February 23, 2003 Indicant.Net Weekly Update

Volume 02, Issue 4 ISSN 1526 6516 © The Indicant Stock Market Report

Dear Indicant Members:

This Week’s Report

Fear and Lethargy #3 – A Combination With A Short Life

The forces of bullish seasonality are very powerful. The Quick-term Bears during the period from November through April are generally shallow. There have been only twelve down periods during normal bullish seasonality since 1950. The most bearish during bullish seasonality was down 14.0% in 1969. Oil prices were beginning to rise and inflation was beginning to grow at historically high rates due to the costly war in Vietnam and the so-called “great society” expense.

The most bullish was in 1985 with a 29.8% increase. Oil prices were falling rapidly in the middle 1980’s. That coupled with supply side economics and tax cuts, provided fuel for an ever-expanding bull market.

Today, the general political thrust is to continue cutting taxes. The secular momentum toward individual freedom that started in Scotland around six hundred years ago continues even with brief disturbances from the likes of FDR’s massive tax hikes. If tyranny by the majority continues to support political tax cutters in the future, expect the bull to return. If tyranny by the majority supports political tax increasers in the future, the bear will continue.

Increased government spending with tax cuts will produce the same bearish theme as tax increases. This is due to the inflationary spirals that will promulgate with huge government deficits. The tax cuts will need to be supported by responsible government spending. Dream on, as it is too easy to spend someone else’s money, which is the core fallacy of the system of government. Pay the weak for their votes, talk democracy, and be led by the tyranny of the majority.

Increasing military confrontations should be expected indefinitely into the future. If the war with Iraq disturbs a steady the supply of crude, you can expect many more years of lethargic market behavior. Gold prices will continue to move north. Oil service stocks, such as Halliburton, Schlumberger, Smith International, and others will do well. Also, the “short” mutual funds will be explosive. There is plenty of room for this market to fall further.

The period of bearish seasonality is rapidly approaching. Bearish seasonality lasts from May 1 through October 31. The past two years have demonstrated a testament to this fact. In 2001, the May-October bearish period drove the Dow south by 15.5%. In 2002, it dropped another 16.5%. Since 1950, there have been twenty-two periods with the Dow closing down during this bearish period. Market increases during bearish seasonality were miniscule. This year could be different if Iraq is quickly defeated in a clinically clean setting. If oil fields are set to blaze, then this bear is far from being over.

The largest increase in the Dow during bearish seasonality was in 1958 with a 19.2% rise. If you recall, $10,000 invested in the Dow stocks in 1950 only in the months of May through October would be worth $8285. Conversely, that same $10,000 invested only in the months from November through April would be worth $457,103. As you can see, bullish and bearish seasonality over the long run have significant merit.

The Dow is down 5.9% since November 1, 2002 . To get back to square one, the market should jump by at least 5.9% before the end of April. We are running out of time. We laid out a plan for George W. Bush to engage in the war he is going to have with Iraq before the end of February. Early last week, George W. had two weeks until the end of February. Now, he only has one week. The current prevailing thought is that the war will begin in mid-March. That will put a damper on the market during the latter part of bullish seasonality.

Since 1950, there have been only twelve down periods from November 1 through April 30. If the impending war continues to impose a cloud over the stock market, then this could be the thirteenth year the market is down during this period of bullish seasonality.

The market’s bullish behavior last week suggests the economy will be continuing to improve six to nine months from now. It also suggests a belief the war with Iraq will be a very short one with limited casualties. As always, there is no need to speculate about all that. The various Indicant models will advise of these yet to be defined scenarios.

January 2003 was down 3.5%. You have heard it before. So goes January, goes the year. There is some merit to that, but can be confusing when military confrontations are thrown into the mix. This is not to discourage those of you, who prefer bull markets. The mid-term election year phenomenon is still expected to hold up. Bullish seasonality is expected to prevail. The market has room to rise at least 5.9% before the end of April. After that, the Quick-term Indicant will guide us through the period of bearish seasonality. Euphoria from a clinically quick and clean victory in Iraq could throw normal market seasonality out the window.

The Impending NASDAQ Short-term Indicant Bear’s Birthday Party

We will continue reporting the details of the historic performance of the Short-term Indicant until this bear’s third birthday. As stated last week, until recently, the longest period of time the Short-term Indicant went without a signal was between October 18, 1929 and August 24, 1932 . During that period, it was a STI-Bear. The market fell by 70.1% before getting a bull signal. That Short-term Indicant Bear lasted 1041 calendar days. The market found its secular bottom in 1932.

http://www.indicant.net/Non-Members/ST%20Tour/ST-1929.htm

We are now enduring a new record length of a Short-term Indicant Bear Market. The current Short-term Indicant Bear is now 1058 days old for the NASDAQ. It is now seventeen days older than the 1929-1932 bear.

http://www.indicant.net/Members/Updates/STI-Mkts/STI.htm

Expect at least one more Quick-term Bull before the end of April. The war with Iraq will definitely shorten its life. Therefore, a sharp rise up and then a sharp drop will follow.

Stock and Fund Update

The top ten performing NASDAQ100 Stocks

#41, Amazon, AMZN, Bought, 11/9/01 , +205.9%

#94, Apollo, APOL, Bought, 2/11/01 , +204.9%

#74, Gilead , GILD, Bought, 4/6/01 , +108.7%

#83, Nextel, NXTL, Bought, 8/16/02 , +99.4%

#57, BEA, BEAS , Bought, 10/11/02 , +73.4%

#38, Citrix, CTXS, Bought, 10/25/02 , +72.7%

#45, Imclone, IMCL, Bought, 10/25/02 , +68.1%

#15, Juniper, JNPR, Bought, 10/25/02 , +63.7%

#70, Genzyme, GENZ, Bought, 8/2/02 , +48.3%

#35, Symnatech, SYMC, Bought, 9/6/02 , +46.5%

The top ten performing Indicant Select Stocks:

#19, Inktomi, INKT, Bought, 10/25/02 , +296.8%

#26, Nortel , NT , Bought, 10/18/02 , +246.0%

#44, Chattem, CHTT, Bought, 3/9/01 , +207.9%

#43, Corning , GLW, Bought, 11/8/02 , +107.9%

#48, Forest Labs, FRX, Bought, 6/4/99 , +104.9%

#4, CNET, CNET, Bought, 10/18/02 , +88.8%

#17, Broadvision, BVSN, Bought, 10/25/02 , +88.7%

#1, CGMI, CMGI, Bought, 10/18/02 , +66.7%

#39, Elan , ELN, Bought, 11/8/02 , +61.1%

#40, Alpharma , ALO, Bought, 11/2/02 , +59.9%

The Only Mutual Funds With Mid-term Indicant Hold Status

#28, Fidelity American Gold, FSAGX, Bought, 12/7/01 , +59.9%

#19, Vanguard Gold/Precious Metals, VGPMX, Bought, 4/13/01 , +48.8%

#40, Fidelity Energy Services, FSESX, Bought, 8/9/02 , +11.0%

#9, State Street Research Global Res A., SSGRX, Bought, 8/16/02 , +10.0%

#52, Fidelity Natural Gas, FSNGX, Bought, 11/23/02 , +6.1%

#71, First American Debt Investment, FALTX, Bought, 4/12/02 , +2.0%

#22, ProFunds Ultra Short, USPIX, Bought, 1/31/03 , - 7.3%

Several Funds received buy signals. Many more should receive buy signals next week as bullish seasonality is expected to gain momentum. The start of the war with Iraq will impose some short-term volatility, but it should be short-lived, depending on military efficiencies.

