January 2002 - Indicant Weekly Stock Market Reports

January 27, 2002 Indicant.Net Weekly Update

Volume 1, Issue 4 ISSN 1526 6516

Cooking the Books - Voodoo Accounting.

Last week we discussed how voodoo accounting could bring down the stock markets. A few weeks ago we decided we could not trust the following institutions: SEC, Public Auditing/Accounting Firms, Boards of Directors, Company Officers, and of course, all Politicians. And a surprising new one is the press. They usually make their biggest inroads by digging up dirt, but they let Imclone and Enron slip through their fingers. They were not relentless when the hard questions went unanswered.

Sophisticated intellectuals are expert at using non-sequiturs to deflect thought from the issue. Whenever an issue is being discussed, people such as politicians, deflect consciousness from "the issue" by talking around it.

Technology is slowly ridding the world of those types of people from power. It most likely started with the science of finger printing and evolved to exposures, such as Sixty-Minutes. In the early years, Sixty Minute viewers could see the non-sequiturs in action. But when repeatedly seen on TV, the average viewer could pick up on it. So, television and some creative programming exposed the ill will of bad people who populate this planet.

A camcorder exposed Osama Bin Laden's lying about not being responsible for September 11. DNA testing exposed Bill Clinton lying about his affairs on government property and during working hours no less. Tape recorders exposed Richard Nixon's lies.

So technology is king. But with it also comes the bad. Manager's can manipulate data in seconds, send it to millions of people also in seconds, and cause a stock to go up or down. It is becoming more evident that Enron leaders were manipulating data for self-gain.

The Indicant was invented to detect such surprises. Never hold a stock that is below the yellow curve. Don't pay attention to any CEO's unless their name is Bill Gates or Michael Dell. There may be a few other good ones, but remember that most are selling.

Mid-term Indicant Stock and Mutual Fund Trade Signals

Due to an error in the preliminary email report sent to you earlier this weekend, they will be repeated below:

In the NASDAQ100 group, sell Biogen (BGEN) -#61 and buy Amazon (AMZN) - #41.

In the Indicant Stocks group, sell Theagenics (TGX) - #58.

In the Dow Jones Utility group, sell NiSource (NI) - #3 and buy Public Services (PEG) - #11.

Stocks remain volatile as we proceed through this inflection point in the market. Many of them are hovering around the bearish yellow curve and thus signaling is more excessive than we like. When the market convinces itself to firmly become "bull" or "bear" then the excessive signaling will diminish.

Amazon looks like an attractive "buy." Over a period of time, Amazon should change their business model to become more of a direct distributor rather than carrying inventory. They have the name recognition to have a lot of clout in the Internet distribution arena. Inventory management is Amazon's biggest problem. If they master that part of the business, then the company's profit performance can be second to none.

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

As always, remember to never have more than 10% of your investment resources into a single stock. And try your best to never have more than 20% of your investment resources in a single mutual fund.

Political Influence

The political climate continues to get better for the stock market. As the Enron case unfolds, the folks on Capitol Hill will engage in very bitter political beatings among each other. And that is good for the stock market. When Congress does not get along with the White House, the stock market has a better chance of going up. Let's hope for more of a "do-nothing" government. As stated last week, let's continue to encourage our leaders to loosen the purse strings for some more smart bombs. Fidelity Defense and Aerospace Fund (FSDAX) - #36 held up pretty well in last week's up and down stock market.

Economic Outlook

As repeatedly stated for the past several months, there is not much difference from last week's report on inflation. The Indicant signaled "buy" for Fidelity American Gold (FSAGX) - #28 on December 7, 2001. It weakened last week and is now up 9.0% since the buy signal. Last week it was up 11.1%. Vanguard Gold and Precious Metals is up 22.7% since the Indicant signaled buy on April 13, 2001. If the markets collapse due to investor's lack of confidence in financial institutions and general accounting practices, then gold and related securities would be excellent investments. We'll be watching for you.

All of the commodities remain in bullish territory for the stock market. Our fears of deflation have abated.

Interest rates remain extremely favorable with respect to stock market projections. The Dow Jones 20 Corporate bonds decreased last week and remain in neutral position while Municipal bonds have been decreasing to neutral position. As long as both remain neutral, that is one more variable to count as bullish for the stock market. All interest rates continue to be bullish for the stock market.

After several weeks of significant increases the Freddie Mac and Fannie Mae mortgage rates continue to soften. They both crossed above the bullish yellow curve into neutral territory seven weeks ago. They continue to drop and are just barely out of bullish territory.

The weakening Yen continues to threaten Detroit and U.S. automotive production in general. And since the loyal consumers of World War II vintage are decreasing in numbers, Detroit is going to take a double hit. The weakening Yen and the decreasing population of "buy American" consumers. The Japanese auto producers have the best of both worlds. They can cut back on production in their U.S. plants and accelerate production in their Japanese facilities. As long as the Yen continues to weaken against the dollar, that will likely happen. They will increase their exports to the U.S. with a better product. The Japanese simply build better cars. That will add to unfavorable trade balances, but thankfully, we Americans can buy the product of our choice.

Only a few years ago, Ford projected they would surpass General Motors in size. General Motors is a huge organization with a tremendous amount of clout. Their size overcomes the incompetence of their management.

The story is mixed on whether or not Greenspan will cut interest rates again. He believes the economy is already rebounding. K-Mart, another Detroit company, is having devastating difficulty in surviving. A weak economy, exposes management incompetence more quickly than an expanding economy. Greenspan has room to weaken the dollar with another cut in interest rates. And he should do that to help U.S. exporters and provide more economic stimulus.

Bullish themes for the stock market are two trillion dollars setting on the sidelines. And those folks are earning less than 2%. The economy appears to be rebounding. The larger companies have hordes of cash and will be buying out number two or three in their respective industries.

Bearish themes for the stock market are historically high stock prices with respect to earnings. Enron and Imclone manipulation of stock prices and voodoo accounting could bring the market down. In other words can you believe the numbers on the financial reports? Will the annual reports you are about to receive in the mail books of fiction or books of fact? Although the threat of deflation has abated, it could return in a hurry. Greenspan must do as much as he can to stimulate demand for products and services. And finally, but not least, the continued threat of terrorism can act as a lid on the stock market.

The market's behavior in this inflection point, as identified with the Quick-term Indicant will advise us which theme will overcome the other.

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

Quick-term Indicant - Markets

Four weeks ago the "quick-term bull leg" was annualizing at greater than a 100% rate. Three weeks ago the annual growth rate was halved to 55.4%. Two weeks ago, it was down to 41.1%. Last week it ended at up up slightly at an annualized growth rate of 41.5%. That is still too much for the economic conditions confronting us. As stated the last few weeks, the markets needed to rest. Especially, the small-caps and mid caps. And the markets continue to take that needed rest, just as predicted.

You will continue to receive the "quick-term market" report Monday through Thursday. We need to watch closely how the markets perceive financial information from corporations. If many doubt their integrity, the market can tumble again.

Short Term Indicant Positions - Markets

The markets have had great difficulty getting a bull signal from the Short-term Indicant. When the Dow received a bull signal on January 3, 2002, it was after the peak of the quick-term bull market. And that Short-term Bull market lasted only two days. In other words the markets are out of synch. That is not too surprising with the uncertainties confronting us.

The NASDAQ Composites are down 54.1% since the Short-term Indicant signaled "bear" on March 31, 2000. It has been nearly two years since the Short-term Indicant signaled "bear" at 4224. You will know we are into a "real" bull leg when the Short-term, Quick-term, and Mid-term Indicants are all signaling "bull." Remember we are still at an inflection point!

Mid-term Indicant Positions - Major U.S. Markets

The Mid-term bull markets remain in tact. They remain embryonic. All markets are just barely above the bearish yellow curve. As stated last week, if this is truly going to be a bull market, it will most likely resemble the one in the early 1950's where there was continued steady movement up a 15-degree slope. It will definitely not be like those of the 1990's with those sixty-degree upward slopes.

The only Mid-term Bear is the Dow Jones Utilities. It is down 20.5% since the "bear" signal in June 2001. Ernon's collapse is a big contributor to that decline.

Even though we did not encounter the dreaded fifth bearish leg that does not mean it is still not possible. The last time a major market endured four or more "quick-term bear legs" was in the 1929-1933 market. And the current market is at four "quick-term bear legs." A fifth one could be around the corner in the event that all the major markets cross below the bearish yellow curve.

Mid-term Indicant Positions - International Markets

This indicator remains bullish for both U.S. and foreign markets. There were no bear signals this past week. Although the U.S. Markets eked out a small gain last week, the international markets were up by over 2%. They ignored the problems of the U.S. markets. That is bullish for all markets. Like the U.S. Markets, several of the international bulls are embryonic. But they are steadily convincing the world economy and outlook is steadily improving.

The Mid-term Indicant has identified eighteen bull markets of the twenty-two international markets it tracks. These are very recent "bull" signals. The eighteen bull markets are up 10.2% since the Indicant signaled "bull" ranging from June through December of last year. Three weeks ago they were up 11.0%. The remaining four bear markets are down 23.8% since the Mid-term Indicant signaled "bear" an average of 35.9 weeks ago.

Click the following hyperlink to view the status and charts.

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

Mid-term Indicant Positions - Mutual Funds (Timing the Sectors)

There were no new buy or sell signals for mutual funds.

The number of funds the Indicant has recommended to buy or hold is now at 53 out of the 76 funds currently monitored by The Indicant. The 57 we were holding last week are up an average of 3.0%. Three weeks ago they were up 4.3%. Many of the funds are very recent purchases and have not had the time to mature their "bull" legs. The average period of time we have been holding these funds is 10.0 weeks. Seven weeks ago it was 7.8 weeks. The 3.0% average gain annualizes to 15.5%, which is down from 31.1% three weeks ago. The 23 funds the Indicant has you avoiding are down an average of 18.8% since the Indicant's sell signals. The Indicant has been avoiding these "bearish" funds for an average of 33.9 weeks.

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

Always remember to never 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.

