February 2007 Indicant Weekly Stock Market Reports

Feb 25, 2007 Indicant Weekly Stock Market Report

Volume 02, Issue 04 ISSN 1526 6516 © The Indicant Stock Market Report

Dear Indicant Members:

This Week’s Report

Stay the Course

The above phrase is overused and the source of frustration for many. The trick is knowing when to “stay the course” and when to abort it. Those of you who invested in the energy sector and precious metals in 2001 and 2002 are benefiting from staying the course. Recent pricing volatility in the energy sector has remained well within bullish domains. Those two sectors have rebounded nicely the past few weeks.

With the rising price of oil and especially the increasing power of OPEC, fuel cell methods, Athabasca Tar Sand Oil, etc. became popular. This originally propelled those stock prices and related securities higher. However, since oil has found an upper limit on its price range, these alternative sources of energy have fallen out of favor.

The economic/political integrations of contemporary societies around the globe slow the evolutionary process of developing alternative sources of energy. Politicians only solution to any problem is simply to throw more money at it. With that approach most of the money is siphoned off by the unproductive and politically inclined. The only significant result from government funding was the development of the Nuclear bomb. That is about it.

Contemporary politicians have never created capital goods and services. They have no idea how that process works. Public education has deteriorated with increasing government influence and controls, where few garnish the education that Abe Lincoln enjoyed under candlelight and with individual effort.

Throwing more money at the energy problem dilutes the potential for individual effort. Imagine the interference Nicola Tesla would have endured in his creation of the electric motor and corresponding generators if politicians were involved in the process. We would still not have that tremendous technology due to the red tape required to bring it to market.

Microsoft products, for the most part, have avoided governmental red tape, while they have endured legal battles against those who have tried to redistribute that wealth; mostly to their own pocketbooks. No matter what the cause is, those who did not participate in the excruciating details of creating it, will try to take it. Those same folks also dampen enthusiasm for the creation of real solutions. Many have to implement minimum wage from rich law-makers’ boredom and self-induced misery. Many are into simply spreading the misery along with their spreading the wealth views.

With political and cartel interference in the energy crisis, alternative energy sources will be slow in developing. While the U.S. and much of the Western Hemisphere devolve to increased socialism, the rest of the world appears bent on increasing their capitalistic pursuits. That means energy prices will continue to enjoy a rising trend as capitalist consume more energy than their former communists brethren did. The reason the stock market is bullish is that increased energy consumption is more than offset with increased economic activity and value/wealth building results by the rising number of capitalists.

Although the Mid-term Indicant has come close to signaling sell for energy and other commodity related securities, the influence of continued rising commodity prices suggests that would be premature. Cycles have weakened, but the bullish trend has not been disturbed. It is with this unrelenting bullish trend in Energy and Commodities that supports the stay the course paradigm, regardless of honorable or dishonorable reasons. A bull is a bull.

Weekly Buy/Sell Summary – Stocks and Funds

The Mid-term Indicant generated one buy signal and no sell signals.

Although there were no sell signals, the Mid-term Indicant is avoiding only 30-stocks and funds of the 345 tracked by the Indicant. The avoided stocks and funds are down an average of 10.9% since the Mid-term Indicant signaled sell an average of 21.6-weeks ago.

There were 53-stocks and funds avoided at this time last year. The avoided stocks and funds one year ago were down an average of 8.7% since their respective sell signals an average of 21.5-weeks earlier.

Two years ago, on February 25, 2005, the Mid-term Indicant was avoiding 61-stocks and funds that were down an average of 29.9% since their respective sell signals an average of 53.7-weeks earlier. Three years ago on February 21, 2004 there were only 15-avoided stocks and funds. They were down 27.9% from their respective sell signals an average of 42.7-weeks earlier. On February 22, 2003, the Mid-term Indicant was avoiding 130-stocks and funds out of 296-tracked. They were down by an average of 9.2% since their sell signals an average of 6.2-weeks earlier.