NASDAQ100 - #34 – Cintas is taking a fall. The stock is down 20% since the January 24, 2003 sell signal. You can see the risks inherent in holding a stock that is on the yellow curve.

http://www.indicant.net/Members/Updates/MTI-Stks-NAS100/NS06.htm#34

NASDAQ100 - #61 – Biogen is now on yellow. The stock has been bouncy after participating in the original thrust of bullish seasonality. The Mid-term Indicant is recommending avoid.

http://www.indicant.net/Members/Updates/MTI-Stks-NAS100/NS11.htm#61

NASDAQ100 - #81 – Concord is down 16% since the Mid-term Indicant signaled sell on February 6, 2003 . Again, avoid stocks on yellow. This stock performed well during the bear market is 2000-2001, but as you can see, its performance has no doubt disgusted long-term holders of that stock.

http://www.indicant.net/Members/Updates/MTI-Stks-NAS100/NS14.htm#81

Indicant Stock - #10 – McLeod is down since the MTI buy signal. Insiders are buying the stock. There is no relation with the Executive VP of Sales and the editor of Indicant.Net. The stock is above yellow and had a nice burst of bullish energy in conjunction with the bullish surge last October. The stock is volatile. If you buy, make certain you employ the tight stop loss of 5%.

http://www.indicant.net/Members/Updates/MTI-Stks-Indicant%20Sel/S02.htm##10

Indicant Stock - #31 – Qwest received a sell signal from the Mid-term Indicant this past weekend. It made you 44.4%, less commission. The price is no yellow. Sometimes stocks bounce north on the first event, but with the threat of war and mixed signals about the economy, take you profit now. Other opportunities are on the horizon.

http://www.indicant.net/Members/Updates/MTI-Stks-Indicant%20Sel/S06.htm#31

Dow Utility - # 12 – Williams Company received a buy signal after selling last weekend. This stock, as you can see, is pretty sick, but also very cheap for a multi-billion dollar corporation. If you are a shareholder, send the board a letter and tell them no one in the company is worth more than a $100,000 per year salary. The top dogs salaries are way out of line with their potential contribution. At any rate, it has nudged slightly above yellow and thus the buy signal. Make certain you enter the tight stop loss of 5% if you decide to buy this stock.

http://www.indicant.net/Members/Updates/MTI-Stks-DJU/DJU-02.htm#12

Stock Market Summary

The past few weeks, we have reported on the unusual shift in seasonal behavior. On December 13, 2002 , the Mid-term Indicant was signaling hold for 75 of the 76 mutual funds tracked by the Indicant. The only fund avoided at that time was #22 - ProFunds Ultra Short, which was down 16.1% from the prior sell signal. Now, it is one of the few funds with a hold signal. Three weeks ago, that fund was up about 5%. Two weeks ago it was down slightly. Last week it was down 7.0%. If you sold on a mental stop loss of 5% do not buy it even though it continues to maintain a hold signal. We are too close to March 1 to buying short related securities. Normally, that fund would have been avoided throughout of this period of bullish seasonality, but the worst December since 1931 encouraged some added risk here.

http://www.indicant.net/Members/Updates/MTI-Mutual%20Funds/MF04.htm#22

On October 11, 2002 , the Mid-term Indicant was signaling hold for only fifty-two stocks and funds. They were up 25.2% (annualized at 52.8%). They had been held an average of 24.8 weeks. The number of held stocks and funds peaked on December 7, 2002 at 286. They were up an average of 16.2% (annualized at 81.0%). They had been held 10.4 weeks. A week earlier on November 30, 2002 , two-hundred and eighty stocks were up 22.2% (annualized at 120.0%).

Last week there were one-hundred and seventy-four stocks and funds being avoided. Normal seasonal behavior tells us that was the low point for the Mid-term Indicant’s position. This week, only one-hundred and thirty stocks and funds are being avoided. That number should continue decrease while the number of stocks and funds with hold signals continue to increase until sometime in April and May. Last year’s seasonal bearish cycle began ahead of schedule in April. At one point the NASDAQ100 was down over 50% in that Quick-term Bear cycle last year.

If the market holds true to seasonal normalcy, expect a powerful bull surge within the next few days. The Quick-term Indicant will spot the beginning of that cycle in the event it does transpire.

Divergence versus Convergence

The market is again slanting some divergence in favor of general equities. This slant is due entirely to bullish seasonality and has absolutely nothing to do with economic or corporate fundamentals. However, convergence is still the theme with slight increases in fear related investments.

Economic Outlook

Again, there is not much new here from the past several weeks. Although Gold and other commodity prices are softening, their cyclical upturns are strong. The U.S. Dollar was mixed last week, but continues to express profound weakness. As long as interest rates remain low, expect the dollar to continue its decline. If oil shortages manifest, the greenback will erode further and an inflationary spiral will kick in. The stock market will not like that.

As has been the case, commodity prices continue to reside at cyclically high levels. Some continue setting new cyclical highs. It will be difficult for the market to express a 1990’s type bull leg with these commodity attributes, but the mid-term election year phenomenon is still expected to influence a bullish direction leading up to the 2004 elections. George W. Bush will do all possible to invigorate the economy so he will not face the same humility as his father as a one term president.

A link to the CRB Bridge Futures is below. It is one of Greenspan’s favorites. As stated the past few weeks, as soon as the employment numbers turn around, he will attack this upward cycle with interest rate hikes. He is running out of stimulus inventory as his prior rate cuts have left him little to play with.

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

Fear Metrics: Economic and Terrorism

The Indicant signaled "buy" for Fidelity American Gold (FSAGX) - #28 on December 7, 2001 . Thirty-seven weeks ago, it was up 66.1% since the Mid-term Indicant signaled buy. Thirty weeks ago, it closed up 12.0% since the buy signal. Twenty-one weeks ago, it closed up 42.9% since the MTI buy signal of December 7, 2001 . Last week it closed up 59.9%, which is up slightly from last weeks 57.0%.

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% thirty-five weeks ago since the MTI buy signal in April 2001. Twenty-nine weeks ago, it closed up 27.8%. Last week it closed up 48.8%, which is up slightly from the 47.5% reported last week.

These two funds have softened the past four weeks. The first week of softening was due to profit taking, as opposed to fundamental reasons. However, there is a direct correlation between news of peace and news of war. The news favored no war last week, then it favored war. The market goes down and gold goes up and vice-versus depending on market beliefs, which is somewhat influenced by news and rumors on the trading floor. Is the element of fear subsiding? This scenario is not likely with terrorists orange alerts and a commitment to hawkish behavior by George W. Bush.

As stated in the past you can monitor these two funds to help you gauge fear related investments. These two funds require “avoid” signals for the market to embark upon a meaningful and lasting bull leg.

Links to both of the above funds are as follows:

http://www.indicant.net/Members/Updates/MTI-Mutual%20Funds/MF05.htm#28

http://www.indicant.net/Members/Updates/MTI-Mutual%20Funds/MF04.htm#19

Quick-term and Short-term Indicant - Markets

You received details about this yesterday. The eight major indexes are down an average of 1.2% since the January 24, 2003 Quick-term Indicant Bear Signal. The S&P400 and S&P600 are the strongest bears. They are down 2.1% and 3.1%, respectively, since the January 24, 2003 QT Bear Signal. At this time last year, the S&P600 was in a league all by itself with a solid 1990’s like bull leg.

The Dow is down 24.3% since the Short-term Indicant signaled bear on March 20, 2002 . The NASDAQ Composite is down 68.1% since the Short-term Indicant signaled bear nearly three years ago on March 30, 2000 .

Additional Quick-term and Short-term Indicant information was in the preliminary report you received earlier this weekend. If you already deleted it from your email inbox, you can find it and all other back issues at the following link.

