February
24, 2008 Indicant Weekly Stock Market Report
Volume 02, Issue 04 ISSN 1526 6516 © The
Indicant Stock Market Report
This Week’s
Report
Be Cautious
of Potential Bullish Spurts
Let’s take a
quick look at the most dynamic bullish spurts. Bullish spurts in the
1930’s were damaging to many investors. General Motors founder, Willie
Crapo Durant, traded General Motors stocks in the early years; sometimes
just to make payroll. He was good at it, using this technique to amass a
personal fortune in addition to sustaining GM operations.
He sold all
his GM stocks a few months before the stock market crash of October 1929.
He knew the market was overbought. He was considered a genius for his
timely sell of stocks.
Years later,
he was found a pauper living in the streets of New York. He had lost his
fortune and an ability to make a living. Ex-millionaires have difficulty
adopting a common-man’s life style. When they fall, the drop is swift and
deep.
Willie loved
to trade stocks. Most of the time he did it for the sake of General
Motors. His lack of focus on operational details resulted in his removal
from GM. He was eventually replaced by Alfred P. Sloan at the helm. Before
that, Willie had enough shares, including GM Treasury stock, to manipulate
the stock price. Even without that insider edge, he was what many
considered as an excellent stock trader.
The stock
market crash in October 1929 was not nearly as bad as what followed that
crash. The after shock that lingered for four years after the crash did
the damage. Click the following link to get a Mid-term Indicant
perspective on the crash of 1929.
http://www.indicant.net/Non-Members/Tours/MTIRYS-Mkts-US/MTIRYS-01-DJI-1928-1932.htm
Focus on the
year 1929. Notice how the stock market found a cyclical bottom at
near-year-end and started a bullish cycle that carried over into 1930.
Willie Durant bought into those bullish cycles with his personal fortune.
However, rather than selling before the next bearish cycle unfolded, he
held. The market fell another 80% after that first Mid-term Indicant
bullish spurt. When one buys into a bullish spurt in the face of an
underlying bear on margin, one loses everything they have, plus some.
You will
notice a few more bullish spurts as the market moved south for the balance
of that particular presidential election cycle for the next three years.
Bullish spurts are devastating to stock traders and passive investors. One
buys and enjoys “paper profits” for a short period. When the market shifts
back to the south, passive investors engage in the mystical prognosis of
“temporary” bearishness. Some learned it is better to sell with a 20% loss
than to hold onto a ninety to one-hundred percent loss. Willie held onto
the 90% losers, eventually losing it all.
The problem
for most traders is they tend to think the trend has shifted back to
bullish near the peaks of bullish spurts. They buy at or near the peaks.
Their trading propensity has them selling half-way down the bearish leg of
the cycle. That is one reason why high frequent traders and day-traders
lose money.
This is not to
say that buying and holding is the best alternative to frequent trading.
Buying and holding can be equally devastating if not more so.
http://www.indicant.net/Non-Members/Tours/MTIRYS-Mkts-US/MTIRYS-01-DJI-1952-1956.htm
It was not
until 1953 before the stock market returned to its 1929 peak. A
thirty-year-old buyer and holder in late October 1929 was in his
mid-fifties before breaking even. Willie Durant was in his late forties
when buying into those bullish spurts in the early dirty thirties. That is
why he was a pauper in his late fifties. The market never came back for
him. The thirty year old, after discounting inflation, never broke even in
his lifetime, unless he lived into his late seventies.
Buying and
holding and high frequent trading have several disadvantages. The trick is
in timing and mix. Mix is tricky, but does increase the probability of
avoiding catastrophic disappointment. For example, buying gold and
precious metals in the late 1990’s would have been a nice diversifying
element to one’s portfolio. A similar investment though the late 1970’s
would have been disappointing for over twenty years. Timing on the mix is
also important.
The current
situation is a bit tricky. Several recent weekly reports highlighted the
small cap index, S&P600, solidly contained in a bearish trading range.
Click this sentence to view its chart. Then scroll down for additional
information, regarding the current situation.
As you can
see, the S&P600 moved laterally last week. It nudged up to the upper
trading range limit line, as opposed to diving deeply to its lower trading
range limit. If the small caps break out of this trading range, then the
underlying bearish influence will be disrupted. This will allow for
alternative configurations, but not necessarily providing birth to a new
bull market.
Scrolling
downward, you will notice the QQQQ’s Force Vector oscillating in a
northeasterly direction. That attribute is associated with bullish
behavior when the underlying security is a yellow bear. That is the case
for QQQQ right now. It is a yellow bear, but Force Vector behavior is
offering some evidence of bullish resistance. So, with that, do not be
surprised with bullish expressions on a near-term basis.
