December
30, 2007 Indicant Weekly Stock Market Report
Volume 12, Issue 05 ISSN 1526 6516 © The
Indicant Stock Market Report
This Week’s
Report
Bullish
Density Weak, But Still a Bull
The Mid-term
Indicant continues to signal bear for the S&P600-Small Cap Index. This is
somewhat disappointing to those desiring bullish behavior. As you can see
from the following link, the trading limit lines are tracking to the south
for this particular index.
http://www.indicant.net/Members/Updates/MTIRYS-Mkts-US/MTI-RYS-10-S&P600-Curr.htm
Those trading
limit lines are not a forecast and can certainly be obsoleted and
superseded with northerly moving trading limit lines at any time.
Unfortunately, that time is not now. Until configurations shift, those
trading limit lines are in full force.
Small Caps are
traditionally more dynamically bullish than the larger cap indices. This
is because of superior management in smaller companies. However, small cap
organizations typically lack capital and during economic hardship suffer
deeper stock valuations. That is evident from the mild recession of
2000-2002 and related bear market. Click the following link to gain some
perspective on that.
http://www.indicant.net/Non-Members/Tours/MTIRYS-Mkts-US/MTIRYS-10-SP600-2000-2004.htm
As you can
see, the above small cap index fell by approximately 30% in 2002 and did
not start recovery until early 2003. Small caps are more volatile than the
larger caps. Small caps suffer from undercapitalization while the
dilettantes in the larger cap companies more or less simply maintain the
greatness of their predecessors, where the large caps were once small caps
themselves.
Even though
small caps stocks enjoy greater management competency, recessions can
bankrupt the best of them. Large cap companies expire more slowly since
they have plentiful capital and other cash raising methods at their
fingertips during their eventual demise. It simply takes longer for large
caps to crumble. Inherent in all of this is the risk/reward function of
investing. Economic recessions elevate the risk in small cap investing and
thus their dramatic price declines during such periods of projected
economic hardship.
Small caps are
not the only problem with bullish density. Although the underlying bias
remains bullish for the stock market, there are other issues with density.
Before elaborating, it is important to understand stock market density. To
get a quick idea of bullish density, click the following link.
http://www.indicant.net/Non-Members/Performance/Current%20ReportCard-History.htm#Mutual%20Funds
You will
notice there are 22-avoid signals for mutual funds. Funds tracked by the
Indicant represent a broad range of economic sectors. At the top of the
above link, you will notice the most avoided funds at this time of year
since 2002 has been only two. That low number of avoid signals is an
attribute consistent with high bullish density. In other words, even
poorly managed organizations can make money during robust economic
periods. That is because increasing production/sales volume elevates from
breakeven points.
Scroll upward
on the above link. You will notice there are higher numbers of avoid
signals for each of the index groups listed on that page. For example,
there are 30-avoid signals for NASDAQ100 stocks. Although the meandering
bear market in 2005 generated 24-avoid signals at this time of year in
2005, that low bullish density was consistent with the historical
standards incumbent in the presidential post election year. You will
notice there were only nine avoid signals in 2006 at this time of year.
The other index constituents on that page reveal similar phenomena.
Increasing
avoid signals and some sporadic bear signals reduce bullish density. When
avoid/bear signals are in the majority, high bearish density is
predominant. High bullish density implies economic robustness is being
projected by the stock market. That projection assumes increasing
elevations from break even points and thus higher earnings “for all.”
Low bullish
density suggests stock market prognosis is without economic robustness.
Here is a
major concern. The stock market is currently deep inside the heart and
soul of bullish seasonality. Last year’s heart and soul of bullish
seasonality began on August 15, 2006. At this time one year ago, the Dow
was up 11.3% from August 15. This year’s heart and soul of bullish
seasonality began on September 17, 2007. The Dow is down 6.7% since then.
This is the first time this century where the major indices are down from
the inception of the heart and soul of bullish seasonality. In other
words, the highest probable period of bullish behavior is not producing to
such standards. The probability of bullishness from the beginning to the
conclusion of the heart and soul of bullish seasonality is over 80%. It is
troublesome that the market is not conforming to historical standards.
Another
element of stock market density is the level of conformance to historical
standards. The market’s bearish behavior during this period of the heart
and soul of bullish seasonality suggests strong fundamental reasons for
its asynchronous behavior. This non-conforming behavior has reduced
bullish density.
High bullish
density allows one to yawn during periods of increasing net worth. Low
density suggests one needs to put on their thinking cap, forget the
scotch, and drink more coffee early in the morning before the sun comes
up. Making money during low bullish density is only for those who work at
it. Those on the periphery will not make money for those making money
needs the losses from the losers. That is the only source of winning.
Another
element contributing to low bullish density is the lethargic behavior from
several ETF’s tracked by the Indicant’s Daily Stock Market Report. There
are only a few weeks heart and soul of bullish seasonality remaining. But
yet, there are several avoid signals for the ETF’s tracked by the
Indicant.
