Jan 25, 2004 Indicant.Net Weekly Update

Volume 1, Issue 4 ISSN 1526 6516 © The Indicant Stock Market Report

Bullish Seasonality – Part 9

The worse performing month in the six-month bullish period is February. The NASDAQ‘s February is the second most volatile month of the year. It has a absolute volatility range of 41.6% since 1970. The NASDAQ has fallen as much as 22.4% in February while enjoying a maximum increase of 19.2%. Both of those extremes occurred very recently, though. The 19.2% increase occurred in 2000, while the 22.4% decrease occurred in 2001. Prior to those years, the NASDAQ’s February was pretty much a boring month with expressions of flatness, but with a bullish bias.

The NASDAQ February 2000 was the last month of the infamous bubble. The Short-term Indicant signaled NASDAQ Bear in March 2000. That bear exceeded the Dow’s 1929-1932 Bear by several weeks. Many of you recall the excitement in early 2003 when the Short-term Indicant finally signaled bull for the NASDAQ. Many of you recall how each week in late 2002 the Short-term Indicant continually expressed dismay that that Bear cycle exceeded the Dow’s Bear cycle of 1929-1932. The good news is the NASDAQ bear did not generate the same economic impact as the 1929-32 Dow Short-term Indicant Bear.

The S&P500’s February is the second most bearish month, even though a it is a constituent of the six-month bullish cycle. Since 1950, it is a loser on average. It has produced an average loss of 0.1%. The S&P500 February does not express that much volatility. It is a ho-hum sort of month on average with a bearish bias. The Dow Jones Industrial Average’s February is the fifth most bearish month of the year on average.

This is a heads up for you. The eight major market indices are above their respective bullish red curves on the Mid-term Indicant by an average of 10.6%. They are above their long-term blue curve by an average of 12.9%. There is nothing wrong with that, but gravitational forces should pull them back, while maintaining their bullish stature. The eight major indices will not need to fall by those average amounts. They can simply hover above the bullish red curve for a few weeks. That will allow the bullish red curve to catch up for the typically bullish March. That sort of expression was experienced last week with the Dow and NASDAQ fallen by a small amount. Many of you recall the second wave of the buying spree occurred in March of last year after a disappointing and unseasonable January.

The Dow’s March-April bi-monthly performance is the third best followed only by the extraordinarily bullish December-January and November-December rolling bi-monthly periods. That is because February is such a dismal month on average. The S&P500’s  March-April bi-monthly performance is the fourth most bullish, followed by a series of bi-monthly periods beginning in October. The March-April bi-monthly period for the NASDAQ is fifth most bearish. However, the NASDAQ’s bi-monthly January-February is the second most bullish. The NASDAQ has historically expressed its greatest measure of bullishness in four-month cycles from November through February.

We are still enjoying the six-months of bullish seasonality. However, the calendar tells us, we are now departing from the heart and soul of that bullish period. We are now entering the jittery part of the final three months of bullish seasonality. You will recall the pre-election year phenomenon over-came normal seasonality last year. The various Indicant models continued signaling bull during most of the bearish period from May through October 2003.

Political cyclicality does not always defeat seasonal normalcy, but the markets returned to a normal state after their abnormal adventures of the golden 1990’s. So far, that normalcy has been highly predictable and we have enjoyed our hold positions since the mid-term election year’s phenomenon of finding the market’s bottom. Several of the current hold positions for stocks originated in October 2002. We took profits on some of them and re-bought in 2003. The worse performing December since 1931 occurred in 2002 right after the current bull began. The Mid-term Indicant was forced to signal sell during that time for mutual funds. You will notice most of the mutual fund buy signals are in March 2003. Bearish seasonality did not generate too many sell signals in 2003.

Remember, the pre-election presidential election year is the second most bullish on the presidential election year cycle. We are in throes of researching that performance with the Mid-term Indicant since 1900. It will be published on the Website in the next few months. That research, coupled with our research the past twenty-five years, is revealing even greater trading precision. We expect to offer the best trading model ever invented to our members.

Weekly Buy/Sell Summary

The Mid-term Indicant generated no buy signals and no sell signals for stocks and funds for the second week in a row.

The Mid-term Indicant is avoiding eight stocks and funds of the 296 tracked by the Indicant. The avoided stocks and funds are down an average of 28.7% since the Mid-term Indicant signaled sell an average of 41.4 weeks ago.

Although there were seven avoided stocks and funds at this time last year, there were ninety-five sell signals. After the buying barrage in late 2002, the worse December since 1931 and a very disappointing January 2003 stimulated this unusual number of sell signals last year. The avoided stocks and funds one year ago were down an average of 24.0% since their respective sell signals an average of 16.6 weeks earlier. The December-02 through February-03 rolling quarter was the third worse in the history of the NASDAQ. That occurred in the heart and soul of bullish seasonality and during the embryonic months of the current bull. Thus, the Mid-term Indicant generated a huge number of sell signals at this time one year ago. So far, the bull has continued to express strength and confidence.

The Mid-term Indicant is currently signaling hold for 288 of the 296 stocks and funds currently tracked by the Indicant. The stocks and funds with hold signals are up an average of 68.6%, which is up from last week. That annualizes to 92.9%, which is down from 124.1% reported on June 7, 2003, but up from 50.2% reported on February 15, 2003. The Mid-term Indicant has been signaling hold for these 288 stocks and funds for an average of 37.4 weeks.

The stocks/funds with hold signals amounted to only 194 after the extensive selling at this time last year. At that time, the Mid-term Indicant was holding those stocks and funds for an average of 18.7 weeks. They were up 22.0% (annualized at 61.2). Most of the selling last year was directed at mutual funds, as several individual stocks continued to climb last year in the face of bear market expressions.

This paragraph is a repeat from last several weeks with a few modifications. The current bull market and buying barrage in late 2002 followed the predicted market bottom in 2002. The mid-term presidential election year phenomenon occurred consistent with history. Even more impressive was how the market synchronized with near perfection with normal seasonality. The Dow30 found bottom on October 9, 2002 at 7286.27. The NASDAQ found bottom on the same day at 1114.11. As earlier stated, the Indicant began its buying barrage in October – November 2002 just after the market bottomed from the severe 2000-2002 Bear Market. Some of you recall the Short-term Indicant Bear for the NASDAQ was the longest in history. It even exceeded the Dow’s 1929-1931 Short-term Indicant Bear. The good news is that the NASDAQ’s decline did not lead to a depression, which is a clear indication of how little influence the tech stocks have on the economy.

This paragraph is similar to the past several weeks with a few modifications slanted for 2004 interpretations. We want to make certain you understand this. The mid-term election year phenomenon found the market bottom, right on cue in 2002. The presidential pre-election year phenomenon is the most bullish year on the presidential election cycle. We have now completed our enjoyment of that in 2003. The second most bullish year along the presidential election cycle is the election year, which is underway in 2004. We are anticipating enjoyment of that as well. The following link will take you to charts that explain this phenomenon, which is currently underway and for you to enjoy. It is in a “members only” section. This paragraph will repeat throughout this year. Some of the charts were updated at the close of 2003, so it is recommended you review them again if you have not yet done so. They have been improved to provide greater elucidation.

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

Make certain you read the entire pages on the above link. You will see there are exceptions. So far, we do not expect 2004 to be an exception. If it becomes an exception, the Quick-term Indicant and the other Indicant models will let you know.

Stop Loss Management

The Mid-term Indicant continues recommending the more tolerant stop loss of 8%. You may want to increase that to 10% if your current hold position is up over 50%. We are still into bullish seasonality, backed by the presidential election year. When the Quick-term Indicant signals bear, you should adjust your stop losses to 5%.

Use either an 8% (or 10%) trailing stop loss or the yellow or green values you will find on the tables. If your stock or fund is above the bearish yellow curve and below the green curve, set your stop loss equal to the greater of the yellow curve and the trailing stop loss. If your stock or fund is above the green curve, set your stop loss at no less the value of the green curve or 8% trailing, whichever is greater. If your stock or fund is above the red curve and you bought at the Mid-term Buy signal, you should use the 8% trailing stop loss. If you are up by triple digit amounts and enjoy your ownership of the stock or fund, then use a 15% trailing stop loss or the slow moving blue curve price. If you really enjoy holding the stock, keep a close eye on the management. Dilettante managers have a way of worming into the business. Watch closely for cronyism and lazy-hazy management dialog. Keep your eye on lavish spending. Those types are more interested in burning your money for their pleasures, as opposed to making you money.