In addition to the buy signal this weekend, the Mid-term Indicant is signaling hold for 314 of the 345-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 114.8%. That annualizes to 64.5%. The Mid-term Indicant has been signaling hold for these 314-stocks and funds for an average of 94.0-weeks.

One year ago on February 24, 2006, the Mid-term Indicant was holding 290-stocks and funds out of the 345 tracked at that time for an average of 92.6-weeks. Those 290-stocks and funds were up by an average of 114.8% (annualized at 64.5%). The Mid-term Indicant was signaling hold for 250-stocks and funds of the 320-tracked two years ago on February 25, 2005. They were up by an average of 89.7% (annualized at 66.9%) since their respective buy signals an average of 69.8-weeks earlier. There were 281-stocks and funds with hold signals on February 21, 2004 since their buy signals an average of 42.7-weeks earlier. They were up by an average of 67.8% (annualized at 82.6%). The Indicant was only tracking 296-stocks and funds in 2002-2003, and early 2004. On February 22, 2003, the Mid-term Indicant was signaling hold for 110-stocks and funds out of 296-tracked. They were up by an average of 28.3% (annualized at 54.9%) since their buy signals an average of 26.8-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 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 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

This section is a repeated each week with a few modifications, reflecting recent secular influences and performance data. Although appearing redundant at times, it is important to read this section to keep abreast of secular market shifts. Quantifications and qualifications are updated, weekly. Remember, secular shifts can last twenty-five or more years. Fortunately, secular market movements do not deter mid-term, short-term, and quick-term profit opportunities. However, they can wreak havoc to the long-term investors’ plans and those that buy and hold.

The current Mid-term Bull market and buying barrage started in late 2002. The mid-term election year of 2002 conformed perfectly to historical standards with deep bearish expressions. That contrasts to the meandering bear market from late January through mid-August 2006 in the more recent mid-term election year.

Deep bearish seasonality was not influential this past year, which usually occurs from late August through early October. Last August, the Quick-term Indicant obviated a bullish bias, contrary to the historical pattern of deep bearish seasonality. Many buy signals were executed in late August - early September 2006, which is usually a period of intense selling.

The market synchronized with near perfection to normal seasonality in the mid-term election year of 2002. The rolling half of May-October 2002 was typically bearish. The 2002 seasonal bear leg was dynamic and configured perfectly to historical standards, although the depth of that bearish cycle was deeper than normal. That NASDAQ bear cycle approached the magnitude of the 1930-32 Dow bear cycle but the 2000-2002 NASDAQ bear leg lasted several weeks longer.

The recently completed mid-term election year of 2006 fundamentally supported historical standards for the first two thirds of 2006. Although mild bearishness exerted its historical influence in 2006, it was nowhere as deep as 2002’s bearishness. The meandering bear in the first two-thirds of 2006 supported the historical standard. That support was extremely mild.

As of mid-August 2006, hard economic fundamentals shifted in support of a bullish onslaught for the heart and soul of bullish seasonality and the normally bullish presidential pre-election year of 2007. So far this year, you have observed the historical significance of the political and stock market cycle of bullish behavior.

The heart and soul of bullish seasonality from mid-October 2005 through January 31, 2006 demonstrated bullish normalcy. The market had been more or less a meanderer since January 31, 2006 until mid-August 2006, when the Quick-term Indicant shifted from bearish to bullish bias.

The heart and soul of bullish seasonality, ending on January 31, 2007, produced significant and expected gains since the August 15, 2006 bullish bias shift. The Dow, S&P500, and NASDAQ finished up by 12.4%, 11.9%, and 16.5% at the conclusion of that heart and soul of bullish seasonality.

How has market fared after the conclusion of the heart and soul of bullish seasonality? From January 31, 2002 through September 30, 2002, the Dow fell 23.5%. The NASDAQ was down 39.4%. From January 31, 2004 until September 30, 2004, the NASDAQ fell 8.2%, while the Dow was down 3.9%. From January 31, 2005 to June 30, 2005, the Dow was down 2.0% and the NASDAQ down 0.4%. From January 31, 2006 through August 1, 2006, the NASDAQ was flat while the Dow was up a respectable 6.1%.