Mid-term Indicant Positions - Indicant Selected Stocks

The Mid-term Indicant generated one sell signal in this group of stocks.

The Mid-term Indicant recommends holding 28 of the 74 stocks it tracks. The number of stocks recommended for holding are down because this group of stocks consists of former NASDAQ100 stocks. They were recently booted off that listing and as promised we will track them for at least one year from the time they were booted. These 28 stocks with a hold recommendation are up an average of 33.6% since the Mid-term Indicant signaled "buy." The average period of time the Indicant has signaled "hold" for these stocks is 17.3 weeks. So, the average annual gain of these held stocks amounts to 101.3%, which is down from 117.6% three weeks ago. As the bull legs mature and as stock prices flatten or endure slight declines, the annualized gain will decrease. The remaining stocks the Indicant recommends to avoid are down an average of 45.2%. The Indicant has avoided these stocks for an average of 36.6 weeks.

Always remember to never keep more than 10% of your investment resources into any single stock.

Click the following hyperlink to view this group of stocks:

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

Mid-term Indicant Positions - Dow Jones 30 Industrial Stocks

The Mid-term Indicant did not generate any buy or sell signals. Honeywell rebounded after its sell signal last week and may get renewed vigor for a buy signal in the next week or two. It fell below the bearish yellow curve two weeks ago and nearly went back above it. By policy, the Indicant never signals buy or hold for any stock below the bearish yellow curve.

The Mid-term Indicant is signaling "hold" on 17 of the 30 Dow Industrial stocks. These 17 stocks are up an average of 7.4%, which is down from 10.6% three weeks ago. The current hold positions are annualizing at a 28.8% growth rate. The Indicant signaled "buy" for these stocks an average of 13.3 weeks ago. The 13 "avoided" stocks are down 11.9% since the Mid-term Indicant signaled "sell" an average of 26.7 weeks ago.

Click the following hyperlink to view this group of stocks:

http://www.indicant.net/Non-Members/Public%20Updates/UD%20MTI-DJIA-STKS.htm

Mid-term Indicant Positions - Dow Jones 15 Utility Stocks

The Mid-term Indicant signaled "buy" for Public Services and "sell" for NiSource. It fell below the bearish yellow curve. It may rebound, but as always never hold a stock below the bearish yellow curve. The Indicant recommends "holding" six of the fifteen utility stocks. These stocks are up 36.2% since the buy signals an average of 66.2 weeks ago. This annualizes to a 28.5% gain for these stocks. The Indicant has signaled "avoid" for the remaining seven stocks for an average of 34.7 weeks. These stocks are down an average of 39.1% since their respective sell signals.

Last week we recommended you take a look at Utility stocks with recent "buy" signals. Some are depressed and are providing nice dividend yields. One of those stocks recommended to take a look at was NiSource because it was in a hold position and was down about 4% since the buy signal. This week it fell below the bearish yellow curve, but ever so slightly. If you bought it last week, you may want to put an 8% stop loss on it. If the markets rebound this week, that stock could move back up above the yellow curve and could be an excellent long-term buy for you. But it is dangerous to hold a stock below the yellow curve. Thus the reason for the stop loss maneuver.

Click the following link will guide you directly to NiSource.

http://www.indicant.net/Members/Updates/MTI-DJU-Stks/DJU-01.htm

Click the following hyperlink to view the entire group of these stocks:

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

Mid-term Indicant Positions - NASDAQ100 Stocks

The Mid-term Indicant signaled "buy" for Amazon. It signaled "sell" for Biogen. Two weeks ago, the Indicant signaled "sell" for eight stocks. Remember, stocks are much more volatile than mutual funds. This is especially true during inflection points. Biogen is a member of the weakening biotech group, which performed well for us in the last half of last year. But those stocks continue to weaken from profit taking and the Imclone disaster.

In addition to the recent buy and sell signals, the Mid-term Indicant now recommends "holding" 55 of the 100 NASDAQ stocks. These stocks are up an average of 20.3% with an average "holding" period of 12.5 weeks. Two weeks ago they were up 23.9%. The 20.3% gain amounts to annual gain of 84.3%. That remains pretty strong and another argument for additional pullbacks in the market. The 43 stocks the Mid-term Indicant is avoiding are down 37.8% since the Indicant signaled "sell" an average of 25.7 weeks ago. The removal of Amazon from the "avoid" list reduced this average period of avoidance by two weeks. Amazon had been avoided for over a year since the Indicant's previous sell signal on January 7, 2001 at $69.56. The buy signal occurred last Friday at $14.64.

Remember to never hold more than 10% of your investment resources into a single stock. You never know when "stupid management" will kick in. As you can tell stocks outperform mutual funds in bull movements, but with greater risks. They decline in price more than good mutual funds during bear markets.

Click the following link to view this group of stocks:

http://www.indicant.net/Non-Members/Public%20Updates/UD%20MTI-NAS100-STKS.htm

Mid-term Indicant Positions - Index Options

The Mid-term Indicant did not generate any bull or bear signals this past week. Keep in mind there were only two bulls last August. Now there are twenty-nine. It was surprising there were no bear signals this past week as many of these sectors are tethering just above the bearish yellow curve. Although there were no new "bull" signals, that brings the total of index options with "bullish" behavior to thirty out

Of the thirty-seven index options the Indicant tracks, thirty options are bulls for the past 6.9 weeks (average). They are down an average of 1.9% since the bull signals. Two weeks ago they were up 2.98% for an annualized gain of 40.0%. As you can see, this bull is very embryonic and could turn into a raging bear very quickly. The remaining seven index options with Indicant bearish behavior are down 26.4%. These indexes have been classified as bear sectors by the Indicant for an average of 37.0 weeks.

To view the status and charts of these markets, please click the following:

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

Long Term Indicant Positions - Dow Jones Industrial Average

The Long-term Indicant has had you in blue chips since December 1991. The blue-chip long-term "buy" was at 2895. There is no sell signal anywhere on the horizon. Since the Long-term Indicant's buy signal in December 1991, the Dow is up 239.9% (annualized at 23.5%). The next update to the Long-term Indicant will be January 28, 2002.

Indicant Conclusion

The new threatening paradigm is investor's confidence in the accounting practices of Corporate America. There is the potential for distrusting the financial establishment, corporate leaders, and public accounting firms. As stated before, the market continues to process through an inflection point. Will the market climb these walls of worry? It has in the past, but not every time.

Technically, there is the potential for upside volatility in the next few weeks. Some of the earnings reports were of favorable surprises. The question is, are they "fact" or "fiction?"

Five weeks ago, we pointed out three scenarios for the market as it processes itself through this inflection point. (1) It can resume its nasty bearish decline. (2) Or the "quick-term bull" can resume it path north and mature into a full-fledged "mid-term bull." 3) Or the market can simply stabilize for awhile before taking directions (1) or (2).

It is with some regret to continue repeating the aforementioned paragraph. Until this "quick-term bull" re-identifies itself as longer term, one of the above three scenarios are still very much possible.

The markets took the direction of number (2) above at the beginning of this year. But the past three weeks, the market has threatened us with number (1). One cannot relax around these inflection points. So, please keep a watchful eye on your email."

Hyperlinks

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

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

Also, once you are inside www.indicant.net, you 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

01-27-02

January 20, 2002 Indicant.Net Weekly Update

Volume 1, Issue 3 ISSN 1526 6516

Dear Indicant Members:

Voodoo Accounting Could Collapse Markets 75% from Current Levels

The investment world has changed the past few months. These changes could induce severe bearish behavior on the stock market. It could even invite a geometric configuration similar to the ugly bear of 1929-1933. If that is the case, the markets could fall another 75% from their current levels.

So, what changed?

Although the Publisher of "The Indicant Stock Market Report" has always known that security analysts provided minimal services to the investment community, we learned that some of them are outright dishonest and even criminal.

Most boards of directors have always been a joke. It is unbelievable that anyone would pay homage to them. If you want to have a good board, you would have a mix of "hands-on" business leaders from other "related" companies and your current employees; especially those directly involved in the value chain. Having bankers, politicians, former politicians, politically connected people, etc. seldom adds value.

We learned that some CPA firms (and their employees), who take an oath of honesty, are not trustworthy. Of course, it is hard to rat on the one who pays the bills, which makes the whole system look faulty.

We learned that the SEC is more incompetent than previously thought. Again, the issue is whether or not the SEC is incompetent, but how much!

We learned that the press does not dig deep and only writes what liars say. What happened to the days of skeptical reporting? The press wrote glowing reports on Enron at a time that they were asking the "unanswered question" to Enron. That is "where are your profits coming from?"

We learned the political powers and corporate powers are in cahoots together. Not too surprising here, as that has been the case for quite some time. Many are just really smart at leaching. But with electronic media, more and more dilettantes are being exposed.

After working as an independent consultant for several Fortune 500 Companies, several observations of voodoo accounting were made with the sole purpose of influencing the stock price. The most common snaky practice is to revalue assets when profits are difficult to come by the old fashion way. That is increasing sales and reducing costs to produce profits. The fake profits quite commonly occur when sales drop off or costs go up due to stupid management. So, to bide time for resume writing and exercising stock options, management will take a look at their property, including inventory, and revalue it. This revaluation is taken to profit. This action deflates future profits with the increased burden expense tied to the increased valuations, but who cares? By then, many of them have their resumes out in the market or have already exercised their stock options. Those in the upper management circles already got their $30 million or so and are gone.

Now most CPA firms don't know the difference between, say an electric motor and a gasoline engine. So when these revaluations occur, they don't have the expertise to assess the integrity. The management is aware of this inherit weakness of the accountants. So, this is a very common ploy to inflate profits; especially in the old rust belt industries. There are exceptions to this, but today it is easier than what it was in the old days.

But Enron's executives were bolder and not nearly as creative as those who play the revaluation game. These guys hid billions in debt and cashed in for personal gain. They reason that for $30 million or so, two years in "country club" jail is not too bad. But, as you have been warned about several times in this newsletter, management stupidity can rear its ugly head at any time. And this is just another example of it, along with dishonest management.

