January 30, 2005 Indicant.Net Weekly Update

Volume 01, Issue 5 ISSN 1526 6516 © The Indicant Stock Market Report

The Shorter Cycles – Part 2

The Indicant Volume Indicator recently produced two robust cycles. The first cycle obviated support for bullish behavior. The second and current cycle now is supporting bearish behavior. This is an unusual configuration. This directional shift was swift. Keep in mind, this is referring to Quick-term perspectives, only, and not suggesting a new bearish trend is underway, although possible.

Look at the NASDAQ’s Indicant Volume Indicator. It is the second chart on the web page. The NASDAQ is much more dramatic than the NYSE Indicant Volume Indicator. The point made here will be easier to grasp by referring to the NASDAQ Indicant Volume Indicator. The link to the Indicant Volume Indicator is below:

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

You will notice robust movement that paralleled the annual fourth quarter Quick-term Bull. That was a sure-fire attribute supporting bullish enthusiasm on your part. It even supported the anticipated Santa Claus rally. However, after the holiday season, there was aggressive robust behavior by the Indicant Volume Indicator paralleling bearish expressions. That was a sure-fire attribute supporting bearish enthusiasm on your part; especially for your weaker holdings.

As you can see, there is a crisp robust movement on the far right of the chart. That crisp robust movement paralleled bearish expressions. That is a bearish attribute. That prompted the Quick-term Indicant to signal bear on January 4, 2005. It also influenced 69 sell signals the next weekend for the weaker holdings.

Normally, the Quick-term Indicant will signal bear on yellow interactions following a nice bullish spurt. That minimizes the number of signals. If the bearish yellow curve is up by a significant amount since the Quick-term Bull signal, why get in a tizzy every time the indices fall below bullish red? If the other Quick-term underlying attributes are supporting bullish bias, there is no need to signal bear.

It is too dangerous to signal bull once the major indices fall below bearish yellow, as there is no floor to stop falling stock prices. The Quick-term Indicant will generally signal bear when the indices fall below bullish red during meandering markets. That depends on other underlying quick-term attributes. However, if quick-term gains are locked in and bearish yellow curve is positioned to profit, then interactions with bearish yellow arouses the Quick-term Indicant to signal bear.

That crisp robust movement after the holiday season by the Indicant Volume Indicator influenced the Quick-term Indicant’s bear signal on January 4, 2005. In other words, the Quick-term Indicant signaled bear when the Indices fell below the bullish red curve, even though bearish yellow was up significantly from the previous Quick-term Bull signal. While you are glancing at the chart, look backward in time. You will notice this particular attribute is unusual.

You will notice that in 2000, robust movement by the Indicant Volume Indicator accompanied a great Quick-term Bear leg on the NASDAQ’s collapse. You will also notice that the market kept falling after the Indicant Volume Indicator turned passive. However, that did not happen until the NASDAQ had already fallen 50% from its peak.

The Quick-term Bull in March 2001 did not receive volume support and quickly petered out. The robust Indicant Volume Indicator in late 2001 was related to 911, but that Quick-term Bull was supported for a short period with a robust Indicant Volume Indicator. You will notice in April 2002, the Indicant Volume Indicator again turned robust, paralleling bearish behavior. The NASDAQ fell another 50% at the disbelief of many investors. The buy and hold investor was hurt tremendously.

The great Quick-term Bull of 2003 was accompanied by robust volume early in the cycle. A passive Indicant Volume Indicator accompanied the sideways market of 2004. The market enjoyed frustrating investors in 2004 with several up and down quick cycles, as it meandered aimlessly and without any conviction to bull or bear allegiance. This passive volume helped the continuation of hold signals for most mutual funds and several of the triple and double-digit stock gainers.

Then in late 2004, the Indicant Volume Indicator again moved crisply and robustly to the north, coupling to profound bullish expressions. Its early movement resembled the great bull leg that originated in March 2003. That was when most of the mutual fund buy signals occurred for the second time since October 2002. They have held that position for the most part since March 2003.

It is not unusual for the Indicant Volume Indicator to turn passive during great bear and bull legs. That occurred in most of 2001 when the NASDAQ continued plummeting. Therefore, it is possible for the market to fall this year on a declining Indicant Volume Indicator.

This Quick-term Bear, so far, appears to be an adjustment to the pinnacle effect. In other words, some of the major indices had moved too high from their Long-term Indicant blue curves on a Mid-term Indicant basis. We have been looking at the Dow Transports the past few weeks studying this phenomenon. It has been plummeting to the south, but still safely above its Mid-term Bullish Red curve. Click the below link to see the chart.

http://www.indicant.net/Members/Updates/MTI-Mkts-US/MTI-MKTS-US.htm

As you can see, a Quick-term Bear was required to bring this particular index back in line with a reasonable growth pattern. Society and governmental regulations consist of too much incompetence, slowness, and stupidity to justify continuing investment support for the Transports after passing a pinnacle effect. So, it has to come back to a reasonable growth rate within the confines of human ability to produce at a confined profit level. The Dow Transports and other indices escaped the confinement of real expectations. Thus, a pinnacle effect pull back was in order and consequently, the current Quick-term Bull was born.

As you can see from the MTI-RYS Indicant model, the Dow Transports is rapidly heading to the Indicant Trip Line. The MTI-RYS will not signal bear if the index falls below that trip line, but it will signal bear if it falls below the bullish red curve and that trip line. Click the below link.

http://www.indicant.net/Members/Updates/MTIRYS-Mkts-US/MTI-RYS-06-DJT-Curr.htm

The MTI-RYS has beat buy and hold on the Transports by 18.0% since November 1, 1996. Click on the following link to see the Transport Charts from 2000 through 2004. As you can, the Dow Transports has enjoyed a meteoritic rise since late 2002. The problem is that this increase outstripped earnings expectation. Also, much of this rise occurred when the news was bad; middle eastern unrest, rising oil prices, rising interest rates, etc. Fundamentals support a bearish outlook, but the markets sometimes move contrarian to perceived fundamentals.

http://www.indicant.net/Non-Members/Tours/MTIRYS-Mkts-US/MTIRYS-06-DJT-2000-2004.htm

As you can see, the Incumbent Trip Line has been elevated per the algorithmic rules to ensure the gains are protected against any possible impending bear market.

One more point to consider. Sometimes volume increases occur on the tail end of a bearish leg. Sometimes that is a sign of a trend reversal. That is a popular attribute followed by many. It has been watered down on the spirit of the phenomenon of commonality. It does not work with the perfection it once did.

In summary, the Quick-term Indicant attributes are biased in favor of the bear at this time. This Quick-term Indicant Bear could be a mere adjustment of the pinnacle effect or it could be the beginning of a protracted bear. There is no need to speculate as to which one it is. The various Indicant models will keep you posted on the market’s direction. Right now, new money should not be invested in general equities. Let’s wait for the Quick-term Indicant to signal bull before committing new money to equities. As long as the MTI-RYS continues to signal bull, your current holdings are safe.

Weekly Buy/Sell Summary

The Mid-term Indicant generated no buy signals and no sell signals for stocks. Again, there were no sell signals for funds. This is a testament to the strength of this Mid-term Bull market.

In addition to the sell signals, the Mid-term Indicant is avoiding 90 stocks and funds of the 320 tracked by the Indicant. The avoided stocks and funds are down an average of 26.8% since the Mid-term Indicant signaled sell an average of 49.1 weeks ago.

There were only eight stocks and funds avoided at this time last year. The avoided stocks and funds one year ago were down an average of 27.9% since their respective sell signals an average of 42.4 weeks earlier. Two years ago, on January 31, 2003, the Mid-term Indicant was avoiding 95 stocks and funds that were down an average of 6.8% since their respective sell signals an average of 5.3 weeks earlier. There were 57 sell signals two years ago, ahead of the second buying spree that occurred in March 2003.

Although there were no buy signals this weekend, the Mid-term Indicant is currently signaling hold for 230 of the 320 stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 90.0%. That annualizes to 64.5%, which is down from 124.1% reported on June 7, 2003, but up from 50.2% reported nearly two years ago on February 15, 2003. The Mid-term Indicant has been signaling hold for these 230 stocks and funds for an average of 72.6 weeks.

One year ago, the Mid-term Indicant was holding 282 stocks and funds out of the 296 for an average of 39.7 weeks. They were up 67.1% (annualized at 88.0%). The Mid-term Indicant was signaling hold for 137 stocks and funds two years ago on January 31, 2003. They were up by an average of 26.5% (annualized at 62.2%) since their respective buy signals an average of 22.2 weeks earlier.

Secular Market Blend

This paragraph is a repeat from the last several months with a few modifications reflecting recent secular influences. The current mid-term bull market and buying barrage in late 2002 followed the predicted market bottom in 2002. The mid-term presidential election year phenomenon was consistent with history. Even more impressive was how the market synchronized with near perfection to normal seasonality in 2002.

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 1929-1932 Short-term Indicant Bear in breadth. 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. Remember, real economic wealth is delivered in only three ways; manufacturing, agriculture, and extraction. All other industries are merely transfer agents of wealth.

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

You will notice many of the mutual fund buy signals occurred in March 2003. Many of you recall how the market did not synchronize with the heart and soul of bullish seasonality from November 2002 through February 2003. After the asynchronous behavior in the November 2002 rolling third of the year, the market turned bullish in March 2003 and again did not synchronize with normal seasonality. The Mid-term Indicant continued signaling bull during bearish seasonality during most of 2003. The market continued moving north during that time. As stated in most of 2004, bearish expressions on a Mid-term basis between May and October 2004 should not be surprising. That is exactly what occurred.

The year, 2004, was consistent with normal bearish seasonality. Unfortunately, bearish expressions started ahead of schedule in 2004. However, the bullish expressions, which solidified in October 2004, synchronized beautifully with historical standards with a bullish outburst. The Quick-term Indicant accurately revealed an early start to bullish seasonality in late 2004. The early part of December was not consistent with the normal Santa Clause rally. However, bullish expressions resumed in late December 2004. Some quick-term attributes suggested there would be a Santa Clause rally and that is exactly what happened.

Although not surprising, 2005 began with unfavorable performance to bullish seasonality. The Quick-term Indicant signaled bear in early January 2005. Bearish expressions followed. At first, these bearish expressions were mild, but two weeks ago, bearish behavior revealed greater aggression. All the Quick-term attributes remain biased with bearish tendencies.