In a few instances, you will see a hold signal for a stock or fund that is down from its buy signal or below one of the above conditions for selling. If you are more of a trader than an investor, feel free to buy stocks and funds in those “bearish” conditions. They are configured for a possible rebound, while at the same time, it is important to set the stop losses mentioned in this report.

Stock and Fund Update

Click the following link to see sorted performance of stocks and funds with hold/avoid signals. In the past, we included them in this email message but now display them on the website. This is available to the public while the specific buy and sell transactions are limited to members only. Be patient with this download. It takes a few minutes.

http://www.indicant.net/Non-Members/Performance/Top-Bot.htm

Summary of Stocks and Funds with Buy and Sell Signals This past Week

To maintain appropriate security, you can see the Mid-term Indicant "buy/sell" signals for stocks and funds for this week by clicking the following link. It is in the member’s only section.

http://www.indicant.net/Members/Updates/All%20Update%20Forms/Buy-Sell%20Summary%20This%20Week.htm

As repeatedly stated, do not hold more than 10% of your investment resources in a single stock and do not hold more than 20% of your investment resources into a single mutual fund. Also, never fall in love with a stock or fund. Only love your portfolio. Never love its contents. Management stupidity can wreak havoc on any stock or fund at any time.

All update information is on a single page in the web site. Click the below link to that page. You will need your login ID.

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

Divergence versus Convergence

All equity sectors continue as red bulls. We are still enjoying equity convergence. That supports a bullish fervor. Commodity related indices lost their red bull status two weeks ago. That condition persists. Fundamentally, that condition will should add fuel to the equity related bulls we are currently enjoying.

Economic Outlook

Although the commodity related options indices lost its red bull status two weeks ago, commodities continue to express red bull behavior. The Dow Jones Futures, Dow Jones Spot, Reuter UK, CRB Bridge Futures, Oil, and Gold continue with red bull status. The markets are obviously anticipating they have peaked for the most part. As many of you know, the market does not do a perfect job with its anticipation, while at the same time, the market does always tell the truth.

The only two commodities tracked by the Indicant without red bull status are wheat and steers. Wheat fell a whopping 11.3% last week. Steers rebounded after its recent crash from foreign lack of interest in consuming mad cow disease.

Interest rates changed very little last week. The Federal funds effective rate declined 4.7%, while most other rates remained pretty much the same from the prior week. All interest rates tracked by the Indicant are deeply bearish, which remains bullish for the stock market.

The U.S. Dollar remained mostly unchanged last week. It continues to be extremely weak against world currencies. Again, this is favorable for U.S. exporters, but continues to be also unfavorable to inflationary pressures. The interest rate cycle, commodities cycle, and current cycle continue to be stable at peak values. It is not likely they will swing wildly during an election year. But, we will keep our eye on them anyway.

All economic data is at the following link:

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

Fear Metrics: Economics and Terrorism

The Indicant signaled buy for Fidelity American Gold (FSAGX) - #28 on December 7, 2001. Eighty-five weeks ago, it was up 66.1% since that buy signal. Seventy-eight weeks ago, it closed up 12.0% since that buy signal. Sixty-nine weeks ago, it closed up 42.9% since the MTI buy signal of December 7, 2001. Last week it closed up 91.7%, which is significantly higher than 47.1% reported twenty-seven weeks ago. The current annualized growth rate is 42.4%, which is up from 28.8% reported twenty-seven weeks ago. This fund experienced little movement last week.

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% eighty-three weeks ago since the MTI buy signal in April 2001. Seventy-six weeks ago, it closed up 30.1%. Last week it closed up 118.4%, which is higher than the 75.9% reported twenty-seven weeks ago. The current annualized growth rate since the April 13, 2001 buy signal is 41.9%, which is higher than 23.1% reported twenty-seven weeks ago. This fund was up slightly last week.

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

Links to both of the above funds are as follows:

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

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

Thirty-nine weeks ago, the Gold and Silver Index fell below the long-term blue curve. As is typical, it bounced back above that curve the following week, forcing the Mid-term Indicant to signal new bull. Since the Mid-term Indicant’s bull signal of May 3, 2003, this index is up 44.8%. Two weeks ago it was up 63.6% since the May 3, 2003 Mid-term Bull signal. Although Gold prices plummeted two weeks ago, they up significantly from 18.8% reported twenty-seven weeks ago. The annualized growth rate is 60.6%, which is more than the 50.7% reported twenty-seven weeks ago, but lower than 142.5% reported thirty-one weeks ago. Two weeks ago, the annualized growth rate since the bull signal was 90.9%. As you can see, gold prices may be beyond its cyclical peak. If that continues, expect the stock market to accelerate its bullish pattern.

Gold prices will tumble if terrorism and inflationary threats subside. It, along with the stock market, will also tumble in the improbable event of deflation. This index continues to move north, which is inconsistent with equity related bulls. Continuing weaknesses in gold and other commodities will jolt the equity markets to the north.

http://www.indicant.net/Members/Updates/MTI-Mkts-Index%20Options/I05.htm#25

Quick-term and Short-term Indicant Update

All eight of the eight major indices continue with red bull expressions. The market does not move robustly to the south when any of the Quick-term Indices are red bulls. Your hold positions are safe. The eight major indices are above the bullish red curve by an average of 1.5%, which is down from last week.  

The eight major indices are up 9.2% since the Quick-term Indicant signaled bull on October 28, 2003. That annualizes to 38.2%. It is not likely the market will rise by that amount by October 28, 2004. As stated last week, it would not be surprising to endure normal bearish seasonality in 2004 only to enjoy a bullish bounce just before the election this year. The Indicant will keep you posted on that.

As stated for the past several weeks, Force Vectors continue their quick up and down oscillations. Last week, four of the eight were pointing south. Now, seven of the eight are pointing north. That continues to be non-bearish.

To view the Quick-term Indicant charts, please click the following hyperlink:

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

The Indicant Volume Indicator continues maturing robust movement. That behavior along with increasing stock prices bodes well for the bullish undercurrent driving this market to the north.

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

The two combined indexes are up by an average of 8.7% since the Short-term Indicant signaled bull on November 24, 2003. That annualizes to 51.6%. The Dow is up 8.4% and the NASDAQ is up 9.1% since the November 24, 2003 Short-term Indicant Bull signal. Both of these indices have been Short-term Bulls for sixty-one calendar days, exceeding an average cycle of 39.6 days for the Dow and 34.0 days for the NASDAQ. The Dow’s annualized growth rate since the November 24, 2003 Bull signal is 50.4% while the NASDAQ’s rate is 54.3%.

To view the Short-term Indicant charts, please click the following hyperlink:

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

A link to the Dow’s Short-term Indicant table is as follows:

http://www.indicant.net/Non-Members/Tours/STI%20Tour/ST-Table%20DJIA1995-2002.htm

A link to the NASDAQ’s Short-term Indicant table is as follows:

http://www.indicant.net/Non-Members/Tours/STI%20Tour/ST-Table%20NAS1995-2002.htm

Perspectives

There is no change from last week. The market continues to gravitate toward its breakout line. It is safely above the breakdown lines. There is no hint of major bearish action in the next few days, other than the normal February bearish threat.

To view the Perspective Charts (Quick-term Indicant, please click the following.

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

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

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

All eight major indices are continue as red bulls. That expression provides a safety net for your current hold positions. They are up an average of 24.0% for an annualized gain of 37.9% since the MTI Bull signals an average of 31.3 weeks ago. The annualized growth rate is down from 47.9% reported thirty-three weeks ago. Although this bull is consistent and steady, it has not yet expressed dynamic tendencies.

The DJIA is up 24.0% since the MTI Bull signal on March 22, 2003.  That is up from 14.1% reported fourteen weeks ago. The NASDAQ Composite is the strongest Mid-term Bull. It is up 49.4% since the March 22, 2003 MTI Bull signal, which is up from 34.6% reported fourteen weeks ago. That annualizes to 183.7%, which is up from 80.9% reported twenty-five weeks ago. Both the Dow and NASDAQ were down slightly last week.