QID, the
contrarian cousin to QQQQ, is a solid red bull, which was discussed last
week. Scrolling down, you will notice it did not lose bullish ground last
week. It did not approach its bullish red curve last week, but continued
to hover well into bullish domains. QID is the inverse to QQQQ and thus
not surprising their Force Vector behavior are the opposite of one
another. QID’s Force Vectors are drifting to support bearishness on a
near-term basis. However, solid red bulls should never be challenged. QID
can endure significant bearishness on overall stock market bullishness,
but remain a bull. If the market rebounds bullishly next week, keep your
eye on QID. The stock market bear will gain momentum if it drops to
bullish red and then bounces sharply to the north. That would mean stock
market bullishness was a mere Quick-term Indicant bullish spurt and thus
without sustainability.
The Dow
Composites is now tracking along a solid bearish trading range. This is
bluest of any blue chip index. If it continues tracking within the
confines of that bearish trading range, the stock market is not only
projecting recession, it is projecting a significant and deep recession
and/or inflation.
Keep your eye
on the daily stock market report. It will help you differentiate
sustainability versus spurts regardless of the direction intensity
underway.
Weekly
Buy/Sell Summary – Stocks and Funds
Click this sentence for a graphical summary of what follows. Simply
scroll down the page to see graphical and detail content of this section.
The Mid-term
Indicant generated two buy signals and two sell signals. This brings the
total buy signals to 31 against 171-sell signal since October 26, 2007.
In addition
to the buy signals, the Mid-term
Indicant is signaling hold for 154 of the 345-stocks and funds tracked by
the Indicant. The stocks and funds with hold signals are up an average of
176.0%. That annualizes to 58.5%. The Mid-term Indicant has been signaling
hold for these 154-stocks and funds for an average of 156.5-weeks.
In addition
to the sell signals, the Mid-term
Indicant is avoiding 187-stocks and funds of the 345- tracked by the
Indicant. The avoided stocks and funds are down an average of 8.8% since
the Mid-term Indicant signaled sell an average of 15.0-weeks ago.
One year ago,
on Feb 23, 2007, the Mid-term Indicant was holding 314-stocks and funds
out of the 345 tracked for an average of 94.0-weeks. They were up by an
average of 113.7% (annualized at 62.9%). There were only 30-stocks and
funds avoided at this time last year. Those avoided stocks and funds were
down an average of 10.9% since their respective sell signals an average of
21.6-weeks earlier.
The Mid-term
Indicant was signaling hold for 290-stocks and funds of the 345-tracked
two years ago on Feb 24, 2006. They were up by an average of 114.8%
(annualized at 64.5%) since their respective buy signals an average of
92.6-weeks earlier. The Mid-term Indicant was avoiding 53-stocks and funds
at that time. They were down an average of 8.7% since their respective
sell signals an average of 21.5-weeks earlier.
There were
250-stocks and funds with hold signals on Feb 25, 2005 since their buy
signals an average of 66.9-weeks earlier. They were up by an average of
89.7% (annualized at 66.9%). There were 61-avoided stocks and funds at
that time. They were down by an average of 29.9% from their respective
sell signals an average of 53.7-weeks earlier.
On Feb 21,
2004, the Mid-term Indicant was signaling hold for 281-stocks and funds
out of 296-tracked. They were up by an average of 67.8% (annualized at
82.6%) since their buy signals an average of 42.7-weeks earlier. The
Mid-term Indicant was avoiding only 15-stocks and funds. They were down by
an average of 27.9% since their sell signals an average of 42.7-weeks
earlier.
Five years
ago, on Feb 22, 2003, there were 110-hold signals for stocks and funds out
of the 296 tracked by the Mid-term Indicant at that time. They were up an
average of 28.3% (annualized at 54.9%) since their respective buy signals
an average of 26.8-weeks earlier. There were 130-avoided stocks and funds
then. They were down an average of 9.2% since their respective sell
signals an average of 6.2-weeks earlier.
Summary of
Stocks and Funds with Buy and Sell Signals This past Week
To maintain
appropriate security, you can see the Mid-term Indicant "buy/sell" signals
for stocks and funds for this week by clicking the following link. It is
in the member’s only section.
http://www.indicant.net/Members/Updates/All%20Update%20Forms/Buy-Sell%20Summary%20This%20Week.htm
As repeatedly
stated, do not hold more than 10% of your investment resources in a single
stock and do not hold more than 20% of your investment resources into a
single mutual fund. Also, never fall in love with a stock or fund. Only
love the value of your portfolio. Never love its contents. Management
stupidity can wreak havoc on any stock or fund at any time.
All updated
information can be found from a single page at Indicant.Net. Click the
below link to that page. You will need your login ID and password.
http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20Summary.htm
The
Quick/Short-term Indicant Stock Market Report
The Indicant website maintains the last twelve months of daily reports on
an annual basis. These weekly reports are maintained on the website
for much longer periods. Beginning in March 2006, the daily stock market
report for the last trading day of each week is imbedded in this weekly
report. This allows web-based retention records of the daily report for
much longer than the last twelve months.