The post election year is historically the most bearish year on the presidential election cycle. Like all things, there are exceptions to historical normalcy. As this year progresses, the various Indicant models will advise if 2005 is an exception or normal. So far, this year appears normal; that is bearish. The Short-term is now signaling bear. The Mid-term and Long-term Indicant models continue to signal bull. The short cycles are dominating now, but your hold positions still appear safe.

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

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

Stop Loss Management

The Mid-term Indicant continues recommending a stop loss of 8% because of the Quick-term Bear. The Quick-term Indicant’s configuration is enough to outweigh bullish seasonality.

If you are up by 50% or more you may find it advantageous to set your stop-loss at 15% from your current hold position. If you sold a stock on the stop loss and the Indicant continues to signal hold, do not buy the stock unless the Quick-term Indicant is signaling bull.

Use a 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 10% trailing, whichever is greater. If your stock or fund is above the red curve and you bought at the Mid-term Buy signal, you should use the 10% trailing stop loss. If you are up by triple digit amounts and enjoy your ownership of the stock or fund, then use a 20% trailing stop loss or the slow moving blue curve price. If you really enjoy holding the stock, keep a close eye on the management. Dilettante managers have a way of worming into the business. Watch closely for cronyism and lazy-hazy management dialog. Keep your eye on lavish spending and excessive concerns about social issues. Those types are more interested in burning your money for their pleasures, as opposed to making you money. High performing companies remain focused on honoring the investments made by their shareholders.

In a few instances, you will see a hold signal for a stock or fund that is down from its buy signal or below one of the above conditions for selling. If you are more of a trader than an investor, feel free to buy stocks and funds with those “bearish” attributes. They are configured for a possible rebound, while at the same time, it is important to set the stop losses mentioned in this report. Use the Quick-term Indicant as a guide in your decision-making processes. If the stock price is falling in a Quick-term Bear market, it is not advisable to buy.

Do not short on stocks if they are up from an avoid signal. Stocks go up more often than they go down. Stocks have a tendency to march to their own drumbeat when rising. Some stocks rise and continue to rise in the most severe of bear markets. Short selling opens up an opportunity for the snakes on Wall Street to take everything you own. They can cause a stock to rise at their whim and without any regard to any fundamental reason. It usually does not make sense to bet against the sweat and toil of hard-working people. There are some instances where stocks rise during bear markets due to legitimate fundamental reasons.

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.

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 the value of your portfolio. Never love its contents. Management stupidity can wreak havoc on any stock or fund at any time.

All update information can be found from a single page at Indicant.Net. Click the below link to that page. You will need your login ID and password.

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

Divergence versus Convergence

Divergent patterns continue with bullish direction in energy sensitive stocks, while nearly all other sectors are succumbing to the pressures of the Quick-term Bear. Divergent patterns are bearish. The Internet sector was the weakest last week on a mid-term basis. The question remains open, is this the 1970’s all over again? Performance so far in 2005 looks exactly like the 1970’s.

Your “new money” behavior should be consistent with bearish bias, even though several Indicant models continue to signal bull.

Economic Conditions – Inflation, Currency, Interest Rates

Commodity prices rose last week for the most part. A one week movement is not a trend. If commodities are past their Mid-term Indicant peak, they should soften. No one wants to see a new peak. If that happens, the market will most likely turn bearish with Greenspan aggressively fending off inflation.

The U.S. Dollar remains weak, but appears to be coming off prior cyclical minimums. It will strengthen provided Greenspan continues increasing interest rates.

This paragraph remains unchanged from the past nine weeks with a few modifications. Interest rates continue their rise, but still from historically low levels. Right now, the stock market is not being bothered by this unfavorable direction on a mid-term basis, while at the same time; equities will not take their suspicious eye off it. The recent bearish bias by the Quick-term Indicant may be an early indication of the market’s intolerance to these unfavorable trends. There is some point where equities will not like the “position” of interest rates if Greenspan continues his northward trek. It is not uncommon to over-cool the economy in post election years, which is now underway.

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

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% one-hundred and thirty-six weeks ago since the MTI buy signal in April 2001. One-hundred and twenty-nine weeks ago, it closed up 30.1%. Last week it closed up 124.2%, which is higher than the 75.9% reported 80-weeks ago. The current annualized growth rate since the April 13, 2001 buy signal is 32.3%, which is significantly higher than 23.1% reported 80 weeks ago. This fund is up from its most recent peak on December 5, 2003 when it was up 117.3%. This fund moved north last week for the third week in a row.

The Fidelity Gold Fund #28 is up 4.6% (annualized at 10.3%) since the Mid-term Indicant signaled buy on August 20, 2004. The last buy/sell cycle was from December 7, 2001 to April 30, 2004 resulted in a 52.9% gross profit. As stated the past several weeks, if Greenspan gets aggressive in his fight against inflation, this fund will most likely not provide the nice profit it did on the last buy/sell cycle. This fund moved south last week.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 150.4% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 60.4%. Vanguard Energy #18, VGENX, is up 71.4% (annualized at 38.9%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 45.4% (annualized at 39.0%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 51.1% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 34.8%.

These funds were up the past two weeks. That is consistent with a 1970’s type of market. If the Chinese economy heats up again, expect these energy related funds to continue their bullish march.

The Gold Index is down 0.3% since the Mid-term Indicant signaled bull on July 9, 2004. This index has basically been flat for one-half year. It is uncommon for this index to not express bullish behavior with rising oil prices. However, the high oil prices have not yet impregnated the consumer price index. When that happens, the gold index and other gold related securities should move to the north.

As repeatedly asked, is this the 1970’s all over again? The remainder of this paragraph will remain unchanged until such time conditions change. So far, it does not look that way, but increasing bullish expressions in the energy sector will lead to more bearish expressions in general equity markets. This may continue in this presidential post election year. Again, forecasting the market is okay for hallway conversations, but never give your broker instructions based on a forecast. The Indicant will keep you posted on the market’s cyclical and trend inclinations.

These funds and the gold and silver index should convey the market’s perception of terrorism, inflation, and the economy. As long as they are in solid hold/bull positions, there remains some pessimism regarding the future of the economy.

Quick-term and Short-term Indicant Update

The Quick-term Indicant Bear that was born on January 4, 2005 has now survived for nearly a month. That is a fairly long period of survival in the midst of the heart and soul of bullish seasonality. The longer it survives, the better chance for greater breadth than normal quick-term bears in bull markets. This will continue to be monitored until it expires. Most quick-term bears do not survive too long during bullish seasonality.

The market’s resistance to bearish dominance strengthened last week, although Friday was bearish. Force Vectors are now moving north, but they continue residence in bearish domains. This configuration suggests a continuing bearish bias on a quick-term basis, but with some bullish resistance.

Vector Pressure direction is now mixed. That supports some bullish resistance to bearish dominance. However, all eight continue residence in bearish domains. These attributes continue supporting a bearish bias, but with some resistance to outright bearish dominance.

Keep in mind Force Vectors and Vector Pressure are eight dimensional and cannot be plotted. Later this year, the Indicant should be able to display a two dimensional representation of these so you can see them. Upon completion, we should be able to provide quick-term perspectives on stocks and exchange traded funds.

Please review the daily reports for more details regarding the Quick-term Indicant.

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

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

This paragraph is the same as last week. The Indicant Volume Indicator continues rising under the influence of quick-term bearish expressions. That volume appears to be approaching maximum volume capacity. The market could get in a rut and begin meandering again if the Indicant Volume Indicator starts moving south again. That would be better than bearish dominance.

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

The Dow is down 0.4% since the Short-term Indicant signaled bear on January 20, 2005. The NASDAQ is down 2.1% since the Short-term Indicant signaled bear on January 11, 2005. Now both indices are Short-term Bears. This, coupled with the Quick-term Bear, is decidedly bearish.

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

This paragraph is unchanged from last week. The indices have retracted from their bullish breakout lines. They are not yet threatening their respective breakdown lines. Although there is a Quick-term Indicant Bear in progress, the perspectives reveal no deep bears on the immediate horizon.

Read your daily emails.

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

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

Refer to the daily reports for more information about the Quick-term Indicant.

For more information about the Quick-term Indicant, refer to last week’s daily reports.

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

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

The eight major indices are up an average of 23.7% since the Mid-term Indicant signaled bull an average of 66.8 weeks ago. That annualizes to 18.4%. The Dow Transports is the strongest bull. It is up 56.7% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Jones Industrial Average is up 22.4% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Composite is up 37.6% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Utilities is up 43.0% since the Mid-term Indicant bull signal on August 16, 2003. Only one of the eight major indices are red bulls. The survivability of these mid-term bulls is now in question. The Quick-term Bear continues to threaten this aging Mid-term Bull.

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 – MTI-RYS – Ten U.S. Indices

Mid-term Indicant Positions - International Markets

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

Although there were no new bull signals, twenty-one of the twenty-two foreign indexes tracked by the Indicant are Mid-term Bulls. They are up an average of 103.6% since the Mid-term Indicant signaled bull an average of 97.7 weeks ago for an annualized gain of 55.1%, which is less than the 72.9% reported 84 weeks ago. International indices were up last week.

The lone bear is down 2.5% since the Mid-term Indicant signaled bear three weeks ago.

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

January 23, 2005 Indicant.Net Weekly Update

Volume 01, Issue 4 ISSN 1526 6516 © The Indicant Stock Market Report

Dear Indicant Members:

This Week’s Report

The Shorter Cycles

The stock market bobs and weaves like a wounded snake for the most part. It has some nice symmetrical cyclical movements from time to time with the sole purpose of lulling one to sleep. At other times, it will move upward with a force resembling the departure of modern day space shuttle. At times, it will move to the south just a little bit. Every now then it tumbles as if gravity was the only influence on all existence.

The market seldom follows a trend on today’s news. It trends to fundamentals, including economic and corporate earnings. The quick-term and short-term cycles do not move on these fundamentals. The shorter cycles are influenced by human emotion and the games people play. Sometimes day-traders wreak havoc on underlying trends as they continue to lose money. At other times, big money gets nervous and creates shaky cyclical behavior.

Big money helped drive Quarter IV 2004 bullish spurt and corresponding Quick-term Bull. Now big money is selling what they recently bought. The Indicant Volume Indicator is nearing the prior bullish peak under the influence of bearish expressions. Big money may have indeed fooled itself. Although Quarter IV is typically bullish, big money was nonetheless a major participate in the last Quick-term Indicant’s bull market late last year. Now, big money is depressed about depressed corporate earnings recently released. The market is cyclically responding on a quick-term basis to poor corporate earnings. However, the market will continue looking into the future and resume whatever trend supports its prognosis.