So what does this mean? All industries sooner or later experience downturns and shakeouts. The financial industry has not endured this in quite some time. Investors may take a jaundiced look at the financial industry and ask, "can I believe your valuations of company XYZ?" If the average investor answers this question with a "no," then watch out. The NASDAQ will collapse to 500 and the Dow will sink back to about 2500. The reason the NASDAQ fell by over 50% from its peak was due to investor's discovery of over-valued Internet and technology stocks. Over-valuing and false valuing induce the same impact on stock prices. Stupid management and dishonest management produce the same impact on stock prices.

Investors are going to start asking that question in the coming weeks and months. And if more and more start answering it with "I cannot believe the current or projected earnings reports" the collapse will be underway. And the Indicant will be watching for you.

Imclone's collapse this past week, by all accounts, is not based on dishonesty. Remember that stupidity and dishonesty have the same impact on the ultimate price of a stock. You were advised by The Indicant to sell Imclone at $42.96 on January 5, 2002. It closed at $18.99 on January 18, 2002.

Mid-term Indicant Stock and Mutual Fund Trade Signals

The specific "buy" and "sell" recommendations were sent to you in an earlier email this weekend. Also, if you need to look at the tables for all of the recommendations, please click the following link:

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

After several weeks of little activity on sell signals, increasing "sell signals" continue to occur. As stated last week, we expected a sell signal for Schlumberger and it occurred as predicted. The oil well services group has pretty well established a continuing descent in their stock prices. The Indicant will continue to track them as long as there is a conflict in the Middle East.

There was only one "buy" signal this past week against a combined total of twelve sell signals for stocks and mutual funds. But there were no sell signals for the stronger companies, such as Dell, Microsoft, Oracle, etc. Mutual Funds held up pretty well. None of the mutual fund sell signals were surprising as they were generated in the weak sectors of biotechnology and energy services.

The next few weeks will be more enlightening about the future direction of the market.

As always, remember to never have more than 10% of your investment resources into a single stock. And try your best to never have more than 20% of your investment resources in a single mutual fund.

Political Influence

The political climate is getting better for the stock market. Last week the only positive influence in the stock market was the anticipated bickering and jawboning from this election year. This week, the Enron story is definitely going to add fuel to political rhetoric. This should stifle actions between the legislative and executive branches of government. Always remember that a do-nothing government is good for the stock market. Let's continue to hope for vetoes, two-thirds overrides, and minimal legislation. But, let's hope that the government loosens its purse strings for some more smart bombs. We need them. And it would be good for any defense and aerospace stocks you may hold. See Fidelity Defense and Aerospace Fund (FSDAX) - #36.

Economic Outlook

As repeatedly stated for the past several months, there is not much difference from last week's report on inflation. The Reuter U.K. commodities crossed above the yellow curve into neutral territory. Other generic groups, such as CRB Bridge Futures and Dow Jones Spot Futures continue rebounding, but remain in healthy "bullish" territory for the stock market. And has been stated, we have been calling for these commodities to increase in price. The threat of deflation, which would devastate the stock market, continues to decrease with the rebound in commodity prices. Gold has started moving bearishly with respect to the stock market. It is getting near the bearish red curve. The Indicant signaled "buy" for Fidelity American Gold (FSAGX) - #28 on December 7, 2001. It is now up 11.1% since that time. If the markets collapse due to investors lack of confidence in financial institutions, then gold and related securities would be excellent investments. We'll be watching for you.

Interest rates remain extremely favorable with respect to stock market projections. The Dow Jones 20 Corporate bonds have been increasing to neutral position while Municipal bonds have been decreasing to neutral position. As long as both remain neutral, that is one more variable to count as bullish for the stock market.

Interest rate trends continue in a southerly direction and that is good for the stock market. The three-month T-Bill and New CD's dropped this past week. And they continue to signal "bullish" behavior for the stock market. They remained relatively unchanged from last week and are below the bearish red curves by a whopping 47% and 51%, respectively. They could move up without jeopardizing their contribution to a bullish stock market.

After several weeks of significant increases the Freddie Mac and Fannie Mae mortgage rates softened last week. They both crossed above the bullish yellow curve into neutral territory six weeks ago. They remained there this past week, but appear to be heading back into bullish territory.

Current Ford management is blaming their current problems on Donald Peterson, who was CEO until the late 1980's. He was the only good CEO Ford had since the old man, Henry, retired. If current management blames the best CEO they had in the second-half of the last century, that means their thinking is fuzzy. So, whatever you do, avoid Ford stock.

It is highly unlikely that Ford will recover the luster it once had. Japanese auto transplants continue to take more market share and with the weakening yen, they U.S. automakers will be more threatened by increasing import competition. The government, lying politicians, and cheating Big Three Executives in the early 1950's destroyed the Tucker Torpedo. And when they did that, they opened the door to the Japanese.

To take a look at the current economic status and charts, click on the following hyperlink. It has been redesigned for more efficient navigating and to keep you better informed about the overall economy and its impact to the stock market.

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

Quick-term Indicant - Markets

Two weeks ago the "quick-term bull leg" was annualizing at greater than a 100% rate. Last week the annual growth rate was halved to 55.4%. And this week, it is down to 41.1%. As stated the last few weeks, the markets needed to rest; especially, the small-caps and mid caps. And the markets continue to take that needed rest, just as predicted.

You will continue to receive the "quick-term market" report every day. This coming week is especially critical for the market. If the new paradigm on distrusting the financial institutions starts to materialize, we will begin to see it.

Short Term Indicant Positions - Markets

The Short-term Indicant signaled "bull for the Dow on Friday, January 3, 2002. And then two days later the Short-term Indicant signaled "bear" again for the Dow. And it continues to signal "bear." The Short-term Indicant quite commonly signals rapid changes in the market. It is used primarily to verify "quick-term" and "mid-term" outlooks. Right now, the Short-term Indicant is telling us to remain cautious about the market.

The NASDAQ Composites are down 54.3% since the Short-term Indicant signaled "bear" on March 31, 2000. It has been nearly two years since the Short-term Indicant signaled "bear" at 4224. You will know we are into a "real" bull leg when the Short-term, Quick-term, and Mid-term Indicants are all signaling "bull." Remember we are still at an inflection point!

Mid-term Indicant Positions - Major U.S. Markets

It was surprising there were no Mid-term bear signals this past week. The NASDAQ100 missed it by 0.0001%. That is how far it is above the bearish yellow curve. The NASDAQ Composite is not much better off. But, nonetheless, both remain in non-bearish territory and the bull signal of last week remains valid.

Most of the major markets are down since the Mid-term Indicant signaled "bull." This is the first time they have been in negative territory since signaling bull. This is a common attribute for embryonic bull markets. If this is truly going to be a bull market, it will most likely resemble the one in the early 1950's where there was continued steady movement up a 15-degree slope. It will definitely not be like the ones in the late 1990's with those sixty-degree upward slopes. No way that is going to happen for at least another generation.

The Dow Jones Utilities remains in a "bearish" position and direction. It is down 20.3% since the "bear" signal in June 2000.

Even though we did not encounter the dreaded fifth bearish leg, that does not mean it is still not possible. The last time a major market endured four or more "quick-term bear legs" was in the 1929-1933 market. And the current market is at four "quick-term bear legs."

Mid-term Indicant Positions - International Markets

This indicator remains bullish for both U.S. and foreign markets. There were no new mid-term "bear" or "bull" signals this past week. It was especially surprising there were no "bear" signals. But there was downward movement and like the U.S. markets, several international markets are tethering precariously close to the "bearish" yellow curves.

The Mid-term Indicant has now identified eighteen bullish signals of the twenty-two international markets the Indicant tracks. These are very recent "bull" signals. The eighteen bull markets are up 8.6% since the Indicant signaled "bull" ranging from June through December of last year. Two weeks ago they were up 11.0%. The remaining four bear markets are down 23.3% since the Mid-term Indicant signaled "bear" an average of 34.9 weeks ago.

Click the following hyperlink to view the status and charts.

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

Mid-term Indicant Positions - Mutual Funds (Timing the Sectors)

The number of funds the Indicant has recommended to buy or hold is now at 53 out of the 76 funds currently monitored by The Indicant. The 57 we were holding last week are up an average of 2.9%. Two weeks ago they were up 4.3%. Many of the funds are very recent purchases and have not had the time to mature their "bull" legs. The average period of time we have owned these funds is 9.0 weeks. Six weeks ago it was 7.8 weeks, but several of the recently bought funds have now entered into the calculation with only a two to four-week holding period. So, the 2.9% average gain annualizes to 16.8%, which is down from 31.1% two weeks ago. The 19 funds the Indicant has you avoiding are down an average of 27.1% since the Indicant's sell signals. The Indicant has been avoiding these "bearish" funds for an average of 39.8 weeks.

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

Always remember to never 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.

Mid-term Indicant Positions - Indicant Selected Stocks

The Mid-term Indicant generated one "buy" signal and four "sell" signals for this group of stocks.

In addition to the "buy" signal this past week, the Mid-term Indicant recommends holding 28 of the 74 stocks it tracks. The number of stocks recommended for holding are down because this group of stocks consists of former NASDAQ100 stocks. They were recently booted off that listing and as promised we will track them for at least one year from the time they were booted. These 28 stocks with a hold recommendation are up an average of 31.9% since the Mid-term Indicant signaled "buy." The average period of time the Indicant has signaled "hold" for these stocks is 16.4 weeks. So, the average annual gain of these holdings amounts to 101.0%, which is down from 117.6% two weeks ago. As the bull legs mature and as stock prices flatten or endure slight declines, the annualized gain will decrease. The remaining stocks the Indicant recommends to avoid are down an average of 52.2%. The Indicant has avoided these stocks for an average of 39.1 weeks.

Always remember to never keep more than 10% of your investment resources into any single stock.

Click the following hyperlink to view this group of stocks:

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

Mid-term Indicant Positions - Dow Jones 30 Industrial Stocks

The Mid-term Indicant did not generate any "buy" signals last week. It generated one "sell" signal. You were advised of the sell signals in the preliminary report earlier this weekend.