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

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

Mid-term Indicant Positions - International Markets

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

Twenty-two of the twenty-two foreign indexes tracked by the Indicant are Mid-term Bulls. They are up an average of 84.9% since the Mid-term Indicant signaled bull an average of 55.6 weeks ago for an annualized gain of 79.5%, which is slightly greater than the 72.9% reported thirty-three weeks ago.

None of the foreign indices is a Mid-term Indicant Bear.

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

Jan 18, 2004 Indicant.Net Weekly Update

Volume 1, Issue 3 ISSN 1526 6516 © The Indicant Stock Market Report

Dear Indicant Members:

This Week’s Report

Bullish Seasonality – Part 8

The last two weekly reports discussed the increasing probability of the market returning to cyclical normalcy. There is increasing evidence the Pre-election year of 2004 will indeed be bullish. There are several fundamental reasons supporting this view. The economy is on a definite rebound. IBM’s recent announcement of hiring more people highlights this.

Corporate earnings are increasing, but that is always a choppy fundamental and quite often irrelevant. This is especially true if one can believe the corporate financial reports. Voodoo bookkeeping is no longer popular since several dilettante managers have been jailed. Regardless, corporate earnings will improve as the economy improves.

The primary fundamental is the average investor has still not entered the stock market. Once Joe Average gets burned, he or she simply decides to stay out of the stock market. As the bull continues, more Joe Average investors will re-enter the stock market. The Indicant Volume Indicator suggests that only the smart money has invested in the current bull. The laws of supply and demand will influence stock prices to the north as more Joe Average investors return to the stock market.

What do the economy, earnings, and supply and demand have to do with the presidential election cycle? First and foremost, the President of the United States has absolutely zero positive influence on stock prices, earnings, or even the economy. The political influence is only negative, but is perceived as positive when politicians undo their prior damage. A recent example of this was George W. Bush’s rescission of the steel tariffs he imposed his first year in office. That tariff inflicted economic damage around the world and added fuel to the already existing recession at that time. Politicians can only damage economic progress. They add no value in anyway.

However, many people, including market experts, believe the President of the United States can exert a positive influence on the economy. Quite often, perceptions overrule reality. The stock market is driven more by perception and human emotion than any other element. That is why the presidential election cycle correlates well with market performance. Human emotion and their perceptions contribute to the various cyclical phenomena. As more people become optimistic, more will invest in the stock market. Stock prices are elastic to the laws of supply and demand.  Joe Average entrance to stock market will create fewer supplies of stocks available to purchase and thus the prices will increase. More and more Joe Averages will enter the market and fuel yet higher stock prices. As the final group of Joe Average’s enter the market, the smart money will start selling. That will create a higher supply of stocks and bring on the next bear market. The late arriving Joe Average’s will get burned again. They always do. That is how smart money makes money in the stock market. Joe Average failures are a major revenue source to many on Wall Street.

What is in store for this pre-election year? Let’s take a quick look at history first. The last presidential election year was bearish, going against the grain of historical expectations. That was Bill Clinton’s 2000. The 2000 Dow closed down by 6.2%. The last time the markets endured back to back bearish movements was in Benjamin Harrison’s 1892 pre-election year and Grover Cleveland’s 1896 pre-election year. Since human emotion is a huge influence on the stock market’s direction, it is highly probable this presidential pre-election year will be bullish.

Some can argue such phenomenal observations are a waste of energy. One can counter that the stock market is up 285.2% since 1832 in presidential pre-election years, which is the second most bullish on the presidential election cycle. That is an average gain of 6.8%.

A few weeks ago, the Indicant advised the back-to-back bearish January’s in 2002 and 2003 would increase the probability of a bullish January 2004. So far, that has been the case. The January Dow is up 1.4%. January is the fourth most bullish month for the Dow. The NASDAQ is up 6.8% so far in January 2004. January is the most bullish NASDAQ month there is. As stated several weeks ago, NASDAQ’s January is in a league all to itself. So far, in 2004, normal cyclical behavior has expressed itself within the confines of expectations.

The NASDAQ January is up by an average of 3.8% since 1970. It is by far the most bullish month for the NASDAQ. After back-to-back bearish January’s in 2002 and 2003, it was obvious the increasing probability of a bullish 2004 January was to be enjoyed. So far, that has been the case and the Indicant advised you of that last December.

The market is still in the six-month bullish period. February is typically a volatile month. It is the worse month in the six-month bullish period. Since 1950, the Dow has eked out an average gain of a mere 0.1%. The S&P500’s February is actually a loser with an average loss of 0.1%. February is the second most bearish month for the S&P500 Index. The NASDAQ’s February is in the middle of the pack with an average gain of only 0.7%. Do not be surprised to see some profit taking in the next few weeks by the big money. However, there is nothing on the immediate horizon that threatens your hold positions.

Weekly Buy/Sell Summary

The Mid-term Indicant generated no buy signals and no sell signals for stocks and funds this weekend.

The Mid-term Indicant is avoiding eight stocks and funds of the 296 tracked by the Indicant. The avoided stocks and funds are down an average of 28.9% since the Mid-term Indicant signaled sell an average of 40.4 weeks ago.

There were six stocks and funds avoided at this time last year. After the buying barrage in late 2002, the worse December since 1931 brought on a few sell signals toward the end of 2002. A contrarian bearish January 2003 continued to accelerate additional sell signals. Those will be reviewed in the next few weeks. The avoided stocks and funds one year ago were down an average of 33.8% since their respective sell signals an average of 25.8 weeks earlier. The current bull market was rekindled in early January-03, but many of you recall it softened with an abnormal degree of severity in the first quarter of 2003.

The Mid-term Indicant is currently signaling hold for 288 of the 296 stocks and funds currently tracked by the Indicant. The stocks and funds with hold signals are up an average of 67.5%, which is up from last week. That annualizes to 93.8%, which is down from 124.1% reported on June 7, 2003, but up from 50.2% reported on February 15, 2003. The Mid-term Indicant has been signaling hold for these 288 stocks and funds for an average of 37.4 weeks.

The stocks/funds with hold signals approximate one year ago when the Indicant was signaling hold for 289 stocks and funds out of the 296 being tracked. At that time, the Mid-term Indicant was holding those stocks and funds for an average of 16.1 weeks. They were up 19.6% (annualized at 63.4%). Many of those stocks and funds continued to climb late last year, as the new bull market began softening.

This paragraph is a repeat from last several weeks with a few modifications. The current bull market and buying barrage in late 2002 followed the predicted market bottom in 2002. The mid-term presidential election year phenomenon occurred consistent with history. Even more impressive was how the market synchronized with near perfection with normal seasonality. The Dow30 found bottom on October 9, 2002 at 7286.27. The NASDAQ found bottom on the same day at 1114.11. As earlier stated, the Indicant began its buying barrage in October – November 2002 just after the market bottomed from the severe 2000-2002 Bear Market. Some of you recall the Short-term Indicant Bear for the NASDAQ was the longest in history. It even exceeded the Dow’s 1929-1931 Short-term Indicant Bear. The good news is that the NASDAQ’s decline did not lead to a depression, which is a clear indication of how little influence the tech stocks have on the economy.

This paragraph is similar to the past several weeks with a few modifications slanted for 2004 interpretations. We want to make certain you understand this. The mid-term election year phenomenon found the market bottom, right on cue in 2002. The presidential pre-election year phenomenon is the most bullish year on the presidential election cycle. We have now completed our enjoyment of that in 2003. The second most bullish year along the presidential election cycle is the election year, which is underway in 2004. We are anticipating enjoyment of that as well. The following link will take you to charts that explain this phenomenon, which is currently underway and for you to enjoy. It is in a “members only” section. This paragraph will repeat throughout this year. Some of the charts were updated at the close of 2003, so it is recommended you review them again if you have not yet done so. They have been improved to provide greater elucidation.

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

Make certain you read the entire pages on the above link. You will see there are exceptions. So far, we do not expect 2004 to be an exception. If it becomes an exception, the Quick-term Indicant and the other Indicant models will let you know.

Stop Loss Management

The Mid-term Indicant continues recommending the more tolerant stop loss of 8%. We are into bullish seasonality, backed by the presidential election year. When the Quick-term Indicant signals bear, you should adjust your stop losses to 5%.