Click the
following link to view the Quick-term Indicant’s table of ETF’s.
http://www.indicant.net/Members/Updates/STI-SQI-QTI-ETF-SumPage/0UD%20QTI-ETF0-Sum.htm
Excluding the
QID, ETF#31, there are six avoid signals. That is an unusually high number
of avoid signals for this time of year, which is during the hot spot of
the heart and soul of bullish seasonality. The QID is excluded since it is
purely contrarian and designed to increase in value during bear markets.
It will provide you profit potential sometimes in the next year or two.
Right now, it is enduring a bear signal due to the bullish bias.
The variant
from historical standards with respect to the high number of ETF avoid
signals during the heart and soul of bullish seasonality further
aggravates low bullish density.
Keep in mind
high bullish density can begin quickly and dynamically. Economic
fundamentals, ranging from the busted housing bubble, incompetent bankers
who promulgated that busted bubble to record high-energy prices suggests a
minimal likelihood of a quick and dynamic expiration of low bullish
density. On the contrary, this low bullish density could be predecessor to
high bearish density.
Do not
speculate. Keep your eye on the Indicant’s daily stock market report.
Weekly
Buy/Sell Summary – Stocks and Funds
Click this sentence for a graphical summary of what follows. Simply
scroll down the page to see detail content of this section.
The Mid-term
Indicant generated no buy signals and no sell signals.
Although
there were no sell signals, the Mid-term Indicant is avoiding 102-stocks and funds of the 345-
tracked by the Indicant. The avoided stocks and funds are down an average
of 13.6% since the Mid-term Indicant signaled sell an average of
18.6-weeks ago.
There were
only 31-stocks and funds avoided at this time last year. Those avoided
stocks and funds were down an average of 13.3% since their respective sell
signals an average of 20.2-weeks earlier.
Two years ago,
on Dec 30, 2005, the Mid-term Indicant was avoiding 50-stocks and funds
that were down an average of 16.0% since their respective sell signals an
average of 27.2-weeks earlier. Three years ago on Dec 31, 2004 there were
only 15-avoided stocks and funds. They were down by an average of 39.6%
from their respective sell signals an average of 57.6-weeks earlier. On
Dec 27, 2003, the Mid-term Indicant was avoiding only 10-stocks and funds
out of 296-tracked at that time. They were down by an average of 26.6%
since their sell signals an average of 37.2-weeks earlier. As you can see,
there were very few avoided stocks in the previous presidential election
year of 2003. Five years ago on Dec 28, 2002, there were only 16-avoided
stocks and funds. They were down an average of 25.6% since their
respective sell signals an average of 21.9-weeks earlier.
Although
there were no buy signals, the Mid-term Indicant is signaling hold for 243 of the 345-stocks and
funds tracked by the Indicant. The stocks and funds with hold signals are
up an average of 147.6%. That annualizes to 59.6%. The Mid-term Indicant
has been signaling hold for these 243-stocks and funds for an average of
128.7-weeks.
One year ago,
on Dec 29, 2006, the Mid-term Indicant was holding 313-stocks and funds
out of the 345 tracked for an average of 87.9-weeks. Those 313-stocks and
funds were up by an average of 106.1% (annualized at 62.7%). The Mid-term
Indicant was signaling hold for 269-stocks and funds of the 320-tracked
two years ago on Dec 30, 2005. They were up by an average of 94.8%
(annualized at 57.5%) since their respective buy signals an average of
85.8-weeks earlier. There were 304-stocks and funds with hold signals on
Dec 31, 2004 since their buy signals an average of 57.6-weeks earlier.
They were up by an average of 73.3% (annualized at 66.2%).
The Indicant
was only tracking 296-stocks and funds in 2002-2003, and early 2004. On
Dec 27, 2003, the Mid-term Indicant was signaling hold for 283-stocks and
funds out of 296-tracked. They were up by an average of 55.8% (annualized
at 82.9%) since their buy signals an average of 35.0-weeks earlier. Five
years ago, on Dec 28, 2002, there were 274-hold signals for stocks and
funds out of the 296 tracked by the Mid-term Indicant. They were up an
average of 14.2% (annualized at 54.7%) since their respective buy signals
an average of 13.5-weeks earlier.
Summary of
Stocks and Funds with Buy and Sell Signals This past Week
To maintain
appropriate security, you can see the Mid-term Indicant "buy/sell" signals
for stocks and funds for this week by clicking the following link. It is
in the member’s only section.
http://www.indicant.net/Members/Updates/All%20Update%20Forms/Buy-Sell%20Summary%20This%20Week.htm
As repeatedly
stated, do not hold more than 10% of your investment resources in a single
stock and do not hold more than 20% of your investment resources into a
single mutual fund. Also, never fall in love with a stock or fund. Only
love the value of your portfolio. Never love its contents. Management
stupidity can wreak havoc on any stock or fund at any time.
All updated
information can be found from a single page at Indicant.Net. Click the
below link to that page. You will need your login ID and password.
http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20Summary.htm
The
Quick/Short-term Indicant Stock Market Report
The Indicant website maintains the last twelve months of daily reports on
an annual basis. These weekly reports are maintained on the website
for much longer periods. Beginning in March 2006, the daily stock market
report for the last trading day of each week is imbedded in this weekly
report. This allows web-based retention records of the daily report for
much longer than the last twelve months.