From January 31, 2003 through September 30, 2003, the Dow was up 15.2%, while the NASDAQ was up 35.3%. The last presidential pre-election year was 2003. Presidential pre-election years are traditionally bullish. So far this year, the Dow is up 0.9% since January 31, 2007 and the NASDAQ is up 2.0%. Last week’s meandering with a slightly bearish influence maintained a presence in bullish domains for the major market indices. Historical standards suggest the market will go much higher this year. Economic fundamentals also support this prognosis.

As you can see, until mid-August 2006, most major market indices have been slightly bullish since late 2003 with pronounced meandering behavior. The only significant bullish expressions, not followed by bearish expressions, occurred in the heart and soul of bullish seasonality (Nov-Jan) in 2004, 2005, and 2006. Other than those “heart and soul” bullish cycles, the market was relatively flat from early 2004 through August 2006. However, this is a presidential pre-election year, where meandering to bearish behavior should not occur. The theme is bullish expectations.

The Dow30 found bottom in the last presidential mid-term election year on October 9, 2002 at 7,286.27. The NASDAQ found bottom on the same day at 1114.11. Finding cyclical bottoms in mid-term election years is common. Fortunately, the bottom of 2006 was minimal and not sharp when compared to that of 2002. The Dow is up 73.6% from the 2002 mid-term presidential election year bottom. The NASDAQ is up 125.7% since October 9, 2002. The S&P600, small caps, is up even more by 146.9% since October 9, 2002.

The NASDAQ is down 50.2% from its historical weekending high of 5048.62 on March 9, 2000. The Dow is up by 7.9% from its previous weekending historical high of 11723 on January 13, 2000. It took over five-and-a-half years for the DJIA to establish a new high. The S&P500 is down 5.0% since its all time high of March 23, 2000. So far, the new century, 2000 inclusive, has not been kind to long-term investors. The NASDAQ needs to climb 100.7% and S&P500 by 5.3% to establish new weekly closing highs.

Historical standards suggest the NASDAQ will not return to its historical high until 2025 or so. A 2000 buyer and holder will not be back to break-even until then. Including inflation, a thirty-year-old investor will be in his or her eighties before the NASDAQ profits from early 2000 investment dollars, which assumes minimal inflation.

Economic or corporate earnings fundamentals did not support the stock market’s meteoric rise in the 1990’s in many sectors. Unprecedented demand for stocks skewed the supply-demand ratio and thus the powerful bull leg of the 1990’s enjoyed sustainability. The simple law of supply and demand propelled stock prices dynamically to the north in the 1990’s. The great bear leg of 2001 and 2002 depressed those prior sources of demand for at least one generation of investors. The market now has to wait for a new generation of investors to enjoy dynamic secular bullishness.

The great bull leg of 2003 was a relatively short bull cycle that has not enjoyed dynamic follow-on bullish behavior due to this lack of demand. However, bullish expressions occur during the heart and soul of bullish seasonality regardless of any technical or fundamental reason. The meandering segments of 2004, 2005, and 2006 were appropriately followed by historically significant bullishness in each of those years.

As earlier stated, the Indicant began its buying barrage in October – November 2002 just after the market bottomed from the severe 2000-2002 Bear Market. There were 239 buy signals between October 5, 2002 and November 9, 2002 out of the 296 stocks and funds tracked by the Mid-term Indicant at that time. Even badly managed companies received a buy signal, which is a common attribute of sustainable new bull markets. As many of you noticed, those companies eventually dipped back to the south after the euphoria of new bullishness.

Since August 18, 2006, the Mid-term Indicant generated 158-buy signals and only 19-sell signals. That is an unusually high number of buy signals when considering historical seasonal market influences. However, all Indicant models supported this recent buying surge just as they did in October 2002 and March 2003. Now that the heart and soul of bullish seasonality has expired, the resistance to generate sell signals has softened. Buying stimulants within the Mid-term Indicant are more reserved, but not as much so during post election years.