Use either an 8% trailing stop loss or the yellow or green values you will find on the tables. If your stock or fund is above the bearish yellow curve and below the green curve, set your stop loss equal to the greater of the yellow curve and the trailing stop loss. If your stock or fund is above the green curve, set your stop loss at no less the value of the green curve or 8% trailing, whichever is greater. If your stock or fund is above the red curve and you bought at the Mid-term Buy signal, you should use the 8% trailing stop loss. If you are up by triple digit amounts and enjoy your ownership of the stock or fund, then use a 15% trailing stop loss or the slow moving blue curve price. If you really enjoy holding the stock, keep a close eye on the management. Dilettante managers have a way of worming into the business. Watch closely for cronyism and lazy-hazy management dialog. Keep your eye on lavish spending. Those types are more interested in burning your money for their pleasures, as opposed to making you money.

In a few instances, you will see a hold signal for a stock or fund that is down from its buy signal or below one of the above conditions for selling. If you are more of a trader than an investor, feel free to buy stocks and funds in those “bearish” conditions. They are configured for a possible rebound, while at the same time, it is important to set the stop losses mentioned in this report.

Stock and Fund Update

Click the following link to see sorted performance of stocks and funds with hold/avoid signals. In the past, we included them in this email message but now display them on the website. This is available to the public while the specific buy and sell transactions are limited to members only. Be patient with this download. It takes a few minutes.

http://www.indicant.net/Non-Members/Performance/Top-Bot.htm

Summary of Stocks and Funds with Buy and Sell Signals This past Week

To maintain appropriate security, you can see the Mid-term Indicant "buy/sell" signals for stocks and funds for this week by clicking the following link. It is in the member’s only section.

http://www.indicant.net/Members/Updates/All%20Update%20Forms/Buy-Sell%20Summary%20This%20Week.htm

As repeatedly stated, do not hold more than 10% of your investment resources in a single stock and do not hold more than 20% of your investment resources into a single mutual fund. Also, never fall in love with a stock or fund. Only love your portfolio. Never love its contents. Management stupidity can wreak havoc on any stock or fund at any time.

All update information is on a single page in the web site. Click the below link to that page. You will need your login ID.

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

Divergence versus Convergence

All equity sectors continue as red bulls. Softening gold prices caused the commodity index to lose its red bull status. That reduction in status for the commodity indexes adds fuel to the equity bull.

Economic Outlook

Finally, there is a change from the past three weeks. Several commodity prices turned sharply to the south last week. Although many of the commodities are still red bulls, last week’s drop offers some hope of a cyclical reversal. Gold prices declined a whopping 3.7%. Does that suggest a decline in fear of terrorism and inflation?

Is this decline in commodities the beginning of a cyclical shift or is it a mere blip on the current upward cycle? Time will tell. If this is not a mere blip, but a meaningful and long-lasting cycle to the south, rest assured the stock market will continue catapulting to the north. The bull will live well and live long

More potential grub for the bull can be found in interest rates. They declined last week and they are already at historically low levels. As long as they remain in their depressed state, the stock market will head north.

All economic data is at the following link:

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

Fear Metrics: Economics and Terrorism

The Indicant signaled buy for Fidelity American Gold (FSAGX) - #28 on December 7, 2001. Eighty-four weeks ago, it was up 66.1% since that buy signal. Seventy-seven weeks ago, it closed up 12.0% since that buy signal. Sixty-eight weeks ago, it closed up 42.9% since the MTI buy signal of December 7, 2001. Last week it closed up 91.1%, which is significantly higher than 47.1% reported twenty-six weeks ago. The current annualized growth rate is 42.5%, which is up from 28.8% reported twenty-six weeks ago. After enjoying three successive weeks of bullish expressions, this fund nosedived this past week.

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% eighty-two weeks ago since the MTI buy signal in April 2001. Seventy-five weeks ago, it closed up 30.1%. Last week it closed up 113.0%, which is higher than the 75.9% reported twenty-six weeks ago. The current annualized growth rate since the April 13, 2001 buy signal is 40.3%, which is higher than 23.1% reported twenty-six weeks ago. This fund also dropped significantly after enjoying three consecutive weeks of bullish expressions.

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

Links to both of the above funds are as follows:

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

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

Thirty-eight weeks ago, the Gold and Silver Index fell below the long-term blue curve. As is typical, it bounced back above that curve the following week, forcing the Mid-term Indicant to signal new bull. Since the Mid-term Indicant’s bull signal of May 3, 2003, this index is up 45.8%. Last week it was up 63.6% since the May 3, 2003 Mid-term Bull signal. Although Gold prices plummeted last week, they up significantly from 18.8% reported twenty-six weeks ago. The annualized growth rate is 63.7%, which is more than the 50.7% reported twenty-six weeks ago, but lower than 142.5% reported thirty weeks ago. Last weeks annualized growth rate since the bull signal was 90.9%. As you can see, gold prices took it on the chin last week. If those sort of weeks continue, expect the stock market to accelerate its bullish pattern.

It should tumble if terrorism and inflationary threats subside. It, along with the stock market, will also tumble in the improbable event of deflation. This index continues to move north, which is inconsistent with equity related bulls. Any weakness here will jolt the equity markets to the north.

http://www.indicant.net/Members/Updates/MTI-Mkts-Index%20Options/I05.htm#25

Quick-term and Short-term Indicant Update

All eight of the eight major indices continue with red bull expressions. The market does not move robustly to the south when any of the indices are red bulls. Your hold positions are safe. The eight major indices are above the bullish red curve by an average of 2.4%, which is down by 0.1% from last week.

The eight major indices are up 9.1% since the Quick-term Indicant signaled bull on October 28, 2003. That annualizes to 40.9%. It is not likely the market will rise by that amount by October 28, 2004. As stated last week, it would not be surprising to endure normal bearish seasonality in 2004 only to enjoy a bullish bounce just before the election this year.

As stated for the past several weeks, Force Vectors continue their quick up and down oscillations. Last week, four of the eight were pointing south. Now, seven of the eight are pointing north. That continues to be non-bearish.

To view the Quick-term Indicant charts, please click the following hyperlink:

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

The Indicant Volume Indicator is now maturing robust movement. That behavior along with increasing stock prices bodes well for the bullish undercurrent driving this market to the north.

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

The two combined indexes are up by an average of 9.3% since the Short-term Indicant signaled bull on November 24, 2003. That annualizes to 62.3%. The Dow is up 8.7% and the NASDAQ is up 9.9% since the November 24, 2003 Short-term Indicant Bull signal.

To view the Short-term Indicant charts, please click the following hyperlink:

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

A link to the Dow’s Short-term Indicant table is as follows:

http://www.indicant.net/Non-Members/ST%20Tour/ST-Table%20DJIA1995-2002.htm

A link to the NASDAQ’s Short-term Indicant table is as follows:

http://www.indicant.net/Non-Members/ST%20Tour/ST-Table%20NAS1995-2002.htm

Perspectives

There is no change from last week. The market continues to gravitate toward its breakout line. It is safely above the breakdown lines. There is no hint of major bearish action in the next few days.

To view the Perspective Charts (Quick-term Indicant, please click the following.

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

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

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

All eight major indices are red bulls. They are up an average of 23.8% for an annualized gain of 41.1% since the MTI Bull signals an average of 30.1 weeks ago. The annualized growth rate is down from 47.9% reported thirty-two weeks ago. Although this bull is consistent and steady, it has not yet expressed dynamic tendencies.

The DJIA is up 24.4% since the MTI Bull signal on March 22, 2003.  That is up from 14.1% reported thirteen weeks ago. The NASDAQ Composite is the strongest Mid-term Bull. It is up 50.6% since the March 22, 2003 MTI Bull signal, which is up from 34.6% reported thirteen weeks ago. That annualizes to 188.0%, which is up from 80.9% reported twenty-four weeks ago. It was up, significantly, last week.

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

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

Mid-term Indicant Positions - International Markets

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

Twenty-two of the twenty-two foreign indexes tracked by the Indicant are Mid-term Bulls. They are up an average of 83.1% since the Mid-term Indicant signaled bull an average of 54.6 weeks ago for an annualized gain of 79.2%, which equals the 72.9% reported thirty-one weeks ago.

None of the foreign indices is a Mid-term Indicant Bear.