The Daily
Indicant Stock Market Report for the last trading day of the current week
is near the conclusion of this weekly stock market report. It is emailed
each weekend, separately, so you can read it, either as a separate
document, or in this document.
The
Indicant Stock Market Report’s Secular Market Blend
The Dow is up
83.4% since its secular low on October 9, 2002. The NASDAQ is up 140.1%
and the S&P500 is up 90.3%. The small cap index, S&P600, is up 133.1%. As
stated the past several weeks, the secular bull that originated on October
9, 2002 no longer remains solid. However, its bullish trend has not been
reversed.
The NASDAQ is
down 47.0% since its last weekly secular peak on March 9, 2000. The S&P500
is down 3.2% since its similar secular peak on March 23, 2000. The S&P500
recently set a new peak, but the old peak will be tracked until the NASDAQ
sets a new one. The Dow is up 14.0% since January 13, 2000 when it peaked
from the 1990’s roaring bull. It has expressed no timidity in roaming
above the new peak area, until recently. The NASDAQ needs to climb 88.8%
to achieve a new record high. Do not be surprised if this occurs after the
year, 2025.
The Dow is up
7.2% so far this year. The S&P500 is up 4.2% and the NASDAQ up 10.7%. At
this time last year, the Dow was up 16.6%, with the S&P500 up 14.1% and
the NASDAQ up 10.0%. The major indices remain behind last year’s
year-to-date performance due to recent bearish aggressions. The upper
range trading limit has imposed an impenetrable lid to bullish ambition so
far this year. Fortunately, the lower range trading limit has imposed an
impenetrable floor to bearish ambition.
The NASDAQ
YTD-2001 was down 19.6%. It was down 30.9% through this week of 2002. It
recovered with a gain of 47.7% by this weekend of 2003. After being down
most of the year due to the meandering bear market, the heart and soul of
bullish seasonality elevated it to being up by 8.7% on this weekend 2004.
At this time of year in 2005, it was up only by 2.5% due to the same
meandering bear from 2004. At this time last year, it was again up by
10.0%. This year, it is up 10.7%. Last week’s bearish behavior did not
shove the 2007 NASDAQ below the performance level of 2006. Based on
historical standards, 2007 should run ahead of 2006 bullishness, but
economic fundamentals are weighing heavily on market performance. This has
induced vacillating performance this year.
As you can
see, the only years the NASDAQ has been up at this time of year has been
the presidential pre-election years (2003 and 2007) and last year’s
mid-term election year (2006). This is compliant to historical standards,
even though 2007 is underperforming against those standards.
You will
notice the Dow endured less volatility than the NASDAQ this century. The
Dow was down 6.0% on this weekend in 2001. In 2002, it was down by 17.1%,
but with less severity than the NASDAQ’s 30.9% drop in 2002. In the last
presidential election year of 2003, the NASDAQ’s 47.7% rise delivered more
excitement than the Dow’s 23.8% increase.
Many of your
recall the meandering bear market in 2004 where the Dow was up by 3.8% was
in the middle of the heart and soul of bullish seasonality. The meandering
bear continued through this week in 2005 with the Dow rising by a mere
0.1%. On this weekend, the Dow was up 16.6% in 2006. The Indicant stated
the bullish bias shift on August 15, 2006 obsoleted historical standards.
More than half that increased occurred after August 15, 2006. As
previously stated, so far this year, the Dow is up 7.2%, which is the
third most bullish year-to-date performance this century. This is enjoyed
in spite of Greenspan’s continuing fictional prognosis, sub-prime lending
stupidity, a rapidly weakening dollar, and record high-energy costs.
Since the
expiration of the heart and soul of bullish seasonality in late January
2007, the Dow is up 5.9%, while the NASDAQ is up 8.6% and the S&P500 is up
by 2.8%. Even with recent bearish behavior, all the major indices are up
since the expiration of the heart and soul of bullish seasonality in late
January of this year. This is a testament to the strength of the bull even
though it has undergone its third major bearish cycle of this year.
Bullish behavior in three of the past five weeks has been consistent with
the current heart and soul of bullish seasonality, which is now underway.
Although it is consistent in direction, the magnitude is low.
The Dow is up
19.0% since the Short-term and Quick-term Indicant signaled bullish bias
on August 16, 2006. The S&P500 and NASDAQ are up 15.0% and 26.5%,
respectively, since then.
Where is the
market headed in 2008, the presidential election year? Keep your eye on
the daily stock market report.
Stop Loss
Management
The Mid-term
Indicant recommends a stop loss of 8% due to bearish relaxation and
configurations conforming to historical and seasonal standards.
Use a 10%
trailing stop loss or the yellow or green values you will find on the
tables for your longer-term hold positions. If your stock or fund is above
the bearish yellow curve and below the green curve, set your stop loss
equal to the greater of the yellow curve and the trailing stop loss. If
your stock or fund is above the green curve, set your stop loss at no less
the value of the green curve or 10% trailing, whichever is greater. If
your stock or fund is above the red curve and you bought at the Mid-term
Buy signal, you should use the 10% trailing stop loss.