Some of you recall the Indicant Stock Market Report tracking the Short-term Indicant Bear for the NASDAQ in 2002. It was the longest in history. It even exceeded the Dow’s 1929-1932 Short-term Indicant Bear in breadth and approached it in magnitude. The good news is that the NASDAQ’s decline did not lead to a depression, which is a clear indication of how little influence tech stocks have on the economy.

There are two important axioms to remember and are always repeated in this report. 1) Real economic wealth is created in only three ways - manufacturing, agriculture, and extraction. 2) The only positive influence politicians have on the economy is to undo their prior damage. They are now doing their damage in 2007, which is the current presidential election year. That is why the market typically finds a bottom in the mid-term election year. That is also why the presidential pre-election year is historically the most bullish on the four-year cycle. If the strength of the current Mid-term Bull can be subjected only to meandering behavior, like 2004, 2005, and 2006, then it is possible for the current Mid-term Bull to be a record setting one in terms of duration.

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

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

You will notice many of the mutual fund buy signals occurred in March 2003. Many of them endured sell signals for the first time since early 2003 during the mildly bearish meandering behavior in mid-2005. However, recent bullish spurts and the bull’s resiliency have minimized selling activity. The Mid-term Indicant is now signaling hold for nearly all mutual funds it tracks with the exception of contrarian funds.

Many of you recall how the market did not synchronize with the heart and soul of bullish seasonality from November 2002 through February 2003. December 2002 was the most bearish since 1931, but not nearly as dynamic as the 1931 bearish expression. After the asynchronous behavior in the November 2002 rolling third of the year, the market turned bullish in March 2003 and again did not synchronize with normal seasonality. The Mid-term Indicant continued signaling bull/hold during bearish seasonality in 2003. The market continued moving north during that time, contrary to historical standards. As stated in most of 2004, bearish expressions on a Mid-term basis between May and October 2004 should not be surprising. That is exactly what occurred. The result was a meandering market with a slight bearish bias during most of 2004 and 2005 and the first two-thirds of 2006.

The Quick-term Indicant’s bearish bias during most of 2006 was replaced with a bullish bias in mid-August 2006. Several buy signals ensued shortly after that bias shift. Bullish behavior occurred, as expected, since mid-August 2006. The various Indicant models, economic fundamentals, and historical standards suggest significant bullishness in the coming months.

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

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

Stop Loss Management

The Mid-term Indicant recommends a stop loss of 8% on recent buys because of the Quick-term Indicant’s bullish bias and bullishly evolving economic fundamentals.

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.

As stated the past two weeks, interest rates continue to delay their potential commitment to the south. That meandering behavior has somewhat of a meandering influence on the stock market. As long as the economy remains “okay”, economic stimulus will be low priority. However, a meandering interest rate market at the current levels bodes well for bullish expectations. Meandering phenomena supports a perception of predictability. The stock market behaves consistently with predictable patterns and thus enjoys a stabilization effect.

Gold and oil continue to rebound with a northerly spurt against their cyclical shift to the south. As stated last week, do not be surprised at oil’s bearish aggression over the next few months. Although Gold has not shifted to bearish domains, its bearishness should parallel oil prices. It may not produce the same magnitude in price declines, but the configuration of bearishness should be congruent. This is because Gold has an emotional base, whereas oil pricing is more influenced on supply and demand.

The U.S. Dollar remains mixed with other currencies, but the bias is a slight strengthening trend. This strengthening is due, in part, to the meandering interest rates.

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 is up 318.6% since the April 13, 2001 buy signal. It’s annualized growth since that buy signal is 53.6%. It moved to the north in 14 of the past 19-weeks. This fund is up sharply the last two weeks.