The Daily
Indicant Stock Market Report for the last trading day of the current week
is near the conclusion of this weekly stock market report. It is emailed
each weekend, separately, so you can read it, either as a separate
document, or in this document.
The
Indicant Stock Market Report’s Secular Market Blend
The Dow is up
69.9% since its secular low on October 9, 2002. The NASDAQ is up 106.7%
and the S&P500 is up 74.2% since then. The small cap index, S&P600, is up
116.0%. As stated the past several months, the secular bull that
originated on October 9, 2002 no longer remains solid.
The Dow is
down 12.6% since its last weekly closing peak in 2007. The NASDAQ is down
19.4% since its last cyclical peak in 2007. The S&P600 is down 17.2% since
its last closing weekly peak value in 2007. The Small Caps was mildly
bearish last week with 0.3% drop, while the blue chips were mildly
bullish. As stated the past few weeks, configurations remain in support of
those that are consistent with a bear market.
The NASDAQ is
down 54.4% since its last weekly secular peak on March 9, 2000. The S&P500
is down 11.4% since its similar secular peak on March 23, 2000. The S&P500
recently set a new peak, but the old peak will be tracked until the NASDAQ
sets a new one, which may not occur until after 2025. The Dow is up 5.6%
since January 13, 2000 when it peaked from the 1990’s roaring bull. It has
expressed no timidity in roaming above the new peak area, until recently.
The NASDAQ needs to climb 119.2% to achieve a new record high. Do not be
surprised if this occurs after the year, 2025.
The NASDAQ
year-to-date performance was bearish by 9.1% through this week in 2001.
Keep in mind the NASDAQ finished 2001 down by 21.1%.
The NASDAQ was
down by 11.6% through this weekend in 2002. Some of you recall the dynamic
bear market in 2002, where the NASDAQ finished that year down by 31.5%.
The NASDAQ YTD 2003 performance was up by 1.0%, but finished that solidly
bullish year up by 50.0%. It was up on this weekend in 2004 by 1.7%, but
down 6.7% in 2005. Both 2004 and 2005 were meandering bear markets. In
2006, it was up by 3.5% and by 4.5% at this time last year. So far this
year, the DOW30 is down 6.7% and the NASDAQ down 13.2%.
As you can
see, this is the most bearish start of any year this century.
The bullish
bias shift on August 15, 2006 expired on January 4, 2008. The heart and
soul of bullish seasonality also expired on January 4, 2008. The Dow
increased 14.0% since the bullish bias shift on August 15, 2006. The
S&P500 was up 9.8% and the NASDAQ up by 18.4%. The NASDAQ is down 8.0%
since the expiration of that bullish bias shift.
As stated last
week, the presidential pre-election year of 2007 was below average
(+10.5%) with the Dow gaining 6.4%. This was the smallest gain since
Reagan’s 2.3% gain in 1987, when the market endured sharp sell off in
October of that year.
Where is the
market headed in 2008, the presidential election year, which is the second
most bullish year on the four-year presidential election cycle? If
historical standards prevail, which is bullish, the market is setting up
nicely for a tremendous profit this year. All that is needed is a bottom
to this bear, as 2008 should finish up on the year, based on historical
standards and falling interest rates. The primary required avoidance is
inflation and economic stabilization. Keep your eye on the daily stock
market report.
Stop Loss
Management
The Mid-term
Indicant recommends a stop loss of 10% due to bearish tendencies.
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 fifteen weeks, falling interest rates typically accompany stock
market bullish behavior. The primary exception to stock market bullishness
with declining interest rates is inflation or deflation. Inflation is the
primary threat at this time. If the CPI continues to rise, falling
interest rates will not stimulate bullish behavior. This paragraph will
remain until commodity prices demonstrate a cyclical decline on a Mid-term
Indicant basis.
Unfortunately,
commodities sky-rocketed last week. Gold is comfortably situated above
$900 per ounce. Oil topped $100 per barrel. Do not be surprised when it
tops $200 per barrel in the next five years. Supply is finite and demand
continues unabated. Strong economies stimulate increasing demand. That
should encourage capital infusion, but without productivity and hard
working effort, that capital infusion become inefficient and thus
inflation. The stock market is intolerant of inefficient and wasted
resources.
Interest rates
were mixed the past two weeks after falling sharply in the prior four
weeks. The Fed’s action remains biased against recession. If it were not
a political election year, the Fed would opt for recession over inflation.
As the election nears, watch for a policy shift. The soft economy of 2008
will be replaced with solid recessionary behavior in 2009.
The U.S.
Dollar, although weakened, is holding up. That is most likely due to the
“masses” betting on the dollars decline. The masses cannot win at that
game. So, when they give up after losing money, the dollar will resume its
weakening path.
Fear
Metrics: Economics and Terrorism
Vanguard Gold and Precious Metals (VGPMX) - #19 is up 412.1% since the
April 13, 2001 buy signal. Its annualized growth since that buy signal is
59.2%. It moved to the north in 46 of the past 76-weeks. It has been
bullish in 17 of the last 27-weeks. This fund has been bullish the past
two weeks.