The Mid-term Indicant is signaling "hold" on 17 of the 30 Dow Industrial stocks. These 17 stocks are up an average of 6.7%, which is down from 10.6% two weeks ago. The current hold positions are annualizing at a 28.1% growth rate. The Indicant signaled "buy" for these stocks an average of 12.3 weeks ago. The 12 "avoided" stocks are down 14.4% since the Mid-term Indicant signaled "sell" an average of 27.9 weeks ago.

Click the following hyperlink to view this group of stocks:

http://www.indicant.net/Non-Members/Public%20Updates/UD%20MTI-DJIA-STKS.htm

Mid-term Indicant Positions - Dow Jones 15 Utility Stocks

The Mid-term Indicant did not generate any "buy" or "sell" signals. The Indicant recommends "holding" seven stocks. These stocks are up 30.1% since the buy signals an average of 56.3 weeks ago. This annualizes to a 27.8% gain in these stocks. The Indicant has signaled "avoid" for the remaining eight stocks for an average of 31.9 weeks. These stocks are down 34.9% since their respective sell signals.

Although the "buy" signal was generated a few weeks ago, you should consider investing in a stock that is down since that "buy" signal. NiSource (NI) - #3 is down 4.2% since the Mid-term Indicant signaled "buy" on December 28, 2001. Although, the Mid-term Indicant is signaling hold, it is okay to "buy." If you are interested into locking into a pretty good dividend, then this could be an excellent opportunity to do so. This group of stocks was added to The Indicant for those of you who may enjoy owning some good dividend yielding stocks without the worry of capital depreciation. If the stock drops below the bearish yellow curve, you will be informed of that with a "sell" recommendation. NiSource could go either way, but it still remains in "hold" position. If it were to remain above the yellow curve, then you would be locked into a dividend yield of around 5%. Take a look at the chart. As you can see, it is hovering pretty close to a sell signal, but as previously stated it could increase in value. This sector of stocks is beat up pretty bad due to Enron's debacle.

Click the following link to NiSource if you are interested:

http://www.indicant.net/Members/Updates/MTI-DJU-Stks/DJU-01.htm

Click the following hyperlink to view the entire group of these stocks:

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

Mid-term Indicant Positions - NASDAQ100 Stocks

The Mid-term Indicant did not signal "buy" for any stocks. It signaled "sell" for three stocks this past week. Last week, the Indicant signaled "sell" for eight stocks. As stated the past few weeks, stocks are much more volatile than mutual funds. This is especially true during inflection points. But if we don't resume getting "buy" signals in the immediate future, then this is not an issue of volatility, but an issue of a resumption of the two-year bear market.

Although there were no additional "buy" signals, the Mid-term Indicant now recommends "holding" 56 of these stocks. These stocks are up an average of 18.3% with an average "holding" period of 12 weeks. Last week they were up 23.9%. The 18.3% gain amounts to annual gain of 82.3%. That remains pretty strong and another argument for additional pullbacks in the market. The 41 stocks the Mid-term Indicant is avoiding are down 40.8%. These stocks have been avoided by The Indicant for an average of 27.0 weeks.

Click the following link to view this group of stocks:

http://www.indicant.net/Non-Members/Public%20Updates/UD%20MTI-NAS100-STKS.htm

Mid-term Indicant Positions - Index Options

The Mid-term Indicant signaled two "new bears" and no new bulls this past week. After four consecutive weeks without signaling a bear, the market softened enough to generate a couple of them. But keep in mind there were only two bulls last August. Now there are thirty. As stated last week, we suspect there will be some bear signals next week as many of these sectors are tethering just above the bearish yellow curve. And we got two of them. Although there were no new "bull" signals, that brings the total of index options with "bullish" behavior to thirty out of the thirty-seven index options the Indicant tracks.

The thirty index options the Indicant identified as bulls last week for the past 5.7 weeks (average) are down an average of 0.6%. Last week they were up 2.98% for an annualized gain of 40.0%. As you can see, this bull is very embryonic and could turn into a raging bear very quickly. The remaining five index options with Indicant bearish behavior are down 41.0%. These indexes have been avoided by the Indicant for an average of 56.6 weeks.

To view the status and charts of these markets, please click the following:

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

Long Term Indicant Positions - Dow Jones Industrial Average

The Long-term Indicant has had you in blue chips since December 1991. The blue-chip long-term "buy" was at 2895. There is no sell signal anywhere on the horizon. Since the Long-term Indicant's buy signal in December 1991, the Dow is up 237.5% (annualized at 23.4%). The next update to the Long-term Indicant will be January 25, 2002.

Indicant Conclusion

There is a real difference from last week's conclusion. That difference is the potential for distrusting the financial establishment, corporate leaders, and public accounting firms. As stated before, the market continues to process through an inflection point."

Four weeks ago, we pointed out three scenarios for the market as it processes itself through this inflection point. (1) It can resume its nasty bearish decline. (2) Or the "quick-term bull" can resume it path north and mature into a full-fledged "mid-term bull." 3) Or the market can simply stabilize for awhile before taking directions (1) or (2).

The markets took the direction of number (2) above at the beginning of this year. But the past two weeks, the market has threatened us with number (1). One cannot relax around these inflection points. So, please keep a watchful eye on your email."

Hyperlinks

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

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

Also, once you are inside www.indicant.net, you 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

01-20-02

January 13, 2002 Indicant.Net Weekly Update

Volume 1, Issue 2 ISSN 1526 6516

Dear Indicant Members:

Inflection Points - "Fear and Greed"

As stated last week, it looks as if we are not going to have a repeat of the 1929-1933 bear market. Our concerns about the recent "quick-term" bull leg being followed by a horrific bear leg continue to diminish. The current market behavior is indicating more mid-term to long-term bullish movement. So far, the markets have not generated that fifth "bear" leg. So, at the very least, we will not encounter greater depression in stock prices based on current behavior.

Last week the quick-term bull leg was annualizing at greater than a 100% rate. This week the annual growth rate was halved to 55.4%. As stated last week, the markets need to rest at some immediate point; especially, the small-caps and mid caps. And the markets took that needed rest just as predicted.

During this inflection point, the quality stocks, such as Dell, Intel, & Microsoft continue to hold up well even though they took a bearish hit this past week. But they are well above the "bearish" yellow line.

There is one concern here. The markets were down last week on increasing trading volume. The NYSE Index fell 2.3% on 6.6 billion shares. The prior week that index was up slightly on 6.0 billion shares. The NASDAQ Composites fell 1.8% on 9.6 billion shares, as compared to the prior week's 8.6 billion shares. The prior weeks include trader absenteeism due to holidays, so this is not as significant an issue as it would otherwise be. But those traders returning from the holidays apparently disagree with those workaholics who traded during the holidays on the short-term direction of the market. We'll keep watching to see who wins that battle.

Mid-term Indicant Stock and Mutual Fund Trade Signals

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

After several weeks of little activity on sell signals, there was some increasing "sell signals" this week. Sell signals were generated for nearly all of the oil well service stocks that received "buy" signals just a few weeks ago. At the time of those "buy" signals, it was predicted they would quickly receive sell signals as there was no underlying fundamental reason for their bullish movements. Sometimes, these particular stock prices move up like that and continue northward in a very dynamic way as "insiders" get critical OPEC or other "crisis-oriented" information before the general public. The recent bullish behavior of these stocks was merely technical adjustments to their ultimate path south.

The Mid-term Indicant did not signal "sell" for Schlumberger, which is the blue chip company of that sector. It would not be surprising to see a "sell" signal next week for that stock. Many of the weaker companies in that group, such as FTC, increased up to the yellow curve and then bounced off it, heading south again. Stronger companies tend to get between the two lines and bounce around. Halliburton, at one time, was second only to Schlumberger in blue chip status. But after years of being run by incompetent management at the top of the organizational chart, it has deteriorated to a so-so company and will most likely never recover the luster it once had.

There was one exciting "buy" signal this past week. If you want to make a play in the burgeoning fuel cell industry, then buy Ballard Power Systems (BLPD). The Mid-term Indicant signaled "buy" this past weekend at $33.91. The prior "sell" signal occurred on November 17, 2000 at $82.88. Ballard appears to possess competent management. It would not be surprising to see Ballard's stock price return to at least half of the last Mid-term Indicant's sell signal of $82.88. This "buy" could be an excellent strategic "buy" for your long-term portfolio. The fuel cell industry remains in its infancy. The growth of the fuel cell industry will act as a depressant to oil well service companies. Some of them may get into fuel cells themselves as a matter of survival, but let's wait and see that develop.

Just because a company is in the fuel cell industry does not mean it will be a good "buy." All companies, regardless of what industry they serve, require competent management. The one consistent attribute toward identifying competent management is that the management loves what they do but has the discipline to do what they do not like to do. E.g, a scientist spending time on marketing or finance.

The FDA did not get eliminated last week, so the Biotech/Health/Drug stocks continue to be a hard play. Dolly's arthritis is not helping that industry, as well. The Mid-term Indicant generated sell signals for Fidelity Biotechnology and Fidelity Health Care. Last week, the Mid-term Indicant signaled sell for Vanguard's Health Care. Although the Biotechnology Index Options remain in bullish mode, it has been dropping in price the past two weeks.

The two groups of stocks and funds, biotechnology and oil well services, which did so well for us in the bear market of 2000 and 2001, are really softening. The biotech/health group may be under some profit-taking pressure. Many institutions may be dumping those higher priced stocks and buying cheaper stocks, including Internet related stocks. The oil well services group has two downward pressures being applied. Reducing oil prices are adversely impacting that industry on a short-term basis. The burgeoning fuel cell industry will continue to impose a longer-term downward lid.

But the Indicant will continue to track that group of stocks as long as there is conflict in the Middle East and as long as a major source of our energy is provided by petroleum.

As always, remember to never have more than 10% of your investment resources into a single stock. And try your best to never have more than 20% of your investment resources in a single mutual fund.