The Dow Transports, which we discussed last week, peaked several weeks ago. It started its decline well ahead of Delta Airlines’ announced cut-throat pricing model. Delta is like a wounded animal; very dangerous. Delta is willing to give up passenger profit margin in hopes of offsetting that with higher volume. It is doing so in the face of profit compressing oil prices. It is interesting to note, like always, that the market smelled this before it happened and thus the crashing behavior of the transportation indices.

As stated last week, one could easily see that the Transportation Index needed to retreat from its astronomical levels. The link to the chart is below in case you missed it last week.

http://www.indicant.net/Members/Updates/MTI-Mkts-US/MTI-MKTS-US.htm

As you can see, the current retreat is natural. On the surface, the recent bearish expressions appear to be supported by fundamental reasons; high fuel costs and Delta’s cut-throat pricing. However, one could argue the recent bearish expressions are natural. In other words, just looking at the chart reveals that a retreat was inevitable regardless of OPEC and Delta management behavior.

The Transportation Indices trend is still north in the face of recent bearish expressions. The Dow Transports are still up by 53.4% since the Mid-term Indicant signaled bull on March 21, 2003. Several other indices are still up since then. The Mid-term Indicant is nowhere near signaling bear even though recent market behavior is unsettlingly bearish.

However, the MTI-RYS Indicant is fairly close to signaling bear for the Dow Transports. If it falls below the Incumbent Trip Line, the Indicant will signal bear. The MTI-RYS model consistently beats buy and hold.

http://www.indicant.net/Members/Updates/MTIRYS-Mkts-US/MTI-RYS-06-DJT-Curr.htm

The underlying principle of the Indicant is recognizing each type of cycle; long and short cycles. Research never stops, as no known market-timing model is perfect; for both the short and long term, plus all in between. It is not that difficult to spot cyclical shifts. The difficulty is identifying if each cyclical shift is the embryo of a new trend. Hindsight always tells you, but who wants to know after the wallet is empty? Most media reports what happened in the past tense. Some pundits project the future. The Indicant does neither. The Indicant spells out if the market is bull or bear each day and week. Right now, the Mid-term Indicant is bull. The Quick-term Indicant is bear. The Indicant responded to this apparent conflict by signaling sell for weaker securities and continuing to hold those that are up by triple and healthy double digit amounts.

An early January 2005 buyer of stocks would argue the current market is a bear. The March 2003 buyer of stocks would contend the current market is a bull. If that March 2003 buyer bought into the Transports, he or she would have plenty of credibility since their portfolio is up by over 50%. The stock market avoider since March 2003 knows that he or she would catch up with the Transport buyer about twenty-years from now at prevailing CD and Money Market rates.

The early January 2005 buyer of stocks would also have significant credibility in claiming the current market is a bear. After all, their portfolio is down over 3% and lagging the CD’s of the market avoider so far this year. Identifying bulls and bears depends on one’s relative frame of reference. For those of you who bought with the Indicant’s buying spree in late 2002 and again in early 2003 recognize this is a bull market.

The current Quick-term Bear is different. It is a genetic deviant. The prior Quick-term Bull from early October 2004 to early January 2005 was aggressive and took on the appearance of a thoroughbred. It was accompanied with Rembrandt-like symmetry with the Indicant Volume Indicator. There was some reduced volume over the holiday season, which is normal. The Indicant Volume Indicator even declined a little. However, the new year brought on tremendous increases in volume that paralleled a declining market. The current Quick-term Bear quickly and completely demolished that thoroughbred of the Quarter IV 2004 Quick-term Bull. The current Quick-term Bear is not yet a thoroughbred, but it has some tenacity.

Even with that unsettling relationship between the Indicant Volume Indicator and recent bearish expressions, the market is still not a bear on a Mid-term basis. When all the Quick-term, Short-term and Mid-term Indicant models are signaling bear, simultaneously, you will then know it is a bear. Right now, the market is mixed.

You will notice there were several sell signals at this time of year two years ago. Many of you recall how December 2002 was the worse performing since 1931. That poor performance carried over into early 2003. Much of the October 2002 buying spree were sold in January and February 2003. This was truer for funds than stocks. However, the current Mid-term Bull was born a few weeks later in March 2003. It continues to thrive today. This is not the first Quick-term Bear to penetrate the current Mid-term Bull. There will be rallies in the near future to offset the effects of this Quick-term Bear. Your longer-term hold positions are safe until the Mid-term Indicant and MTI-RYS signal bear.

The Indicant will be displaying Exchange Traded Funds with Quick-term modeling before the end of this year. Early next year, all stocks will be displayed on a Quick-term model. The current research is focused on displaying Force Vectors, Vector Pressure, and the Supply/Demand Quotient so you can play options and improve timing. That will help Indicant members be even more victorious by beating buy and hold investing and Wall Street types. That is our goal.

Weekly Buy/Sell Summary

The Mid-term Indicant generated no buy signals and five sell signals for stocks. Again, there were no sell signals for funds. This is a testament to the strength of this Mid-term Bull market.

In addition to the sell signals, the Mid-term Indicant is avoiding 85 stocks and funds of the 320 tracked by the Indicant. The avoided stocks and funds are down an average of 27.5% since the Mid-term Indicant signaled sell an average of 48.7 weeks ago.

There were only eight stocks and funds avoided at this time last year. The avoided stocks and funds one year ago were down an average of 28.7% since their respective sell signals an average of 41.4 weeks earlier. Two years ago, on January 24, 2003, the Mid-term Indicant was avoiding only seven stocks and funds that were down an average of 24.0% since their respective sell signals an average of 16.6 weeks earlier. There were 95 sell signals two years ago, ahead of the second buying spree that occurred in March 2003.

Although there were no buy signals this weekend, the Mid-term Indicant is currently signaling hold for 230 of the 320 stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 88.6%. That annualizes to 64.4%, which is down from 124.1% reported on June 7, 2003, but up from 50.2% reported nearly two years ago on February 15, 2003. The Mid-term Indicant has been signaling hold for these 230 stocks and funds for an average of 71.6 weeks.

One year ago, the Mid-term Indicant was holding 288 stocks and funds out of the 296 for an average of 38.4 weeks. They were up 68.6% (annualized at 92.9%). The Mid-term Indicant was signaling hold for 288 stocks and funds two years ago on January 25, 2003. They were up by an average of 22.0% (annualized at 61.2%) since their respective buy signals an average of 18.7 weeks earlier.

Secular Market Blend

This paragraph is a repeat from the last several months with a few modifications reflecting recent secular influences. The current mid-term bull market and buying barrage in late 2002 followed the predicted market bottom in 2002. The mid-term presidential election year phenomenon was consistent with history. Even more impressive was how the market synchronized with near perfection to normal seasonality in 2002.

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 1929-1932 Short-term Indicant Bear in breadth. 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. Remember, real economic wealth is delivered in only three ways; manufacturing, agriculture, and extraction. All other industries are merely transfer agents of wealth.

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

You will notice many of the mutual fund buy signals occurred in March 2003. Many of you recall how the market did not synchronize with the heart and soul of bullish seasonality from November 2002 through February 2003. After the asynchronous behavior in the November 2002 rolling third of the year, the market turned bullish in March 2003 and again did not synchronize with normal seasonality. The Mid-term Indicant continued signaling bull during bearish seasonality during most of 2003. The market continued moving north during that time. As stated in most of 2004, bearish expressions on a Mid-term basis between May and October 2004 should not be surprising. That is exactly what occurred.

The year, 2004, was consistent with normal bearish seasonality. Unfortunately, bearish expressions started ahead of schedule in 2004. However, the bullish expressions, which solidified in October 2004, synchronized beautifully with historical standards with a bullish outburst. The Quick-term Indicant accurately revealed an early start to bullish seasonality in late 2004. The early part of December was not consistent with the normal Santa Clause rally. However, bullish expressions resumed in late December 2004. Some quick-term attributes suggested there would be a Santa Clause rally and that is exactly what happened.

Although not surprising, 2005 began with unfavorable performance to bullish seasonality. The Quick-term Indicant signaled bear in early January 2005. Bearish expressions followed. At first these bearish expressions were mild, but last week, bearish behavior revealed greater aggression. All the Quick-term attributes remain biased with bearish tendencies.

The post election year is historically the most bearish year on the presidential election cycle. Like all things, there are exceptions to historical normalcy. As this year progresses, the various Indicant models will advise if 2005 is an exception or normal. So far, this year appears normal; that is bearish. The Short-term, Mid-term, and Long-term Indicant models continue to signal bull.

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

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

Stop Loss Management

The Mid-term Indicant continues recommending a stop loss of 8% because of the Quick-term Bear. The Quick-term Indicant’s configuration is enough to outweigh bullish seasonality.

If you are up by 50% or more you may find it advantageous to set your stop-loss at 15% from your current hold position. If you sold a stock on the stop loss and the Indicant continues to signal hold, do not buy the stock unless the Quick-term Indicant is signaling bull.

Use a 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 10% trailing, whichever is greater. If your stock or fund is above the red curve and you bought at the Mid-term Buy signal, you should use the 10% trailing stop loss. If you are up by triple digit amounts and enjoy your ownership of the stock or fund, then use a 20% trailing stop loss or the slow moving blue curve price. If you really enjoy holding the stock, keep a close eye on the management. Dilettante managers have a way of worming into the business. Watch closely for cronyism and lazy-hazy management dialog. Keep your eye on lavish spending and excessive concerns about social issues. Those types are more interested in burning your money for their pleasures, as opposed to making you money. High performing companies remain focused on honoring the investments made by their shareholders.

In a few instances, you will see a hold signal for a stock or fund that is down from its buy signal or below one of the above conditions for selling. If you are more of a trader than an investor, feel free to buy stocks and funds with those “bearish” attributes. They are configured for a possible rebound, while at the same time, it is important to set the stop losses mentioned in this report. Use the Quick-term Indicant as a guide in your decision-making processes. If the stock price is falling in a Quick-term Bear market, it is not advisable to buy.

Do not short on stocks if they are up from an avoid signal. Stocks go up more often than they go down. Stocks have a tendency to march to their own drumbeat when rising. Some stocks rise and continue to rise in the most severe of bear markets. Short selling opens up an opportunity for the snakes on Wall Street to take everything you own. They can cause a stock to rise at their whim and without any regard to any fundamental reason. It usually does not make sense to bet against the sweat and toil of hard-working people. There are some instances where stocks rise during bear markets due to legitimate fundamental reasons.