Fidelity Gold, Fund #28, is up 21.4% since its buy signal on September
7, 2007. It is annualized at 45.8% since that buy signal. This fund was
solidly bullish last week.
State Street Research Global #9, SSGRX, which is isolated in the
energy sector, is up 316.4% since the Mid-term Indicant signaled buy on
August 16, 2002. It is annualizing at 56.5%. This fund was bullish the
past two weeks, following bearishness in three of the last seven weeks.
Vanguard Energy #18, VGENX, is up 232.9% (annualized at 47.0%) since
the Mid-term Indicant signaled buy on April 5, 2003.
Fidelity Energy Services #40, FSESX, is up 204.0% (annualized at
47.7%) since the Mid-term Indicant signaled buy on December 6, 2003.
Fidelity Energy #39, FSENX, is up 191.1% since the Mid-term Indicant
signaled buy on August 16, 2003. It is annualized at 41.7%.
These energy
related funds were solidly bullish last week in addition to precious
metals and commodities. This supports an inflationary theme.
Investors in
these funds are supporting a 1970’s type of market with high inflation and
high oil prices. As long as capitalism remains in vogue around the globe
and alternative sources of energy continue to lag exponentially increasing
demand, a long-term perspective on holding strategy is appropriate.
The SQI
(Consolidated Short-term and Quick-term Indicant) model signaled buy for
the
GLD-ETF#11 on August 3, 2005. It is up 114.5% since then. It is
annualized at 44.2%. This fund has been bullish in twenty of the past
twenty-six weeks. It was solidly bullish last week.
The SQI
signaled buy for
ETF#03 – Energy and Natural Resources on March 26, 2003. It is up
248.4% (annualized at 49.8%). This fund has been bearish in four of the
past seven weeks, but solidly bullish the past two weeks.
Mid-term
Indicant Positions – Ten U.S. Indices
There were no new bull signals and no
new bear signals.
The lone bull,
Dow-Utilities, is up 19.6% since the Mid-term Indicant signaled bull on
June 2, 2006. It is annualizing at 11.3%.
The Mid-term
Indicant is signaling bear for nine of the ten major indices. They are
down by an average of 3.4% since their bear signals an average of
7.9-weeks ago. The S&P600 is down 7.8% since its bear signal 15-weeks
ago. It was mildly bearish last week and is now nestled against its upper
trading range limit of a steep bearish slope. If it crosses above this
upper limit, the current bearish cycle will become disrupted.
The Mid-term Indicant Dow Jones Industrial Average performance is at
$37,116,204
That beats buy
and hold performance of $1,883,618 on a $10,000 investment in the Dow
stocks in 1900. The
MTI S&P500 is at $176,088. That beats buy and hold’s $132,541 on a
December 31, 1971 $10,000 investment. The
MTI-NASDAQ is at $209,566. That beats buy and hold’s $79,867 on an
October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy
and hold by 1,870.5%, 32.9%, and 162.4%, respectively, for these indices
as of this past week.
The Indicant’s
percentage advantage over buy and hold does not change during bull
signals. The advantage changes only during bear signals. That is because
the buy and hold model has to keep holding, while the MTI-RYS model avoids
bear markets. The only purpose of the Mid-term Indicant model is to avoid
the bear markets. That is why it beat buy and hold by nearly 2,000%
covering the past 100+ years.
Click here to go to the current Mid-term Indicant assessment of the ten
major indices.
Click here for a tour of the Mid-term Indicant for major market indices.
Mid-term
Indicant Positions - NASDAQ100 Stocks
Click here to see NASDAQ100 report card history.
Click here for
Mid-term Indicant Table of NASDAQ 100 Stocks.
Mid-term
Indicant Positions - Dow Jones 30 Industrial Stocks
Click here to see Dow 30 report card history.
Click here for
Mid-term Indicant - Table of Dow Jones Industrial Average Stocks.
Mid-term
Indicant Positions - Dow Jones 15 Utility Stocks
Click here to see Dow Utilities Report Card history.
Click here for
Mid-term Indicant - Dow Jones Utility Stocks Table.
Mid-term
Indicant Positions - Indicant Selected Stocks
Click here to see Indicant Select Stock Report Card history.
Click here for
Mid-term Indicant Table of Indicant Selected Stocks.
Mid-term
Indicant Positions - Mutual Funds
Click here to see Mutual Fund Report Card history.
The Mid-term
Indicant signaled buy for
ProFunds Ultra Short on January 18, 2008. It was down 32.3% since the
Mid-term Indicant signaled sell on September 15, 2006 until the buy signal
on January 18, 2008. Historical norms of market cyclicality suggested the
next buying opportunity for this fund should not occur until 2009.
However, the recent bear signal for several major indices facilitated an
earlier buy signal. Do not be surprised if this buy signal is reversed
ahead of seasonal normalcy.