Political Influence

Not much changed this past week. The good news is that in this election year, political leadership in the executive and legislative branches of government will continue to grow apart. It will be good for the stock market, as both political parties become more hateful and less willing to work together.

Economic Outlook

There is not much difference from last week's report on inflation. All commodities continue their rebounding mode, but remain in healthy bullish territory. Concerns about deflation continue to abate. But when the commodities get back up to the yellow curves, let's see how they react. It will be good if they stabilize. It they bounce off the yellow curve, which is a common phenomenon, we'll take the matter under study again. Oil prices did not get up to the yellow curve as expected and have turned back south again. As previously stated, this does not bode well for the oil well services industry.

Interest rates remain extremely favorable with respect to stock market projections. The Dow Jones 20 Corporate bonds increased slightly to 7.14%, which is the exact value of the bullish "yellow curve." The term "bullish" here is in reference to the stock market. The DJ corporate bonds remain in neutral territory as far as the stock market is concerned.

Municipal bonds decreased last week from 5.64% to 5.53%. They remain in neutral to bullish territory with respect to the stock market.

Interest rate trends continue in a southerly direction and that is good for the stock market. The three-month T-Bill and New CD's remained relatively flat this past week at 1.65% and 1.97%. And they continue to signal "bullish" behavior for the stock market. They remained relatively unchanged from last week and are below the bearish red curves by a whopping 44% and 48%, respectively. They could move up without jeopardizing the bullish outlook for the stock market.

After several weeks of significant increases the Freddie Mac and Fannie Mae mortgage rates softened last week. They both crossed into neutral territory five weeks ago and remained there this past week. But they are heading south again. After aggressively passing above the "bullish" yellow curve, they are moving in a southerly direction again.

Not much changed since last week with respect to currencies. The exchange rate for the U.S. dollar against other world currencies remains favorable to the stock market. The dollar continues to hold up well to the Fed's "loosening" policies. The Japanese Yen continues to falter against the dollar at an accelerating rate. This has not changed in the past few weeks. The weakening yen will help the Japanese out of their long-standing recession. This is anti-inflationary for the U.S. economy as several imports come from Japan thus lowering their prices to us for their superior products.

As stated several times in the past, a weak yen is not good for the U.S. automobile manufacturers, as they will face stiffer price competition. The Lexus, Acura, and Infinity finally destroyed the Lincoln Continental. It is amazing that the Cadillac has survived. But GM is a huge company with tremendous marketing abilities. Their manufacturing abilities remain questionable, though. But they are doing the right thing, by out-sourcing more and more of their parts, as the management in Detroit has forgotten how to manufacture product. And more and more MBA mentality is centered toward earnings as opposed to the "art" of producing products of value.

Ford began its stupendous decline after Mr. Peterson resigned from Ford Motor company in the late 1980's. Since then, Ford has allowed a series of incompetent management at the helm. Most of them, as the case with most Fortune 500 top dogs, simply lived off rising GNP, as opposed to internal operating performance. More importantly, Ford showed their true colors in the late 1990's when they did not support a world class company, Johnson Controls, destruction of the union. Ford chose to support the union. Ford's stock is down since 1994 and Johnson Controls is up three digits. High performing executives focus on two things: What is best for shareholders and love of their companies' processes! Ford hasn't had that in years.

It is highly unlikely that Ford will recover. Japanese auto transplants continue to take more market share and with the weakening yen, they U.S. automakers will be more threatened by increasing import competition.

The Indicant does not track auto stocks as this industry is old, lethargic, and for the most part behind the times on everything they do. The exceptions are the Japanese transplants, but industry and political pressures tie them down. As the yen continues to weaken and imported automobiles expand market share, Dick Gephardt will start squawking again about "protecting" U.S. jobs. Every time he and other political leaders do that, it only delays the inevitable and results in greater damage to the economy. But it sounds good and provides camera time. It is unbelievable that people think politicians actually have something to do with jobs and the economy. If Gephardt wants to provide jobs to U.S. automobile workers, he should acquire financing and start an auto company, run it well, and employ all those people being laid off at Ford. Of course, he would have work much harder than he has at any time of his low-effort life.

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

Quick-term Indicant - Markets

As stated last week, do not be surprised to see some softening in the markets in the near future. This happened last week. Expect more of the same until we see another surge in volume. Last week's NASDAQ volume was up by a billion shares over the prior week. The NASDAQ was down this week, as well as all of the major markets. The S&P600 (small caps) is the only market above the bullish red curve as of last Friday's close. The NASDAQ and S&P400 all fell below the bullish red curve last Friday at the close. But the "quick-term indicant" has the markets safely in bullish territory. And until we see a significant drop on increasing volume, the "quick-term indicant" will continue to signal "bull."

Short Term Indicant Positions - Markets

The Short-term Indicant signaled "bull for the Dow on Friday, January 3, 2002. And then two days later the Short-term Indicant signaled "bear" again for the Dow. The Short-term Indicant quite commonly signals rapid changes in the market. It is used primarily to verify "quick-term" and "mid-term" outlooks. Right now, the Short-term Indicant is telling us to remain cautious about the market.

The NASDAQ Composites are down 52.1% since the Short-term Indicant signaled "bear" on March 31, 2000. It has been nearly two years since the Short-term Indicant signaled "bear" at 4224. You will know we are into a "real" bull leg when the Short-term, Quick-term, and Mid-term Indicants are all signaling "bull." All markets and models are getting close to doing this, but remember we are still at an inflection point!

Mid-term Indicant Positions - Major U.S. Markets

As stated last week, we expected the Mid-term Indicant to signal "bull" for the NASDAQ and NASDAQ100 markets this week. Also, if you recall it was stated this would be possible even if the markets had a down week, which was also predicted. We had the down week. And even more excitingly, the Mid-term Indicant signaled "bull" for both of those markets.

The Mid-term Indicant now has seven major markets of the eight it tracks in bullish direction. The Dow Jones Utilities is the only major U.S. market that remains in a bearish direction. And we don't need Utilities to be bullish to have a real bull leg to enjoy.

The Dow Jones Industrial Average, S&P500, S&P100, Dow Jones Transports, and Dow Jones Composites are +1.2%, -1.1%, -0.4%, +3.0%, and +1.0% since the Mid-term Indicant signaled "bull" an average of 4.8 weeks ago. As you can see the performance dropped off from last week with the bearish market behavior. This mid-term bull leg is embryonic and it will either mature or the Mid-term Indicant will signal bear within the next few weeks.

The Dow Jones Utilities remains in a "bearish" position and direction. It is down 20.1% since the "bear" signal in June 2000.

As some of you know the Mid-term Indicant's signaling "bull" for the NASDAQ and NASDAQ100 does not mean you can kick back and relax. These two markets, as well as the other markets, are precariously close to the bearish "yellow curve." And a reversal in direction is very possible.

The good news is that we did not encounter that dreaded fifth bearish leg. The last time a major market endured that was in the 1929-1933 market. The NASDAQ "mid-term bear market" lasted about one-half as long as the bear market that introduced the great depression of last century. It is still possible for this to occur, but the likelihood diminished with the Mid-term Indicant's "bull" signal for the NASDAQ and NASDAQ100 indexes.

Mid-term Indicant Positions - International Markets

This indicator remains bullish for both U.S. and foreign markets. There were no new mid-term "bear" or "bull" signals this past week. But there was downward movement and like the U.S. markets, several international markets are tethering precariously close to the "bearish" yellow curves.

The Mid-term Indicant has now identified eighteen bullish signals of the twenty-two international markets the Indicant tracks. These are very recent "bull" signals. The eighteen bull markets are up 9.4% since the Indicant signaled "bull" ranging from June through December of this year. Last week they were up 11.0%. The remaining four bear markets are down 25.5% since the Mid-term Indicant signaled "bear" an average of 33.9 weeks ago.

Click the following hyperlink to view the status and charts.

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

Mid-term Indicant Positions - Mutual Funds (Timing the Sectors)

The number of funds the Indicant has recommended to buy or hold is now at 57 out of the 76 funds currently monitored by The Indicant. The 57 we were holding last week are up an average of 4.4%. Last week they are up 4.3%. Many of the funds are very recent purchases and have not had the time to mature their "bull" legs. The average period of time we have owned these funds is 7.9 weeks. Five weeks ago it was 7.8 weeks, but several of the recently bought funds have now entered into the calculation with only a one or two-week holding period. So, the 4.4% average gain annualizes to 28.8%, which is down from last weeks 31.1%. The 16 funds the Indicant has you avoiding are down an average of 26.1% since the Indicant's sell signals. The Indicant has been avoiding these "bearish" funds for an average of 45.3 weeks.

Although the markets are looking stronger, remember that we are at an inflection point and if the markets turn south, many of those funds will also turn south. Click the following hyperlink to view the funds' status and charts.

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

Always remember to never 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.

Mid-term Indicant Positions - Indicant Selected Stocks

The Mid-term Indicant generated one "buy" signal and five "sell" signals for this group of stocks.

In addition to the "buy" signals this past week, the Mid-term Indicant recommends holding 37 of the 74 stocks it tracks. These 37 stocks are up an average of 38.4% since the Mid-term Indicant signaled "buy." The average period of time the Indicant has signaled "hold" for these stocks is 17.8 weeks. So, the average annual gain of these holdings amounts to 40.3%, which is down from last week's 117.6%. The 40.3% average annual gain is a more reasonable expectation in light of the current condition of the economy. As the bull legs mature and as stock prices flatten or endure slight declines, the annualized gain will decrease. The remaining stocks the Indicant recommends to avoid are down an average of 55.7%. The Indicant has avoided these stocks for an average of 44.8 weeks.

Always remember to never keep more than 10% of your investment resources into any single stock.

Click the following hyperlink to view this group of stocks:

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

Mid-term Indicant Positions - Dow Jones 30 Industrial Stocks

The Mid-term Indicant did not generate any "buy" signals last week. It did generate two "sell" signals. One of the sell signals was for Alcoa, which was bought on October 5, 2001 at $31.40. The sell signal occurred at $35.86 for a 13.6% gain. The other "sell" was Coca Cola at $45.40. It was bought at $48.59 on October 12, 2001. The loss was 6.6%. Coca Cola is appears to be weakening quite significantly. Alcoa may bounce around between the bull and bear curves, but the overall direction of the Dow and related stocks does not support continued holding of either of those stocks from a mid-term perspective.