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

Mid-term Indicant Positions - Major U.S. Market Indices

The Mid-term Indicant signaled Bull for the NASDAQ and NASDAQ100.

The remaining indexes are still Mid-term Bears. They are down an average of 3.6% since the MTI Bear signal an average of 3.8 weeks ago.

The strength of the NASDAQ and NASDAQ100 in this Quick-term Bear cycle is encouraging. During this cycle, those two indexes at one time were the weakest. Their strong rebound could not be ignored.

To view Mid-term Indicant charts for U.S. Market Indices, please click the following link.

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

Mid-term Indicant Positions - International Markets

There was one new bull signal and no new bear signals.

In addition to the new bull signal, eight of the twenty-two foreign indexes tracked by The Indicant are Mid-term Bulls. They are up an average of 52.4% since the Mid-term Indicant signaled bull an average of 43.1 weeks ago for an annualized gain 63.3%.

Thirteen markets have been bears for an average of 3.2 weeks. They are up an average of 0.4%.

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

  February 16, 2003 Indicant.Net Weekly Update

Volume 02, Issue 3 ISSN 1526 6516 © The Indicant Stock Market Report

Dear Indicant Members:

This Week’s Report

Fear and Lethargy #2 – An Interesting Combination

Where is the stock market focused right now? From time to time you will see several experts, including yours truly, say the stock market is always looking out six to nine months into the future. This is a belief held by many, but the stock market is notorious for missing the mark. It looks, but sometimes, like each of us, cannot see.

One of our treasured members, Dave L., asked a few weeks ago, “What was the stock market thinking in March 2000?” The stock market was actually not thinking in March 2000. All the partying it did in 1998-1999 made it drunk. After it got over its hangover, it looked at the future and decided a 5,000 NASDAQ is less appropriate than a 1500 NASDAQ or so. Apparently, the market got some sensibility.

The Indicant Volume Indicator (IVI) continues to signal increasing market lethargy. The NASDAQ’s IVI peaked in early February 2001 or about one year after the Short-term Indicant signaled bear for the NASDAQ. Many people were selling out when the NASDAQ was around 3800 to 3000. Some bought and some sold on the way down. Of course, many people were buying in the belief the market was as low as it could go at each Quick-term Bull/Bear cycle. When share demand exceeded share supply, those Quick-term Bull cycles kicked in on the way down. However, economic and market fundamentals imposed a relatively quick-term lid on each cycle to the north.

The NASDAQ’s tumble disenchanted many investors. Last year’s voodoo bookkeeping contributed to accelerating disenchantment. Voodoo bookkeeping influenced a departure of foreign investors from the U.S. markets. The number of potential sellers is down. This is intuitively apparent by inspecting the Indicant Volume Indicator. The depletion of the supply of sellers will provide baseline support for the market to turn bullish in the near future. The “near future” is a relative term. Some find comfort in a near future of one year. For those of you who are type A personalities, “near future” means tomorrow. For those extreme cases of type A, “near future” means tomorrow. The various Indicant models attempt to accommodate all of you.

We will continue reporting the details of the historic performance of the Short-term Indicant until this bear’s third birthday. As stated last week, the longest period of time the Short-term Indicant went without a signal was between October 18, 1929 and August 24, 1932 . During that period, it was a STI-Bear. The market fell by 70.1% before getting a bull signal. That Short-term Indicant Bear lasted 1041 calendar days. The market found its secular bottom in 1932.

http://www.indicant.net/Non-Members/ST%20Tour/ST-1929.htm

We are now enduring a new record length of a Short-term Indicant Bear Market. The current Short-term Indicant Bear is now 1051 days old for the NASDAQ. It is ten days older than the 1929-1932 bear.

http://www.indicant.net/Members/Updates/STI-Mkts/STI.htm

In the throes of the Great Depression of the 1930’s, the stock market went up. It found its bottom in 1932 or nearly 90% below its 1929 peak. Last week we discussed how the international economy and increasing diversification acts as a depressant to another Great Depression. So, we will not repeat it here, but be confident in the ideals portrayed by Adam Smith, Socrates, and all free-market minded people. The momentum built over the past several hundred years is unstoppable, regardless of the wishes of Bin Laden, Saddam Hussein, all Kings, Queens , dictators, and other destructive behaviors. Even the Kenneth Lays (Enron CEO) of the world are being ostracized from society’s burgeoning requirements to put in an honest days work for an honest days wages and using the stock market for cream to one’s nest egg.

So, has the market found a secular bottom? Who knows and who cares? If the market is going up, invest in it and enjoy. If the market is going down, stay out or invest in contraire securities. Read your Indicant email.

Stock and Fund Update

The top ten performing NASDAQ100 Stocks

#94, Apollo Corp, APOL, Bought, 2/11/01 , +201.4%

#41, Amazon.Com, AMZN, Bought, 11/9/01 , +181.7%

#74, Gilead Sci, GILD, Bought, 4/6/01 , +104.2%

#83, Nextel Comms A, NXTL, Bought, 8/16/02 , +92.4%

#57, BEA Systems, BEAS , Bought, 10/11/02 , +68.2%

#38, Citrix Systems, CTXS, Bought, 10/25/02 , +63.8%

#15, Juniper Networks, Inc., JNPR, Bought, 10/25/02 , +56.9%

#93, Ciena Corp, CIEN, Bought, 10/25/02 , +53.1%

#2, Cytyc Corp, CYTC, Bought, 8/2/02 , +42.6%

#43, Mercury Intract, MERQ, Bought, 10/18/02 , +41.5%

The top ten performing Indicant Select Stocks:

#19, Inktomi, INKT, Bought, 10/25/02 , +295.1%

#26, Nortel , NT , Bought, 10/18/02 , +266.7%

#44, Chattem, CHTT, Bought, 3/9/01 , +217.8%

#43, Corning , GLW, Bought, 11/8/02 , +115.8%

#4, CNET, CNET, Bought, 10/18/02 , +114.7%

#48, Forest Labs, FRX, Bought, 6/4/99 , +97.0%

#17, Broadvision, BVSN, Bought, 10/25/02 , +77.8%

#31, Qwest Comm., Q, Bought, 10/11/02 , +76.5%

#40, Alpharma Inc, ALO, Bought, 11/2/02 , +57.7%

#1, CGMI, Inc, CMGI, Bought, 10/18/02 , +53.9%

The Only Mutual Funds With Mid-term Indicant Hold Status

#28, Fidelity American Gold, FSAGX, Bought, 12/7/01 , +58.0%

#19, Vanguard Gold/Precious Metals, VGPMX, Bought, 4/13/01 , +47.5%

#9, State Street Research Global Res A., SSGRX, Bought, 8/16/02 , +5.5%

#40, Fidelity Energy Services, FSESX, Bought, 8/9/02 , +3.0%

#71, First American Debt Investment, FALTX, Bought, 4/12/02 , +2.2%

#52, Fidelity Natural Gas, FSNGX, Bought, 11/23/02 , +0.7%

#22, ProFunds Ultra Short, USPIX, Bought, 1/31/03 , -0.5%

NASDAQ100 - #1 – Apple Computer is as a tight a trading pattern as they come. The stock refuses to fall below bearish yellow curve. It moved above the green curve this past week. That stimulated a buy signal.

http://www.indicant.net/Members/Updates/MTI-Stks-NAS100/NS01.htm#1

NASDAQ100 - #30 – Cisco Systems bounced up since last week’s sell signal. Although a nice 22.0% gain was realized on that sell signal, the stock remains below the green curve. The stock appears to have formed a historical bottom, but wait until it moves beyond the green curve before the next buy.