At this time,
this fund is up by 7.2% since the Mid-term Indicant signaled buy on
January 18, 2008. It is annualizing at 73.7%.
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
327.7% (annualized at 20.0%) since the Long-term Indicant signaled bull
851-weeks ago. Economic data is the primary influence on the Long-term
Indicant. Recessions, deflation, and inflation have not been strong enough
to signal bear since that bull signal. A link to the Long-term Indicant is
below:
http://www.indicant.net/Members/Updates/LTI-Markets-DJIA/DJIA.htm
Quick/Short-term Indicant Stock Market Report - Summary
Near-term
attributes: Mixed with minimal
obviation, but some attributes configured late Friday in support of a
bullish bounce.
Quick-term
Red Bulls: Two of thirty; One
is non-contrarian. Minimal bullish support.
Quick-term
Yellow Bears/Threats: Twenty of
thirty supporting the bear.
Quick-term
Non-Bearishness: QTI
differential is -7.3%, supporting bear.
Short-term
Non-Bearishness:
Breakout/breakdown differential -1.9%, supporting bear.
Force
Vectors: Reconfigured on Friday
with some non-bearish sentiment. Do not be surprised at a bullish bounce
in the near future.
Vector
Pressure: Six in bullish
domains. Twenty-four in bearish domains. Non-bullish, but holding steady
and forming a minor base for a bullish bounce.
Long-term
Hold Positions: Continue
holding, except where sell signals are noted
Immediate
Tactics: Sell aggressively on
signals.
Current
Quick-term Bias: Configurations
continue favoring the bear.
Overall
(Long-term) Market Status:
8/15/06 –bullish-bias expired on 01/04/08.
Profit
Potential from Naked Options:
Volatility is high, enhancing option opportunities.
Volume:
Bearish bias dominant, but
weakening with what appears to be returning lethargy.
Quick-term/Short-term Indicant Stock Market Report Details
The
Short-term Indicant signaled bear on Friday, January 4, 2008 for both
major indices. The Dow is down 3.3% and the NASDAQ is down 8.0%,
respectively, since that bear signal.
Please read
on. Click here to see the
Short-term Indicant’s history.
As stated the
past several days, both
Indicant Volume Indicator’s are continuing in their lethargic
pattern, suggesting diminishing interest in either dynamic bearish or
bullish direction.
As stated the
past several days. these configurations are suggesting stock market
comfort at current levels. Rest assured, all comfort zones are temporary.
The NASDAQ
nestled directly on its bearish yellow curve on last Thursday’s bearish
aggression. The past three interactions with this curve were not met with
a bullish response, unlike behavior during the days of solid bullishness
(August 15, 2006 through January 4, 2008). During that bullish period, the
NASDAQ seldom interacted with bearish yellow. As it neared bearish yellow,
it bounced north.
As stated
last Thursday, it will be interesting to see Friday’s behavior. The
dilemma was expressed as follows: “If the NASDAQ moves below bearish
yellow again, the bear will gain more momentum. However, there is one more
floor remaining that provides bullish hope. That is the NASDAQ’s long-term
lower trading range limit line. It has not yet crossed below that line,
but getting eerily close to it. Without a floor the bear can roam at
will.”
This is what
happened on Friday. The NASDAQ opened mildly bullish, as if it was going
to bounce north off of bearish yellow. The market reasoned such a bounce
was unjustified with the underlying economic fundamentals and wavering
economic reports regarding sub-prime lending impact. The market adopted
the more bearish theme throughout most of the day with the NASDAQ
plummeting under the pressure of extreme bearish aggression. During the
final 30-minutes of Friday’s session, the NASDAQ returned to bearish
yellow. So, the pondering continues….at least until Monday.
Pondering
points are this. The NASDAQ expressed discomfort falling under the bear’s
influence on an intraday basis. However, it equally felt discomfort
falling below a critical technical level; the bearish yellow curve. In
other words, there is bear/bull equilibrium on a near-term basis. These
short periods of equilibrium are similar to those in 2002, when the market
periodically lacked bearish continuation commitments, while it was equally
absent of allowing the bull to garnish influence.
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 12-ETF’s. They are up by an average of 54.5%
(annualized at 17.4%) since their respective buy signals an average of
160.9-weeks ago. Although there were no sell signals, the SQI is avoiding
18-ETF’s at this time. They are down by an average of 2.9% since their
sell signals an average of 9.0-weeks ago.
The SQI model is the one that most of you will prefer for your trading
decisions. It generates fewer signals than the other two models and
represents consistencies in the Quick-term and Short-term outlooks for the
specific ETF’s. It also beats buy and hold on a regular basis, although
there is only eight years of proof. The quality of that proof is high
since this period includes a powerful bull and bear. The model sours a
little during meandering markets with an excessive number of signals from
time to time. Research toward perfecting continues.