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

Jan 11, 2004 Indicant.Net Weekly Update

Volume 1, Issue 2 ISSN 1526 6516 © The Indicant Stock Market Report 

Dear Indicant Members:

 This Week’s Report

Bullish Seasonality – Part 7

Last week’s report discussed there is an increasing probability of the market returning to cyclical normalcy. The NASDAQ crash of 2000-2002 has returned to the market to a position of normalcy and thus the increased probability of predictability. Voodoo bookkeeping, dilettante management, the phenomenon of the presidential election cycles, economic conditions, and normal seasonality are all influencing the ebb and flow of stock prices. Historical cyclical behavior is gaining influence over the stock market.

Normal seasonality did not produce expected normalcy in late 2000 for any of the major indices. Normal seasonality returned to the stock market in late 2001 with some gusto, but the normal presidential election cycle overruled normal seasonal behavior in late 2001 and early 2002. Again normal seasonality returned to the market in late 2002, but even that surge in stock prices departed from normal seasonal behavior in early 2003. Many of you recall the major buying spree recommended by the Indicant in October 2002 through November 2002. Many of those stocks are still receiving hold signals.

Even though there was a buying barrage in late 2002, the markets bullish seasonal move was weak. It was so weak that most of the mutual funds received sale signals from January through February in 2003, while many of the stocks held ground. The fourth quarter of 2002 and January-February 2003 were extremely weak with respect to normal seasonal expressions. December 2002 was the worse December since 1931. January was down which is difficult for the most bullish month of the year.

Most of the mutual funds receiving buy signals in March 2003 are still being held. The presidential election cycle phenomenon influenced the market, as expected, throughout most of 2003. The bottom was found in the mid-term election year of 2002 and the market has steadily increased in the pre-election year of 2003. Both of these events were expected. The market has behaved nicely with respect to those expectations.

The current bull market started with little noise, other than the Indicant’s high volume of buy signals in late 2002. The current bull’s movement has been tantalizingly slow. It has not been dynamic. The magnitude of its movement is very subtle. The NASDAQ is still down from its peak in March 2000 by over 50%. Most investors are still reeling from the effects of that bear market. Voodoo bookkeeping continues to make the headlines more than the markets movement to the north. Real investors are making money, while the average investor is still setting on the sidelines.

The press did their normal New Years Day publications and wrote about how the market was up significantly in 2003. The average investor read that sort of stuff. Many average investors accelerated their investments into the stock market in early January 2004. That increased the demand for stocks against the finite supply of them. Thus, your hold positions continued to benefit from this buying onslaught earlier this month.

Economic news, the presidential election cycle, and normal seasonality are continuing to support market normalcy. The average investor who read the morning paper on January 1, 2004 put quite a bit of money in the stock market this month. They continue to do so according to the Indicant Volume Indicator. If the market produces some huge gains – enough to make the evening news in the next few weeks - expect that sort of stuff to be self-serving. In other words, your hold positions will continue to manifest happy results for you as more and more latecomers join this bull in 2004.

The concern, as always, is that annual lag in the month of February. January is the most bullish month for the stock market. Because of that, February is, historically, somewhat of a bearish month as profit taking by the short-term traders increases the supply of stocks. Thus, the prices typically go down. Politicians will continue to support favorable economic behavior where they can. That is why the stock market produces more profits for investors in pre-election and election years. We just enjoyed the phenomenon of presidential pre-election year bulls in 2003. It is the most bullish year on the presidential election cycle. The second most bullish year is the presidential election year itself.

The current configurations of the various Indicant models support continuing bullish behavior. Bullish seasonality concludes on April 30, 2004. With the exception of February, we have time to enjoy our hold positions.

Weekly Buy/Sell Summary

The Mid-term Indicant generated no buy signals and two sell signals for stocks and funds this weekend.

The Mid-term Indicant is avoiding six stocks and funds of the 296 tracked by the Indicant. The avoided stocks and funds are down an average of 29.0% since the Mid-term Indicant signaled sell an average of 39.4 weeks ago.

There were six stocks and funds avoided at this time last year. After the buying barrage in late 2002, the worse December since 1931 brought on a few sell signals toward the end of 2002. A contrarian bearish January 2003 continued to accelerate additional sell signals. Those will be reviewed in the next few weeks. The avoided stocks and funds one year ago were down an average of 31.6% since their respective sell signals an average of 24.9 weeks earlier. The current bull market was rekindled in early January-03, but you will later see it softened with an abnormal degree of severity in the first quarter of 2003.

The Mid-term Indicant is signaling hold for 288 of the 296 stocks and funds currently tracked by the Indicant. The stocks and funds with hold signals are up an average of 63.5%, which is up significantly from last week. That annualizes to 90.8%, which is down from 124.1% reported on June 7, 2003, but up from 50.2% reported on February 15, 2003. The Mid-term Indicant has been signaling hold for these 288 stocks and funds for an average of 36.4 weeks.

The stocks/funds with hold signals approximate one year ago when the Indicant was signaling hold for 284 stocks and funds out of the 296 being tracked. At that time, the Mid-term Indicant was holding those stocks and funds for an average of 15.0 weeks. They were up 22.2% (annualized at 76.6%). Many of those stocks and funds continued to climb late last year, as the new bull market began softening.

This paragraph is a repeat from last several weeks with a few modifications. The current bull market and buying barrage in late 2002 followed the predicted market bottom in 2002. The mid-term presidential election year phenomenon occurred consistent with history. Even more impressive was how the market synchronized with near perfection with normal seasonality. The Dow30 found bottom on October 9, 2002 at 7286.27. The NASDAQ found bottom on the same day at 1114.11. As earlier stated, the Indicant began its buying barrage in October – November 2002 just after the market bottomed from the severe 2000-2002 Bear Market. Some of you recall the Short-term Indicant Bear for the NASDAQ was the longest in history. It even exceeded the Dow’s 1929-1931 Short-term Indicant Bear. The good news is that the NASDAQ’s decline did not lead to a depression, which is a clear indication of how little influence the tech stocks have on the economy.

This paragraph is similar to the past several weeks with a few modifications slanted for 2004 interpretations. We want to make certain you understand this. The mid-term election year phenomenon found the market bottom, right on cue in 2002. The presidential pre-election year phenomenon is the most bullish year on the presidential election cycle. We have now completed our enjoyment of that in 2003. The second most bullish year along the presidential election cycle is the election year, which is underway in 2004. We are anticipating enjoyment of that as well. The following link will take you to charts that explain this phenomenon, which is currently underway and for you to enjoy. It is in a “members only” section. This paragraph will repeat throughout this year. Some of the charts were updated at the close of 2003, so it is recommended you review them again if you have not yet done so.

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

Make certain you read the entire pages on the above link. You will see there are exceptions. So far, we do not expect 2004 to be an exception. If it becomes an exception, the Quick-term Indicant and the other Indicant models will let you know.

Stop Loss Management

The Mid-term Indicant continues recommending the more tolerant stop loss of 8%. We are into bullish seasonality, backed by the presidential election year. When the Quick-term Indicant signals bear, you should adjust your stop losses to 5%.

Use either an 8% trailing stop loss or the yellow or green values you will find on the tables. If your stock or fund is above the bearish yellow curve and below the green curve, set your stop loss equal to the greater of the yellow curve and the trailing stop loss. If your stock or fund is above the green curve, set your stop loss at no less the value of the green curve or 8% trailing, whichever is greater. If your stock or fund is above the red curve and you bought at the Mid-term Buy signal, you should use the 8% trailing stop loss. If you are up by triple digit amounts and enjoy your ownership of the stock or fund, then use a 15% trailing stop loss or the slow moving blue curve price. If you really enjoy holding the stock, keep a close eye on the management. Dilettante managers have a way of worming into the business. Watch closely for cronyism and lazy-hazy management dialog. Keep your eye on lavish spending. Those types are more interested in burning your money for their pleasures, as opposed to making you money.

In a few instances, you will see a hold signal for a stock or fund that is down from its buy signal or below one of the above conditions for selling. If you are more of a trader than an investor, feel free to buy stocks and funds in those “bearish” conditions. They are configured for a possible rebound, while at the same time, it is important to set the stop losses mentioned in this report.