The Mid-term Indicant has identified 18 Dow Industrial stocks to continue "holding". These 18 stocks are up an average of 8.2%, which is down from last week's 10.6%. The current hold positions are annualizing at a 38.3% growth rate. The Indicant signaled "buy" for these stocks an average of 11.1 weeks ago. The 11 "avoided" stocks are down 15.5% since the Mid-term Indicant signaled "sell" an average of 32.4 weeks ago.

Click the following hyperlink to view this group of stocks:

http://www.indicant.net/Non-Members/Public%20Updates/UD%20MTI-DJIA-STKS.htm

Mid-term Indicant Positions - NASDAQ100 Stocks

The best "buy signal" this past weekend is Yahoo. The Mid-term Indicant signaled "buy" at $20.16. The prior "sell" signal occurred at $116.50 on July 7, 2000. That was eighteen months ago. Over that eighteen-month period Yahoo fell 83%. Not only is the Mid-term Indicant signaling "buy" for Yahoo, the fundamentals are improving and the new management team appears competent. Now, if they hire an ex-Enron executive, dump it, as you will not be able to believe any of the financial reports. We'll be watching for you. Of course, most Fortune 500 companies use "fuzzy math" to compute their asset base. Never believe book values of any company.

You will notice quite a few sell signals for biotech stocks that now populate the NASDAQ100 listing. There are several possible reasons for this. It is not uncommon for traders to dump a stock after it gets the publicity of being added to a classy listing, such as the NASDAQ100. Remember the saying, "buy on the rumor and sell on the news."

The Biotechnology sector started dropping three weeks prior to the announcement that Dolly the sheep got premature arthritis. This is bad for that industry. Apparently, cloning is a misleading term. Traders and investors are most likely dumping these more expensive stocks in favor of cheaper high tech stocks, such as Yahoo, Oracle, etc.

The Mid-term Indicant signaled "buy" for three stocks and "sell" for eight stocks this past week. As stated last week, stocks are much more volatile than mutual funds and during inflection points, they become extremely volatile.

In addition to the "buy signals" this past week the Mid-term Indicant recommends "holding" 56 of these stocks. These stocks are up an average of 23.9% with an average "holding" period of 11 weeks. That amounts to annual gain of 113%. That is pretty strong and another argument for additional pullbacks in the market. The 33 stocks the Mid-term Indicant is avoiding are down 44.5%. These stocks have been avoided by The Indicant for an average of 33.0 weeks.

Click the following link to view this group of stocks:

http://www.indicant.net/Non-Members/Public%20Updates/UD%20MTI-NAS100-STKS.htm

Mid-term Indicant Positions - Index Options

The Mid-term Indicant signaled one "new bull" and no new bears this past week. That is four weeks in a row without a bear signal. We suspect there will be some bear signals next week as many of these sectors are tethering just above the bearish yellow curve. In addition to the new "buy" signal, that brings the total of index options with "bullish" behavior to thirty-one out of the thirty-seven index options the Indicant tracks.

The thirty-one index options the Indicant identified as bulls last week for the past 5.0 weeks (average) are up an average of 2.98%. That annualizes to a 40.0% gain. That is a relatively high annualized reading for this sector. The remaining five index options with Indicant bearish behavior are down 39.3%. These indexes have been avoided by the Indicant for an average of 56.2 weeks.

To view the status and charts of these markets, please click the following:

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

Long Term Indicant Positions - Dow Jones Industrial Average

The Long-term Indicant has had you in blue chips since December 1991. The blue-chip long-term "buy" was at 2895. There is no sell signal anywhere on the horizon. Since the Long-term Indicant's buy signal in December 1991, the Dow is up 245.0% (annualized at 24.1%). The next update to the Long-term Indicant will be January 25, 2002.

Indicant Conclusion

There is no real difference from last week's conclusion, so last week's comments are repeated here.

"The market is nearing completion of the "inflection point. The Mid-term Indicant continues to illustrate growing strength. The markets around the world are encouraged at the destruction of religious fanatics. Freedom since the beginning of time has been repeatedly challenged and each time freedom wins. It sometimes takes a century or two, but freedom movements always prevail. This will not be an exception. Last week, we pointed out three scenarios for the market at this point in time. (1) It can resume its nasty bearish decline. (2) Or the "quick-term bull" can resume it path north and mature into a full-fledged "mid-term bull." 3) Or the market can simply stabilize for a while before taking directions (1) or (2).

The markets are beginning to take the shape of number (2) above. But one cannot relax around these inflection points. So, please keep a watchful eye on your email."

Hyperlinks

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

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

Also, once you are inside www.indicant.net, you 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

01-13-02

January 6, 2002 Indicant.Net Weekly Update

Volume 1, Issue 1 ISSN 1526 6516

Dear Indicant Members:

Inflection Points - "Fear and Greed"

It looks as if we are not going to have a repeat of the 1929-1933 bear market. Our concerns about the recent "quick-term" bull leg being followed by a horrific bear leg are diminishing with each passing day. The current market behavior is indicating more bullish movement. If the markets do not generate that fifth "bear" leg in the immediate future, at the very least, we will not encounter greater depression in stock prices.

This quick-term leg is annualizing at greater than a 100% rate. So, if this quick-term bull leg continues as is by October 2002, the NASDAQ will be back at the 4000 level. This is highly unlikely, but the indicant is not going to get into forecasting the market no matter how tempting it is. Okay, just a little bit of forecasting here. The markets need to rest at some immediate point; especially, the small-caps and mid caps. As you can see from the charts, the S&P400 and S&P600 continue their recent explosion north. The NASDAQ and NASDAQ100 paused late last year and even fell below the red bullish curve. But the S&P400 and S&P600 have not.

It is bullish for the money rotation to continue as it is doing. Money rotates from one market to the other market. Money leaves NASDAQ and goes to the small/mid caps. Although 80% of day traders lose money they can be very influential on this money rotation and can actually help the market along. Of course, all the while, most are losing their money, as most casino types ultimately do.

During this inflection point, the quality stocks, such as Dell and Intel held up very well. Quality companies are leading this market recovery. Oracle is also a quality company but more dependent on the larger companies willingness to spend their capital budget. And the Mid-term Indicant signaled "buy" this past week for Oracle. Oracle is one of the finest, if not best, software companies in the world. It will continue to do well in the long run.

As stated last week, economic wealth is delivered in only three ways: 1) Manufacturing, 2) Agriculture, and 3) Extraction. All else are just middlemen. A significant portion of the Internet simply replaced existing middlemen, such as direct mailers, retailers, advertisers, etc. Therefore, no real economic wealth was generated.

But the Mid-term Indicant signaled "buy" for the one of the Internet option indexes this past week.

So, if real economic wealth is not delivered through the Internet, then why is this sector getting bullish? Two reasons: 1) Intranet expansion in the industrial sector will help continued improvements in productivity. 2) It found it's real contribution to the economy and is currently priced at a level equal to that contribution. 3) Fear and greed.

Yes, fear and greed are kicking into the market as you read this. That $2 trillion setting on sidelines is just now starting to enter the market. Many people have short memories and the frenzy could push the market much higher. The "fear" of being left behind is not going to be too difficult of a play for folks earning around 1.5% in their money market accounts. "Greed" is always in the market. Greed is good. Without it, the markets would simply parallel earnings. And that would simply be no fun for guys like us. And some companies reported earnings are fake.

Anyway, the economy and the increasing quality of life need the greed factor. So, as the bull movements get mentioned more and more by Dan Rather and make a few front-page headlines in your local newspaper, the fear and greed factor will propel the market into higher ground. There is a bullish fear and a bearish fear. The fear of losing money in the stock market drives prices down. The fear of being left behind drives prices up. The latter is what is going on right now.

As we near the end of this inflection point, this section of the weekly report will get shorter and shorter as you may have noticed this week. You're welcome!

Mid-term Indicant Stock and Mutual Fund Trade Signals

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

The Mid-term Indicant finally signaled "buy" for the Rydex NAS100 (RYOCX) index fund at $11.68. This is the first signal for that fund since the Mid-term Indicant signaled "sell" over fifteen months ago on September 29, 2000 at $26.20. It fell 55.4% since that Mid-term Indicant "sell" signal. Interestingly, the Mid-term Indicant did not yet signal "bull" for the NASDAQ100, but it should next week. So, we'll keep a watchful eye on it. But, if the greed/fear factor really kicks in, as expected, this fund should be one of the better performing ones as long as the general markets do well.

The Mid-term Indicant signaled "buy" for State Street Research (SSGRX). This fund was outstanding during the market crash of late 1999 and most of 2000. It is an energy-related fund. The energy industry always does well in bear markets and typically under-performs in bull markets. This fund has been gyrating with significant volatility the past few months. It would not be surprising if we get a sell signal in the next few weeks for that fund. We'll watch what companies they are investing in. If they slant their investments in the fuel cell industry, then it and other such funds could be good ones to buy when the Mid-term Indicant sends such a signal.

The Mid-term Indicant signaled "buy" for Schlumberger (SLB) this past week. This is one of the finest companies in the world, but their earnings are primarily dependent on the energy industry; specifically oil. But they also have one of the best track records at mitigating stupidity in their management ranks. On the one hand, it would not be too surprising if the Mid-term Indicant signaled sell in the next few weeks. Conversely, they are good enough to participate in the fuel cell field. They are very engineering intensive.

The drug stocks are a hard play. If the FDA were eliminated, they would perform very well. But the FDA will always impose a dark cloud on their performance. If the Mid-term Indicant could catch one at the bearish yellow line and then have the price go above the bullish red line, then such stocks would be a good long term buy with the sell point set at the yellow curve, as opposed to the red curve. Pfizer and other such companies are not (or cannot) stimulate any excitement in the investment community and continue to trade in a tight trading range.