Short-term Indicant Report Card, Status, and Charts
There was one
buy signal and no sell signals. In addition to the buy signal, the
Short-term Indicant is signaling hold for 14-ETF’s. They are up an average
of 131.2% (annualized 43.0%) since the STI signaled, buy, an average of
156.9-weeks ago. Although there were no sell signals, there are 15-ETF’s
with avoid signals. They are down by an average of 5.0% since their sell
signals an average of 9.8-weeks ago.
The
Short-term Indicant is more active in buying/selling than the Consolidated
model. The Quick-term Indicant, which follows, is even more active.
Quick-term Report Card, Status, and Charts
There were no
buy signals and no sell signals. Although there were no buy signals, the
Quick-term Indicant is signaling hold for only five-ETF’s. They are up by
an average of 63.4% (annualized at 41.1%) since the QTI signaled buy an
average of 79.3-weeks ago. Although there were no sell signals, the
Quick-term Indicant is avoiding 25-ETF’s. They are down by an average of
4.2% since their sell signals an average of 8.0-weeks ago.
The
Quick-term Indicant is yet more active with buy and sell signals.
Conflicts
Between the Short-term and Quick-term Indicants
There are ten
conflicts, whereby the Short-term Indicant and the Quick-term Indicant are
in disagreement between hold and avoid status. This suggests market
disharmony. The combined Short/Quick Indicant models identify 33-hold
signals and 55-avoid signals, providing a bearish edge. The bullish bias
shift on August 15, 2006 expired on January 4, 2008. Please read on.
Quick-term Indicant Bull/Bear Health Report
Twenty of the
30-ETF’s are below their respective bearish yellow curves. The average
relative position of all thirty ETF’s is below bearish yellow by a mere
0.4%. Just as it appeared the bear was about to relinquish power to the
bull from yesterday’s reading, the typical bull/bear battle ensued with
the bear winning with Thursday’s bearish aggression and Friday’s strong
intraday bullish closing.
Only two of
the ETF’s are above their bullish red curves. All thirty ETF average
positions are 6.9% below their bullish red curves. All of those below
bullish red are non-contrarian. This attribute is offering no bullish
support. Keep in mind QID is not included in this statistic. It is
discussed near the end of this report.
The QTI
differential is minus 7.3%, which supports the bear.
Short-term Indicant Bull/Bear Health Report for ETF’s
The above
heading is linked to the Short-term Indicant table. This paragraph is
repeated daily as a reminder of accurately interpreting the charts. By
clicking the charts on the table you can review potential contact with the
breakdown lines (bearish) and potential contact with breakout lines
(bullish). It is extremely bearish when several ETF’s are contacting their
respective breakdown lines. The breakdown lines are the yellow lines
(bearish). The breakout lines are the red ones (bullish). Close proximity
to breakout implies an increased probability of an actual breakout
occurring. It is certainly bullish and you will want to be in a hold
position for those few days a year when the breakout occurs. Conversely,
significant contact with yellow (breakdown) suggests “avoid” positions are
best.
One of the
thirty ETF’s is contacting its breakout line. Again, it is contrarian
ETF#11-GLD. There is no bullish support from this attribute at this time.
ETF#11 is a clear signal of economic weakness, coupled to inflationary
fears.
This was the
thirty-fourth consecutive trading day of non-contrarian non-contact, which
is a bearish attribute.
The average
distance from breakout contact is 15.0%. Double digit variances from
breakout contact for thirty-three consecutive trading-days is not
supportive of the bull.
None of the
ETF’s are contacting their breakdown lines. Non-contact by non-contrarian
ETF’s is relaxing bearish influence.
The average
distance between the price and breakdown is 13.0%. This configuration is
providing non-bearish support, which has been the case since March 2003,
but barely hanging on to that support.
The
breakout/breakdown differential is negative 2.0%. A negative value
suggests bearish bias, preventing bullish sustainability. This has been
shrinking and thus attempting to mitigate bearish dominance.
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
Force Vectors are directionally bullish. That is a tremendous increase
from Thursday, suggesting a bullish spurt is on the immediate horizon.
To understand
potential financial opportunities,
click here to learn to identify Robust Force Vectors. They are visible
on the
Quick-term Indicant charts.
ETF Force
Vectors/Vector Pressure Crossings/Option Signals
Remember, the
links contained herein are more visible when reading this on the website.
Click this sentence for Vector Pressure Option Signals. There was one
call option buy signal after Friday’s close. The market’s bullish behavior early in
Friday’s session was too mild and too short for the put option buy signals
with deeply discounted price offerings to transact. That is good as some
of the near-term attributes are configuring in favor of the bull.
Six of the
thirty ETF Vector Pressures are in
bullish domains, which continues configuring in support of the bear.
However, that is an increase by one from Thursday.
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 bullish
bias shift that began on August 15, 2006 expired on January 4, 2008.
January 30,
2008 – The Fed’s cut in interest rates did not stimulate bullish interest,
which is bearish. However, it is better to wait for near-term attributes
to mature before resuming written covered call options.