If you are up
by triple digit amounts and enjoy your ownership of the stock or fund,
then use a 20% trailing stop loss or the slow moving blue curve price. If
you really enjoy holding the stock, keep a close eye on the management.
Dilettante managers have a way of worming into the business. Watch closely
for cronyism and lazy-hazy management dialog. Keep your eye on lavish
spending and excessive concerns about social issues. Those types are more
interested in burning your money for their pleasures, as opposed to making
you money. High performing companies remain focused on honoring the
investments made by their shareholders.
In a few
instances, you will see a hold signal for a stock or fund that is down
from its buy signal or below one of the above conditions for selling. If
you are more of a trader than an investor, feel free to buy stocks and
funds with those “bearish” attributes. They are configured for a possible
rebound, while at the same time, it is important to set the stop losses
mentioned in this report. Use the Quick-term Indicant as a guide in your
decision-making processes. If the stock price is falling in a Quick-term
Bear market, it is not advisable to buy.
Do not short
on stocks if they are up from an avoid signal. Stocks go up more often
than they go down. Stocks have a tendency to march to their own drumbeat
when rising. Some stocks rise and continue to rise in the most severe of
bear markets. Short selling opens up an opportunity for the snakes on Wall
Street to take everything you own. They can cause a stock to rise at their
whim and without any regard to fundamental reason. It usually does not
make sense to bet against the sweat and toil of hard-working people.
Stock and
Fund Update
Click the
following link to see sorted performance of stocks and funds with
hold/avoid signals. In the past, they were included in this email message
but now display them on the website. This is available to the public,
while the specific buy and sell transactions are limited to members only.
The below table is public information and not updated on a frequent basis.
http://www.indicant.net/Non-Members/Performance/Top-Bot.htm
Economic Conditions – Inflation, Currency, Interest Rates
Click the
above heading for a summary of hard economic indicators.
Commodity
prices accelerated last week, which is not favorable to the cause of
fending off inflation.
As stated the
past seven weeks, falling interest rates typically accompany stock market
bullish behavior. The primary exception to stock market bullishness with
declining interest rates is inflation or deflation. Inflation is the
primary threat. If the CPI continues to rise, falling interest rates will
not stimulate bullish behavior.
Interest rates
rebounded to the north last week. That northerly bounce will have no
influence on the underlying favorable trend.
After four
consecutive weeks of strengthening, the U.S. Dollar weakened last week.
This vacillation has a stabilization effect for the world economy.
Overall, the
stock market is holding up fairly with economic elements that tend to
depress it.
Fear
Metrics: Economics and Terrorism
Vanguard Gold and Precious Metals (VGPMX) - #19 is up 361.1% since the
April 13, 2001 buy signal. Its annualized growth since that buy signal is
53.1%. It moved to the north in 42 of the past 68-weeks. It has been
bullish in thirteen of the last nineteen weeks. It was solidly bearish the
past three weeks.
Fidelity Gold, Fund #28, is up 9.3% since its buy signal on September
7, 2007. It is annualized at 29.8% since that buy signal. This fund was
solidly bullish last week.
State Street Research Global #9, SSGRX, which is isolated in the
energy sector, is up 305.8% since the Mid-term Indicant signaled buy on
August 16, 2002. It is annualizing at 56.2%.
Vanguard Energy #18, VGENX, is up 253.5% (annualized at 52.8%) since
the Mid-term Indicant signaled buy on April 5, 2003.
Fidelity Energy Services #40, FSESX, is up 239.6% (annualized at
58.2%) since the Mid-term Indicant signaled buy on December 6, 2003.
Fidelity Energy #39, FSENX, is up 204.4% since the Mid-term Indicant
signaled buy on August 16, 2003. It is annualized at 46.1%.
These energy
related funds were bullish last week while precious metals and other
commodities were mixed.
Investors in
these funds are supporting a 1970’s type of market with high inflation and
high oil prices. As long as capitalism remains in vogue around the globe
and alternative sources of energy continue to lag exponentially increasing
demand, a long-term perspective on holding strategy is appropriate.
The SQI
(Consolidated Short-term and Quick-term Indicant) model signaled buy for
the
GLD-ETF#11 on August 3, 2005. It is up 90.5% since then. It is
annualized at 37.1%. This fund has been bullish in fourteen of the past
eighteen weeks.
The SQI
signaled buy for
ETF#03 – Energy and Natural Resources on March 26, 2003. It is up
272.8% (annualized at 56.5%). This fund was solidly bullish last week.
Mid-term
Indicant Positions – Ten U.S. Indices
There were no new bull signals and no
new bear signals. As stated, the past several weeks expect an
increased number of bull/bear signals with fluttering behavior due to
nearing the conclusion of the election cycle phenomenon.
There are nine
bulls. They are up by an average of 20.9% since the Mid-term Indicant
signaled bull an average of 71-weeks ago. That annualizes to 13.9%.
There is one
index of the ten major indices that remains with a bear signal. It is down
by 0.5% since the Mid-term Indicant signaled bear seven weeks ago. This
bearish index is the S&P600-Small Caps. It is configuring for a deep dive
on a Mid-term Indicant basis. However, configuring and doing are two
different elements. Keep your eye on the Quick-term and Short-term
Indicant ETF’s for a day-by-day monitoring of the bull/bear battle now
underway.