http://www.indicant.net/Members/Updates/MTI-Stks-NAS100/NS05.htm#30

NASDAQ100 - #31 – Microchip bounced strongly this past week. It reveals a couple of bearish attributes. Even though the stock’s price is below the green curve, the bounce north moved above the long-term blue curve. The bounce is dynamic. Make certain you impose the tight stop loss referred to yesterday, as it is obviously a volatile stock.

http://www.indicant.net/Members/Updates/MTI-Stks-NAS100/NS06.htm#31

NASDAQ100 - #42 – Dell fell below the low end of a long period of a tight trading range. It is one of the strongest fundamentally sound companies that is publicly traded. The bounce was somewhat strong. If the Quick-term Indicant signals bull, do not wait for the buy notification on this stock. Patience is key here, although it has been a puzzling stock for the active trader the past two years.

http://www.indicant.net/Members/Updates/MTI-Stks-NAS100/NS07.htm#42

NASDAQ100 - #67 – Cephalon also received a buy signal in the face of poor market fundamentals. If the initial price surge off yellow is robust, the Mid-term Indicant signals buy. However, make certain you impose the tight stop loss referred to yesterday.

http://www.indicant.net/Members/Updates/MTI-Stks-NAS100/NS12.htm#67

NASDAQ100 - #81 – Concord fell 15% after last week’s sell signal. A stock such as this highlights the reasons for little hesitation on selling when the price falls to yellow. The floor could be zero. There has been a lot of shuffling of the management in this company. When management shuffles, sell the stock. That is usually a sign of power struggling, which typically induces lost focus on the business basics.

http://www.indicant.net/Members/Updates/MTI-Stks-NAS100/NS14.htm#81

Indicant Stock - #11 – Ariba is on yellow, but the Mid-term Indicant continues to hold. This stock traded at over a $100/share in the not too distant past. Although the company is threatened with class action law suits, the stock’s pattern is building a solid base for future bullish behavior. This stock is up 31.6% since the October 25, 2002 buy signal. If you are still holding, make certain you set your stop losses as prescribed in yesterday’s email.

http://www.indicant.net/Members/Updates/MTI-Stks-Indicant%20Sel/S02.htm##11

Indicant Selected Stock #26 – Nortel (NT) continues to perform well. This stock traded at near $100 in the past. The stock is up 266% since the Mid-term Buy signal at $0.63 on October 18, 2002 . That is down from the 274.6% reported last week. As you can see, even the top performing stocks are struggling somewhat. Even with nice gain, make certain you establish the stop losses as prescribed in yesterday’s email.

http://www.indicant.net/Members/Updates/MTI-Stks-Indicant%20Sel/S05.htm#26

Dow Jones Utility - #15 – Centerpoint is down 33.6% since the January 24, 2003 sell signal. Some people believe the utilities are boring stocks. Enron changed all of that.

http://www.indicant.net/Members/Updates/MTI-Stks-DJU/DJU-03.htm#15

Stock Market Summary

On December 13, 2002 , the Mid-term Indicant was signaling hold for 75 of the 76 mutual funds tracked by the Indicant. The only fund avoided at that time was #22 - ProFunds Ultra Short, which was down 16.1% from the prior sell signal. Now, it is one of the few funds with a hold signal. Last week that fund was up about 5% and now it is down slightly. If you bought this fund, make certain you sell it when you see the Quick-term Indicant signal bull. Read the daily Indicant email.

http://www.indicant.net/Members/Updates/MTI-Mutual%20Funds/MF04.htm#22

On October 11, 2002 , the Mid-term Indicant was signaling hold for only fifty-two stocks and funds. They were up 25.2% (annualized at 52.8%). They had been held an average of 24.8 weeks. The number of held stocks and funds peaked on December 7, 2002 at 286. They were up an average of 16.2% (annualized at 81.0%). They had been held 10.4 weeks. A week earlier on November 30, 2002 , two-hundred and eighty stocks were up 22.2% (annualized at 120.0%).

Then the worst performing December since 1931 manifested itself. The Quick-term Indicant never signaled bear during December. The market rebounded nicely in early January and by January 18, 2003 the Mid-term Indicant was holding 289 stocks and funds with an annualized gain of 63.8%. At that time, the Mid-term Indicant was avoiding only six stocks and funds which were down 33.8% since their respective sell signals.

Seasonal normalcy has not occurred this year, which has been the case the past two years on the bullish side of seasonality. Seasonal normalcy argues for bull legs between Nov 1 and April 30 every year. All eight indexes are down an average of 7.0% since Nov 1. The Dow is down 609 points since Nov 1, 2002 . The S&P400 is down 8.7% since Nov 1, 2002 . Last year the S&P400 and S&P600 were the strongest bulls before the April collapse of 2002 when one of the longest Quick-term Bear legs occurred from April 2002 through August 2002.

If the market holds true to seasonal normalcy, expect a powerful bull surge within the next few weeks. The Quick-term Indicant will spot the beginning of that cycle in the event it does transpire.

Divergence versus Convergence

Two weeks ago, Fuel Cell stocks moved aggressively to the north, prompting several buy signals. During the past two weeks, those stocks produced mixed performances. Fear related investments softened this past week, while the general market was favored ever so slightly. There is a slight divergence favoring energy and fear related investments, but the gap narrowed last week due to Friday’s stock market bounce to the north.

Economic Outlook

There is nothing new here from the past several weeks. Many of the comments are the same as the past few weeks, as there was no change in direction. Gold and oil prices continue to skyrocket. Gold prices did soften somewhat this past week most likely due to profit taking. The U.S. Dollar continues to express weakness. As long as interest rates remain low, expect the dollar to continue its decline. If oil shortages manifest, the greenback will erode further and an inflationary spiral will kick in. The stock market will not like that.

Other commodity prices continue to reside at cyclically high levels. Some continue setting new cyclical highs. It will be difficult for the market to express a 1990’s type bull leg with these commodity attributes, but the mid-term election year phenomenon is still expected to influence a bullish direction leading up to the 2004 elections. George W. Bush will do all possible to invigorate the economy so he will not face the same humility as his father as a one term president.

A link to the CRB Bridge Futures is below. It is one of Greenspan’s favorites. As stated last week, as soon as the employment numbers turn around, he will attack this upward cycle with interest rate hikes. He is running out of stimulus inventory as his prior rate cuts have left him little to play with.

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

Fear Metrics: Economic and Terrorism

The Indicant signaled "buy" for Fidelity American Gold (FSAGX) - #28 on December 7, 2001 . Thirty-six weeks ago, it was up 66.1% since the Mid-term Indicant signaled buy. Twenty-nine weeks ago, it closed up 12.0% since the buy signal. Twenty weeks ago, it closed up 42.9% since the MTI buy signal of December 7, 2001 . Last week it closed up 58.0%, which is down significantly from last weeks 62.7%.

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% thirty-four weeks ago since the MTI buy signal in April 2001. Twenty-eight weeks ago, it closed up 27.8%. Last week it closed up 47.5%, which is down significantly from the 53.4% reported last week.

These two funds have softened the past three weeks. The first week of softening was due to profit taking, as opposed to fundamental reasons. However, there is a direct correlation between news of peace and news of war. The news favored no war last week. Is the element of fear subsiding? This scenario is not likely with terrorists orange alerts and a commitment to hawkish behavior by George W. Bush.

As stated in the past you can monitor these two funds to help you gauge fear related investments. These two funds require “avoid” signals for the market to embark upon a meaningful and lasting bull leg.