You will notice the new constituents to the NASDAQ100 stocks have been added to the listing. The NASDAQ100 stocks removed by the NASDAQ Committee are listed in the Indicant Selected stocks. So, there are no stocks that have disappeared from last week's report. They are just in a different place.

Also, you will notice that we have added Fuel Cell stocks in the Indicant selected stocks. You will be reading more about fuel cells in the future. The editor of The Indicant use to build automobile engines and also worked for several years in the petroleum industry. The economic potential for fuel cell technology in the next ten years is greater than the fast food hamburger or the computer chip. However, the indicant needs to track these stocks because no matter how good an evolving industry is, "stupid management" can bring your investments down much quicker than they go can up. So, we'll be watching. Never fall in love with a particular stock. Love only those stocks that go up in price and increase your net worth.

As always, remember to never have more than 10% of your investment resources into a single stock. And try your best to never have more than 20% of your investment resources in a single mutual fund.

Political Influence

This is an election year and the battle has begun. And that is good for the stock market. There should be a significant "do nothing" government. And has been stated repeatedly, a "do nothing" government is great for the stock market. Vetoes, bickering, jawboning, etc. will be an excellent backdrop for a bull market. Let's continue to vote for a "do-nothing" government. Of course, if lawmakers decided to eliminate the FDA and other regulatory agencies, a standing ovation would not be out of order. If that were to happen, watch the quality of life and wealth of all Americans to zoom beyond those that are unimaginable in the current environment in which we live.

Economic Outlook

There is not much difference from last week's report on inflation. All commodities continue to rebound, but they are very far below the bullish position for the market. And the rebounding is negating the former fears of deflation. So, the rebounding of commodities at this point is not bad news. It is even okay for oil prices to rise, but not too much more than their current levels. It would not be surprising to see oil prices rise above the yellow curve and then move south again. That would be a ignite even more of a bullish scenario for the stock market.

Interest rates remain extremely favorable with respect to stock market projections. The Dow Jones 20 Corporate bonds are still yielding more than 7.00%. It remains in neutral territory as far as the stock market is concerned. We're not sure how the market will react if the Fed does not cut again. And many smaller companies are unable to get loans, so the lower rates are not helping that many of the small caps that are rising in price as far as their capital expansion plans go. But it will help their bottom lines as they will be more free of debt than they would otherwise be with looser lending policies by banks and institutions.

Municipal bonds decreased last week from 5.67% to 5.64%. They remain in neutral territory.

Interest rate trends continue in a southerly direction and that is good for the stock market. The three-month T-Bill and New CD's remained relatively flat this past week at 1.70% and 1.95%. And they continue to signal "bullish" behavior for the stock market. They remained relatively unchanged from last week and are below the bearish red curves by a whopping 41% and 48%, respectively. They could move up some more without jeopardizing the stock market.

After several weeks of significant increases, the Freddie Mac and Fannie Mae mortgage rates softened last week. They both crossed into neutral territory four weeks ago and remained there this past week.

Not much changed since last week with respect to currencies. The exchange rate for the U.S. dollar against other world currencies remains favorable to the stock market. The dollar continues to hold up well to the Fed's "loosening" policies. The Japanese Yen continues to falter against the dollar at an accelerating rate. This is anti-inflationary for the U.S. economy as several imports come from Japan thus lowering their prices to us. It is not good for the U.S. automobile manufacturers, as they will face stiffer price competition. It is also not good for producers in the U.S. who have designs toward exporting to Japan.

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

Quick-term Indicant - Markets

The modification of the Quick-term Indicant with the inclusion of the S&P400 and S&P600 will help us spot changes in the market's direction more clearly in the future. Do not be surprised to see some softening in the "quick-term indicant" in the near future. As stated before, that $2 trillion has not yet entered the market. The current trading volumes are at approximately 75% of the "sell off" volume that drove the NASDAQ down from 4000 to less than 2000. We will monitor the "fear/greed" motivators through our volume analysis this coming year. The volumes were up this past week with the bullish behavior, but still nowhere near the sell-off volume of early 2000. Also, as stated last November, this "quick-term" bull leg was supported with healthy volume. The false bull leg in the spring of 2001 was not supported with any significant increases in trading volume.

Short Term Indicant Positions - Markets

The Short-term Indicant signaled "bull" for the Dow on Friday, January 3, 2002. This is a very bullish sign for the stock market. The Short-term Indicant is not necessarily a short-term indicator for the markets. It is called short-term because it is updated and monitored daily. And it outperforms "buy" and hold" by over 50%. It and the Mid-term Indicant have been back-tested over the past eighty years for validation.

The Short-term Indicant signaled "bear" for the Dow on May 25, 2001 at 11,257. It signaled "bull" last Friday at 10,073. That is how the Short-term Indicant helps us. It is an excellent indicator to confirm Quick-term and Mid-term signals.

The Short-term Indicant has not yet signaled "bull" for the NASDAQ Composites, which is down 53.1% since it signaled "bear" on March 31, 2000. It has been nearly two years since the Short-term Indicant signaled "bear" at 4224. You will know we are into a "real" bull leg when the Short-term, Quick-term, and Mid-term Indicants are all signaling "bull." All markets and models are getting close to doing this, but remember we are still at an inflection point!

Mid-term Indicant Positions - Major U.S. Markets

The Mid-term Indicant still has five major markets of the eight it currently tracks in bullish territory. The only markets that remain in bearish mode are the NASDAQ Composite, the NASDAQ100, and the Dow Jones Utilities. The NASDAQ composites has all the required attributes for a "bull" signal, but has to wait for the NASDAQ100 to confirm it. This confirmation should occur next week and can even do that if the market goes down for the week.

The Dow Jones Industrial Average, S&P500, S&P100, Dow Jones Transports, and Dow Jones Composites are up 4.0%, 1.2%, 2.1%, 7.7%, and 3.8% since the Mid-term Indicant signaled "bull" an average of 3.8 weeks ago. The oldest bull signal was the Dow Jones Industrial Average on November 16, 2001 and the latest were the S&P100 and Dow Jones Composites on December 21, 2001.

The Dow Jones Utilities remains in a "bearish" position. It is down 19.1% since the "bear" signal in June 2000. We don't need it to signal "bull" for a real good bull leg. Utilities are still "governed."

The NASDAQ Composites remained above the yellow curve this past week. It also has conviction. But the NASDAQ100 fell below the bearish curve after having crossed it last week. The reason there was not a bull signal last week was due to its lack of conviction. These two markets, as well as other markets, were moving in a bullish direction and a few of them approached the "yellow" curve last spring. That was the last inflection point. And when they made near contact with the "yellow" line, they bounced off it heading south again. Twenty-eight weeks ago the Indicant said "it is important to not get caught up in the frenzy." Let's wait until we have a clear signal from the Mid-term Indicant." And these markets continued to plunge south another 30%. We did not get a bullish signal then and we still don't have one. Continued bearish direction for these markets continues to be an option. We don't need the Dow Utilities to move into bullish territory for a "real" bull leg, but we do need the NASDAQ and NASDAQ100 to move north with conviction.

This is probably the last week you'll be subjected to the above paragraph. We are proud to have advised that the quick-term bull leg in the spring of 2001 was fake and that the bear market would resume. This is why The Indicant has several models. You know a bull or bear is real when all the models are saying the same thing.

The NASDAQ and NASDAQ100 are down 46.3% and 53.1% since the Mid-term Indicant recommended, "sell" over a year ago in September 2000.

Mid-term Indicant Positions - International Markets

This indicator remains very bullish. There was one new "bull" signal this past week and no "bear" signals. The new bull was Peru's Lima General (^IGRA). The rebounding of the Argentina market, which remains in "bear" territory, may have helped it. But the Argentina market remains in "bearish" territory.

The Mid-term Indicant has now identified seventeen bullish signals of the twenty-two international markets the Indicant tracks. These are very recent "bull" signals. The seventeen bull markets are up 11.0% since the Indicant signaled "bull" ranging from June through December of this year with average bull duration of 7.3 weeks. This bull movement is annualizing at a 78.4% growth rate. The remaining four bear markets are down 23.2% since the Mid-term Indicant signaled "bear" an average of 32.9 weeks ago.

Click the following hyperlink to view the status and charts.

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

Mid-term Indicant Positions - Mutual Funds (Timing the Sectors)

As previously stated, the cloned sheep, Dolly, got arthritis, prematurely. The reports do not indicate when her genetic ancestor got arthritis, if ever. Does that prove that arthritis is not a genetic defect? Although it is possible to clone genes, it is not possible to clone the environment. Is Dolly getting the same minerals in her diet as her genetic parent did?

At any rate, the Mid-term Indicant signaled "sell" for Vanguard Health Care (VGHCX). The biotechnology sector is most likely going through a pausing period, as money rotates to more depressed sectors, such as high technology. Fidelity's Health Care (FSPHX) did not generate a "sell" signal but is in a borderline position to do so. Those funds made us money during the recent bear market period and it is looking more and more like investors are rotating money from the health sector back to the Dell's, Intel's, etc.

For those of you who are longer-term oriented on health care, you may want to hold Vanguard Health (VGHCX) until it crosses below the yellow curve. This fund closed at $115.64 last Friday and the yellow curve value is at $110.73. The FDA, societal morJ s, premature arthritis, and money rotation out of this sector has acted as a lid on the health industry. But the longer-term forces are still in place, as us baby boomers continue to get older. So, you may want to employ a "yellow curve strategy." This is appropriate if you bought in October 1998 at $71.80. Right now you are up 61% with that strategy. That annualizes to a 19.3% gain over the past 38 months. But for those of you who recently bought that fund or nearing retirement or needing more liquidity, you may want to reconsider your "hold" position. If it moves up again, the Indicant will get you back into that fund.

The number of funds the Indicant has recommended to buy or hold is now at 58 out of the 76 funds currently monitored. The 53 funds we were holding last week are up an average of 4.3%. Many of the funds are very recent purchases and have not had the time to mature their "bull" legs. The average period of time we have held these funds is 7.2 weeks. Four weeks ago it was 7.8 weeks, but several of the recently bought funds have now entered into the calculation with only a one or two-week holding period. So, the 4.3% average gain annualizes to 31.1%. The 15 funds the Indicant has you avoiding are down an average of 26.7% since the Indicant sell signals. The Indicant has been avoiding these "bearish" funds for an average of 44.9 weeks.