The Mid-term Indicant Dow Jones Industrial Average performance is now
at $ $38,756,514
That beats buy
and hold performance of $ $2,043,450 on a $10,000 investment in the Dow
stocks in 1900. The
MTI S&P500 is at $ $187,574. That beats buy and hold’s $144,822 on a
December 31, 1971 $10,000 investment. The
MTI-NASDAQ is at $223,774. That beats buy and hold’s $92,734 on an
October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy
and hold by 1,796.6%, 28.6%, and 141.3%, respectively, for these indices
as of this past week.
The Indicant’s
percentage advantage over buy and hold does not change during bull
signals. The advantage changes only during bear signals. That is because
the buy and hold model has to keep holding, while the MTI-RYS model avoids
bear markets. The only purpose of the Mid-term Indicant model is to avoid
the bear markets. That is why it beat buy and hold by nearly 2,000% over
the past 100+ years.
Click here to go to the current Mid-term Indicant assessment of the ten
major indices.
Click here for a tour of the Mid-term Indicant for major market indices.
Mid-term
Indicant Positions - NASDAQ100 Stocks
Click here to see NASDAQ100 report card history.
Click here for
Mid-term Indicant Table of NASDAQ 100 Stocks.
Mid-term
Indicant Positions - Dow Jones 30 Industrial Stocks
Click here to see Dow 30 report card history.
Click here for
Mid-term Indicant - Table of Dow Jones Industrial Average Stocks.
Mid-term
Indicant Positions - Dow Jones 15 Utility Stocks
Click here to see Dow Utilities Report Card history.
Click here for
Mid-term Indicant - Dow Jones Utility Stocks Table.
Mid-term
Indicant Positions - Indicant Selected Stocks
Click here to see Indicant Select Stock Report Card history.
Click here for
Mid-term Indicant Table of Indicant Selected Stocks.
Mid-term
Indicant Positions - Mutual Funds
Click here to see Mutual Fund Report Card history.
The Mid-term
Indicant continues avoiding
ProFunds Ultra Short. It is down 43.9% since the Mid-term
Indicant signaled sell on September 15, 2006. Historical norms of market
cyclicality suggest the next buying opportunity for this fund may not
occur until 2009. However, the recent bear signal for several major
indices suggest an increasing probability of this funds profit production
before 2009.
Do no buy it
just yet. Wait for the Quick-term Indicant to offer support.
Click here for
Mid-term Indicant Table of Mutual Funds
Always
remember never to keep more than 20% of your investment resources into a
single mutual fund. Sector investing in mutual funds is an extremely good
way to mix your investments.
Long Term
Indicant Positions - Dow Jones Industrial Average
The blue-chip
Long-term Indicant Bull signal was at 2895 for the DJIA in November 1991.
Keep in mind the Long-term Indicant generated only five bull/bear cycles
since 1920.
The Dow is up
361.7% (annualized at 22.3%) since the Long-term Indicant signaled bull
843-weeks ago. Economic data is the primary influence on the Long-term
Indicant. Recessions, deflation, and inflation have not been strong enough
to signal bear since that bull signal. A link to the Long-term Indicant is
below:
http://www.indicant.net/Members/Updates/LTI-Markets-DJIA/DJIA.htm
Quick/Short-term Indicant Stock Market Report - Summary
Quick-term
Red Bulls: Six of thirty; three
are non-contrarian. This bullish attribute remains weakened, while
maintaining modest bullish support.
Quick-term
Yellow Bears/Threats: Eight of
thirty. Attribute remains configured with modest non-bearish support.
Quick-term
Non-Bearishness: Weak;
inflationary fears threaten the bull, but the slightest inflationary
weakness will invite vigorous bullish responses.
Short-term
Non-Bearishness: Both major
indices approached lower trading range limit, but again did not find
comfort. They responded with bullishness, while not robustly at this time.
Force
Vectors: Bullish cycle was
shallow and appears completed, but from well within bullish domains, which
supports bullish bias.
Vector
Pressure: Sixteen in bullish
domains. They are increasing and supporting bullish bias.
Long-term
Hold Positions: Continue
holding.
Immediate
Tactics: Vector Pressure is
supporting more aggressive buying.
Current
Quick-term Bias: Bullish.
Configurations are mixed.
Overall
(Long-term) Market Status:
Bullish bias prevailing, but weakened.
Profit
Potential from Naked Options:
Volatility is high, enhancing option opportunities. However, do not write
any covered options in this environment.
Volume:
Configurations are neutral.
September 17,
2007-Configurations are shifting away from bearish support………….
September 18,
2007-The Dow’s 335-point gain today (9/18/07) is not jittery behavior. It
is not a bullish spurt. It reflects the beginning of the heart and soul of
bullish seasonality. Enjoy!
October 19,
2007-Recent bearish aggression is configured as a spurt in the face of the
underlying bull at this time. Several attributes will advise if this
bearish aggression is sustainable. Current configurations suggest it is
not sustainable. Keep in mind these attributes can shift quickly.