Fidelity Gold, Fund #28, is up 50.9% since the Mid-term Indicant signaled buy on August 26, 2005. That annualizes to 33.6%. This fund has enjoyed bullish behavior in the last seven weeks after bearish dominance in the previous four weeks.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 266.0% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 58.0%.

Vanguard Energy #18, VGENX, is up 175.0% (annualized at 44.0%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 126.7% (annualized at 38.8%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 126.9% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 35.5%.

The energy related funds were bullish last week.

Investors in these funds are supporting a 1970’s type of market with high inflation and high oil prices. Energy and gold always do well during such times. Fundamentals appear to be shifting in favor of selling the above funds (09/10/06). Do not sell until the Mid-term Indicant signals sell. They continue to rebound and are enduring potential fluttering. As long as capitalism remains in vogue around the globe and alternative sources of energy continue to lag exponentially increasing demand, a long-term perspective on holding strategy is appropriate at this time.

The SQI (Consolidated Short-term and Quick-term Indicant) model signaled buy for the GLD-ETF#11 on August 3, 2005. It is up 55.6% since then. It is annualized at 35.2%. Its bullish position is being threatened on a Quick-term Indicant basis.

The SQI signaled buy for ETF#03 – Energy and Natural Resources on March 26, 2003. It is up 172.8% (annualized at 43.5%). This fund also rebounded last week.

Mid-term Indicant Positions – Ten U.S. Indices

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

All ten major indices are bulls. The Dow Transports again received a bull signal. They are up by an average of 25.6% since the Mid-term Indicant signaled bull an average of 84-weeks ago. That annualizes to 16.0%, which is down significantly from the past three years. This is due to the bear signals for the S&P400 and S&P600 Indexes on July 21, 2006, which had been receiving a bull signal since October 25, 2002. Those two indices endured some fluttering after the expiration of the tremendous bull leg that lasted nearly four years. A new bull leg is underway and may proceed just as vigorously for these two indices as the bull leg from October 2002 through July 2006, where the S&P400 and S&P600 increased by 66.3% and 79.3%, respectively.

Dynamic bullish statistics were eliminated due to the Dow Transports bear signal and a new bull signal on January 19, 2007. The Dow Transports enjoyed a 23.1% gain from its March 21, 2003 bull signal until its bear signal on March 19, 2004. It fluttered with a new bull signal one week later on March 26, 2004 and enjoyed an 80.0%-gain until a new bear signal on December 22, 2006.

Also, the Dow Utilities increased by 104.4% from its October 25, 2002 bull signal to the March 21, 2006 bear signal. After some fluttering, it received a new bull signal on June 2, 2006. Interestingly, the Dow Utilities was the best performing index since the October 25, 2002 Mid-term Indicant bullish bias shift.

The Mid-term Indicant Dow Jones Industrial Average performance is now at $ $38,312,248

That beats buy and hold performance of $ $1,934,156 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $ $187,369. That beats buy and hold’s $ $142,148

on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $ $210,441.

That beats buy and hold’s $ $87,209 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 1,880.8%, 31.8%, and 141.3%, respectively, for these indices as of this past week.

The Indicant’s percentage advantage over buy and hold does not change during bull signals. The advantage changes only during bear signals. That is because the buy and hold model has to keep holding, while the MTI-RYS model avoids bear markets. The only purpose of the MTI-RYS model is to avoid the bear markets. That is why it beat buy and hold by nearly 2,000% over the past 100+ years.

Click here to go to the current Mid-term Indicant assessment of the ten major indices.

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

Divergence versus Convergence

The meandering nature of this market with its weak bullish/bearish cycles again returned to endure mild bearish divergence last week. Large caps reacted bearishly to the mild bullish behavior in the energy sector. Technology and small caps were mildly bullish and thus ignored the bullishness expressed by the energy sector. This meandering to mild bearish divergence is supportive of bullish sustainability, albeit mild.

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 is now avoiding ProFunds Ultra Short. It is down 17.3% since the Mid-term Indicant signaled sell on September 15, 2006. Historical norms of market cyclicality suggest the next buying opportunity for this fund may not occur until 2009.