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

Always remember to never 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.

Mid-term Indicant Positions - Indicant Selected Stocks

As you can tell from the tables, there were quite a few changes to the stocks being tracked by the Indicant. The NASDAQ committee removed the following stocks from the NASDAQ100. They can be found in Indicant selected stocks. The number behind the symbol is its position in the stock table:

Ariba (ARBA) - #11, Broadvision (BVSN) - #17, CMGI (CMGI) - #1, Cnet Networks (CNET) - #4, 3COMS (COMS) - #5, Inktomi (INKT) - #19, Level 3 Communication (LVLT) -#6, McLeod (MCLD) - #10, Metromedia (MFNX) - #13, Novell (NOVL) - #16, Palm (PALM) - #18, Parametric (PMTC) - #2, Real Networks (RNWK) - #8, XO Communications (XOXO) - #24.

New stocks added to Indicant selected stocks were primarily fuel cell companies, some high technology companies, and one Russian company:

Cholestech (CTEC) - #7, Mcafee (MCAF) - #14, Vimpel Communications (VIP) - #21, Retek (RETK) - #22, Fuel Cell Energy (FCEL) - #27, HPower (HPOW) - #28, Millenium Cell (MCEL) - # 30, Hydrogenic (HYGS) - #32, Proton Energy Systems (PRTN) - #33, Ballard (BLDP) - #34, Plug Power (PLUG) - #35, Energy Conv (ENER) - #38, United Technologies (UTX) - #39.

All of the above stocks can be found at the following hyperlink.

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

The Russian Company, Vimpel (VIP) is trying to get cell phones in the hands of 100,000,000 Russians. Prior to the communist taking over Russia early last century, productivity in that country exceeded that of the United States. The Russian stock market continues to explode with bullish behavior. It will crash some day, but right now it is like the U.S. markets of the early 1900's.

The following hyperlink will take you to the Vimpel's chart.

http://www.indicant.net/Members/Updates/MT-Stocks/S06.htm

As you can see, Vimpel's price is currently above the red line by a significant amount. There are two ways to play this situation:

You can wait for the price to return to the red line. It will! But, that could be after the price skyrockets.
You can buy now and sell first time the price hits the red line. You could lose money on that, but the long-term potential of this particular stock is fantastic. After the 100,000,000 Russians all have their cell phones, the stock will probably plummet. Of course, one always has to be weary of stupid management (E.g., Enron, Lucent). Finally, the Mid-term Indicant will advise you of when to sell.

It is not understood why countries around the world don't adopt the U.S. Constitution, verbatim. If that were to happen, the Dow would exceed 100,000 within eighteen months of those adoptions. Then when the politicians around the world creep into the process the Dow would fall to around 50,000. Then after the honest, hard-working business minded people learned to work around the "new" constraints imposed by the leach politicians, the Dow would zoom past 500,000. If this process started today, the Dow would exceed 500,000 by 2010. If the U.S. Congress were to reduce their work schedule back to a part time basis, as originally designed, and work in political elements only one month out of the year and all regulatory bureaucracies were eliminated, the Dow would zoom past 1,000,000 prior to the end of this decade. Dreaming, huh? That process is in place right now. The people of the world are getting smarter in recognizing leach behavior, but it is a slow process. The general direction of this movement is undeniably in force. A recent favorable indicator of this movement is the women of Afghanistan. At least we can now see their beautiful faces.

The Mid-term Indicant generated five "buy" signals and one "sell" signal for this group of stocks.

In addition to the "buy" signals this past week, the Mid-term Indicant recommends holding 37 of the 74 stocks it tracks. These 37 stocks are up an average of 38.6% since the Mid-term Indicant signaled "buy." The average period of time the Indicant has signaled "hold" for these stocks is 17.1 weeks. So, the average annual gain of these holdings amounts to 117.6%. Please remember to recognize the annual gain here is mentioned only to illustrate the Indicant "hold" signal for some of these stocks has been for a relatively short period of time. The remaining stocks the Indicant recommends to avoid are down an average of 56.6%. The Indicant has avoided these stocks for an average of 45 weeks.

An interesting "buy" signal was 3COM. They began their decline when they bought a football stadium in San Francisco. All the distraction and false ego build-ups helped that company's demise. But maybe they learned their lesson. The Mid-term Indicant signaled sell at $12.94 a year and a half ago and now has signaled "buy" at $6.85. To view the chart, just click on the following link:

http://www.indicant.net/Members/Updates/MT-Stocks/S02.htm

Always remember to never keep more than 10% of your investment resources into any single stock.

Click the following hyperlink to view this group of stocks:

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

Mid-term Indicant Positions - Dow Jones 30 Stocks

The Mid-term Indicant generated one "buy" and no "sell" signals for the Dow stocks last week. In addition to the "buy" signal, the Mid-term Indicant has identified 18 Dow stocks to "hold". These 18 stocks are up an average of 10.6%. The Indicant signaled "buy" for these stocks an average of 10.7 weeks ago. The 11 "avoided" stocks are down 13.5% since the Mid-term Indicant signaled "sell" an average of 31.3 weeks ago.

Click the following hyperlink to view this group of stocks:

http://www.indicant.net/Non-Members/Public%20Updates/UD%20MTI-DJIA-STKS.htm

Mid-term Indicant Positions - NASDAQ100 Stocks

The NASDAQ committee added the following stocks to the NASDAQ100:

Cytyc Corp (CYTC) - #2, Charter Communications (CHTR) - #8, Sepracor Inc (SEPR) - #10, Synopsys Inc (SNPS) - #18, Express Scripts (ESRX) - #27, Integrated Dev (IDTI) - #32, Symantech Corp (SYMC) - #35, Imclone Systems (IMCL) #45, CDW Computer (CDWC) - #47, Cephalon Inc (CEPH) - #67, Invitrogen Corp (IVGN) - #77, Icos Corp (ICOS) - #91, Apollo Group (APOL) - #94, Protien Design (PDLI) - #96.

The Mid-term Indicant signaled "buy" for four stocks and "sell" for three stocks this past week. Remember that stocks are much more volatile than mutual funds and during inflection points, they become extremely volatile.

In addition to the "buy signals" this past week the Mid-term Indicant recommends "holding" 60 of these stocks. These stocks are up an average of 24.3% with an average "holding" period of 11 weeks. The 33 stocks the Mid-term Indicant is avoiding are down 44.5%. These stocks have been avoided for an average of 36.0 weeks.

One of the better "buys" that came up this past week was Oracle (ORCL). This is a quality company that has tremendous long-term potential. If Larry Ellison, CEO and founder, stays busy and works hard, that company will outperform the markets a tremendous amount. Mr. Ellison is of Russian descent and should have tremendous potential overseas as the former communistic countries evolve into a higher capitalistic structure. You have to keep an eye on Oracle. In the past Mr. Ellison has been distracted by a high level of leisure time and every time he gets excessive about that, the stock plummets. Everyone should have fun, but those who lead companies had better have most of their fun "on the job."

Click the following link to view this group of stocks:

http://www.indicant.net/Non-Members/Public%20Updates/UD%20MTI-NAS100-STKS.htm

Mid-term Indicant Positions - Index Options

The Mid-term Indicant signaled three "new bulls" and no new bears this past week. That is three weeks in a row without a bear signal. In addition to the new "buy" signals that brings the total of index options with "bullish" behavior to twenty-eight out of the thirty-seven index options the Indicant tracks.

The twenty-eight index options the Indicant identified as bulls last week for the past 4.6 weeks (average) up are an average of 1.4%. That annualizes to a healthy 15.8% gain. It is healthy in the sense that it is not exorbitant and thus allowing room for additional growth. The remaining six index options with Indicant bearish behavior are down 38.5%. These indexes have been avoided by the Indicant for an average of 56.8 weeks.

After signaling "bull" last week, the Oil Well Services Index (OSX) has fallen 6.7%. This is not surprising. This index led the increase in oil prices in early 2000. This recent decrease in the OSX index is not enough to signal "bear" but it is expected to do so in the next few weeks. Again, the Indicant does not forecast anything, but it is too tempting to not say that oil prices will creep back up to the yellow curve and then head back down. OPEC's greed was a bad form of greed. They could have delayed the development of alternative fuel sources by merely increasing oil prices paralleling the producer price index over the past twenty-five years. Now their days as a force to contend with are numbered.

To view the status and charts of these markets, please click the following:

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

Long Term Indicant Positions - Dow Jones Industrial Average

The Long-term Indicant has had you in blue chips since December 1991. The blue-chip long-term "buy" was at 2895. There is no sell signal anywhere on the horizon. The Long-term Indicant tracks the 30 Dow stocks that compiles the Dow Jones Industrial Average. Since the Long-term Indicant's buy signal in December 1991, the Dow is up 254.4% (annualized at 25.1%). The next update to the Long-term Indicant will be January 25, 2002.

Indicant Conclusion

There is no real difference from last week's conclusion, so last week's comments are repeated here.

"The market is nearing completion of the "inflection point." The Mid-term Indicant continues to illustrate growing strength. The markets around the world are encouraged at the destruction of religious fanatics. Freedom since the beginning of time has been repeatedly challenged and each time freedom wins. It sometimes takes a century or two, but freedom movements always prevail. This will not be an exception. Last week, we pointed out three scenarios for the market at this point in time. (1) It can resume its nasty bearish decline. (2) Or the "quick-term bull" can resume it path north and mature into a full-fledged "mid-term bull." 3) Or the market can simply stabilize for a while before taking directions (1) or (2).

The markets are beginning to take the shape of number (2) above. But one cannot relax around these inflection points. So, please keep a watchful eye on your email."

Hyperlinks

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

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

Also, once you are inside www.indicant.net, you 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,

Indicant.Net,

01-06-02