November 7,
2007-The major indices again reacted bearishly after contacting the upper
trading range limit. This phenomenon does not detract from the underlying
bullish trend.
November 9,
2007-Economic fundamentals are threatening the bull, but the bullish trend
has not been reversed.
December 7,
2007-The major indices contacted the lower trading range limit a few days
ago and bounced solidly to the north. They are now trekking north. There
is no guarantee they will again interact with the upper trading range
limit, but the probability is high they will during the few remaining
weeks of the heart and soul of bullish seasonality.
December 14,
2007. The probability of the major indices interacting with the lower
trading range limit increased today over interaction with the upper
trading range limit.
December 18,
2007. Bullish response occurred today (Dec 18) reducing probability of
penetrating the lower trading range limit.
Quick-term/Short-term Indicant Stock Market Report Details
The
Short-term Indicant signaled bull on Thursday, December 6, 2007 for
both major indices. The DJIA is down 1.9% and the NASDAQ is down 1.3%,
respectively, since then.
From Dec 11,
2007 daily stock market report, it was stated “a continuation of this bull
cycle should test the upper trading range limit again. This should occur
before the heart and soul of bullish seasonality concludes in late January
2008.” Very recent volume has been more supportive of the bear.
From Dec 20,
2007 daily stock market report. Configurations are suggesting increasing
heart and soul of bullish seasonality influence.
From Dec 21,
2007. The Dow’s 200-plus point jump today substantiates the heart and soul
of bullish seasonality influence.
From Dec 28,
2007. Lethargic volume due to holidays is generating unnatural market
forces. This is common when a few traders are more likely to manipulate
market values. The market should enjoy natural dynamics on January 3,
2008.
Please read
on. Click here to see the
Short-term Indicant’s history.
Both
Indicant Volume Indicator’s continue configuring lethargically. This
is influenced by holiday volume. As stated the past several days, the
current lethargic cycle coincides with bullish market behavior. That
suggests less than desired momentum for sustaining the underlying bullish
bias, but also not encouraging to recent bearish expressions. A
continuation of cyclical and seasonal influences should favor the bull,
regardless of bearish economic fundamentals, for the next few weeks.
SQI Report Card (Consolidated Short/Quick), Status, and Charts
There were no
buy signals and no sell signal. Although there were no buy signals, the
SQI is signaling hold for 24-ETF’s. They are up by an average of 73.8%
(annualized at 28.2%) since their respective buy signals an average of
134.8-weeks ago. Although there were no sell signals, the SQI is avoiding
six ETF’s at this time. They are down by an average of 5.3% since their
sell signals an average of 7.3-weeks ago.
The SQI model is the one that most of you will prefer for your trading
decisions. It generates fewer signals than the other two models and
represents consistencies in the Quick-term and Short-term outlooks for the
specific ETF’s. It also beats buy and hold on a regular basis, although
there is only eight years of proof. The quality of that proof is high
since this period includes a powerful bull and bear. The model sours a
little during meandering markets with an excessive number of signals from
time to time. Research toward perfecting continues.
Short-term Indicant Report Card, Status, and Charts
There were no
buy signals and no sell signals. Although there were no buy signals, the
Short-term Indicant is signaling hold for 24-ETF’s. They are up an average
of 95.1% (annualized 37.5%) since the STI signaled, buy, an average of
130.5-weeks ago. Although there were no sell signals, there are six ETF’s
with avoid signals. They are down by an average of 5.5% since their sell
signals an average of 7.3-weeks ago.
The
Short-term Indicant is more active in buying/selling than the Consolidated
model. The Quick-term Indicant, which follows, is even more active.
Quick-term Report Card, Status, and Charts
There were no
buy signals and no sell signals. Although there were no buy signals, the
Quick-term Indicant is signaling hold for 25-ETF’s. They are up by an
average of 19.5% (annualized at 27.4%) since the QTI signaled buy an
average of 36.5-weeks ago. Although there were no sell signals, the
Quick-term Indicant is avoiding five ETF’s. They are down by an average of
4.3% since their sell signals an average of 5.9-weeks ago.
The
Quick-term Indicant is yet more active with buy and sell signals.
Conflicts
Between the Short-term and Quick-term Indicants
There are
three conflicts, whereby the Short-term Indicant and the Quick-term
Indicant are in disagreement between hold and avoid status. This
harmonious relationship, although weakened with increased volatility in
2007, remains in support of the Quick-term bullish bias shift since August
15, 2006.
Quick-term Indicant Bull/Bear Health Report
Eight of the
30-ETF’s are below their respective bearish yellow curves. The average
relative position of all thirty ETF’s is above bearish yellow by 4.8%.
This is providing non-bearish support.
Six of the
ETF’s are above their respective bullish red curves, which is supportive
of the bullish bias. All thirty ETF average positions are 3.6% below their
bullish red curves. As long as one non-contrarian ETF remains above
bullish red, the bear cannot gain complete dominance. Three of the six red
bulls are non-contrarian.
