Jan 28,
2007 Indicant Weekly Stock Market Report
Volume 01, Issue 04 ISSN 1526 6516 © The
Indicant Stock Market Report
Dear Indicant
Members:
This Week’s
Report
The Heart
and Soul of Bullish Seasonality Is Again Expiring
About this
time each year, the heart and soul of bullish seasonality expires.
Meandering or bearish behavior typically follow the expiration of the
heart and soul of bullish seasonality. Demonstrated performance suggests
the recent heart and soul has already expired. Formal expiration, based on
historical standards, will be on January 31, 2007.
The current
heart and soul of bullish seasonality started early in mid-August 2006.
That was an early start. It penetrated the historical standard of deep
bearish seasonality. There is more about that later in this report. It is
important to recognize the Quick-term Indicant’s bullish bias shift on
August 15, 2006 remains in tact.
There is one
point of concern. Last Thursday’s aggressive bearish expression was
coupled with extremely high volume. That is a bearish attribute. Other
Quick-term configurations suggest that high volume was purely emotional.
It appears to be an overreaction to a bounce in oil prices. Click the
following link and draw your own conclusions. It is okay to be intuitive.
http://www.indicant.net/Members/Updates/Economic/E03.htm
Intuition
suggests the emotionalism cascading into last Thursday’s bearish stock
market expression was discordant with the underlying cyclical movement of
oil prices. That is why day-traders lose money, along with other
short-term thinkers. There is an old saying, “never fight the trend.”
Emotion is important. When dominant, though, irrationality follows. That
always leads to losing results.
The impending
expiration of the heart and soul of bullish seasonality has softened the
Mid-term Indicant’s resistance to generating sell signals for stocks and
funds. There were six sell signals this weekend. When a stock or fund
starts moving to the south, it is difficult to project exactly when and
where the bottom of that movement will occur. Although the Indicant models
continue to search for that answer, it has yet to find success in that
endeavor. The Indicant simply identifies a bearish movement and within the
confines of eight dimensional data, identifies the propensity of
continuing bearish expressions. Sell signals ensue when that propensity
appears with a high probability of sustainable bearishness. Sometimes,
investor emotion alone can drive a stock south for extended periods.
Fundamentally, though, stocks always find their correct position. This
sometimes results in the Indicant being bothered with fluttering, which is
a quick pattern of sell and buy signals.
The Mid-term
Indicant has one simple rule, though, for stocks and funds. It very seldom
avoids a stock or fund that is above its bullish red curve. There was one
buy signal this weekend for a stock due to this simple rule. The Mid-term
Indicant signaled buy for Indicant Select Stock #17, Broad Vision, this
weekend due to this simple rule. Click the following link.
http://www.indicant.net/Members/Updates/MTI-Stks-Indicant%20Sel/S03.htm##17
Although this
stock remains fundamentally weak, it is a former NASDAQ100 stock. The
logarithmically expressed chart is used since it has such a wide range of
prices. Do not be surprised at fluttering behavior in the coming weeks.
Click Enron’s link, below, to see an example of this.
http://www.indicant.net/Members/Updates/MTI-Stks-DJU/DJU-02.htm#10
As you can
see, Enron was avoided for nearly four years. When its stock price moved
above its bullish red curve, fluttering followed with a succession of buy
and sell signals. This stock has turned out to be a successful buy. It is
up 263.5% since its buy signal on November 11, 2005. It does not always
work out this way. Sometimes, fluttering is followed by continued
southerly movement.
The most
dangerous time of holding a stock or fund is right after buying it.
Sometimes the buy signals are inappropriate for long-term, mid-term, and
short-term desires. That is why you should always be prepared to sell
quickly after buying the stock.
The Mid-term
Indicants’ rules for generating a sell signal are more complicated. It
generated a sell signal for Indicant Select Stock #39, Elan, this weekend.
Click the following link to view its chart.
http://www.indicant.net/Members/Updates/MTI-Stks-Indicant%20Sel/S07.htm#39
This stock
moved up 230.2% from its buy signal on April 8, 2005 until its sell signal
this weekend. The Mid-term Indicant is very patient with triple digit
gainers before signaling sell. As you can see from the chart, the trend is
south and the recent bullish cycle expired. From time to time, the
Mid-term Indicant will signal sell for triple digit gainers so you can
pocket the profits or move your money to other areas of interest. Elan’s
recent bullish cycle did not eclipse its last bullish cycle. Therefore,
its trend is down.