Links to both of the above funds are as follows:

http://www.indicant.net/Members/Updates/MTI-Mutual%20Funds/MF05.htm#28

http://www.indicant.net/Members/Updates/MTI-Mutual%20Funds/MF04.htm#19

Quick-term and Short-term Indicant - Markets

You received details about this yesterday. The eight major indexes are down an average of 3.1% since the January 24, 2003 Quick-term Indicant Bear Signal. The S&P400 and S&P600 are the weakest indexes. They are down 4.7% and 4.1%, respectively, since the January 24, 2003 QT Bear Signal. At this time last year, the S&P600 was in a league all by itself with a solid 1990’s like bull leg.

The Dow is down 25.3% since the Short-term Indicant signaled bear on March 20, 2002 . The NASDAQ Composite is down 69.0% since the Short-term Indicant signaled bear nearly three years ago on March 30, 2000 .

Additional Quick-term and Short-term Indicant information was in the preliminary report you received earlier this weekend. If you already deleted it from your email inbox, you can find it and all other back issues at the following link.

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

Mid-term Indicant Positions - Major U.S. Market Indices

All eight indexes are bears. They are down an average of 3.1% since the MTI Bear Signals an average of 2.6 weeks ago. The weakest index is the Dow Jones Transports, which is down 7.7% since its Mid-term Bear Signal on January 24, 2003 . The NASDAQ and NASDAQ100 are the strongest. They are up since their respective Mid-term Bear signals on January 24, 2003 by 1.7% and 2.7%, respectively. If the Quick-term Indicant signals bullish support, then a Mid-term Bull will reemerge. We will watch this daily in the coming days.

To view Mid-term Indicant charts for U.S. Market Indices, please click here.

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

Mid-term Indicant Positions - International Markets

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

Eight of the twenty-two foreign indexes tracked by The Indicant are Mid-term Bulls. They are up an average of 51.0% since the Mid-term Indicant signaled bull an average of 42.1 weeks ago for an annualized gain 63.0%.

In addition to the new bear, thirteen markets have been bears for an average of 2.4 weeks. They are down an average of 2.4%.

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

February 9, 2003 Indicant.Net Weekly Update

Volume 02, Issue 2 ISSN 1526 6516 © The Indicant Stock Market Report

Dear Indicant Members:

This Week’s Report

Fear and Lethargy – An Interesting Combination

The Indicant Volume Indicator (IVI) is signaling increasing market lethargy. The NASDAQ’s IVI peaked in early February 2001 or about one year after the Short-term Indicant signaled bear for the NASDAQ. With all the fear about the economy and war, there is little selling pressure. Have all the folks who can sell already sold. If that is the case, this market is positioning itself for a bull leg. When sellers dry up, the market goes up. Please read on.

The longest period of time the Short-term Indicant went without a signal was between October 18, 1929 and August 24, 1932 . That is until this past week. During that period between October 1929 and August 1932, the Dow fell by 70.1%. After a brief period of a Short-term Bull position, the market continued its decline by another 15%. That Short-term Indicant Bear from 1929 through 1932 lasted 1041 calendar days. A link to the chart for the 1929-1932 Short-term Indicant Bear Market is below.

http://www.indicant.net/Non-Members/ST%20Tour/ST-1929.htm

The Short-term Indicant signaled bear for the NASDAQ on March 30, 2000 . This Short-term Indicant bear is now 1044 days old or three days older than the introduction to the dirty thirties and the great depression.

There have been about the same number of Quick-term Bull/Bear cycles in both these markets with the near-same geometric configurations. A link to the current Short-term Indicant Bear Market is below:

http://www.indicant.net/Members/Updates/STI-Mkts/STI.htm

Note that the 1929-1932 comparison to the 2000-2003 Short-term Indicants are two different indexes. Speculative investing preceded the 1929-1932 Dow crash. The anatomy of the 2000-2003 NASDAQ consists of the same set of events. Thus the comparison between the two indexes has some merit. The NASDAQ did not exist in 1929, but takes on the near-same geometric patterns of the 1929-1933 Short-term Indicant bear cycle.

Will we endure dirty 00’s like the dirty 30’s? That is very unlikely for the most of us, but many of those whose livelihood rests in NASDAQ economics would argue there has been a depression since the Y2K scare has been put to bed.

The economy is much more diversified now than then. U.S. politicians brought about the great depression with their protectionism of the years leading up to the dirty thirties. The 1920’s was fraught with scandals, much like the first part of this century. The combination of influential politicians and dilettante management contributed to the great depression and the current bear market. Those of us who keep our heads down and focus on our work every day carry on our shoulders those who cause the problems.

George W. Bush’s protectionism of the U.S. Steel Industry about this time a year ago will not directly and immediately impact the stock market. But it will generate some additional free-market decay. The stock market is a pure believer in the survival of the fittest mantra, regardless of where the fittest comes from.

The U.S. Steel Industry was out-competed by international steel companies. The terrain of competition was the same. Management lethargy and excessive unionism infiltrated the U.S. Steel Industry several years ago. The combination of dilettante management and unions brought it down. As always, soft-handed politicians support the tyranny of the majority to get votes. If the true majority adopted the philosophies of dilettante management, voodoo bookkeepers, and politicians, all of which are cast in the same mold, then social decay would accelerate to the point whereby the dark ages would resume.

The economy is more internationally intimate today than in the dirty 30’s. You and I are competing with people around the world. That competition, alone, accelerates an increasing quality of life for all through the struggles of competition. International competition is always more stimulating than competition within small confines.

From sunrise to dusk you are doing one of two things. You are either adding to economic vibrancy or you are subtracting from it. Politicians, dilettante managers, and voodoo bookkeepers subtract and we add. Be appreciative that there are more of us than them, or the NASDAQ, Dow, and all other indexes would be at zero. But those that subtract are in our face every day.

Even with that dilemma, the world economy is much too big for a few politicians to bring it down. Saddam Hussein can chuckle at his contribution to the current Quick-term Bear leg. Those kind of guys, like Bill Clinton, worry about their individual legacies as opposed to adding economic well being. They are interested in exerting their will and beliefs on others, while the most of us simply do our jobs every day.

The history books of the future, if shrouded in reality, will recognize the true heroes of our history. People, such as Henry Ford, Bill Gates, Soichira Honda, Shiego Shingo, Frank and Lillian Gilbreath, Federick Taylor, Thomas Edison, Gallileo, Shakespear, Rembrandt, Schlumberger, Earle P. Halliburton, J.Paul Getty, John D. Rockerfellow, Aristotle, Ayn Rand, Brooker T. Washington, Nicola Tesla, James Jay Hill, ad infinitum. Right now, history books still portray many of the above as robber barons.

There are people just like you and I. The difference between those above, and you and I is they figured out how to please more people in a short period of time. Other than that, we are all very similar. Some of us put in our twelve hour work day pleasing the world, such as Bill Gates, but most of us just stick close to pleasing a few. That is fine. Our individual efforts are what make the world economy work.

These great individuals produced something someone else was willing to pay for and most the time brought on a smile to the buyer. Sure, the producer was grinning from ear to ear but so was the buyer. That is the heart and soul of economics.

Honest history books will portray those great individuals as the foundation of our economic prosperity and happiness. Notice these great individuals come from many places on the planet. No one country can claim itself as being the single source of greatness. They come from all corners of the planet. The only common source to greatness is the degree of freedom. Three generations of communistic control in several countries stifled greatness from individual effort. Now that communism is dying, greater competitive pressures from around the globe will gain momentum. With that, there will be increasing economic prosperity for both the ambitious and not so ambitious.

Most of them were honest. Yes, some were ruthless, but definitely honest. Nice and honesty are not synonyms. They are quite unlike those dilettantes that wormed their way into high governmental and Fortune 500 positions.

Honest history books in the future will appropriately slander most politicians and contemporary corporate managers. Yes, some politicians become politicians in an effort to get on the inside and bust the corruption, such as Winston Churchill or Harry Truman. Unfortunately, the mere act of getting there corrupts them.