February 12,
2008 – Several Quick-term Indicant attributes are suggesting bullish
resurgence. It is too risky to write covered call options at this time.
February 14,
2008 – Bullish behavior on Monday, Tuesday, and Wednesday of this week was
replaced with bearish aggression on Thursday. It is reiterated no
foundational structure has configured to obviate the market’s directional
propensity. It remains too risky to write options at this time.
February 21,
2008 – Significant put option buy signals in the recent past has been
predecessor to significant bearish behavior.
February 22,
2008 – Although the market was significantly bearish on an intraday basis,
several configurations shifted away from immediate bearish support.
ProFunds Ultra Short mutual fund moves inversely to the QQQQ by
exponential amounts. The Consolidated Indicant model is now avoiding QQQQ.
You will notice the Mid-term Indicant is signaling hold for ProFunds Ultra
Short. Continue holding unless you see a buy signal for QQQQ or sell
signal for ProFunds Ultra Short or ETF#31-QID, which is discussed below.
The
Quick-term and Short-term Indicant tracks ETF#31, QID, which is the ETF
cousin to ProFunds Ultra Short. This ETF is relatively new and has not yet
developed enough data to formally track its outlook. It is excluded from
overall ETF statistics because it is purely contrarian. It is designed to
move bullishly during bear markets and bearishly during bull markets. This
exclusion is required for convergent/divergent monitoring.
The
Quick-term Indicant signaled buy on January 8, 2008 for QID. It is up
14.1% since that buy signal (annualized at 112.5%).
Feb 4,
2008-QQQQ is approaching its bearish yellow line from below, while QID is
approaching its bullish red curve from above. The specific interactions
with both of these securities will offer some insight on bearish
sustainability.
Feb 5,
2008-Both indices’ behavior was consistent with that of bearish ambition.
Feb 6,
2008-QQQQ reacted bearishly and QID exerted more bullish influence. This
behavior is consistent with bearish expectations.
Feb 12,
2008-QID started a quick-term cooling from its red-hot bullish position a
few days ago. It is configured to cool. Watch its behavior as it
approaches its red bullish curve on the Quick-term Indicant chart. If it
bounces north the bear market will persist.
QID is up
1.1% since the Consolidated Indicant signaled buy on January 22, 2008. The
Short-term Indicant signaled sell 1.3 weeks ago and it is up by 4.6% since
then. Due to the Quick-term Indicant’s holding and the Short-term
Indicant’s selling, the Consolidated Indicant continues to hold until such
time the Quick-term and Short-term Indicant are in agreement on
directional intensity. Right now, the Quick-term Indicant is retaining a
solid hold position due to it being a red bull.
To
familiarize yourself with viewing the market from an ETF perspective,
click the following update links.
Quick-term ETF Options
Quick-term Indicant for ETF’s
Short-term Indicant for ETF’s
Consolidated Quick-term/Short-term Indicant for ETF’s
Click here to the report card, which is updated weekly, to link to related
tours.
Links to the
Short-term Indicant and Indicant Volume Indicator are below:
Short-term Indicant for DJIA and NASDAQ
Short-term Indicant Tables for the Dow Jones Industrial Average Index
Short-term Indicant Table for the NASDAQ Composite Index
Indicant Volume Indicator
Divergence
versus Convergence
The markets
enjoyed mild divergence last week. Directional intensity in several
sectors was too mild to define bullish or bearish attributes. It was
merely divergent. Blue chips rose slightly last week, while small caps
moved slightly south last week. Commodities zoomed northward with powerful
bullish forces.
Unfortunately,
the market has endured combined bearish convergence and divergence in
seven of the last ten weeks. Fortunately, the market has not endured four
consecutive weeks of bearish convergence in the recent bearish cycle. In
other words, it remains possible for 2008 to enjoy stock market
bullishness.
As stated in
last week’s report, there is a glimmer of hope for those desiring bullish
behavior. The probability of a deep and sustainable bear market was
significantly reduced three weeks with the enjoyment of bullish
convergence. Of course, that was an obvious bullish spurt. It slowed
bearish ambition.
Indicant
Conclusion
As stated the
past few weeks, the market’s perception is confrontation with only two
choices; inflation or recession. The political establishment continues
biasing forces in favor of inflation by unleashing policies to stave off
recession. The only salvation to the short-term gluttony of politicians is
massive increases in productivity to offset thee anti-economic growth
posture of politicians. Unfortunately, productivity is not delivering. It
suffers with head count reduction and the distraction of loosing one’s
home.
Also, as
stated last week, interest rates are plummeting, which is common company
to bull markets. That, coupled with traditional election year bullishness
should invite a bull market this year. The primary threat to this is
inflation. If the CPI or PPI rise too rapidly, the bear will gain secular
influence. It is more difficult for policy makers to stifle inflation than
recession.
Keep up with
the daily stock market report as the Quick-term attributes can shift
quickly.
Do not get
lazy and set those stop losses for those stocks and funds that continue to
enjoy hold signals.