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.

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 the value of your portfolio. Never love its contents. Management stupidity can wreak havoc on any stock or fund at any time.

All update information can be found from a single page at Indicant.Net. Click the below link to that page. You will need your login ID and password.

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

Divergence versus Convergence

Divergent patterns continue with a bullish surge in energy sensitive stocks. Technology and general endured unseasonable bearish expressions. A divergent pattern suggest specific sectors are being favored at the expense of other sectors. Rising oil prices continue to support the energy sector. The question remains open, is this the 1970’s all over again? Last week’s performance looks exactly like the 1970’s.

Your “new money” behavior should be consistent with bearish bias, even though several Indicant models continue to signal bull.

Economic Conditions – Inflation, Currency, Interest Rates

Nothing changed since last week. As stated the past three weeks, it is encouraging that commodities are holding in the neutral zone. The CRB Bridge Futures, which has been obstinately holding its bullish position, remains in a neutral position. Equities will respond with bullish bias if the commodity prices continue falling and provided interest rates remain in mild position. It will be difficult for this scenario in the face of rising oil prices.

The U.S. Dollar continues to remain weak, but showing signs of a potential turnaround. After moving in a cyclically weakening direction the past several months, the smoothness of the incumbent cycle was severely interrupted last week.

This paragraph remains unchanged from the past nine weeks with a few modifications. Interest rates continue their rise, but still from historically low levels. Right now, the stock market is not being bothered by this unfavorable direction on a mid-term basis, while at the same time; equities will not take their suspicious eye off it. The recent bearish bias by the Quick-term Indicant may be an early indication of the market’s intolerance to these unfavorable trends. There is some point where equities will not like the “position” of interest rates if Greenspan continues his northward trek. It is not uncommon to over-cool the economy in post election years, which is now underway.

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

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% one-hundred and thirty-five weeks ago since the MTI buy signal in April 2001. One-hundred and twenty-eight weeks ago, it closed up 30.1%. Last week it closed up 123.8%, which is higher than the 75.9% reported 79-weeks ago. The current annualized growth rate since the April 13, 2001 buy signal is 32.3%, which is significantly higher than 23.1% reported 79 weeks ago. This fund is down from its most recent peak on December 5, 2003 when it was up 117.3%. This fund moved north last week for the second week in a row.

The Fidelity Gold Fund #28 is up 7.4% (annualized at 17.3%) since the Mid-term Indicant signaled buy on August 20, 2004. The last buy/sell cycle was from December 7, 2001 to April 30, 2004 resulted in a 52.9% gross profit. As stated the past several weeks, if Greenspan gets aggressive in his fight against inflation, this fund will most likely not provide the nice profit it did on the last buy/sell cycle. This fund also moved north the past two weeks after taking it on the chin in the prior three weeks.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 146.7% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 59.4%. Vanguard Energy #18, VGENX, is up 68.9% (annualized at 37.8%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 44.1% (annualized at 38.5%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 48.3% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 33.2%.

These funds were up this past week. That is consistent with a 1970’s type of market. If the Chinese economy heats up again, expect these energy related funds to resume their bullish march.

The Gold Index is up 3.5% (annualized at 6.4%) since the Mid-term Indicant signaled bull on July 9, 2004. As repeatedly asked, is this the 1970’s all over again? The remainder of this paragraph will remain unchanged until such time conditions change. So far, it does not look that way, but increasing bullish expressions in the energy sector will lead to more bearish expressions in general equity markets. This may continue in this presidential post election year. Again, forecasting the market is okay for hallway conversations, but never give your broker instructions based on a forecast. The Indicant will keep you posted on the market’s cyclical and trend inclinations.

These funds and the gold and silver index should convey the market’s perception of terrorism, inflation, and the economy. As long as they are in solid hold/bull positions, there remains some pessimism regarding the future of the economy.

Quick-term and Short-term Indicant Update

The Quick-term Indicant Bear that was born on January 4, 2005 has now survived for fifteen days. The longer it survives, the better chance for greater breadth than normal quick-term bears in bull markets. This will continue to be monitored until it expires. Most quick-term bears do not survive too long during bullish seasonality.

The market’s resistance to bearish dominance weakened last week. Force Vectors are moving south. They continue residence in bearish domains. This configuration suggests a continuing bearish bias on a quick-term basis.

Vector Pressure direction is also moving south and decidedly bearish. All eight continue residence in bearish domains. These attributes continue supporting a bearish bias.

Keep in mind Force Vectors and Vector Pressure are eight dimensional and cannot be plotted. Later this year, the Indicant should be able to display a two dimensional representation of these so you can see them. Upon completion, we should be able to provide quick-term perspectives on stocks and exchange traded funds.

Please review the daily reports for more details regarding the Quick-term Indicant.

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

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

This paragraph is the same as last week. The Indicant Volume Indicator continues rising under the influence of quick-term bearish expressions. That volume appears to be approaching maximum volume capacity. The market could get in a rut and begin meandering again if the Indicant Volume Indicator starts moving south again.

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

The Dow is down 0.7% since the Short-term Indicant signaled bear on January 20, 2005. The NASDAQ is down 2.2% since the Short-term Indicant signaled bear on January 11, 2005. Now both indices are Short-term Bears. This, coupled with the Quick-term Bear, is decidedly bearish.

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

This paragraph is unchanged from last week. The indices have retracted from their bullish breakout lines. They are not yet threatening their respective breakdown lines. Although there is a Quick-term Indicant Bear in progress, the perspectives reveal no deep bears on the immediate horizon.

Read your daily emails.

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

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

Refer to the daily reports for more information about the Quick-term Indicant.

For more information about the Quick-term Indicant, refer to last week’s daily reports.

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

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

The eight major indices are up an average of 22.5% since the Mid-term Indicant signaled bull an average of 65.8 weeks ago. That annualizes to 17.8%. The Dow Transports is the strongest bull. It is up 53.4% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Jones Industrial Average is up 22.0% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Composite is up 35.9% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Utilities is up 39.7% since the Mid-term Indicant bull signal on August 16, 2003. Seven of the eight major indices are red bulls, which add significantly to the viability of these long-standing mid-term bull cycles. However, the Quick-term Bear continues to threaten this aging Mid-term Bull.

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 – MTI-RYS – Ten U.S. Indices

Mid-term Indicant Positions - International Markets

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

Although there were no new bull signals, twenty-one of the twenty-two foreign indexes tracked by the Indicant are Mid-term Bulls. They are up an average of 100.0% since the Mid-term Indicant signaled bull an average of 96.7 weeks ago for an annualized gain of 53.8%, which is less than the 72.9% reported 83 weeks ago. International indices were flat last week.

The lone bear is down 0.8% since the Mid-term Indicant signaled bear two weeks ago.

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

January 16, 2005 Indicant.Net Weekly Update

Volume 01, Issue 3 ISSN 1526 6516 © The Indicant Stock Market Report

Dear Indicant Members:

This Week’s Report

The Three C’s: Conviction, Commitment, Cycle

Conviction is always the predecessor to any significant result. Once the underlying belief is firmed from the conviction, commitments to specific actions follow. It is the cycles one endures that tests one’s execution of commitment. An excessive number of cycles can challenge ones commitment to these specific actions. They can tear down the strongest of convictions. Once the conviction is gone, the cause of commitment is void and thus no execution. That is the way of hazy investors.

There is a strongly held conviction by many that people should be free to pursue their happiness. Commitments to defending that conviction have been strong for a few thousand years. Unfortunately, the measure of happiness is not the same for all people. It is these differences that cause cycles. For example, the happiness generated in the roaring twenties was interrupted by an economic downturn and later by Adolph Hitler. Such cycles can destroy commitments, while convictions of freedom have not been defeated. Some societies acquiesced on that conviction and the result was communism. Cyclical behavior constantly challenges ones commitments, but seldom defeats strong convictions.

All bears and all bulls must endure cyclical behavior. The grandest of bear markets in 1929-1931 and the NASDAQ’s 2000-2002 endured several quick-term cycles. The upward half of each cycle challenged the commitment of those bears. Eventually, the underlying conviction of each bear was destroyed.

The underlying conviction of bulls has never been destroyed. That is easily proven because the stock market greater than zero. Although cyclical behavior has been destructive to the commitments of bulls in the past, it has never destroyed the conviction of the bulls. However, the conviction of many stock market investors eventually is destroyed. Some people are burned by the stock market once and they never return. Those people no longer hold the conviction that money can be made in the stock market.

Others lose their commitment to stock market investing, while maintaining an underlying conviction that money can be made in the stock market. Those types are more likely to be stock market timers. If successful, the timers will make more money than the buy and hold investors and will always earn more money than those who lost their conviction in making money in stocks.

The current Mid-term Bull market is committed to an optimistic economic future. The current Quick-term Bear is committed to aligning the market to the underlying fundamental concerns of rising interest rates and rising energy costs. Will this quick-term cycle destroy the current Mid-term Bull’s commitment? Remember, it will not destroy its conviction, but a loss in commitment can range out to twenty or thirty years. It is that high-risk, no guarantees, that justifies market timing.

Last weeks high number of sell signals for stocks indicated this Quick-term Bear’s commitment will indeed be destructive to the current Mid-term Bull. However, the half life of all Quick-term Bears are relatively short. There will be cyclical upward movement in the near future. Sometimes that cyclical movement is technical. They are always short-lived. Sometimes the initial cyclical movement is the first to reverse whatever underlying trend is underway. When that Quick-term cyclical upward movement supports the same commitments as the Mid-term cycles, subsequent Quick-term bears bottom out at higher levels. We will be watching for that attribute in the current Quick-term Bear.

The current Quick-term Bear is born from the peaks of the current Mid-term Bull. It may just be technical. You can intuitively grasp this concept by taking a look at the Dow Jones Transports. Economic fundamentals could not support a continuation of its march to the north. Click the below link to look at the Dow Transports.

http://www.indicant.net/Members/Updates/MTI-Mkts-US/MTI-MKTS-US.htm

As you can see, the Dow Transport’s Mid-term Indicant Bull was born in March 2003. It has steadily propelled northward since then. There was one quick-term cycle in early 2004, but the commitment to this Mid-term Bull was not shattered. What was absolutely amazing is the magnitude of this bull in the face of record high oil prices. Fundamentally, there was a commitment that high-energy costs were temporary. That commitment is now being challenged by fundamental forces; rising energy costs.