Click here for Mid-term Indicant Table of Mutual Funds.

Always remember never to keep more than 20% of your investment resources into a single mutual fund. Sector investing in mutual funds is an extremely good way to mix your investments.

Long Term Indicant Positions - Dow Jones Industrial Average

The blue-chip Long-term Indicant Bull signal was at 2895 for the DJIA in November 1991. Keep in mind the Long-term Indicant generated only five bull/bear cycles since 1920.

The Dow is up 336.9% (annualized at 21.9%) since the Long-term Indicant signaled bull 799-weeks ago. Economic data is the primary influence on the Long-term Indicant. The recession, deflation, and inflation have not been strong enough to signal bear. A link to the Long-term Indicant is below:

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

Quick/Short-term Indicant Stock Market Report - Summary

Quick-term Red Bulls: Twenty-eight of thirty; support for bullish bias continues.

Short-term/Quick-term Non-Bearishness: Countering “sustainable” deep bearish ambition.

Force Vectors: Solid support for sustainable bullish behavior.

Vector Pressure: Showing significant resistance to bearish influence.

Long-term Hold Positions: Solidly safe.

Current Quick-term Bias: Bullish.

Overall Market Status: Bullish support on a Quick-term basis.

Profit Potential from Naked Options: Minimal due to the absence of volatility.

Volume: Configurations support bullish bias.

Special Comments Continued from Tuesday, August 15, 2006 – Bias Shift to Bullish

The Quick-term and Short-term Indicant remain bullishly biased and increasingly so.

Quick-term/Short-term Indicant Stock Market Report Details

The Dow is up 10.0% since the Short-term Indicant signaled bull on September 12, 2006 for both the Dow and NASDAQ. The NASDAQ is up 13.5% since the Short-term Indicant signaled bull on the same day. They are annualizing at 22.2% and 30.1%, respectively, on the current short-term bullish cycle. Click here to see the Short-term Indicant’s history.

As stated the past several days, both Indicant Volume Indicator’s are losing robust configurations, but non-threatening to the underlying bullish bias. A period of lethargic volume will enhance bullish sustainability. This supports the continuation of this steady bullish cycle.

SQI Report Card (Consolidated Short/Quick), Status, and Charts

There were no buy signals and no sell signals. Although there were no buy signals, the SQI is signaling hold for 30-ETF’s. They are up 66.8% (annualized at 33.5%) since their respective buy signals an average of 102.3-weeks ago. The SQI is not avoiding any of the 30-ETF’s.

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 30-ETF’s. They are up an average of 68.4% (annualized 35.4%) since the STI signaled, buy, an average of 99.3-weeks ago. The STI is not avoiding any of the 30-ETF’s.

Keep in mind, the Short-term Indicant is much 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 30-ETF’s. They are up by an average of 18.6% (annualized at 26.4%) since the QTI signaled buy an average of 36.2-weeks ago. The Quick-term Indicant is avoiding one ETF at this time. It is up 2.3% since its sell signal 4.0-week ago.

Conflicts Between the Short-term and Quick-term Indicants

There is one conflict, where the Short-term Indicant and the Quick-term Indicant are in disagreement between hold and avoid status. This conflict is minor. The bias shift on August 15, 2006 remains in favor of the bull.

There are eighty-nine hold signals out of a possible 90, while there is only one avoid signal. This ratio supports sustainable bullish behavior.

Quick-term Indicant Bull/Bear Health Report

None of the 30-ETF’s is below its bearish yellow curves. The average position of all thirty ETF’s is above bearish yellow by 11.2%. This is maintaining the market’s non-bearish posture. This non-bearish configuration is strong with zero threat of sustainable or deep bearish behavior.

Twenty-eight ETF’s are above their respective bullish red curves, which is an exceedingly healthy bullish attribute.

All thirty ETF average positions are 3.5% above their bullish red curves. This attribute is solidly bullish on a Quick-term Indicant basis.