What does all this have to do with the relationship between the current Short-term Indicant Bear Market and the dirty thirties? There are thousands of business leaders growing in power. The mafia use to control politicians. Now it is economics for the masses. Electronic surveillance and technology has exposed politicians for what they are. Twenty years ago, Bill and Monica would have been “he says, she says” parlance. Technology revealed the facts. Slick Willy had to endure his deserved humility.

With burgeoning technology and business leaders around the world, the current bear market is simply that – a bear market. The NASDAQ is down nearly 70% since the Short-term Indicant signaled bear nearly three years ago. It is too soon to be 100% confident the world is not about to enter another great depression, but it would not be surprising to see a few more years of lingering recessionary behavior. It will take quite some time to weed out all the dilettante managers, voodoo bookkeepers, and rid ourselves of the influence of the lying characters of SWC (Slick Willy Clintonism). Foreign money left the market during the chorus of voodoo bookkeeping last year. It has yet to return. But at the depth of bad news, the bottom of the market may be very near. Lets get Iraq out of the way, lock up a few more voodoo bookkeepers, ostracize dilettante managers and enjoy the next major bull leg. Three-hundred million flat tax Russians are about to bring it home.

Stock and Fund Update

The top ten performing NASDAQ100 Stocks

#41, Amazon.Com, AMZN, Bought, 11/9/01 , +201.1%

#94, Apollo Corp, APOL, Bought, 2/11/01 , +192.9%

#74, Gilead Sci, GILD, Bought, 4/6/01 , +110.2%

#83, Nextel Comms A, NXTL, Bought, 8/16/02 , +87.3%

#57, BEA Systems, BEAS , Bought, 10/11/02 , +69.0%

#38, Citrix Systems, CTXS, Bought, 10/25/02 , +63.4%

#15, Juniper Networks, Inc., JNPR, Bought, 10/25/02 , +52.7%

#93, Ciena Corp, CIEN, Bought, 10/25/02 , +48.0%

#70, Genzyme Gen, GENZ, Bought, 8/2/02 , +42.7%

#35, Symnatech Corp, SYMC, Bought, 9/6/02 , +41.3%

The top ten performing Indicant Select Stocks:

#19, Inktomi Corp, INKT, Bought, 10/25/02 , 292.9%

#26, Nortel Networks Corp, NT, Bought, 10/18/02 , 274.6%

#44, Chattem Inc, CHTT, Bought, 3/9/01 , 212.3%

#48, Forest Laboratories Inc, FRX, Bought, 6/4/99 , +112.4%

#4, CNET Networks, Inc., CNET, Bought, 10/18/02 , +105.2%

#43, CORNING , GLW, Bought, 11/8/02 , +90.4%

#17, Broadvision, BVSN, Bought, 10/25/02 , +81.4%

#31, Qwest Communications International Inc, Q, Bought, 10/11/02 , +73.7%

#39, ELAN CORP PLC , ELN, Bought, 11/8/02 , +64.0%

#40, Alpharma Inc, ALO, Bought, 11/2/02 , +55.3%

The Only Mutual Funds With Mid-term Indicant Hold Status

#28-Fidelity American Gold-FSAGX-Bought-12/7/01 +62.7%

#19-Vanguard Gold/Precious Metals-VGPMX-Bought-4/13/01 +53.2%

#9-State Street Research Global Res A.-SSGRX-Bought-8/16/02 +.8%

#40-Fidelity Energy Services-FSESX-Bought-8/9/02 +5.9%

#22-ProFunds Ultra Short-USPIX-Bought-1/31/03 +5.3%

#52-Fidelity Natural Gas-FSNGX-Bought-11/23/02 +2.9%

#71-First American Debt Investment-FALTX-Bought-4/12/02 +2.1%

#36-Fidelity Defense and Aerospace-FSDAX-Bought-11/2/02 -1.3%

The Mid-term Indicant signaled sell for Cisco (NAS100 #30 – CSCO) with a 22.0% gain. The stock fell to the yellow curve, as did many other stocks. Since the market is fundamentally threatened, it is too risky to continue holding the stock. With economic normalcy and without the threat of war, this stock, as well as many others, would continue receiving hold signals.

http://www.indicant.net/Members/Updates/MTI-Stks-NAS100/NS05.htm#30

Indicant Selected Stock #26 – Nortel (NT) continues to perform well. This stock traded at near $100 in the past. The stock is up 274.6% since the Mid-term Buy signal at $0.63 on October 18, 2002 . Even that sizeable percentage gain, it can be wiped out relatively quickly, which is a common characteristic of penny stocks. Make certain your stop loss is in place as described in yesterday’s preliminary report.

http://www.indicant.net/Members/Updates/MTI-Stks-Indicant%20Sel/S05.htm#26

Many forgot the art of managing stop losses during the 1990 bull years as stocks pretty much moved in a northerly direction. The market of the past three years has reinforced that discipline. You must put on your calendar a little reminder to re-establish your stop losses every week. Try to automate this process with your broker. Here is an example of why that is so important.

Indicant Select Stock #51 El Paso Corporation (EP) plummeted by 41% last week. It was above green and the stock was riding an increasing yellow curve for the first time in over three years. Then last Wednesday, on high volume, the stock plummeted and continued to erode for the remainder of the week. It is unlikely this stock will recover any time soon, as it is associated with voodoo bookkeeping and Enron sort of things.

http://www.indicant.net/Members/Updates/MTI-Stks-Indicant%20Sel/S09.htm#51

Stock Market Summary

On December 13, 2002 , the Mid-term Indicant was signaling hold for 75 of the 76 mutual funds tracked by the Indicant. The only fund avoided at that time was #22 - ProFunds Ultra Short, which was down 16.1% from the prior sell signal. Now, it is one of the few funds with a hold signal.

http://www.indicant.net/Members/Updates/MTI-Mutual%20Funds/MF04.htm#22

The recent decline in the stock market has significant breadth. With the exception of specific stocks that are holding up very well, although down significantly from their early December peaks, nearly all sectors are out of favor. Fear related investments, such as gold continues to lead the way.

See yesterday’s preliminary report for more details about the stock market.

Divergence versus Convergence

Last week Fuel Cell stocks moved aggressively to the north, prompting several buy signals. This past week, those stocks produced mixed performance. Fuel Cell investing can be speculative, much like the early years of Microsoft and Dell. A few will perform in substance and a few will turn into dilettante types. The market is really struggling with any committed belief that $50+ oil is on the horizon. Which will it be; $50+ oil or $18 oil. The world economy needs $18 to $25 oil right now, but we do not always get what we need. $50 oil would get George W. Bush reelected as the governor of Texas , but it will certainly make him a one-term president, like dad.

Economic Outlook

There is nothing new here from the past several weeks. Many of the comments are the same as the past few weeks, as there was no change in direction. Gold and oil prices continue to skyrocket. The U.S. Dollar continues to express weakness. As long as interest rates remain low, expect the dollar to continue its decline. If oil shortages manifest, the greenback will erode further and the inflationary spiral will kick in.

Other commodity prices continue to reside at cyclically high levels. Some continue setting new cyclical highs. It will be difficult for the market to express a 1990’s type bull leg with these commodity attributes, but the mid-term election year phenomenon is still expected to influence a bullish direction leading up to the 2004 elections. George W. Bush will do all possible to invigorate the economy so he will not face the same humility as his father as a one term president.

A link to the CRB Bridge Futures is below. It is one of Greenspan’s favorites. As stated last week, as soon as the employment numbers turn around, he will attack this upward cycle with interest rate hikes. He is running out of stimulus inventory as his prior rate cuts have left him little to play with.