Notice this index is coming off its all time peak, where it exceeded its prior peak in 1999. That was when oil prices were low and prior to 911. Rising energy costs directly and unfavorably influence the transport indices more than any other index. Contrarian investing is committed to the doctrine of buying when the news is at its worse. The contrarian commitment is now being challenged. The nature of quick-term cycles hold that the current news is actually worse than what was perceived as the worse in prior news. In other words, the worse has yet to come. This confounds the contrarians who now have to bail out and get in line with the fundamentalists. That is one reason for recent bearish expressions in the transportation indices.

The current Quick-term Bear is reflecting that phenomenon of aligning contrarians to fundamentalists. The question is how long will this Quick-term Bear last and how deep will it fall. It was born on the tail end of the heart and soul of bullish seasonality. The last “unusual” quick-term bear of significance was born in December 2002, which was followed by the birth of the current Mid-term Bulls in March 2003. There is no need to forecast this, as most were wrong in their forecast for 2003 after the December 2002 Quick-term Bear.

Interestingly, most of the stocks receiving sell signals last weekend actually declined. A few were not so accommodating and bounced to the north. The Indicant did not signal buy for those contrarian stocks this past weekend because of the Quick-term Bear. Hopefully, this Quick-term Bear will be short lived and buy signals will be issued for those stocks receiving sell signals last weekend.

If the current Quick-term Bear is short-lived, the current Mid-term Bulls will not expire any time soon. That scenario is positive for your current hold positions. You will notice much of the recent bearish expressions have occurred above the bullish red curve for mutual funds. If the funds fall below bullish red, their reaction to that will be worth noting. If they approach bearish yellow, coupled with a solid Quick-term Bear market, expect the current Mid-term Bulls to expire. Also, review the MTI-RYS model, which beats buy and hold by nearly 2000% in the past 104 years.

Read the daily reports to keep up with the ebb and flow of the Quick-term cycles. Commitments are always be challenged.

Weekly Buy/Sell Summary

The Mid-term Indicant generated no buy signals and one sell signal for stocks. Again, there were no sell signals for funds. This is a testament to the strength of this Mid-term Bull market.

In addition to the sell signals, the Mid-term Indicant is avoiding 84 stocks and funds of the 320 tracked by the Indicant. The avoided stocks and funds are down an average of 28.2% since the Mid-term Indicant signaled sell an average of 48.1 weeks ago.

There were only eight stocks and funds avoided at this time last year. The avoided stocks and funds one year ago were down an average of 28.9% since their respective sell signals an average of 40.4 weeks earlier. Two years ago, on January 18, 2003, the Mid-term Indicant was avoiding only six stocks and funds that were down an average of 33.8% since their respective sell signals an average of 25.8 weeks earlier.

Although there were no buy signals this weekend, the Mid-term Indicant is currently signaling hold for 235 of the 320 stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 89.2%. That annualizes to 66.6%, which is down from 124.1% reported on June 7, 2003, but up from 50.2% reported nearly two years ago on February 15, 2003. The Mid-term Indicant has been signaling hold for these 236 stocks and funds for an average of 69.6 weeks.

One year ago, the Mid-term Indicant was holding 288 stocks and funds out of the 296 for an average of 36.4 weeks. They were up 67.5% (annualized at 93.8%). The Mid-term Indicant was signaling hold for 289 stocks and funds two years ago on January 18, 2003. They were up by an average of 19.6% (annualized at 63.4%) since their respective buy signals an average of 16.1 weeks earlier.

Secular Market Blend

This paragraph is a repeat from the last several months with a few modifications reflecting recent secular influences. The current bull market and buying barrage in late 2002 followed the predicted market bottom in 2002. The mid-term presidential election year phenomenon was consistent with history. Even more impressive was how the market synchronized with near perfection to normal seasonality in 2002.

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 1929-1932 Short-term Indicant Bear in breadth. 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. Remember, real economic wealth is delivered in only three ways; manufacturing, agriculture, and extraction. All other industries are merely transfer agents of wealth.

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

You will notice many of the mutual fund buy signals occurred in March 2003. Many of you recall how the market did not synchronize with the heart and soul of bullish seasonality from November 2002 through February 2003. After the asynchronous behavior in the November 2002 rolling third of the year, the market turned bullish in March 2003 and again did not synchronize with normal seasonality. The Mid-term Indicant continued signaling bull during bearish seasonality during most of 2003. The market continued moving north during that time. As stated in most of 2004, bearish expressions on a Mid-term basis between May and October 2004 should not be surprising. That is exactly what occurred.

The year 2004 was consistent with normal bearish seasonality. Unfortunately, bearish expressions started ahead of schedule in 2004. However, the bullish expressions, which solidified in October 2004, synchronized beautifully with historical standards with a bullish outburst. The Quick-term Indicant accurately revealed an early start to bullish seasonality. The early part of December was not consistent with the normal Santa Clause rally. However, bullish expressions resumed in late December 2004. Some quick-term attributes suggested there would be a Santa Clause rally and that is exactly what happened.

Although not surprising, 2005 began with unfavorable performance to bullish seasonality. The Quick-term Indicant signaled bear in early January 2005. Bearish expressions followed, but to date have been mild.

The post election year is historically the most bearish year on the presidential election cycle. Like all things, there are exceptions to normalcy. As the year progresses, the various Indicant models will advise if 2005 is an exception or normal. So far, this year appears normal; that is bearish. The Short-term, Mid-term, and Long-term Indicant models continue to signal bull.

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

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

Stop Loss Management

The Mid-term Indicant is now recommending a stop loss of 8% because of the Quick-term Bear. The Quick-term Indicant’s configuration is enough to outweigh bullish seasonality.

If you are up by 50% or more you may find it advantageous to set your stop-loss at 15% from your current hold position. If you sold a stock on the stop loss and the Indicant continues to signal hold, do not buy the stock unless the Quick-term Indicant is signaling bull.

Use a 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 10% trailing, whichever is greater. If your stock or fund is above the red curve and you bought at the Mid-term Buy signal, you should use the 10% trailing stop loss. If you are up by triple digit amounts and enjoy your ownership of the stock or fund, then use a 20% trailing stop loss or the slow moving blue curve price. If you really enjoy holding the stock, keep a close eye on the management. Dilettante managers have a way of worming into the business. Watch closely for cronyism and lazy-hazy management dialog. Keep your eye on lavish spending and excessive concerns about social issues. Those types are more interested in burning your money for their pleasures, as opposed to making you money. High performing companies remain focused on honoring the investments made by their shareholders.

In a few instances, you will see a hold signal for a stock or fund that is down from its buy signal or below one of the above conditions for selling. If you are more of a trader than an investor, feel free to buy stocks and funds with those “bearish” attributes. They are configured for a possible rebound, while at the same time, it is important to set the stop losses mentioned in this report. Use the Quick-term Indicant as a guide in your decision-making processes. If the stock price is falling in a Quick-term Bear market, it is not advisable to buy.

Do not short on stocks if they are up from an avoid signal. Stocks go up more often than they go down. Stocks have a tendency to march to their own drumbeat when rising. Some stocks rise and continue to rise in the most severe of bear markets. Short selling opens up an opportunity for the snakes on Wall Street to take everything you own. They can cause a stock to rise at their whim and without any regard to any fundamental reason. It usually does not make sense to bet against the sweat and toil of hard-working people. There are some instances where stocks rise during bear markets due to legitimate fundamental reasons.

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.

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 the value of your portfolio. Never love its contents. Management stupidity can wreak havoc on any stock or fund at any time.

All update information can be found from a single page at Indicant.Net. Click the below link to that page. You will need your login ID and password.

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

Divergence versus Convergence

Divergent patterns resumed with a bullish surge in energy sensitive stocks. Technology and general endured unseasonable bearish expressions. A divergent pattern suggest specific sectors are being favored at the expense of other sectors. Rising oil prices continue to support the energy sector. The question remains open, is this the 1970’s all over again?

Your “new money” behavior should be consistent with bearish bias, even though several Indicant models continue to signal bull.

Economic Conditions – Inflation, Currency, Interest Rates

As stated the past three weeks, it is encouraging that commodities are holding in the neutral zone. The CRB Bridge Futures, which has been obstinately holding its bullish position, remains in a neutral position. Equities will respond with bullish bias if the commodity prices continue falling and provided interest rates remain in mild position. It will be difficult for this scenario in the face of rising oil prices.

The U.S. Dollar continues to remain weak. After showing signs of resisting further erosion, it is now showing signs of continuing weakness. In the past it has been reported there is a point whereby foreign markets will weaken their currencies to protect their economies. However, the demand for U.S. exports has not increased to what would be expected with the weaker dollar. This could be due to deferments in ridding corporate America of the dilettante management teams the evolved in the 1990’s. Last weeks report stated the dollar will continue to weaken if Greenspan continues rate hikes. This was an error. The opposite typically occurs.

This paragraph remains unchanged from the past eight weeks with a few modifications. Interest rates continue their rise, but still from historically low levels. Right now, the stock market is not being bothered by this unfavorable direction on a mid-term basis, while at the same time; equities will not take their suspicious eye off it. The recent bearish bias by the Quick-term Indicant may be an early indication of the market’s intolerance to these unfavorable trends. There is some point where equities will not like the “position” of interest rates if Greenspan continues his northward trek. It is not uncommon to over-cool the economy in post election years, which is now underway.

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

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% one-hundred and thirty-four weeks ago since the MTI buy signal in April 2001. One-hundred and twenty-seven weeks ago, it closed up 30.1%. Last week it closed up 121.0%, which is higher than the 75.9% reported 78 weeks ago. The current annualized growth rate since the April 13, 2001 buy signal is 31.7%, which is significantly higher than 23.1% reported 78 weeks ago. This fund is down from its most recent peak on December 5, 2003 when it was up 117.3%. This fund rebounded last week after two significant down weeks.

The Fidelity Gold Fund #28 is up 4.5% (annualized at 10.8%) since the Mid-term Indicant signaled buy on August 20, 2004. The last buy/sell cycle was from December 7, 2001 to April 30, 2004 resulted in a 52.9% gross profit. As stated the past several weeks, if Greenspan gets aggressive in his fight against inflation, this fund will most likely not provide the nice profit it did on the last buy/sell cycle. This fund was also rebounded after three consecutive weeks of deep bearish expressions.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 143.3% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 58.4%. Vanguard Energy #18, VGENX, is up 68.8% (annualized at 38.1%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 43.0% (annualized at 38.1%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 47.7% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 33.1%.