Stock and Fund Update

Click the following link to see sorted performance of stocks and funds with hold/avoid signals. In the past, we included them in this email message but now display them on the website. This is available to the public while the specific buy and sell transactions are limited to members only. Be patient with this download. It takes a few minutes.

http://www.indicant.net/Non-Members/Performance/Top-Bot.htm

Summary of Stocks and Funds with Buy and Sell Signals This past Week

To maintain appropriate security, you can see the Mid-term Indicant "buy/sell" signals for stocks and funds for this week by clicking the following link. It is in the member’s only section.

http://www.indicant.net/Members/Updates/All%20Update%20Forms/Buy-Sell%20Summary%20This%20Week.htm

As repeatedly stated, do not hold more than 10% of your investment resources in a single stock and do not hold more than 20% of your investment resources into a single mutual fund. Also, never fall in love with a stock or fund. Only love your portfolio. Never love its contents. Management stupidity can wreak havoc on any stock or fund at any time.

All update information is on a single page in the web site. Click the below link to that page. You will need your login ID.

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

Divergence versus Convergence

The energy sector moved above red last week. Foreign markets, generic markets, internet markets, large caps, medical, and technology are all red bulls. Even commodity-oriented securities are red bulls. More and more people are moving money from their 1% plus CD’s and money market funds into equities and other investments. Sooner or later, these conflicting money flows will assert more favoritism in a more focused group.

However, it is bullish when all sectors are moving north. That is the result of the simplicity of supply and demand for any investment instrument. In the long run, though, energy and general equities will not move in the same direction. One will over-power the other. Continuing increases in commodity prices is a concern. As soon as the unemployment numbers get to where political leadership wants them and the first hint of a rising consumer price index, rest assured Greenspan would knock the bull down with an increase in interest rates.

Economic Outlook

Absolutely nothing has changed from the past three weeks. The remainder of this paragraph is a repeat from last week. The three-month T-Bill continues to slip to the south. CD’s continue to ebb and flow at historical lows. Freddie Mac and Fannie Mae interests are beginning to cycle to the south again. That is bullish for the market. 

Nothing changed from the past two weeks, so the remainder of this paragraph is a repeat.  The US Dollar continues to nosedive against world currencies. The weak dollar continues to help exporters and hurt importers. As stated last week, overall, that is favorable to the U.S. economy, but the world is smaller. Economic co-dependency around the world is increasing at an accelerating rate. Political influences are decreasing, which is good news for those who desire a higher quality of life for members of this planet.

With the exception of the price collapse of steers, all other commodity prices continue to remain at very high levels. You can bet Greenspan is watching that. When and if those higher commodity prices impregnate the consumer price index, watch out. Greenspan’s future actions are expected to be consistent with the phenomenon of the presidential election cycle. He will do nothing to jeopardize George W. Bush’s re-election. The idea is to produce unfavorable economic impact in the post election year of 2005.

All economic data is at the following link:

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

Fear Metrics: Economics and Terrorism

The Indicant signaled buy for Fidelity American Gold (FSAGX) - #28 on December 7, 2001. Eighty-three weeks ago, it was up 66.1% since that buy signal. Seventy-six weeks ago, it closed up 12.0% since that buy signal. Sixty-seven weeks ago, it closed up 42.9% since the MTI buy signal of December 7, 2001. Last week it closed up 109.3%, which is significantly higher than 47.1% reported twenty-five weeks ago. The current annualized growth rate is 51.5%, which is up from 28.8% reported twenty-five weeks ago. This fund has enjoyed three successive weeks of bullish expressions.

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% eighty-one weeks ago since the MTI buy signal in April 2001. Seventy-four weeks ago, it closed up 30.1%. Last week it closed up 129.9%, which is higher than the 75.9% reported twenty-five weeks ago. The current annualized growth rate since the April 13, 2001 buy signal is 46.7%, which is higher than 23.1% reported twenty-five weeks ago. This fund has also enjoyed three successive weeks of bullish expressions.

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

Links to both of the above funds are as follows:

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

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

Thirty-seven weeks ago, the Gold and Silver Index fell below the long-term blue curve. As is typical, it bounced back above that curve the following week, forcing the Mid-term Indicant to signal new bull. Since the Mid-term Indicant’s bull signal of May 3, 2003, this index is up 63.6%, which is up significantly from 18.8% reported twenty-five weeks ago. The annualized growth rate is 90.9%, which is more than the 50.7% reported twenty-five weeks ago, but lower than 142.5% reported twenty-nine weeks ago. It should tumble if terrorism and inflationary threats subside. It, along with the stock market, will also tumble in the improbable event of deflation. This index continues to move north, which is inconsistent with equity related bulls. Any weakness here will jolt the equity markets to the north.

http://www.indicant.net/Members/Updates/MTI-Mkts-Index%20Options/I05.htm#25

Quick-term and Short-term Indicant Update

All eight of the eight major indices continue with red bull expressions. The market does not move robustly to the south when any of the indices are red bulls. Therefore, your hold positions are safe. The eight major indices are above the bullish red curve by an average of 2.5%, which is up by 0.3% from three weeks ago.

The eight major indices are up 8.0% since the Quick-term Indicant signaled bull on October 28, 2003. That annualizes to 39.7%. It is not likely the market will rise by that amount by October 28, 2004. It would not be surprising to endure normal bearish seasonality in 2004 only to enjoy a bullish bounce just before the election this year. So, it is possible to enjoy at 39.7% or more increase this year, but a few trades in the year may be necessary.

As stated for the past several weeks, Force Vectors continue their quick up and down oscillations. Four of the eight are pointing south. The last time the Force Vectors unleashed dynamic behavior was in March 2003. As previously stated this bull market is very subtle. All eight Vector Pressures are in bullish domains. That is non-bearish.

To view the Quick-term Indicant charts, please click the following hyperlink:

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

The Indicant Volume Indicator is finally demonstrating the early stages of robust movement. As long as the market continues to increase with this robustness, expect continuing bullish posturing, position, and direction.

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

The two combined indexes are up by an average of 7.6% since the Short-term Indicant signaled bull on November 24, 2003. That annualizes to 59.3%. The Dow is up 7.3% and the NASDAQ is up 7.9%. That is also bullish.

To view the Short-term Indicant charts, please click the following hyperlink:

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

A link to the Dow’s Short-term Indicant table is as follows:

http://www.indicant.net/Non-Members/ST%20Tour/ST-Table%20DJIA1995-2002.htm

A link to the NASDAQ’s Short-term Indicant table is as follows:

http://www.indicant.net/Non-Members/ST%20Tour/ST-Table%20NAS1995-2002.htm

Perspectives

There is no change from last week. The market continues to gravitate toward its breakout line. It is safely above the breakdown lines. There is no hint of major bearish action in the next few days.

To view the Perspective Charts (Quick-term Indicant, please click the following.

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

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

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

All eight major indices are bulls. They are up an average of 22.0% for an annualized gain of 37.9% since the MTI Bull signals an average of 29.1 weeks ago. The annualized growth rate is down from 47.9% reported thirty-one weeks ago. Although this bull is consistent and steady, it is not a dynamic one.

The DJIA is up 22.7% since the MTI Bull signal on March 22, 2003.  That is up from 14.1% reported twelve weeks ago. The NASDAQ Composite is the strongest Mid-term Bull. It is up 46.8% since the March 22, 2003 MTI Bull signal, which is up from 34.6% reported twelve weeks ago. That annualizes to 174.0%, which is up from 80.9% reported twenty-three weeks ago. It was up last week.

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

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

Mid-term Indicant Positions - International Markets

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

Twenty-two of the twenty-two foreign indexes tracked by the Indicant are Mid-term Bulls. They are up an average of 82.5% since the Mid-term Indicant signaled bull an average of 53.6 weeks ago for an annualized gain of 80.1%, which exceeds the 72.9% reported thirty weeks ago.

None of the foreign indices is a Mid-term Indicant Bear.

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

Jan 04, 2004 Indicant Weekly Update

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

Dear Indicant Members:

This Week’s Report

Bullish Seasonality – Part 6

The 1995 through early 2000 hype-driven rise in the stock market was unnatural. Investors forgot that real economic wealth originates from only three broad sectors; manufacturing, extraction, and agriculture. All other industries merely support those three economic functions. The rise in the NASDAQ was not consistent with this core economic principle. However, many NASDAQ stocks support productivity growth, which is the heart and soul of increasing the quality of life.