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

Fear Metrics: Economic and Terrorism

The Indicant signaled "buy" for Fidelity American Gold (FSAGX) - #28 on December 7, 2001 . Thirty-five weeks ago, it was up 66.1% since the Mid-term Indicant signaled buy. Twenty-eight weeks ago, it closed up 12.0% since the buy signal. Nineteen weeks ago, it closed up 42.9% since the MTI buy signal of December 7, 2001 . Last week it closed up 62.7%, which is down slightly from the prior week.

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% thirty-three weeks ago since the MTI buy signal in April 2001. Twenty-seven weeks ago, it closed up 27.8%. Last week it closed up 53.4%, which is down slightly from prior week.

These two funds softened the past two weeks due to profit-taking as opposed to fundamental reasons. These two funds will perform well during periods of high inflation. Although, we are nowhere near that scenario, it is important to note that this segment of the market is anticipating that, along with other catastrophes from war to terrorism.

The three primary fear elements continue to be war with Iraq , rising oil prices, and terrorism. As stated last week, voodoo bookkeepers cannot adjust the price of gold and therefore confidence in financial integrity is always high. Gold has been a safe bet against the threat of inflation. Gold has a history of performing well during periods of fear. There is no logical reason for this. People seem to feel good owning gold when the future is not bright or clear. The real winners own food, shelter, and clothing in the event of social collapse.

As stated in the past you can monitor these two funds to help you gauge fear related investments. These two funds require “avoid” signals for the market to embark upon a meaningful and lasting bull leg.

Links to both of the above funds are as follows:

http://www.indicant.net/Members/Updates/MTI-Mutual%20Funds/MF05.htm#28

http://www.indicant.net/Members/Updates/MTI-Mutual%20Funds/MF04.htm#19

Quick-term and Short-term Indicant - Markets

You received details about this yesterday. The eight major indexes are down an average of 3.8% since the January 24, 2003 Quick-term Indicant Bear Signal. The NASDAQ and S&P600 are the weakest indexes. They are down 4.4% and 4.3%, respectively, since the January 24, 2003 QT Bear Signal.

The Dow is down 25.7% since the Short-term Indicant signaled bear on March 20, 2002 . The NASDAQ Composite is down 69.6% since the Short-term Indicant signaled bear nearly three years ago on March 30, 2000 .

Additional Quick-term and Short-term Indicant information was in the preliminary report you received earlier this weekend. If you already deleted it from your email inbox, you can find it and all other back issues at the following link.

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

Mid-term Indicant Positions - Major U.S. Market Indices

There was one new bear signal for the Dow Utilities. There are now no more Mid-term Bull Indexes.

In addition to the new bear signal, the seven existing bears are down an average of 3.9% since the MTI Bear Signals an average of 1.9 weeks ago. The weakest index is the S&P500, which is down 6.2% since its Mid-term Bear Signal on January 24, 2003 .

To view Mid-term Indicant charts for U.S. Market Indices, please click here.

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

Mid-term Indicant Positions - International Markets

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

The nine bull markets are up an average of 45.1% since the Mid-term Indicant signaled bull an average of 44.9 weeks ago for an annualized gain 52.2%, which is down from 55% ten weeks ago.

In addition to the new bears, eleven markets have been bears for an average of 1.6 weeks. They are down an average of 2.4%.

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

February 2, 2003 Indicant.Net Weekly Update

Volume 02, Issue 1 ISSN 1526 6516 © The Indicant Stock Market Report

Dear Indicant Members:

This Week’s Report

The Stock Market Heard the President

“We do not need anyone’s permission to attack Iraq .” Not sure if that is a direct quote, but that is what the stock market heard him say in the State of the Union address.

Energy stocks edged upward. Fuel Cell stocks really moved up, while the energy services stocks simply edged up. The stock market can sometimes get a little emotional. Is Saddam crazy enough to damage the Arabian oil fields to the point whereby we will need fuel cells to power our energy needs?

Those fuel cell stocks have been bouncy for several months and within a relatively tight trading range. Even if one of them announced 458-horse power with 1950’s type engine thrusts running on water, the inventor would be ridiculed, ostracized, and most likely killed. There is simply too much economic infrastructure in the energy sector for that to be allowed. Government and the Big Three auto makers gained up on Tucker and destroyed him and his company in the early 1950’s because he was a threat to the comfort zones of the “status quo.” It happens.

At $100 per barrel and Russia as the primary supplier, tremendous amounts of capital would flow into fuel cell technology. The market may smell a scenario such as that. But, oh how the market forgets. A quick defeat of Iraq with the oil fields in tact will return those stocks to the depths from which they came. The world has always preferred evolutionary change as opposed to revolutionary change because people simply resist change. With that, Fuel Cell technology will be slow in coming. Exxon and pals will need to run low on raw material first.

Two weeks ago, nearly all sectors were heading south. There was a small separation this past week with a significant surge in fuel cell stocks. The market continued to express bearishness this past week, as numerous mutual funds were sold. Some stocks are holding their ground. This is true even in the most bearish of markets. There are always a few winners that continue moving north regardless of what the market is doing.

Surprisingly, many of the NASDAQ100 stocks are holding their ground. The top ten performing NASDAQ100 stocks are as follows:

#41           Amazon.Com                  AMZN       Bought         11/9/01       +206.9%

#94           Apollo Corp                     APOL        Bought         2/11/01       +199.6%

#74           Gilead Sci                       GILD         Bought            4/6/01       +116.9%

#38           Citrix Systems                 CTXS        Bought       10/25/02         +90.6%

#83           Nextel Comms A             NXTL        Bought         8/16/02         +88.4%

#57           BEA Systems                   BEAS         Bought       10/11/02         +86.9%

#15           Juniper Networks, Inc.    JNPR        Bought       10/25/02         +58.3%

#93           Ciena Corp                       CIEN         Bought       10/25/02         +57.2%

#70           Genzyme Gen                   GENZ       Bought           8/2/02          +51.9%

#43           Mercury Intract              MERQ       Bought       10/18/02          +47.2%

The top ten performers of the Indicant Selected Stocks group are as follows:

#19     Inktomi Corp          INKT         Bought       10/25/02     +297.6%

#26     Nortel                       NT              Bought       10/18/02     +276.2%

#44     Chattem Inc            CHTT        Bought           3/9/01     +235.0%

#48     Forest Lab              FRX           Bought           6/4/99     +120.4%

#4       CNET                     CNET         Bought       10/18/02     +118.1%

#39     Elan                         ELN           Bought         11/8/02      +88.3%

#31     Qwest                        Q              Bought       10/11/02      +85.6%

#17     Broadvision             BVSN        Bought       10/25/02      +81.4%

#1       CGMI, Inc              CMGI        Bought       10/18/02      +74.5%

#43     Corning                     GLW         Bought         11/8/02      +70.0%

The top ten mutual fund performers are as follows:

#28           Fidelity American Gold                         FSAGX      Bought       12/7/01       +64.0%

#19           Vanguard Gold/Precious Metals          VGPMX     Bought       4/13/01       +54.1%

#55           Fidelity Software & Comptr Ser.          FSCSX       Bought       10/11/02      +19.5%

#57           Fidelity Telecommunications                 FSTCX      Bought       10/18/02     +19.0%

#51           Fidelity Multimedia                                FBMPX     Bought       10/11/02    +16.5%

#47           Fidelity Industrial Materials                  FSDPX      Bought       10/18/02    +10.4%

#9             State Street Research Global Res A.   SSGRX      Bought       8/16/02      +7.3%

#56           Fidelity Technology                                FSPTX       Bought       10/18/02    +5.9%

#37           Fidelity Developing Communications    FSDCX      Bought       10/25/02    +4.5%

#40           Fidelity Energy Services                        FSESX       Bought       8/9/02         +4.4%

You will notice the mutual funds cover several different industry sectors. The performance levels are dwindling with the declining stock market, except those associated with fear and inflation.