These funds were down significantly week before last, but up significantly this past week. That is consistent with a 1970’s type of market. If the Chinese economy heats up again, expect these funds to resume their bullish march.

The Gold Index is up 1.5% (annualized at 2.9%) since the Mid-term Indicant signaled bull on July 9, 2004. As repeatedly asked, is this the 1970’s all over again? The remainder of this paragraph will remain unchanged until such time conditions change. So far, it does not look that way, but increasing bullish expressions in the energy sector will lead to more bearish expressions in general equity markets. This may occur in this presidential post election year. Again, forecasting the market is okay for hallway conversations, but never give your broker instructions based on a forecast. The Indicant will keep you posted on the market’s cyclical and trend inclinations.

These funds and the gold and silver index should convey the market’s perception of terrorism, inflation, and the economy. As long as they are in solid hold/bull positions, there remains some pessimism regarding the future of the economy.

Quick-term and Short-term Indicant Update

The Quick-term Indicant Bear that was born on January 4, 2005 has now survived for ten days. The longer it survives, the better chance for greater breadth than normal quick-term bears in bull markets.

As expected, the market resisted outright bearish dominance late last week. The Force Vectors are now moving back to the north, but without strong conviction. They still reside in bearish domains. This configuration suggests a continuing bearish bias on a quick-term basis.

Vector Pressure direction is also moving south and decidedly bearish. All eight now reside in bearish domains. These attributes continue supporting a bearish bias.

Keep in mind Force Vectors and Vector Pressure are eight dimensional and cannot be plotted. Later this year, the Indicant should be able to display a two dimensional representation of these so you can see them. Upon completion, we should be able to provide quick-term perspectives on stocks and exchange traded funds.

Please review the daily reports for more details regarding the Quick-term Indicant.

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 rising under the influence of quick-term bearish expressions. That volume appears to be approaching maximum volume capacity. The market could get in a rut and begin meandering again if the Indicant Volume Indicator starts moving south again.

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

The Dow is up 3.1% (annualized at 11.3%) since the Short-term Indicant signaled bull on October 6, 2004. The NASDAQ is up 0.4% since the Short-term Indicant signaled bear on January 11, 2005. As stated in last week’s report, it would not be surprising to see the Short-term Bull expire. That happened to the NASDAQ, but the Dow’s Short-term Bull continues to resist expiration.

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

The indices have retracted from their bullish breakout lines. They are not yet threatening their respective breakdown lines. Although there is a Quick-term Indicant Bear in progress, the perspectives reveal no deep bears on the immediate horizon.

Read your daily emails.

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

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

Refer to the daily reports for more information about the Quick-term Indicant.

For more information about the Quick-term Indicant, refer to last week’s daily reports.

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

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

The eight major indices are up an average of 24.8% since the Mid-term Indicant signaled bull an average of 64.8 weeks ago. That annualizes to 19.9%. The Dow Transports is the strongest bull. It is up 57.7% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Jones Industrial Average is up 23.9% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Composite is up 38.2% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Utilities is up 39.9% since the Mid-term Indicant bull signal on August 16, 2003. Seven of the eight major indices are red bulls, which add significantly to the viability of these long-standing mid-term bull cycles. However, the Quick-term Bear continues to threaten this aging Mid-term Bull.

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 – MTI-RYS – Ten U.S. Indices

Mid-term Indicant Positions - International Markets

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

Although there were no new bull signals, twenty-one of the twenty-two foreign indexes tracked by the Indicant are Mid-term Bulls. They are up an average of 100.9% since the Mid-term Indicant signaled bull an average of 95.7 weeks ago for an annualized gain of 54.8%, which is less than the 72.9% reported 82 weeks ago. International indices were up last week.

The lone bear is up 0.1% since the Mid-term Indicant signaled bear last weekend.

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

January 09, 2005 Indicant.Net Weekly Update

Volume 01, Issue 2 ISSN 1526 6516 © The Indicant Stock Market Report

Dear Indicant Members:

This Week’s Report

The Presidential Post Election Year is Now

Last Monday’s Quick-term Indicant detected a volume bubble. Such events occur quite regularly, but this one was different than most. The Bullish Red curve offered absolutely no resistance to recent bearish expressions. A volume bubble, coupled with that attribute, suggests a significant bias shift in favor of bearish dominance. The depth and breadth of this impending bearish behavior is not predictable. The Indicant does not care what those indeterminate variables are. A bear is a bear, regardless of depth or magnitude.

The current market is not yet a bear. That is because the Mid-term Indicant is still signaling bull. The Mid-term Indicant’s RYS model continues to signal bull. This is just a Quick-term Bear. However, the Quick-term Indicant is configured in a way that justifies selling stocks with weak hold positions. There were no sell signals for mutual funds. Stocks are more volatile and if the market succumbs to bearish dominance, the weaker stocks will fall first and by the most. If this Quick-term Bear is short-lived, buy signals will quickly ensue for these weak stocks.

The Quick-term Indicant’s bear signal was not influenced by the normal bearish behavior of the presidential post election year. However, the presidential post election year will not be ignored on the heels of a nice bull market. The historical standard for presidential election years is decidedly bearish. The average increase for the Dow and other major indices since 1832 is a mere 2.0%. It is the only year only the presidential election year cycle where the number of down years exceeds the up years. The market has been down twenty-three years and up only nineteen years in post election years since 1832. A hypothetical investor would have lost money from 1832 through 1980, if invested only in presidential post election years. That’s right – the investor would have lost money on a buy and hold for nearly 150 years.

The presidential post election year deviated from historical bearish after 1980. Since then they have been decidedly bullish except for G.W. Bush’s 2001, where the Dow fell by 7.1%.

Rising interest rates, high oil prices, high commodity prices and a meandering economy are fundamental reasons supporting an expectation of bearish expressions this year. However, until the other Indicant models signal bear, this market remains a bull. The Quick-term Indicant is configured in support of selling weak holdings. Continue to hold your double and triple digit gainers. Sell your weak holdings. It is better to buy stocks on the rebound as opposed to watching them race to the south. If the Quick-term Indicant signals bull, then the buy signals will be issued.

Weekly Buy/Sell Summary

The Mid-term Indicant generated no buy signals and 69 sell signals for stocks. There were no sell signals for funds.

In addition to the sell signals, the Mid-term Indicant is avoiding 15 stocks and funds of the 320 tracked by the Indicant. The avoided stocks and funds are down an average of 41.1% since the Mid-term Indicant signaled sell an average of 61.1 weeks ago.

There were only six stocks and funds avoided at this time last year. The avoided stocks and funds one year ago were down an average of 29.0% since their respective sell signals an average of 39.4 weeks earlier. Two years ago, on January 11, 2003, the Mid-term Indicant was avoiding only six stocks and funds that were down an average of 31.6% since their respective sell signals an average of 24.9 weeks earlier.

Although there were no buy signals this weekend, the Mid-term Indicant is currently signaling hold for 236 of the 320 stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 86.7%. That annualizes to 65.9%, which is down from 124.1% reported on June 7, 2003, but up from 50.2% reported nearly two years ago on February 15, 2003. The Mid-term Indicant has been signaling hold for these 236 stocks and funds for an average of 68.4 weeks.

One year ago, the Mid-term Indicant was holding 288 stocks and funds out of the 296 for an average of 36.4 weeks. They were up 63.5% (annualized at 90.8%). The Mid-term Indicant was signaling hold for 284 stocks and funds two years ago on January 11, 2003. They were up by an average of 22.2% (annualized at 76.6%) since their respective buy signals an average of 15.0 weeks earlier.

Secular Market Blend

This paragraph is a repeat from the last several months 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 was consistent with history. Even more impressive was how the market synchronized with near perfection with normal seasonality in 2002. 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 1929-1932 Short-term Indicant Bear in breadth. 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. Remember, real economic wealth is delivered in only three ways; manufacturing, agriculture, and extraction. All other industries are merely transfer agents of wealth.

The next paragraph is repeated from the past several months, but it does not hurt to reread it each week. As we embark the new year, there will be some modifications to it.

You will notice many of the mutual fund buy signals occurred in March 2003. Many of you recall how the market did not synchronize very well with the heart and soul of bullish seasonality from November 2002 through February 2003. After the asynchronous behavior in the November 2002 rolling third of the year, the market turned bullish in March 2003 and again did not synchronize with normal seasonality. The Mid-term Indicant continued signaling bull during bearish seasonality during most of 2003. The market continued moving north during that time. As stated in most of 2004, bearish expressions on a Mid-term basis in 2004 between May and October should not be surprising. That is exactly what occurred. The year 2004 was consistent with normal bearish seasonality. Unfortunately, bearish expressions started ahead of schedule in 2004. However, the bullish expressions, which solidified in October 2004, synchronized beautifully with historical standards with a bullish outburst. The Quick-term Indicant accurately revealed an early start to bullish seasonality. The early part of December was not consistent with the normal Santa Clause rally. However, bullish expressions resumed in late December 2004. Some quick-term attributes suggested there would be a Santa Clause rally and that is exactly what happened.

The post election year is historically the most bearish year on the presidential election cycle. Like all things, there are exceptions to normalcy. As the year progresses, the various Indicant models will advise if 2005 is an exception or normal. So far, this year appears normal; that is bearish. The Short-term, Mid-term, and Long-term Indicant models continue to signal bull.

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. With one week remaining, 2004 has not been an exception.

Stop Loss Management

The Mid-term Indicant is now recommending a stop loss of 8% because of the Quick-term Bear. The Quick-term Indicant’s configuration is enough to outweigh bullish seasonality.

If you are up by 50% or more you may find it advantageous to set your stop-loss at 15% from your current hold position. If you sold a stock on the stop loss and the Indicant continues to signal hold, do not buy the stock unless the Quick-term Indicant is signaling bull.

Use a 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 10% trailing, whichever is greater. If your stock or fund is above the red curve and you bought at the Mid-term Buy signal, you should use the 10% trailing stop loss. If you are up by triple digit amounts and enjoy your ownership of the stock or fund, then use a 20% trailing stop loss or the slow moving blue curve price. If you really enjoy holding the stock, keep a close eye on the management. Dilettante managers have a way of worming into the business. Watch closely for cronyism and lazy-hazy management dialog. Keep your eye on lavish spending and excessive concerns about social issues. Those types are more interested in burning your money for their pleasures, as opposed to making you money. High performing companies remain focused on honoring the investments made by their shareholders.