Short-term Indicant Bull/Bear Health Report for ETF’s
The above
heading is linked to the Short-term Indicant table. This paragraph is
repeated daily as a reminder of accurately interpreting the charts. By
clicking the charts on the table you can review potential contact with the
breakdown lines (bearish) and potential contact with breakout lines
(bullish). It is extremely bearish when several ETF’s are contacting their
respective breakdown lines. The breakdown lines are the yellow lines
(bearish). The breakout lines are the red ones (bullish). Close proximity
to breakout implies an increased probability of an actual breakout
occurring. It is certainly bullish and you will want to be in a hold
position for those few days a year when the breakout occurs. Conversely,
significant contact with yellow (breakdown) suggests “avoid” positions are
best.
One of the
thirty ETF’s is contacting its breakout line. It is contrarian
ETF#11-Precious Metals. There is no bullish support from this attribute at
this time.
This was the
thirteenth consecutive day of non-contrarian non-contact. This non-bullish
bias suggests shallower bull cycles on a near-term basis. This attribute
is non supportive of the bull.
As stated the
past several months, the high concentration of non-contrarian
breakout-contact since August 2006 was solidly bullish. Contact in
fifty-nine of the last eighty-three trading days supports bullish bias.
This attribute is losing influence in support of the bull.
The average
distance from breakout contact is 8.9%. This remains in support of the
quick-term bullish bias, but weakened.
None of the
ETF’s are contacting their breakdown lines, which is non-bearish.
The average
distance from the price and breakdown is 17.1%. This configuration is
providing non-bearish support, which has been the case since March 2003.
The gap
between breakout and breakdown has stabilized, which suggests market
stability with a slight bullish bias.
ETF Force
Vector Configurations
You can scan
the
Quick-term Indicant for Exchange Traded Funds table and click on the
charts to observe Force Vector configurations. Scroll down each of the
charts, where a quick link has been added to take you to the next series
of Quick-term ETF charts. Use you back arrow on your browser to return to
the previous page.
Twenty-five
Force Vectors are moving bullishly, supporting the underlying bullish
bias. The recent bearish configuration has bottomed. The bullish cycle is
maturing but from well within bullish domains, which is not offering the
bear any momentum.
To understand
potential financial opportunities,
click here to learn to identify Robust Force Vectors. They are visible
on the
Quick-term Indicant charts.
ETF Force
Vectors/Vector Pressure Crossings/Option Signals
Remember, the
links contained herein are more visible when reading this on the website.
Click this sentence for Vector Pressure Option Signals. There were
four call option buy signals and one put option buy signal after Friday’s
close. This brings the total call option buy signals to fifteen in the
last seven trading days. That is the first put option buy signal in
several days.
The market’s
mild bullishness was not favorable to Wednesday’s call option buy signals.
Although mild bullishness protected Thursday’s deeply discounted call
option buys, profit potential will be enhanced if Monday’s market behavior
is bullish.
Sixteen
ETF Vector Pressures are in bullish
domains. This is no longer providing near-unanimous or majority bullish
support. However, as stated daily last week, they are not configuring with
dynamic bearish support. Vector Pressure increased by six last Thursday
and Friday, providing increasing bullish support.
Make certain
you sell naked options when the Force Vectors shift direction or within
two days of the purchase, whichever occurs first. If you are unfamiliar
with this, take the
options tour.
Remember
options trading is risky. Never offer “market prices.” Always bid low in
hopes of an intraday contrarian movement to the underlying assumption of
directional behavior. Always place day-orders, only. That keeps the floor
folks out of your pocketbook. Do not despair if your order does not take.
There are plenty of opportunities throughout the course of the year.
Remember, stalking is the key to success here. Although not necessary for
stock market success, those of you who have a gambling instinct will enjoy
this. For those of you with a longer-term perspective, it does not hurt to
see what the short-term folks are thinking. The Indicant indicates both
perspectives.
Quick-term
and Short-term Indicant Summary
The shift
from bearish bias to bullish bias started on Tuesday, August 15, 2006
after maintaining a bearish bias from early February 2006 until August 15,
2006.
Continue to
avoid writing covered call options at this time.
The
Quick-term Bull remains in tact.
ProFunds Ultra Short mutual fund moves inversely to the QQQQ by
exponential amounts. The Consolidated Indicant model is not avoiding QQQQ,
which does not support holding contrarian fund, ProFunds Ultra Short.
The
Quick-term and Short-term Indicant tracks ETF#31, QID, which is the ETF
cousin to ProFunds Ultra Short. This ETF is relatively new and has not yet
developed enough data to formally track its outlook. It will be excluded
on overall ETF statistics because it is purely contrarian. It is designed
to move bullishly during bear markets and bearishly during bull markets.
QID inclusion
in overall ETF analysis will distort observations of market divergence and
convergence due to the nature of its design. For example, precious metals
and energy are contrarian but can parallel market direction with
synergistic relationships. That, quite often, relates to market
convergence when some non-contrarian funds are paralleling the general
markets.
QID will
receive Quick-term and Short-term sell signals, but must mature more for
independent near-term observations. This comment will be removed once that
maturity is developed.
QID is down
48.4% since all three models signaled bear upon the initial offering of
this ETF 76.1-weeks ago.