All buy and
sell periods do not manifest triple digit results. The Mid-term Indicant
generated a sell signal for Mutual Fund #45, Fidelity’s Home Finance.
Click the following link to view its chart.
http://www.indicant.net/Members/Updates/MTI-Mutual%20Funds/MF08.htm#45
This fund
endured some fluttering since it started turning south in late 2004.
Fidelity has been subjected to lawsuits, which contributed to several of
its fund’s bearishness. This fund has also endured soured fundamental
problems due to the real estate bubble; both real and perceived. This fund
was sold at a loss of 7.4%.
The sell of
this fund was the first sell signal for any fund since September 15, 2006.
Non-contrarian funds move with the market. The expiration of the heart and
soul of bullish seasonality contributed to this sell signal.
Buying and
selling funds is more difficult, as funds have trading frequency rules.
The Mid-term Indicant is usually more patient in signaling buy or sell for
funds because of this.
The Mid-term
Indicant signaled sell for a petroleum related security this weekend,
which has been a rare even the past five years. Most of the petroleum
related stocks and funds received buy signals in 2001 and 2002. They have
enjoyed hold signals since those buy signals. The sell signal was for
Indicant Select Stock #59, BJ Services. Click the following link to view
its chart.
http://www.indicant.net/Members/Updates/MTI-Stks-Indicant%20Sel/S10.htm#59
As you can
see, this stock appears in the embryonic stages of establishing a
southerly trend. Many of these petroleum related securities are
configuring in this manner. BJ Services was sold this weekend with only a
52.6% gain.
Halliburton
has a similar configuration. Click the following link to view
Halliburton’s chart. It is up 323.1% since the Mid-term Indicant signaled
buy on August 9, 2002. This is a triple digit hold position. As earlier
stated the Mid-term Indicant has more patience before signaling sell for
triple digit gainers. The Mid-term Indicant is less patient with only
double-digit gains, which is the case with BJ Services.
Keep your eye
on the Short-term and Quick-term Indicant. Currently, the Quick-term and
Short-term bullish bias prevails, but the expiration of the heart and soul
of bullish seasonality warrants greater diligence at this time.
Weekly
Buy/Sell Summary – Stocks and Funds
The Mid-term
Indicant generated one buy signal and six sell signals.
In addition to
the sell signals, the Mid-term Indicant is avoiding only 31-stocks and
funds of the 345 tracked by the Indicant. The avoided stocks and funds are
down an average of 12.8% since the Mid-term Indicant signaled sell an
average of 21.3-weeks ago.
There were
58-stocks and funds avoided at this time last year. The avoided stocks and
funds one year ago were down an average of 8.7% since their respective
sell signals an average of 19.3-weeks earlier.
Two years ago,
on January 28, 2005, the Mid-term Indicant was avoiding 90-stocks and
funds that were down an average of 26.8% since their respective sell
signals an average of 49.1-weeks earlier. Three years ago on January 24,
2004, there were only eight avoided stocks and funds. They were down 28.7%
from their respective sell signals an average of 41.4-weeks earlier. On
January 25, 2003, the Mid-term Indicant was avoiding only six stocks and
funds out of 296-tracked. They were down by an average of 24.0% since
their sell signals an average of 16.6-weeks earlier.
In addition to
the buy signal this weekend, the Mid-term Indicant is signaling hold for
307 of the 345-stocks and funds tracked by the Indicant. The stocks and
funds with hold signals are up an average of 107.2%. That annualizes to
60.5%. The Mid-term Indicant has been signaling hold for these 307-stocks
and funds for an average of 92.2-weeks.
One year ago
on January 27, 2006, the Mid-term Indicant was holding 280-stocks and
funds out of the 320 tracked at that time for an average of 92.3-weeks.
Those 280-stocks and funds were up by an average of 118.7% (annualized at
66.9%). The Mid-term Indicant was signaling hold for 230-stocks and funds
of the 320-tracked two years ago on January 28, 2005. They were up by an
average of 90.0% (annualized at 64.5%) since their respective buy signals
an average of 72.6-weeks earlier. There were 288-stocks and funds with
hold signals on January 24, 2004 since their buy signals an average of
38.4-weeks earlier. They were up 68.6% (annualized at 92.9%). The Indicant
was only tracking 296 stocks and funds in 2002-2003, and early 2004. On
January 25, 2003, the Mid-term Indicant was signaling hold for 194-stocks
and funds out of 296-tracked. They were up by an average of 22.0%
(annualized at 61.2%) since their buy signals an average of 18.7-weeks
earlier.