In a few instances, you will see a hold signal for a stock or fund that is down from its buy signal or below one of the above conditions for selling. If you are more of a trader than an investor, feel free to buy stocks and funds with those “bearish” attributes. They are configured for a possible rebound, while at the same time, it is important to set the stop losses mentioned in this report. Use the Quick-term Indicant as a guide in your decision-making processes. If the stock price is falling in a Quick-term Bear market, it is not advisable to buy.

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.

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 the value of your portfolio. Never love its contents. Management stupidity can wreak havoc on any stock or fund at any time.

All update information can be found from a single page at Indicant.Net. Click the below link to that page. You will need your login ID and password.

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

Divergence versus Convergence

The current Quick-term Bear market is coupled with bearish convergence. Even inflationary friendly investments declined in complete harmony with general equities. This combination of attributes is a definite bearish bias. It is unusual for this configuration during the heart and soul of bullish seasonality.

The market will not provide a consistent pattern. The configurations can change quickly. Your behavior should be consistent with bearish bias, even though several Indicant models continue to signal bull.

Economic Conditions – Inflation, Currency, Interest Rates

As stated the past two weeks, it is encouraging that commodities are holding in the neutral zone. The CRB Bridge Futures, which has been obstinately holding its bullish position, finally succumbed to neutral position. Equities will respond with bullish bias if the commodity prices continue falling and provided interest rates remain in mild position.

The U.S. Dollar continues to remain weak, but showing signs of resisting further erosion. Its position is favorable for the U.S. economy, but threatens foreign markets. There is a point whereby foreign markets will weaken their currencies to protect their economies. If Greenspan continues increasing rates, expect the dollar to discontinue weakening.

As stated the past four weeks, keep your eye on China and Greenspan. Those two entities can and have the ability to induce a bear market. Greenspan has a lot more latitude to induce an economic “cooling effect” in the upcoming post election year.

This paragraph remains unchanged from the past seven weeks with a few modifications. Interest rates continue their rise, but still from historically low levels. Right now, the stock market is not being bothered by this unfavorable direction, while at the same time; equities will not take their suspicious eye off it. There is some point where equities will not like the “position” of interest rates if Greenspan continues his northward trek. It is not uncommon to over-cool the economy in post election years, which is now underway.

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

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% one-hundred and thirty-three weeks ago since the MTI buy signal in April 2001. One-hundred and twenty-six weeks ago, it closed up 30.1%. Last week it closed up 116.6%, which is higher than the 75.9% reported 77 weeks ago. The current annualized growth rate since the April 13, 2001 buy signal is 30.7%, which is significantly higher than 23.1% reported 77 weeks ago. This fund is down from its most recent peak on December 5, 2003 when it was up 117.3%. This fund is down significantly the past two weeks.

The Fidelity Gold Fund #28 is up 3.3% (annualized at 8.5%) since the Mid-term Indicant signaled buy on August 20, 2004. The last buy/sell cycle was from December 7, 2001 to April 30, 2004 resulted in a 52.9% gross profit. As stated the past several weeks, if Greenspan gets aggressive in his fight against inflation, this fund will most likely not provide the nice profit it did on the last buy/sell cycle. This fund was down significantly last week after rising the prior three weeks.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 131.3% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 54.0%. Vanguard Energy #18, VGENX, is up 63.2% (annualized at 35.4%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 34.1% (annualized at 30.8%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 40.4% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 28.5%.

These funds were down significantly last week. The good news is that is inconsistent with a 1970’s type of market. If the Chinese economy heats up again, expect these funds to resume their bullish march.

The Gold Index is up 1.7% (annualized at 3.3%) since the Mid-term Indicant signaled bull on July 9, 2004. As repeatedly asked, is this the 1970’s all over again? The remainder of this paragraph will remain unchanged until such time conditions change. So far, it does not look that way, but increasing bullish expressions in the energy sector will lead to more bearish expressions in general equity markets. This may occur in this presidential post election year. Again, forecasting the market is okay for hallway conversations, but never give your broker instructions based on a forecast. The Indicant will keep you posted on the market’s cyclical and trend inclinations.

These funds and the gold and silver index should convey the market’s perception of terrorism, inflation, and the economy. As long as they are in solid hold/bull positions, there remains some pessimism regarding the future of the economy.

Quick-term and Short-term Indicant Update

After enjoying a quick-term cyclical increase of nearly 10% between October 1, 2004 and last Monday, the Quick-term Indicant signaled bear last Monday. The eight major indices are down by an average of 0.7% since the Quick-term Indicant signaled bear on January 7, 2005. As stated in the weekly reports the quick-term attributes are now configured with a significant bearish bias.

The quick-term’s bullish red curve offered no resistance to falling stock prices last Monday. None of the eight major indices are red bulls, which contrast significantly with last week.

Force Vectors are now moving south. The movement is aggressive and decidedly bearish in demeanor. They now reside in bearish domains. This configuration suggests a bearish bias.

Vector Pressure direction is also moving south and decidedly bearish. Six of the eight still reside in bullish domains. These attributes now support bearish bias.

Keep in mind Force Vectors and Vector Pressure are eight dimensional and cannot be plotted. Later this year, the Indicant should be able to display a two dimensional representation of these so you can see them. Upon completion, we should be able to provide quick-term perspectives on stocks and exchange traded funds.

Please review the daily reports for more details regarding the Quick-term Indicant.

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

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

Although the Indicant Volume Indicator is non-descript, there was a noticeable volume bubble last Monday. Overall, the current configuration has shifted from bullish bias to bearish bias.

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

The Dow is up 3.8% (annualized at 14.0%) since the Short-term Indicant signaled bull on October 6, 2004. The NASDAQ is up 6.8% (annualized at 26.4%) since the Short-term Indicant signaled bull on October 5, 2004. It will not be surprising if this Short-term Bull expires next week.

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

The indices have retracted from their bullish breakout lines. They are not yet threatening their respective breakdown lines.

Read your daily emails.

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

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

Refer to the daily reports for more information about the Quick-term Indicant.

For more information about the Quick-term Indicant, refer to last week’s daily reports.

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

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

The eight major indices are up an average of 25.0% since the Mid-term Indicant signaled bull an average of 63.8 weeks ago. That annualizes to 20.4%. The Dow Transports is the strongest bull. It is up 60.7% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Jones Industrial Average is up 24.4% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Composite is up 38.6% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Utilities is up 36.7% since the Mid-term Indicant bull signal on August 16, 2003. All eight major indices are red bulls, which add significantly to the viability of these long-standing mid-term bull cycles. However, the Quick-term Bear is threatening this aging Mid-term Bull.

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 – MTI-RYS – Ten U.S. Indices

Mid-term Indicant Positions - International Markets

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

Although there were no new bull signals, twenty-one of the twenty-two foreign indexes tracked by the Indicant are Mid-term Bulls. They are up an average of 100.8% since the Mid-term Indicant signaled bull an average of 94.7 weeks ago for an annualized gain of 55.3%, which is less than the 72.9% reported 81 weeks ago. International indices were up last week.

There was a new bear signal this week and performance will be noted next week.

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

January 02, 2005 Indicant.Net Weekly Update

Volume 01, Issue 1 ISSN 1526 6516 © The Indicant Stock Market Report

Dear Indicant Members:

This Week’s Report

Two Years of Historical Bullish Behavior Concludes

Although the presidential election year of 2004 was bullish, its performance was below the average for election years. The Dow increased a mere 3.1% in 2004 against a historical average of 7.2% since 1832. Most of that increase occurred in the final three months of the year. The Dow has been used as the yardstick to gauge historical performance since the late 1890s while other indices were used prior to that time.

The most bearish year on the presidential election cycle is the post election year. From 1832 to 1980, money would have been lost in the presidential election year. Politicians and their hired help in government are not sensitive to the economic needs of the populace. Politicians are perceived to practice their mischievous ways in the post election year. The market historically smelled this nasty behavior by politicians and lent credit to their behavior with a bearish response in post election years.

That changed with the great bull market that originated in the early 1980’s. However, the 150 year tradition of bearish expressions cannot be ignored.

The reason for post election year bearish expressions is due to capitalist’s perception and corresponding depression by the motives by politicians. The capitalists are well aware of the “tyranny by the majority” effects of democracies. The capitalists know that politicians generally feel the need to redistribute wealth. That message has to be in their dialect for the majority are the people are not millionaires. That more or less depresses any excitement the market may have to offer in the way of bullish expressions.

That paradigm shifted in the early 1980’s when President Reagan appeared not so intent on wealth redistribution. He reduced taxes by record amounts. After nearly 150 years of seeing through the deficiencies in wealth redistribution, the market did not reflect the capitalist’s depression in post election years.

Another phenomenon occurred in the 1990’s. Different parties elected the executive and legislative branches of government. The U.S. Congress and the U.S. President could not see eye to eye. This stalemated the government. The stock market responded with a resounding bullish spurt. The stock market has always favored a bullish bias with different parties leading the legislative and executive branches of government.

We enter 2005 with the same party leading both branches of government. That could induce a historically standard bearish expression in 2005. Although the party is Republican and supposedly more friendly to business, history reveals the market does not care which party is in control of both branches.

Although the election year is typically bullish, the market endured some significant fundamental issues. Interest rates started rising right along the politician’s strategic planning cycle. The idea is to make certain the economy is not recessionary on Election Day. Rising commodity prices and record high oil prices did not adversely impact the stock market, although these fundamental issues dampened bullish enthusiasm. The market’s meandering behavior in 2004 was due, in part, to the inflationary threat.

Regardless of fundamental threats to a bullish market and historical standards, the various Indicant models still support bullish behavior. Until that changes, enjoy your hold positions.

Weekly Buy/Sell Summary

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

Although there were no sell signals, the Mid-term Indicant is avoiding 15 stocks and funds of the 320 tracked by the Indicant. The avoided stocks and funds are down an average of 39.6% since the Mid-term Indicant signaled sell an average of 60.1 weeks ago.

There were only six stocks and funds avoided at this time last year. The avoided stocks and funds one year ago were down an average of 28.6% since their respective sell signals an average of 38.6 weeks earlier. Two years ago, on January 3, 2003, the Mid-term Indicant was avoiding only 12 stocks and funds that were down an average of 25.9% since their respective sell signals an average of 23.0 weeks earlier.