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.

Three ETF’s are contacting their breakout lines. As stated the past several months, the high concentration of breakout-contact the past several months is solidly bullish.

The average distance from breakout contact is at a miniscule 1.4%, which is not a great distance to find an area friendly for bullish exuberance.

The average distance from the price and breakdown is 24.3%. This configuration provides tremendous non-bearish support, which has been the case since March 2003. The probability of immediate contact remains low and thus a non-bearish bias is maintained on a short-term basis.

This attribute remains solidly non-bearish.

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.

Eighteen of the thirty ETF Force Vectors are in bullish domains. This solidly supports the underlying bullish bias.

Force Vector behavior has not offered many robust cycles since the robustness that occurred in July-August 2006, just ahead of the bullish bias shift. That is one reason for this somewhat tame Quick-term Bull market. However, this is a steady bull to be enjoyed.

To understand potential financial opportunities, click here to learn to identify Robust Force Vectors. They are visible on the Quick-term Indicant charts.

ETF Force Vectors/Vector Pressure Crossings/Option Signals

Remember, the links contained herein are more visible when reading this on the website.

Click this sentence for Vector Pressure Option Signals. There were no option buy signals for the fourteenth consecutive trading day.

Although the market has been bullish, it is not dynamically so. It is just a simple steady bull with less magnitudes of follow-on bearishness , which is not favorable to naked options plays. The absence of volatility is not friendly to naked options buy/selling. Stalking successfully is the only way to make money during limited volatility.

Twenty-nine ETF Vector Pressures are in bullish domains, which supports the bullish bias. Positive Vector Pressure guards against bearish dominance. As long as Vector Pressure is positive (in bullish domains), bearish expressions are mere spurts without sustainability.

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 since early February 2006. The Quick-term and Short-term Indicant models are suggesting bullish bias.

Based on Vector Pressure configurations and increasing bullish bias, do not write 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 no longer avoiding QQQQ, which no longer supports holding contrarian fund, ProFunds Ultra Short.

To familiarize yourself with viewing the market from an ETF perspective, click the following update links.

Quick-term ETF Options

Quick-term Indicant for ETF’s

Short-term Indicant for ETF’s

Consolidated Quick-term/Short-term Indicant for ETF’s

Click here to the report card, which is updated weekly, to link to related tours.

Links to the Short-term Indicant and Indicant Volume Indicator are below:

Short-term Indicant for DJIA and NASDAQ

Short-term Indicant Tables for the Dow Jones Industrial Average Index

Short-term Indicant Table for the NASDAQ Composite Index

Indicant Volume Indicator

Indicant Conclusion

Last week’s mixed or divergent behavior is a healthy expression for bullish sustainability even though the market is now past the heart and soul of bullish seasonality.

The Quick-term Indicant’s Force Vectors are bordering some robustness for the first time in quite some time. If robust cycles return, then you will have much more clarity on short-term trading tactics. For those of you who focus on a mid-term to long-term perspective remain in a nice profitable position.

The Quick-term and Short-term Indicant continue to express bullish bias.

Do not get lazy and set those stop losses for those stocks and funds that continue to enjoy hold signals.

The daily updates are on the following link.

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

Hyperlinks

To access all major markets, stocks, funds, economic data, charts, statuses, etc, click the following hyperlink:

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

In addition, once you are inside the website, click on "members update" or simply log in. It is on the top of every page in the web site so you can always find your way back.

Happy Investing,

www.indicant.net

02/25/07

Feb 18, 2007 Indicant Weekly Stock Market Report

This Week’s Report

An Indicant Review

The Mid-term Indicant generated yet another sell signal for an energy related security this weekend. Indicant Select Stock #69, Precision Drilling, gained 173.7% from its October 18, 2002 buy signal. Click the following link to view its chart.

http://www.indicant.net/Members/Updates/MTI-Stks-Indicant%20Sel/S12.htm#69

Are energy stocks configuring to endure a long bearish cycle? It is difficult to answer this question with absolute clarity. Halliburton, which as a blue chip energy stock, endured a twenty-year period of no gains. That was because oil prices fell from $36 per barrel to less than $9 per barrel in the 1980’s. All energy related securities endured a similar fate.