To
familiarize yourself with viewing the market from an ETF perspective,
click the following update links.
Quick-term ETF Options
Quick-term Indicant for ETF’s
Short-term Indicant for ETF’s
Consolidated Quick-term/Short-term Indicant for ETF’s
Click here to the report card, which is updated weekly, to link to related
tours.
Links to the
Short-term Indicant and Indicant Volume Indicator are below:
Short-term Indicant for DJIA and NASDAQ
Short-term Indicant Tables for the Dow Jones Industrial Average Index
Short-term Indicant Table for the NASDAQ Composite Index
Indicant Volume Indicator
Divergence
versus Convergence
Bearish
divergence occurred last week, following bearish convergence in the prior
week. Bearish divergence indicates the market’s perception is concerned
more about inflation. In the prior week, the market was somewhat depressed
about economic outlook.
Indicant
Conclusion
As stated five
weeks ago, the stock market responded bullishly as it approached its lower
trading range limit. As stated two weeks ago, the next bull/bear battle
should occur at the upper trading range limit.
After
bull/bear battling in neutral territory the three weeks ago with the
bearish dominance, the major indices again could not fall below the lower
trading range limit. The major indices bounced north two weeks ago. As
long as the lower trading range limit continues being impenetrable, the
bullish bias and trend remain in tact, regardless of the unsettling nature
of these bearish spurts.
Keep up with
the daily stock market report as the Quick-term attributes can shift
quickly.
Do not get
lazy and set those stop losses for those stocks and funds that continue to
enjoy hold signals.
The daily
updates are on the following link.
http://www.indicant.net/Non-Members/Back%20Issues/QT.htm
Hyperlinks
To access all
major markets, stocks, funds, economic data, charts, statuses, etc, click
the following hyperlink:
http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20Summary.htm
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
12/30/07
December
23, 2007 Indicant Weekly Stock Market Report
Volume 12, Issue 04 ISSN 1526 6516 © The
Indicant Stock Market Report
This Week’s
Report
The Lower
Trading Range Limit Continues Bullish Enforcement
Click the
following link to view two major indices trading limits.
http://www.indicant.net/Members/Updates/STI-Mkts/IVI.htm
The link
displays the NYSE. Scroll down to view the NASDAQ.
Regardless of
economic fundamentals confronting the stock market, the underlying bullish
trend continues.
You will
notice both indices have endured periods of bearish cycles. Since the bull
began in late 2002, the trend has been bullish. Every now and then bearish
sentiment influences the direction. These periods of bearish sentiment did
not upset the bullish trend. However, these bearish cycles left a
footprint where they bottomed. That bottoming has been convenient to those
of us who search for symmetry.
Although not
perfectly symmetrical, they have left a nice pattern that details lower
trading range limits. The stock market will eventually destroy these
semi-symmetrical configurations. The trick is to recognize what follows
during the moment of destruction. Sometimes the underlying trend is simply
adjusted as opposed to a trend reversal. That occurred in early 2007 just
after the Greenspan scare last February. After enduring a short bearish
cycle from Greenspan babble, both major indices moved above their upper
trading range limit.
You will
notice an orange colored line on both charts. They are the original lower
trading range limits that connect to the early stages of this bull market
that date back to 2003. You will also notice the market is significantly
above that line. Not too many investors wish to be holding in the event
the major indices fall to that line. That would approximate a 20% drop in
market valuations. Technically, such a drop would not reverse the
underlying bullish trend even though many would offer unsuccessful
arguments. Some would even refer to such a drop as a bear market, where a
20% drop defines formality. Regardless, though the trend would still be
bullish, regardless of such babble.
Bull/bear
cycles are relative to where the buying occurred. For those who are
longer-term oriented and who bought in the early 1990’s would smugly
endure a drop to the orange line without winching. That is because they
would still be up by triple digit amounts. Those who bought just ahead of
such a southerly move would endure emotions more than merely winching.
Their worth would actually be down by 20% or so if contact with the orange
line were encountered.
When the major
indices formed a more elevated upper trading range limit, another lower
trading range limit was defined with connections to the minimum points of
last three bearish cycles. The first bearish cycle was induced by
Greenspan babble. The second bearish cycle was induced by market
recognition of the sub-primed lending crisis in June/July. The third and
most recent bearish cycle was induced by a significantly increased
consumer price index, coupled with fears of economic weakness from the
lingering sub-prime lending crisis. It is this higher lower trading range
limit the Indicant refers to in the daily stock market report. It is noted
by the light blue line just above the orange line.
The last
bearish cycle, like to prior two bearish cycles, approached this higher
lower trading range limit, but did not fall below it. The bear’s inability
to drive the market below that particular line allows its construction. It
is nearly symmetrical in linear terms, while the timing of the cycles are
not predictable. The point of interest is how the market reacts when it
approaches this particular lower trading range limit. The Quick-term
Indicant and other short-term models will assist recognition of the
market’s directional intentions.
The major
indices have conveniently moved bullishly from this lower trading range
limit. There will be a time at some future point, where the market will
not bounce to the north off these lower trading range limits. That is when
the bear will gain influence and become dictatorial over market direction.