Summary of
Stocks and Funds with Buy and Sell Signals This past Week
To maintain
appropriate security, you can see the Mid-term Indicant "buy/sell" signals
for stocks and funds for this week by clicking the following link. It is
in the member’s only section.
http://www.indicant.net/Members/Updates/All%20Update%20Forms/Buy-Sell%20Summary%20This%20Week.htm
As repeatedly
stated, do not hold more than 10% of your investment resources in a single
stock and do not hold more than 20% of your investment resources into a
single mutual fund. Also, never fall in love with a stock or fund. Only
love the value of your portfolio. Never love its contents. Management
stupidity can wreak havoc on any stock or fund at any time.
All updated
information can be found from a single page at Indicant.Net. Click the
below link to that page. You will need your login ID and password.
http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20Summary.htm
The
Quick/Short-term Indicant Stock Market Report
The Indicant website maintains the last twelve months of daily reports on
an annual basis. These weekly reports are maintained for much longer
periods. Beginning in March 2006, the daily stock market report for the
last trading day of each week is imbedded in this weekly report. This
allows retention records of the daily report for much longer than the last
twelve months.
The Daily
Indicant Stock Market Report for the last trading day of the current week
is near the conclusion of this weekly stock market report. It is emailed
each weekend, separately, so you can read it either as a separate document
or in this document.
The
Indicant Stock Market Report’s Secular Market Blend
This section
is a repeated each week with a few modifications, reflecting recent
secular influences and performance data. Although appearing redundant at
times, it is important to read this section to keep abreast of secular
market shifts. Quantifications and qualifications are updated, weekly.
Remember, secular shifts can last twenty-five or more years. Fortunately,
secular market movements do not deter mid-term, short-term, and quick-term
profit opportunities. However, they can wreak havoc to the long-term
investors’ plans and those that buy and hold.
The current
Mid-term Bull market and buying barrage started in late 2002. The mid-term
election year of 2002 conformed perfectly to historical standards with
deep bearish expressions. That contrasts to the meandering bear market
from late January through mid-August 2006 in the more recent mid-term
election year.
Deep bearish
seasonality was not influential this past year, which usually occurs from
late August through early October. Last August, the Quick-term Indicant
obviated a bullish bias, contrary to the historical pattern of deep
bearish seasonality. Many buy signals were executed in late August and
early September, which is contrary to current popularity. The masses can
never be right.
The market
synchronized with near perfection to normal seasonality in the mid-term
election year of 2002. The rolling half of May-October 2002 was typically
bearish. The 2002 seasonal bear leg was dynamic and configured perfectly
to historical standards, although the depth of that bearish cycle was
deeper than normal. That NASDAQ bear cycle approached the magnitude of the
1930-32 Dow bear cycle but the 2000-2002 NASDAQ bear leg lasted several
weeks longer.
The recently
completed mid-term election year fundamentally supported historical
standards for the first two thirds of 2006. Although mild bearishness
exerted its historical influence in 2006, it was nowhere as deep as 2002’s
bearishness. The meandering bear in the first two-thirds of 2006 supported
the historical standard. That support was extremely mild.
As of
mid-August 2006, hard economic fundamentals shifted in support of a
bullish onslaught for the heart and soul of bullish seasonality and the
normally bullish presidential pre-election year of 2007.
The heart and
soul of bullish seasonality from mid-October 2005 through January 31, 2006
demonstrated bullish normalcy. The market had been more or less a
meanderer since January 31, 2006 until mid-August 2006, when the
Quick-term Indicant shifted from bearish to bullish bias.
The last
period of the heart and soul of bullish seasonality, ending January 31,
2006 produced gains of 2.8%, 4.2%, and 7.2% for the Dow, S&P500, and
NASDAQ, respectively. The Dow, S&P500, and NASDAQ are up 11.9%, 11.3%, and
15.9%, respectively, since the current heart and soul of bullish
seasonality began on August 15, 2006.