The 1995-2000 rise in the NASDAQ convoluted normal market behavior. The 2000-2002 crash in the NASDAQ has postured an increased probability of returning to a higher degree of normalcy. Although the Indicant does not officially forecast the market, the outlook for 2004 is continuing bullish behavior. The Indicant is only interested in market direction regardless if it is a cyclical turn or a change in trend.

The Mid-term cycles and the long-term trend continue to be north (bullish). The current mid-term and short-term cycles favor a northerly direction. The market is bullish.

From 1832 through 1981, the Dow was down 16.0% in presidential post election years. The great bull market since 1981 has yielded gains of 27.7%, 27.0%, 13.7%, and 22.6% in the presidential post election years of 1985, 1989, 1993, and 1997, respectively. That was abnormal behavior when compared to historical trends. The Dow declined 7.1% in 2001 in George W. Bush’s first post presidential election year. That was the first post election year since Reagan’s 1981 to move down. The years 1985, 1989, 1993, and 1997 were abnormal. The year 2001 was normal. The abnormality was due to an abnormal market. We have another year to go before worrying about 2005’s post presidential election year.

The long running series of abnormal behavior has introduced an increasing probability of returning to normalcy. With that, we can expect 2004 to be bullish. This is supported by the normal market behavior of 2003 where we enjoyed the presidential pre-election year phenomenon of expected bullish behavior. We enjoyed avoiding steep losses in the 2002 mid-term election year. We enjoyed participating in the mid-term election year finding bottom, which is normal when compared to historical patterns. We enjoyed getting into the market in October 2002, which was the same month the market found that bottom.

Based on historical trends, what is in store for 2004? Bullishness! Since 1832, the market has risen 457.6% during presidential pre-election years. The last time the market endured a down presidential pre-election year was Hoover’s 1929. Since then the market has been up in every presidential pre-election year. Last year’s rise was above average. The market Dow increased 25.3% in 2003. The average increase since 1832 is 10.6%.

The charts have been updated and a link to it follows:

http://www.indicant.net/Members/Updates/History-Seasonal/HS0100.htm#Political%20Cycle%20Phenomena

After viewing this chart, you will notice the second most bullish year for the stock market is the presidential election year. Since 1832 the market is up 285.2%. The current Mid-term Indicant configurations suggest bullish behavior is in order for 2004. To view historical behavior within the presidential election cycle since 1920, click the following link.

http://www.indicant.net/Members/Updates/History-Seasonal/HS0090.htm

You noticed the market finding bottoms during the mid-term election year for the most part. You will also notice aberrations. The Indicant will keep you posted if 2004 becomes aberrant. So far, it appears postured within the expectations of historical norms. It is unlikely that 2005 will be as dynamic as 2004. A bull is a bull regardless of magnitude. Make certain you scroll down the page to get the jest of the profound influence the presidential election cycle has on the stock market. The table at the bottom of the page has been updated.

Last year’s January was somewhat disappointing, as it was down, just as December 2002 was disappointing. That aberration was more than offset by the unseasonable bullish behavior from May through October 2003. Stocks and funds continued to rise during that normal bearish period. The presidential pre-election year was more influential on market behavior than normal seasonality during 2003. Do not expect that to be the case this year. It would not be surprising to see the market depress during normal bearish seasonality this year followed by a big bounce in October 2004.

The last presidential election year that was down was Clinton’s 2000. Prior to that, it was Ronald Reagan’s 1984. Both of those disappointments came off the heels of solid bull markets that preceded those two presidential election years. Is the 2003 bull enough to impose another disappointing presidential election year? That is unlikely. Even though the 2003 Bull Market was a nice one, it was not dynamic. The early 1980’s and mid 1990’s bull markets were dynamic. Both generated front-page news quite often. The 2003 Bull Market has been a subtle one. The Indicant Volume Indicator suggests many investors are still on the sidelines. Many will most likely enter the market this year and then fall victim to the bearish seasonal period in 2004. The supply of available stocks will continue to shrink as more investors enter the market. That will provide an uplift to the market.

Weekly Buy/Sell Summary

The Mid-term Indicant generated four buy signals and no sell signals for stocks and funds this weekend.

The Mid-term Indicant is avoiding six stocks and funds of the 296 tracked by the Indicant. The avoided stocks and funds are down an average of 28.6% since the Mid-term Indicant signaled sell an average of 38.6 weeks ago.

There were twelve stocks and funds avoided one year ago. After the buying barrage in late 2002, the worse December since 1931 brought on a few sell signals toward the end of last year, but an early strong January-03 reduced the number of avoided stocks. Those stocks and funds one year ago were down an average of 25.9% since their respective sell signals an average of 23.0 weeks earlier. The current bull market was rekindled in early January-03, but you will later see it softened with some degree of severity in the first quarter of 2003.

In addition to the buy signals, the Mid-term Indicant is signaling hold for 286 of the 296 stocks and funds currently tracked by the Indicant. The stocks and funds with hold signals are up an average of 57.7%, which is up slightly from last week. That annualizes to 83.9%, which is down from 124.1% reported on June 7, 2003, but up from 50.2% reported on February 15, 2003. The Mid-term Indicant has been signaling hold for these 286 stocks and funds for an average of 35.8 weeks.

The stocks/funds with hold signals approximate one year ago when the Indicant was signaling hold for 277 stocks and funds out of the 296 being tracked. At that time, the Mid-term Indicant was holding those stocks and funds for an average of 14.3 weeks. They were up 19.1% (annualized at 69.3%). Many of those stocks and funds continued to climb late last year, as the new bull market began softening.

This paragraph is a repeat from last few weeks. The current bull market and buying barrage slightly over a year ago followed the predicted market bottom in 2002. The mid-term presidential election year phenomenon occurred consistent with history and even more impressive was how the market synchronized with near perfection with normal seasonality. The Dow30 found bottom on October 9, 2002 at 7286.27. The NASDAQ found bottom on the same day at 1114.11. As earlier stated, the Indicant began its buying barrage in October – November 2002 just after the market bottomed from the severe 2000-2002 Bear Market. Some of you recall the Short-term Indicant Bear for the NASDAQ was the longest in history. It even exceeded the Dow’s 1929-1931 Short-term Indicant Bear. The good news is that the NASDAQ’s decline did not lead to a depression, which is a clear indication of how little influence the tech stocks have on the economy.

This paragraph is similar the past several weeks with a few modifications slanted for 2004 interpretations. We want to make certain you understand this. The mid-term election year phenomenon found the market bottom, right on cue in 2002. The presidential pre-election year phenomenon is the most bullish year on the presidential election cycle. The second most bullish year along the presidential election cycle is the election year. The following link will take you to charts that explain this phenomenon, which is currently underway and for you to enjoy. It is in a “members only” section. This paragraph will repeat throughout this year. Prior paragraphs had links that took you to portions of this members only section. Some of the charts have been updated, so it is recommended you review them again.

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

Make certain you read the entire pages on the above link. You will see there are exceptions. So far, we do not expect 2004 to be an exception. If it becomes an exception, the Quick-term Indicant and the other Indicant models will let you know.

Stop Loss Management

The Mid-term Indicant continues recommending a more tolerant stop loss of 8%. We are into bullish seasonality. When the Quick-term Indicant signals bear, you should adjust your stop losses to 5%.

Use either an 8% trailing stop loss or the yellow or green values you will find on the tables. If your stock or fund is above the bearish yellow curve and below the green curve, set your stop loss equal to the greater of the yellow curve and the trailing stop loss. If your stock or fund is above the green curve, set your stop loss at no less the value of the green curve or 8% trailing, whichever is greater. If your stock or fund is above the red curve and you bought at the Mid-term Buy signal, you should use the 8% trailing stop loss. If you are up by triple digit amounts and enjoy your ownership of the stock or fund, then use a 15% trailing stop loss or the slow moving blue curve price. If you really enjoy holding the stock, keep a close eye on the management. Dilettante managers have a way of worming into the business. Watch closely for cronyism and lazy-hazy management dialog. Keep your eye on lavish spending. Those types are more interested in burning your money for their pleasures, as opposed to making you money.

In a few instances, you will see a hold signal for a stock or fund that is down from its buy signal or below one of the above conditions for selling. If you are more of a trader than an investor, feel free to buy stocks and funds in those “bearish” conditions. They are configured for a possible rebound, while at the same time, it is important to set the stop losses mentioned in this report.