What does a stock look like after losing over $100 billion in one year? A link to AOL Time Warner is below. The senior management is building a real nice office in Manhattan . CNN founder, Ted Turner, quit the company. This sounds like boardroom cronyism. After founders, such as Ted Turner and Steve Case, built the company, the leeches have arrived. Where do they come from and how do they get there? Oh well, leeches and dilettantes have always been among us. Fundamentally, this stock should not perform well. However, if for some mystical reason, it makes a move, you will receive a buy signal.

http://www.indicant.net/Members/Updates/MTI-Stks-Indicant%20Sel/S01.htm##3

NAS100 – #14 Conexant (CNXT) fell 24% after last week’s sell signal. The chart’s scale was changed to logarithmic so that you can see how the stock behaves at the bottom. A link to that chart is below:

http://www.indicant.net/Members/Updates/MTI-Stks-NAS100/NS03.htm#14

Although NAS100 #30 – Cisco ((CSCO) still has a Mid-term Indicant hold signal, it is just barely above the yellow curve. Make certain you have your stop loss in effect. It is up 27% since the Mid-term Indicant signaled buy on October 18, 2002 . This is a great company with great leadership. Fundamentally and in the long term, it should do well. However, keep in mind the current gain can be wiped out in a single day. Thus, the importance of setting your stop loss.

http://www.indicant.net/Members/Updates/MTI-Stks-NAS100/NS05.htm#30

Indicant Selected Stock #26 – Nortel (NT) continues to perform well. This stock traded at near $100 in the past. The stock is up 276.2% since the Mid-term Buy signal at $0.63 on October 18, 2002 . Even that sizeable percentage gain can be wiped out relatively quickly, which is a common characteristic of penny stocks. Make certain your stop loss is in place as described in yesterday’s preliminary report.

http://www.indicant.net/Members/Updates/MTI-Stks-Indicant%20Sel/S05.htm#26

Stock Market Summary

The stock market continues to express concerns about war. The Mid-term Indicant signaled Bear for the NASDAQ and NASDAQ100 yesterday. This, coupled with the Quick-term Indicant’s bear signal on January 24, 2003 , is a major concern.

The Force Vectors continue to be very mature in their current bearish cycle. However, they are without any positive energy and remain in place at very depressed levels. Their configuration appears much like those in December 2002. Let’s hope this February is not the worse February since 1931.

The Mid-term Indicant signaled buy for the ProFunds Ultra Short that past week. If you elect to buy it, do not plan on holding it very long. We are still in a period of bullish seasonality. The phenomenon of the mid-term election year should still kick in a bull leg. This will more likely occur after the outcome with the war with Iraq is clear. A link to this fund is below. Even though this is a mutual fund, set a stop loss anyway. This fund can be volatile. Also, make certain you sell this fund when you see the Quick-term Indicant signal bull.

http://www.indicant.net/Members/Updates/MTI-Mutual%20Funds/MF04.htm#22

Divergence versus Convergence

As earlier stated Fuel Cell Stocks moved aggressively to the north last week. The market is prognosticating a serious crude oil shortage in the near future. There is an apparent belief that capital will flow into these stocks in the event oil prices skyrocket.

Economic Outlook

There is nothing new here from last week. Many of the comments are the same as last week, as there was no change in direction. Gold and oil prices continue to skyrocket.

The U.S. Dollar continues to express weakness. As long as interest rates remain low, expect the dollar to continue its decline. If oil shortages manifest, the greenback will erode further and the inflationary spiral will kick in.

The three-month T-Bill is shaping additional declines in interest rates. After pausing, CD’s, Fannie Mae, Feddie Mac, and other interest rates are again shifting further to the south.

Other commodity prices continue to reside at cyclically high levels. Some are even setting new cyclical highs. It will be difficult for the market to express a 1990’s type bull leg with these commodity attributes, but the mid-term election year phenomenon is still expected to influence a bullish direction leading up to the 2004 elections. George W. Bush will do all possible to invigorate the economy so he will not face the same humility as his father as a one term president.

A link to the CRB Bridge Futures is below. It is one of Greenspan’s favorites. As stated last week, as soon as the employment numbers turn around, he will attack this upward cycle with interest rate hikes. He is running out of stimulus inventory as his prior rate cuts have left him little to play with.

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

Fear Metrics: Economic and Terrorism

The Indicant signaled "buy" for Fidelity American Gold (FSAGX) - #28 on December 7, 2001 . Thirty-four weeks ago, it was up 66.1% since the Mid-term Indicant signaled buy. Twenty-seven weeks ago, it closed up 12.0% since the buy signal. Eighteen weeks ago, it closed up 42.9% since the MTI buy signal of December 7, 2001 . Last week it closed up 64.0%, which is down from the prior week.

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% thirty-two weeks ago since the MTI buy signal in April 2001. Twenty-six weeks ago, it closed up 27.8%. Last week it closed up 54.1%, which is down by about four percentage points from the prior week.

These two funds softened last week, but most likely due to profit-taking as opposed to fundamental reasons. These two funds will perform well during periods of high inflation. Although, we are nowhere near that scenario, it is important to note that this segment of the market is anticipating that, along with other catastrophes from war to terrorism. Let us hope this segment of the market is wrong in that assertion.

The three primary fear elements continue to be war with Iraq , rising oil prices, and terrorism. As stated last week, voodoo bookkeepers cannot adjust the price of gold and therefore confidence in financial integrity is always high. Gold has been a safe bet against the threat of inflation.

As stated in the past you can monitor these two funds to help you gauge fear related investments. These two funds require “avoid” signals for the market to embark upon a meaningful and lasting bull leg.

Links to both of the above funds are as follows:

http://www.indicant.net/Members/Updates/MTI-Mutual%20Funds/MF05.htm#28

http://www.indicant.net/Members/Updates/MTI-Mutual%20Funds/MF04.htm#19

Quick-term and Short-term Indicant - Markets

You received details about this yesterday. The eight major indexes are down an average of 0.9% since the January 24, 2003 Quick-term Indicant signal. The NASDAQ and NASDAQ100 are the weakest indexes. They are down 1.6% and 1.3%, respectively, since the January 24, 2003 QT Bear signal.

The Dow is down 23.9% since the Short-term Indicant signaled bear on March 20, 2002 . The NASDAQ Composite is down 68.7% since the Short-term Indicant signaled bear nearly three years ago on March 30, 2000 .

Additional Quick-term and Short-term Indicant information was in the preliminary report you received earlier this weekend. If you already deleted it from your email inbox, you can find it and all other back issues at the following link.

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

Mid-term Indicant Positions - Major U.S. Market Indices

There were two new bear signals for the NASDAQ and NASDAQ100. The Dow Utilities is now the only Mid-term Bull.

In addition to the new bear signals, the five existing bears are down an average of 3.0% since the MTI Bear signal one week ago. The weakest index is the Dow Transports, which is down 4.6% due expected higher fuel costs.

The lone bull is the Dow Utilities. That index is up 4.0%, which annualizes to 16.1%. It has been a bull for thirteen weeks.

To view Mid-term Indicant charts for U.S. Market Indices, please click here.

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

Mid-term Indicant Positions - International Markets

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

The eleven bull markets are up an average of 37.5% since the Mid-term Indicant signaled bull an average of 38.4 weeks ago for an annualized gain 50.7%, which is down from 55% nine weeks ago.

In addition to the new bears, five markets have been bears for an average of 1.0 weeks. They are down an average of 0.8%.

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

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