The historical
standard of the heart and soul of bullish seasonality will expire this
week. Last week’s bearish performance suggests that expiration has already
occurred. That does not mean a bearish cycle will unfold. It means the
market will no longer have the historical standard for bullish support.
Fundamental support is always the market’s driver, which remains favorable
to bullish intentions.
The Dow30
found bottom in the last presidential mid-term election year on October 9,
2002 at 7,286.27. The NASDAQ found bottom on the same day at 1114.11.
Finding cyclical bottoms in mid-term election years is common.
Fortunately, the bottom of 2006 was minimal and not sharp when compared to
that of 2002. The Dow is up 71.4% from the 2002 mid-term presidential
election year bottom. The NASDAQ is up 118.6% since October 9, 2002. The
S&P600, small caps, is up even more by 135.0% since October 9, 2002.
The NASDAQ is
down 51.8% from its historical high of 5048.62 on March 9, 2000. The Dow
is up by 6.5% from its previous week-ending historical high of 11723 on
January 13, 2000. It took over five-and-a-half years for the DJIA to
establish a new high. The S&P500 is down 6.9% since its all time high of
March 23, 2000. So far, the new century, 2000 inclusive, has not been kind
to long-term investors. The NASDAQ needs to climb 107.3% and S&P500 by
7.4% to establish new weekly closing highs.
Historical
standards suggest the NASDAQ will not return to historical high until 2025
or so. A 2000 buyer and holder will not be back to break-even until then.
Including inflation, a thirty-year-old investor will be in his or her
eighties before the NASDAQ profits from early 2000 investment dollars,
which assumes minimal inflation.
Economic or
corporate earnings fundamentals did not support the stock market’s
meteoric rise in the 1990’s in many sectors. Unprecedented demand for
stocks skewed the supply-demand ratio and thus the powerful bull leg of
the 1990’s enjoyed sustainability. The simple law of supply and demand
propelled stock prices dynamically to the north in the 1990’s. The great
bear leg of 2001 and 2002 depressed those prior sources of demand for at
least one generation of investors. The market now has to wait for a new
generation of investors to enjoy dynamic secular bullishness. The great
bull leg of 2003 was a relatively short bull cycle that has not enjoyed
follow-on bullish behavior due to this lack of demand. However, bullish
expressions occur during the heart and soul of bullish seasonality
regardless of any technical or fundamental reason. The meandering segments
of 2004, 2005, and 2006 were appropriately followed by historically
significant bullishness in each of those years.
Until
mid-August 2006, most major market indices have been slightly bullish
since late 2003 with pronounced meandering behavior. The only significant
bullish expressions, not followed by bearish expressions, occurred in the
heart and soul of bullish seasonality (Nov-Jan) in 2003, 2004, and 2005.
Other than those “heart and soul” bullish cycles, the market was
relatively flat from early 2004 through August 2006.
For example,
the Dow fell 4.4% from January 31, 2004 through October 31, 2004. The
NASDAQ fell by the same amount. The Dow fell 0.5% from January 31, 2005
through October 31, 2005, while the NASDAQ was up only 2.8%. The
Quick-term Indicant shifted to bullish bias on August 15, 2006. The NASDAQ
was down 10.3% from January 31, 2006 through August 14, 2006. The S&P500
was down 0.9% while the Dow was up 2.1%. The market was not bullishly
expressive after the heart and soul of bullish seasonality in 2004, 2005,
and 2006.
As earlier
stated, the Indicant began its buying barrage in October – November 2002
just after the market bottomed from the severe 2000-2002 Bear Market.
There were 239 buy signals between October 5, 2002 and November 9, 2002
out of the 296 stocks and funds tracked by the Mid-term Indicant at that
time. Even badly managed companies received a buy signal, which is a
common attribute of sustainable new bull markets. As many of you noticed,
those companies eventually dipped back to the south after the euphoria of
new bullishness.
Since August
18, 2006, the Mid-term Indicant generated 149-buy signals and only 17-sell
signals. That is an unusually high number of buy signals when considering
historical seasonal market influences. However, all Indicant models
supported this recent buying surge just as they did in October 2002 and
March 2003. Now that the heart and soul of bullish seasonality is
expiring, the resistance to generate sell signals has softened.
Some of you
recall the Indicant Stock Market Report tracking the
Short-term Indicant Bear for the NASDAQ in 2002. It was the longest in
history. It even exceeded the Dow’s 1929-1932 Short-term Indicant Bear in
breadth and approached it in magnitude. The good news is that the NASDAQ’s
decline did not lead to a depression, which is a clear indication of how
little influence tech stocks have on the economy.
