two weeks. Your utility hold positions remain safe, but keep your eye on this particular index. Severe bears show little mercy, regardless of dividend yields, while this index would be the mildest in the event a dynamic bearish cycle unfolds.

The Mid-term Indicant Dow Jones Industrial Average performance is now at $32,950,585. That beats buy and hold performance of $1,664,878 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $163,340. That beats buy and hold’s $123,916 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $190,215. That beats buy and hold’s $78,827 on an October 18, 1985 $10,000 investment. The Mid-term Indicant’s RYS model beats buy and hold by 1,879.2%, 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 buy and hold model has to keep holding, while the MTI-RYS model avoids bear markets. The only purpose of the MTI-RYS model is to avoid the bear markets. That is why it beat buy and hold by nearly 2000% over the past 100+ years.

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

Mid-term Indicant Positions - NASDAQ100 Stocks

Click here to see NASDAQ100 report card history.

Click the following link to view this group of stocks:

http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20MTI-NAS100-STKS.htm

Mid-term Indicant Positions - Dow Jones 30 Industrial Stocks

Click here to see Dow 30 report card history.

Click the following hyperlink to view this group of stocks:

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

Mid-term Indicant Positions - Dow Jones 15 Utility Stocks

Click here to see Dow Utilities Report Card history.

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

Mid-term Indicant Positions - Indicant Selected Stocks

Click here to see Indicant Select Stock Report Card history.

Click the following hyperlink to view this group of stocks:

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

Mid-term Indicant Positions - Mutual Funds

Click here to see Mutual Fund Report Card history.

Click here to see all Mutual Funds tracked by the Mid-term Indicant.

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 275.9% (annualized at 19.5%) since the Long-term Indicant signaled bull 735-weeks ago. Economic data is the primary influence on the Long-term Indicant. The recession, deflation, and inflation have not been strong enough to signal bear. A link to the Long-term Indicant is below:

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

Indicant Conclusion

The Quick-term Indicant continues to signal bull. Quick-term and Short-term attributes remain with a significant bullish bias. The heart and soul of bullish seasonality is now here and should last through January. Keep your eye on the daily reports, as the market from time to time aborts historical standards. Also, keep in mind that next year is the mid-term election year, which historically finds a market bottom. Since predecessor years leading up to the mid-term election year have not demonstrated dynamic bearishness, do not be surprised at a bearish cycle in early 2006. As always, await guidance from the various Indicant models. They will let you know when or if this expected bearishness will occur.

The current Quick-term Bull remains possessed with strong bullish configurations even though the Indicant Volume Indicator is now lethargic. None of the Quick-term, Short-term, and Mid-term attributes suggest bearish influence. Read your daily reports, as quick-term attributes can shift quickly. The market also lacks bullish convergence, which suggests a turn to bearish influences can occur quickly. Too many sectors are not participating in the current heart and soul of bullish seasonality.

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

12/04/05