The energy sector has enjoyed tremendous gains since late 2002 when the overall stock market shifted from a bearish bias to a bullish bias. However, until recently, the energy sector enjoyed much greater growth than the overall stock market gains.

So, in the past two weeks, two energy related securities have endured sell signals for the first time since 2002. Their configurations are suggesting the market’s expectation for continued growth in exploration, drilling, and production completions is not bullish.

That should bode well for the stock market. The stock market has always enjoyed falling energy prices. That prognosis should shift investment dollars from energy to other sectors. That will propel other sectors disproportionately higher than otherwise would be expected from just simple corporate earnings.

Keep in mind, the Mid-term Indicant has not yet signaled sell for energy related mutual funds. Individual stocks have much more volatility than funds, which enjoy the phenomenon of commonality by collating many stocks into the funds portfolio. Other stocks that are not as badly performing offset a bad performing stock. This has a dampening effect on fund prices and not nearly as volatile.

Therefore, keep in mind, the stock market is based on projected earnings, economic outlook, supply and demand, and investor emotions. The Mid-term Indicant will be patient on selling energy related funds, until it is obvious all four major market drivers are synchronized with a bearish outlook. Right now, the Mid-term Indicant is not finding that synchronization, even though most energy related securities are down significantly from their peak prices. The idea for long-term investing is to stay the course, unless all four major market drivers are synchronized. When that occurs, there is no point in continued holding, as such securities will endure a long bearish cycle of varying magnitudes.

Weekly Buy/Sell Summary – Stocks and Funds

The Mid-term Indicant generated three buy signals and one sell signal.

In addition to the sell signal, the Mid-term Indicant is avoiding only 30-stocks and funds of the 345 tracked by the Indicant. The avoided stocks and funds are down an average of 11.6% since the Mid-term Indicant signaled sell an average of 20.8-weeks ago.

There were 53-stocks and funds avoided at this time last year. The avoided stocks and funds one year ago were down an average of 9.2% since their respective sell signals an average of 20.5-weeks earlier.

Two years ago, on February 16, 2005, the Mid-term Indicant was avoiding 61-stocks and funds that were down an average of 30.1% since their respective sell signals an average of 52.9-weeks earlier. Three years ago on February 14, 2004 there were only 13-avoided stocks and funds. They were down 27.0% from their respective sell signals an average of 41.7-weeks earlier. On February 15, 2003, the Mid-term Indicant was avoiding 174-stocks and funds out of 296-tracked. They were down by an average of 8.3% since their sell signals an average of 5.2-weeks earlier.

In addition to the buy signals this weekend, the Mid-term Indicant is signaling hold for 311 of the 345-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 114.0%. That annualizes to 63.4%. The Mid-term Indicant has been signaling hold for these 311-stocks and funds for an average of 93.5-weeks.

One year ago on February 17, 2006, the Mid-term Indicant was holding 286-stocks and funds out of the 320 tracked at that time for an average of 92.4-weeks. Those 286-stocks and funds were up by an average of 115.9% (annualized at 65.2%). The Mid-term Indicant was signaling hold for 256-stocks and funds of the 320-tracked two years ago on February 16, 2005. They were up by an average of 86.2% (annualized at 65.3%) since their respective buy signals an average of 68.6-weeks earlier. There were 281-stocks and funds with hold signals on February 14, 2004 since their buy signals an average of 41.7-weeks earlier. They were up by an average of 68.5% (annualized at 85.6%). The Indicant was only tracking 296-stocks and funds in 2002-2003, and early 2004. On February 15, 2003, the Mid-term Indicant was signaling hold for 106-stocks and funds out of 296-tracked. They were up by an average of 26.1% (annualized at 50.2%) since their buy signals an average of 27.1-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

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