The daily
updates are on the following link.
http://www.indicant.net/Non-Members/Back%20Issues/QT.htm
Hyperlinks
To access all
major markets, stocks, funds, economic data, charts, statuses, etc, click
the following hyperlink:
http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20Summary.htm
Once you are
inside the website, click on "members update" or simply log in. It is on
the top of every page in the web site so you can always find your way
back.
Happy
Investing,
www.indicant.net
02/24/08
February
17, 2008 Indicant Weekly Stock Market Report
Volume 02, Issue 03 ISSN 1526 6516 © The
Indicant Stock Market Report
This Week’s
Report
ETF-QID
Solidly Bullish and Small Cap-S&P600 Solidly Bearish
Last week’s
report established a focus on ETF-QID as being solidly bullish on a
Quick-term Indicant basis. QID is a relatively new ETF. It is designed to
move bullishly when the overall stock market moves bearishly.
Specifically, its direction is the inverse of ETF-QQQQ’s direction. Let’s
take a closer look at ETF-QID. Click the below link.
../../../Non-Members/Back
Issues/Archives/February/Feb08-Static.htm#February 17, 2008 Weekly Report
As you can
see, ETF-QID catapulted its bullish red curve a few weeks ago. This ETF is
up 13.2% since the Quick-term Indicant signaled buy on January 8, 2008.
This ETF has a little more risk in ownership than other ETF’s. It moves
disproportionately in a contrarian direction to the overall stock market;
specifically, ETF-QQQQ, which represents the NASDAQ100 stocks. That means
even the slightest bullish spurt in QQQQ can wipe out this gain more
quickly than normal market movement.
However,
ETF-QID can provide tremendous opportunities during solid and deep bear
markets. It is a cousin to ProFunds Ultra Short, which is discussed later
in this report. During 2002, ProFunds Ultra Short provided some Indicant
Members with a 70% gain while the NASDAQ fell by nearly 50%. The problem
with ProFunds Ultra Short was the minimum investment requirement of
$100,000 in 2002. That minimum disallowed several from participation.
ETF-QID and
ProFunds Ultra Short behave in the same manner. However, ETF-QID has no
restrictions or minimums. It trades just like a stock, which is the common
attribute among ETF’s.
This is an
inverted view of the stock market. As long as QID is bullish, the overall
stock market will remain bearish. Solid red bulls are not to be argued
with. When they shift bearishly while maintaining their red bull status
should be viewed as irrelevant to the underlying bullish cycle underway.
In this particular case, a bullish cycle with this ETF is the same as a
bearish overall stock market.
As you can see
from the chart on the above link, it appears the bullish attributes of
ETF-QID are weakening. Force Vectors are moving south. However, Vector
Pressure remains solidly within bullish domains.
Also, the
chart reveals how powerful its recent bullish surge is relative to 2007’s
behavior. Some of you recall the bearish scare in late February early
March 2007. At that time, ETF-QID reacted with intimidation when it moved
above bullish red. Many of you recall how the Quick-term Indicant
generated only two sell signals during that particular bear scare. It was
induced by journalists and Greenspan jibber-jabber. In other words, it was
one of those fake bearish spurts that occur from time to time.
Many of you
recall how the sub-prime lending became headline news in mid-summer 2007.
Take a look at ETF-QID on the link. You will notice it scooted north and
touched its bullish red curve before plummeting back to the south.
Economic reports at that time suggested the sub-prime lending crisis would
produce only a negligible economic impact. So, the stock market again
propelled northward with that bullish optimism. Although those early
economic report would eventually proved to be wrong, there was still
plenty of bull money to be made in the stock market.
Hat’s off to
those of you who sold ETF-QQQQ in July 2007. ETF-QQQQ is lower now than it
was then. However, some of you held through the lavish bullish swing
through late summer through November. Although the Quick-term Indicant
tends to signal buy/sell more frequently than the other models, it did not
signal sell until early January 2008. The hold signal was over two years
old and the gain exceeded 30%. Such configurations allow more patience to
minimize trading.
You will
notice from the chart, ETF-QID expressed no timidity passing above bearish
yellow and bullish red. It appears comfortably nestled against bullish
red. ETF-QID has only been holding since January 8, 2008. The Quick-term
Indicant will be less patient with it moving downward. However, it is
unlikely the Quick-term Indicant will signal sell as long as it is a
red-bull. If the bullish red curve acts as a floor to it bottoming, then
holding is appropriate. If the bullish red curve offers no resistance to
bearish ETF-QID behavior, then the Quick-term Indicant will likely signal
sell.
ETF-QID is the
inverse of ETF-QQQQ. When the market moves south, this particular fund
moves north. That affords one to make money during bear markets.
Scroll
downward on the above link. You will notice some of the underlying
attributes attempting to shake this ETF from it bearish direction. Its
Force Vector and Vector Pressure are attempting to establish a bullish
foothold.