There are two
important axioms to remember and are always repeated in this report. 1)
Real economic wealth is created in only three ways - manufacturing,
agriculture, and extraction. 2) The only positive influence politicians
have on the economy is to undo their prior damage. They are now doing
their damage, some of which will be undone in 2007; the next presidential
pre-election year. That is why the market typically finds a bottom in the
mid-term election year. That is also why the presidential pre-election
year is historically the most bullish on the four-year cycle. If the
strength of the current Mid-term Bull can be subjected only to meandering
behavior, like 2004 and 2005, then it is possible for the current Mid-term
Bull to be a record setting one in terms of duration.
Political
institutions reduce wealth. Politicians continually attempt to
redistribute wealth, which flies in the face of the laws of nature. They
promote “middle class” attainment. The larger the middle class, the more
power politicians and their academic brethren have. The communists tried
that, resulting 99% poverty, while the ruling 1% lived like kings. In
other words, socialism rewards an ability to intellectualize, while
capitalism rewards the results of appealing effort.
The remainder
of this section, Secular Market Blend, is repeated, in part, from the past
several months, but it does not hurt to reread it each week. As time
progresses and conditions change, there will be modifications to it to
maintain a balanced frame of reference.
You will
notice many of the
mutual fund buy signals occurred in March 2003. Many of them endured
sell signals for the first time since early 2003 during the mildly bearish
meandering behavior in mid-2005. However, recent bullish spurts and the
bull’s resiliency have minimized selling activity and resumed buying. As a
matter of fact, the Mid-term Indicant is now signaling buy or hold for all
mutual funds it tracks with the exception of contrarian funds.
Many of you
recall how the market did not synchronize with the heart and soul of
bullish seasonality from November 2002 through February 2003. December
2002 was the most bearish since 1931, but not nearly as dynamic as the
1931 bearish expression. After the asynchronous behavior in the November
2002 rolling third of the year, the market turned bullish in March 2003
and again did not synchronize with normal seasonality. The Mid-term
Indicant continued signaling bull/hold during bearish seasonality in 2003.
The market continued moving north during that time, contrary to historical
standards. As stated in most of 2004, bearish expressions on a Mid-term
basis between May and October 2004 should not be surprising. That is
exactly what occurred. The result was a meandering market with a slight
bearish bias during most of 2004 and 2005 and the first two-thirds of
2006.
The Quick-term
Indicant’s bearish bias most of this year was replaced with a bullish bias
in mid-August 2006. Several buy signals ensued shortly after that bias
shift. The bullish behavior occurred, as expected, since mid-August 2006.
The various Indicant models, economic fundamentals, and historical
standards suggest significant bullishness in the coming months and the
next two years.
http://www.indicant.net/Members/Updates/History-Seasonal/HS0001.htm
Make certain
you read the entire pages on the above link. You will see there are
exceptions.
Stop Loss
Management
The Mid-term
Indicant recommends a stop loss of 8% on recent buys because of the
Quick-term Indicant’s bullish bias and bullishly evolving economic
fundamentals.
Use a 10%
trailing stop loss or the yellow or green values you will find on the
tables for your longer-term hold positions. If your stock or fund is above
the bearish yellow curve and below the green curve, set your stop loss
equal to the greater of the yellow curve and the trailing stop loss. If
your stock or fund is above the green curve, set your stop loss at no less
the value of the green curve or 10% trailing, whichever is greater. If
your stock or fund is above the red curve and you bought at the Mid-term
Buy signal, you should use the 10% trailing stop loss.
If you are up
by triple digit amounts and enjoy your ownership of the stock or fund,
then use a 20% trailing stop loss or the slow moving blue curve price. If
you really enjoy holding the stock, keep a close eye on the management.
Dilettante managers have a way of worming into the business. Watch closely
for cronyism and lazy-hazy management dialog. Keep your eye on lavish
spending and excessive concerns about social issues. Those types are more
interested in burning your money for their pleasures, as opposed to making
you money. High performing companies remain focused on honoring the
investments made by their shareholders.