Stock and Fund Update

Click the following link to see sorted performance of stocks and funds with hold/avoid signals. In the past, we included them in this email message but now display them on the website. This is available to the public while the specific buy and sell transactions are limited to members only. Be patient with this download. It takes a few minutes.

http://www.indicant.net/Non-Members/Performance/Top-Bot.htm

Summary of Stocks and Funds with Buy and Sell Signals This past Week

To maintain appropriate security, you can see the Mid-term Indicant "buy/sell" signals for stocks and funds for this week by clicking the following link. It is in the member’s only section.

http://www.indicant.net/Members/Updates/All%20Update%20Forms/Buy-Sell%20Summary%20This%20Week.htm

As repeatedly stated, do not hold more than 10% of your investment resources in a single stock and do not hold more than 20% of your investment resources into a single mutual fund. Also, never fall in love with a stock or fund. Only love your portfolio. Never love its contents. Management stupidity can wreak havoc on any stock or fund at any time.

All update information is on a single page in the web site. Click the below link to that page. You will need your login ID.

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

Divergence versus Convergence

The Internet sector held ground last week after rebounding to red bull status three weeks ago. As stated last week, technology continues to hold up well. Energy softened a little last week, but at worse, it is neutral with little expressions of bearishness. Foreign markets expressed bullish commitment, as well as the medical sector. The overall stock market continues to be a red bull. The weariness expressed in November has succumbed to continuing bullish expressions. The increasing price convergence that was mentioned last week continues to lend support for continuing bullish behavior. As stated last week, headline news is needed to add some spark. We got that with all the year end observations in the general media. From that, we should expect a bullish January. The first trading day of this year did not express that, but there are several more days remaining this month.

Economic Outlook

Absolutely nothing has changed from the past two weeks. So, the remainder of this paragraph is a repeat from last week. The three-month T-Bill continues to slip to the south. CD’s continue to ebb and flow at historical lows. Freddie Mac and Fannie Mae interests are beginning to cycle to the south again. That is bullish for the market. 

Nothing changed from the past two weeks, so the remainder of this paragraph is a repeat.  The US Dollar continues to nosedive against world currencies. The weak dollar continues to help exporters and hurt importers. As stated last week, overall, that is favorable to the U.S. economy, but the world is smaller.

There is a huge difference here from the past few weeks. Steers are nose-diving. A few weeks ago, they were skyrocketing, as the law of supply and demand kicked in. It is still in effect, except mad cow disease in the U.S. has stifled foreign demand. Steers were skyrocketing when the bad beef was only in Canada, but now has spread to the U.S. The exclusion of exports has more than offset the anticipated available supply of beef from the good herds. This is all speculative, as the population of good herds has yet to be determined. If no new cases are found in the next few weeks, expect the steer prices to skyrocket back to the north. If only a few new cases are found and the problem appears to be under control, expect northerly moving prices in the next few months, but not as dramatic as the previous two cycles.

Other than gold’s continuing movement to the north, other commodities softened last week. In a few more weeks, we will know if the northerly cyclical patterns are truly reversing or if last week was just an aberration. The equity markets will not continue to ignore the threats of inflation. You can bet Greenspan is watching them and the equity markets will not like his counter attack to any inflationary threats.

All economic data is at the following link:

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

Fear Metrics: Economics and Terrorism

The Indicant signaled buy for Fidelity American Gold (FSAGX) - #28 on December 7, 2001. Eighty-two weeks ago, it was up 66.1% since that buy signal. Seventy-five weeks ago, it closed up 12.0% since that buy signal. Sixty-six weeks ago, it closed up 42.9% since the MTI buy signal of December 7, 2001. Last week it closed up 106.2%, which is significantly higher than 47.1% reported twenty-four weeks ago. The current annualized growth rate is 50.5%, which is up from 28.8% reported twenty-four weeks ago. This fund has enjoyed two successive weeks of bullish expressions.

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% eighty weeks ago since the MTI buy signal in April 2001. Seventy-three weeks ago, it closed up 30.1%. Last week it closed up 128.1%, which is higher than the 75.9% reported twenty-four weeks ago. The current annualized growth rate since the April 13, 2001 buy signal is 46.3%, which is higher than 23.1% reported twenty-four weeks ago. This fund has also enjoyed back to back weeks of bullish expressions.

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

Links to both of the above funds are as follows:

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

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

Thirty-six weeks ago, the Gold and Silver Index fell below the long-term blue curve. As is typical, it bounced back above that curve the following week, forcing the Mid-term Indicant to signal new bull. Since the Mid-term Indicant’s bull signal of May 3, 2003, this index is up 62.1%, which is up significantly from 18.8% reported twenty-four weeks ago. The annualized growth rate is 91.2%, which is more than the 50.7% reported twenty-four weeks ago, but lower than 142.5% reported twenty-eight weeks ago. It should tumble if terrorism and inflationary threats subside. It, along with the stock market, will also tumble in the improbable event of deflation. This index continues to move north, which is inconsistent with equity related bulls. Any weakness here will jolt the equity markets to the north.

http://www.indicant.net/Members/Updates/MTI-Mkts-Index%20Options/I05.htm#25

Quick-term and Short-term Indicant Update

All eight of the eight major indices are now red bulls. The market closed out 2003 with a strong bullish note. That is up from four red bulls two weeks. The market does not move robustly to the south when any of the indices are red bulls. Therefore, your hold positions are safe. The eight major indices are above the bullish red curve by an average of 1.2%, which is up by 0.3% from two weeks ago.

The eight major indices are up 5.4% since the Quick-term Indicant signaled bull on October 28, 2003. That annualizes to 30.0%. It is not likely the market will rise by 30.0% by October 28, 2004, but it would not be surprising to endure normal bearish seasonality in 2004 only to enjoy a bullish bounce just before the election this year.

As stated for the past several weeks, Force Vectors continue their quick up and down oscillations. They continue pointing to the south for six of the eight major indices. All eight Vector Pressures are in bullish domains. That is non-bearish.

To view the Quick-term Indicant charts, please click the following hyperlink:

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

The Indicant Volume Indicator showed a minute expression of discontinuing its lethargic expressions. As stated last week, the key is to observe its configuration around the middle of January. If January is bullish, and we expect that, it will be even more bullish with some robust and dynamic expressions from the Indicant Volume Indicator.

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

The two combined indexes are up by an average of 4.9% since the Short-term Indicant signaled bull on November 24, 2003. That annualizes to 45.5%. The Dow is up 6.8% and the NASDAQ is up 3.1%. That is also bullish.

To view the Short-term Indicant charts, please click the following hyperlink:

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

A link to the Dow’s Short-term Indicant table is as follows:

http://www.indicant.net/Non-Members/ST%20Tour/ST-Table%20DJIA1995-2002.htm

A link to the NASDAQ’s Short-term Indicant table is as follows:

http://www.indicant.net/Non-Members/ST%20Tour/ST-Table%20NAS1995-2002.htm

Perspectives

There is no change from last week. The market continues to gravitate toward its breakout line. It is safely above the breakdown lines. There is no hint of major bearish action in the next few days.

To view the Perspective Charts (Quick-term Indicant, please click the following.

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

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

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

All eight major indices are bulls. They are up an average of 20.4% for an annualized gain of 37.0% since the MTI Bull signals an average of 28.1 weeks ago. The annualized growth rate is down from 47.9% reported thirty weeks ago. Although this bull is consistent and steady, it is not a dynamic one. Yes, it is a delight from the 2000-2002 bear markets.

The DJIA is up 22.2% since the MTI Bull signal on March 22, 2003.  That is up from 14.1% reported eleven weeks ago. The NASDAQ Composite is the strongest Mid-term Bull. It is up 41.2% since the March 22, 2003 MTI Bull signal, which is up from 34.6% reported eleven weeks ago. That annualizes to 153.0%, which is up from 80.9% reported twenty-two weeks ago. It was up last week.

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

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

Mid-term Indicant Positions - International Markets

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

In addition to the new bull signal, twenty-two of the twenty-two foreign indexes tracked by the Indicant are Mid-term Bulls. They are up an average of 74.8% since the Mid-term Indicant signaled bull an average of 52.6 weeks ago for an annualized gain of 74.0%, which approximates the 72.9% reported twenty-nine weeks ago.

None of the foreign indices is a Mid-term Indicant Bear.

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

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