In addition to the buy signals this weekend, the Mid-term Indicant is currently signaling hold for 304 of the 320 stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 73.3%. That annualizes to 66.2%, which is down from 124.1% reported on June 7, 2003, but up from 50.2% reported nearly two years ago on February 15, 2003. The Mid-term Indicant has been signaling hold for these 304 stocks and funds for an average of 57.6 weeks.

One year ago, the Mid-term Indicant was holding 286 stocks and funds out of the 296 for an average of 35.8 weeks. They were up 57.7% (annualized at 83.9%). The Mid-term Indicant was signaling hold for 277 stocks and funds two years ago on January 3, 2003. They were up by an average of 19.1% (annualized at 69.3%) since their respective buy signals an average of 14.3 weeks earlier.

Secular Market Blend

This paragraph is a repeat from the last several months 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 was consistent with history. Even more impressive was how the market synchronized with near perfection with normal seasonality in 2002. 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 1929-1932 Short-term Indicant Bear in breadth. 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. Remember, real economic wealth is delivered in only three ways; manufacturing, agriculture, and extraction. All other industries are merely transfer agents of wealth.

The next paragraph is repeated from the past several months, but it does not hurt to reread it each week. As we approach the close of this year, there will be some modifications to it.

You will notice many of the mutual fund buy signals occurred in March 2003. Many of you recall how the market did not synchronize very well with the heart and soul of bullish seasonality from November 2002 through February 2003. After the asynchronous behavior in the November 2002 rolling third of the year, the market turned bullish in March 2003 and again did not synchronize with normal seasonality. The Mid-term Indicant continued signaling bull during bearish seasonality during most of 2003. The market continued moving north during that time. As stated in most of 2004, bearish expressions on a Mid-term basis in 2004 between May and October should not be surprising. That is exactly what occurred. The year 2004 was consistent with normal bearish seasonality. Unfortunately, bearish expressions started ahead of schedule this year. However, the bullish expressions, which solidified in October 2004, are synchronizing beautifully with historical standards. The Quick-term Indicant accurately revealed an early start to bullish seasonality. The early part of December was not consistent with the normal Santa Clause rally. However, bullish expressions resumed. Some quick-term attributes suggests there will be a Santa Clause rally and that is exactly what happened. Now, we are entering the final month of dynamic seasonal performance; that is January 2005.

2005 is historically the most bearish year on the presidential election cycle. Like all things, there are exceptions to normalcy. As the year progresses, the various Indicant models will advise if 2005 is an exception or normal.

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. With one week remaining, 2004 has not been an exception.

Stop Loss Management

The Mid-term Indicant is now recommending a stop loss of 10% because of bullish seasonality. If you are up by 50% or more you may find it advantageous to set your stop-loss at 15% from your current hold position. If you sold a stock on the stop loss and the Indicant continues to signal hold, do not buy the stock unless the Quick-term Indicant is signaling bull. Right now, the Quick-term Indicant is signaling a solid bull, as opposed to those shaky quick-term bulls throughout most of this year.

Use a 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 10% trailing, whichever is greater. If your stock or fund is above the red curve and you bought at the Mid-term Buy signal, you should use the 10% trailing stop loss. If you are up by triple digit amounts and enjoy your ownership of the stock or fund, then use a 20% trailing stop loss or the slow moving blue curve price. If you really enjoy holding the stock, keep a close eye on the management. Dilettante managers have a way of worming into the business. Watch closely for cronyism and lazy-hazy management dialog. Keep your eye on lavish spending and excessive concerns about social issues. Those types are more interested in burning your money for their pleasures, as opposed to making you money. High performing companies remain focused on honoring the investments made by their shareholders.

In a few instances, you will see a hold signal for a stock or fund that is down from its buy signal or below one of the above conditions for selling. If you are more of a trader than an investor, feel free to buy stocks and funds with those “bearish” attributes. They are configured for a possible rebound, while at the same time, it is important to set the stop losses mentioned in this report. Use the Quick-term Indicant as a guide in your decision-making processes. If the stock price is falling in a Quick-term Bear market, it is not advisable to buy.

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.

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 the value of your portfolio. Never love its contents. Management stupidity can wreak havoc on any stock or fund at any time.

All update information can be found from a single page at Indicant.Net. Click the below link to that page. You will need your login ID and password.

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

Divergence versus Convergence

The market has an improved bullish convergent mix right now. That favors bullish behavior right now. Keep in mind the market is in bullish seasonality, while it is encouraging the market has shifted slightly from a divergent pattern.

Economic Conditions – Inflation, Currency, Interest Rates

As stated last week, it is encouraging that commodities are holding in the neutral zone. The CRB Bridge Futures continue to be obstinate and holding its bullish position. Equities will respond with bullish bias if the commodity prices continue falling and provided interest rates remain in mild position.

There is nothing different from last week on the U.S. dollar, which continues to weaken. That is bullish for domestic equities. Continued erosion will threaten some international markets.

As stated the past three weeks, keep your eye on China and Greenspan. Those two entities can and have the ability to induce a bear market. Greenspan has a lot more latitude to induce an economic “cooling effect” in the upcoming post election year.

This paragraph remains unchanged from the past six weeks with a few modifications. Interest rates continue their rise, but still from historically low levels. Right now, the stock market is not being bothered by this unfavorable direction, while at the same time; equities will not take their suspicious eye off it. There is some point where equities will not like the “position” of interest rates if Greenspan continues his northward trek. It is not uncommon to over-cool the economy in post election years, which starts today.

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

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% one-hundred and thirty-two weeks ago since the MTI buy signal in April 2001. One-hundred and twenty-five weeks ago, it closed up 30.1%. Last week it closed up 128.6%, which is higher than the 75.9% reported 76 weeks ago. The current annualized growth rate since the April 13, 2001 buy signal is 34.1%, which is significantly higher than 23.1% reported 76 weeks ago. This fund is up from its most recent peak on December 5, 2003 when it was up 117.3%. This fund was down significantly last week.

The Fidelity Gold Fund #28 is up 9.4% (annualized at 25.4%) since the Mid-term Indicant signaled buy on August 20, 2004. The last buy/sell cycle was from December 7, 2001 to April 30, 2004 resulted in a 52.9% gross profit. As stated the past several weeks, if Greenspan gets aggressive in his fight against inflation, this fund will most likely not provide the nice profit it did on the last buy/sell cycle. This fund was up slightly last week for the third consecutive week.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 143.8% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 59.6%. Vanguard Energy #18, VGENX, is up 69.7% (annualized at 39.5%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 40.9% (annualized at 37.7%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 47.0% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 33.6%.

These funds were mixed last week with some rising slightly and some falling slightly. There was not much interest in this holiday season. If the Chinese economy heats up again, expect these funds to continue moving with a bullish fervor.

The Gold Index is up 8.2% (annualized at 16.8%) since the Mid-term Indicant signaled bull on July 9, 2004. As repeatedly asked, is this the 1970’s all over again? The remainder of this paragraph will remain unchanged until such time conditions change. So far, it does not look that way, but increasing bullish expressions in the energy sector will lead to more bearish expressions in general equity markets. This may occur in this presidential post election year. Again, forecasting the market is okay for hallway conversations, but never give your broker instructions based on a forecast. The Indicant will keep you posted on the market’s cyclical and trend inclinations.

These funds and the gold and silver index should convey the market’s perception of terrorism, inflation, and the economy. As long as they are in solid hold/bull positions, there remains some pessimism regarding the future of the economy.

Quick-term and Short-term Indicant Update

The eight major indices are up by an average of 9.1% since the Quick-term Indicant signaled bull on October 1, 2004. That annualizes to 36.4%. Do not expect the annualized number to manifest in this post election year. That is not a forecast. If it does, we will enjoy it. The quick-term attributes support a continuing bullish bias.

All eight major market indices are red bulls. That is decidedly bullish. As stated the past five weeks, the bullish red curve should as a protective floor, preventing sharp drops in stock prices. The eight major indices are above their respective bullish red curves by an average of 0.8%, which is down from 1.8% four weeks ago. The last few interactions with bullish red have proven to be a floor to falling prices.

Force Vectors are now moving south, which is a little unsettling. However, all eight of them are positioned bullish domains. That supports a bullish bias.

Vector Pressure direction is mixed with some indices moving north and others moving south. All eight still reside in bullish domains. These attributes support bullish bias, although weakened from a few weeks ago.

Keep in mind Force Vectors and Vector Pressure are eight dimensional and cannot be plotted. Later this year, the Indicant should be able to display a two dimensional representation of these so you can see them. Upon completion, we should be able to provide quick-term perspectives on stocks and exchange traded funds.

Please review the daily reports for more details regarding the Quick-term Indicant.

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

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

Both Indicant Volume Indicators have lost their robustness the past few days. That does not mean the market is about to lose bullish bias. Most of that is typical holiday activity. Softening demand can support status quo behavior. Since the current market is bullish, status quo will be good for your hold positions.

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

The Dow is up 5.3% (annualized at 22.5%) since the Short-term Indicant signaled bull on October 6, 2004. The NASDAQ is up 11.2% (annualized at 47.2%) since the Short-term Indicant signaled bull on October 5, 2004. This continues to support a bullish bias on a short-term basis, while being threatened by market neutrality.

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 nothing different here. The major indices continue flirting with their respective breakout lines, which supports bullish bias. After nearly contacting their respective breakdown lines last year, they responded like all good bulls do.

Read your daily emails.

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

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

Refer to the daily reports for more information about the Quick-term Indicant.

For more information about the Quick-term Indicant, refer to last week’s daily reports.

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

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

The eight major indices are up an average of 28.7% since the Mid-term Indicant signaled bull an average of 62.8 weeks ago. That annualizes to 23.8%. The Dow Transports is the strongest bull. It is up 67.8% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Jones Industrial Average is up 26.5% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Composite is up 42.5% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Utilities is up 41.0% since the Mid-term Indicant bull signal on August 16, 2003. All eight major indices are red bulls, which add significantly to the viability of these long-standing mid-term bull cycles.

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 – MTI-RYS – Ten U.S. Indices

Mid-term Indicant Positions - International Markets

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

Although there were no new bull signals, twenty-two of the twenty-two foreign indexes tracked by the Indicant are Mid-term Bulls. They are up an average of 98.1% since the Mid-term Indicant signaled bull an average of 90.1 weeks ago for an annualized gain of 56.7%, which is less than the 72.9% reported 80 weeks ago. International indices were up last week.

None of these international indices is a bear at this time.

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

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