In a few
instances, you will see a hold signal for a stock or fund that is down
from its buy signal or below one of the above conditions for selling. If
you are more of a trader than an investor, feel free to buy stocks and
funds with those “bearish” attributes. They are configured for a possible
rebound, while at the same time, it is important to set the stop losses
mentioned in this report. Use the Quick-term Indicant as a guide in your
decision-making processes. If the stock price is falling in a Quick-term
Bear market, it is not advisable to buy.
Do not short
on stocks if they are up from an avoid signal. Stocks go up more often
than they go down. Stocks have a tendency to march to their own drumbeat
when rising. Some stocks rise and continue to rise in the most severe of
bear markets. Short selling opens up an opportunity for the snakes on Wall
Street to take everything you own. They can cause a stock to rise at their
whim and without any regard to fundamental reason. It usually does not
make sense to bet against the sweat and toil of hard-working people.
Stock and
Fund Update
Click the
following link to see sorted performance of stocks and funds with
hold/avoid signals. In the past, they were included in this email message
but now display them on the website. This is available to the public,
while the specific buy and sell transactions are limited to members only.
http://www.indicant.net/Non-Members/Performance/Top-Bot.htm
Economic Conditions – Inflation, Currency, Interest Rates
Click the
above heading for a summary of hard economic indicators.
The U.S.
dollar remains mixed relative to other countries. The Canadian dollar
continues to weaken, while other major currencies are holding onto their
position of strength. There is no cyclical robustness at this time.
Oil prices
rose last week, but not enough to reposition the underlying cycle of
weakening. Other commodities also increased last week, but not cyclically
significant. Prices remain in bearish domains (bullish for stock
equities). Other commodities continue configuring bearishly. That
configuration supports the stock market’s bullish bias.
There is
nothing different from last week. Interest rates continue to relax. They
have not yet fallen to neutral domains. They are preparing to fall.
Falling commodity prices support interest rate reductions.
Fear
Metrics: Economics and Terrorism
Vanguard Gold and Precious Metals (VGPMX) - #19 is up 286.7% since the
April 13, 2001 buy signal. It’s annualized growth since that buy signal is
48.8%. It moved to the north in 11 of the past 15-weeks. It moved to the
north the past three weeks after two weeks of deep bearish expressions.
Fidelity Gold, Fund #28, is up 40.8% since the Mid-term Indicant
signaled buy on August 26, 2005. That annualizes to 28.3%. This fund also
enjoyed a bullish rebound the past three weeks after bearish dominance in
the previous four weeks.
State Street Research Global #9, SSGRX, which is isolated in the
energy sector, is up 246.6% since the Mid-term Indicant signaled buy on
August 16, 2002. It is annualizing at 54.7%. The performance for this fund
was modified to include a healthy dividend to investors last December.
Vanguard Energy #18, VGENX, is up 165.1% (annualized at 42.7%) since
the Mid-term Indicant signaled buy on April 5, 2003.
Fidelity Energy Services #40, FSESX, is up 113.2% (annualized at
35.5%) since the Mid-term Indicant signaled buy on December 6, 2003.
Fidelity Energy #39, FSENX, is up 115.2% since the Mid-term Indicant
signaled buy on August 16, 2003. It is annualized at 32.9%.
The energy
related funds were bullish last week with the bounce in oil prices.
Investors in
these funds are supporting a 1970’s type of market with high inflation and
high oil prices. Energy and gold always do well during such times.
Fundamentals appear to be shifting in favor of selling the above funds
(09/10/06). Do not sell until the Mid-term Indicant signals sell.
The SQI
(Consolidated Short-term and Quick-term Indicant) model signaled buy for
the
GLD-ETF#11 on August 3, 2005. It is up 45.6% since then. It is
annualized at 30.4%. Its bullish position is being threatened on a
Quick-term Indicant basis and last week’s bearishness is threatening the
current hold position. However, it was slightly bullish the past three
weeks.
The SQI
signaled buy for
ETF#03 – Energy and Natural Resources on March 26, 2003. It is up
163.0% (annualized at 41.9%). This fund moved north the past two weeks
after aggressive bearishness three and four weeks ago.
Mid-term
Indicant Positions – Ten U.S. Indices
There was one new bull signal and no
new bear signals.
All ten major
indices are bulls. The Dow Transports again received a bull signal. They
are up by an average of 20.6% since the Mid-term Indicant signaled bull an
average of 80-weeks ago. That annualizes to 13.5%, which is down
significantly from the past three years. This is due to the bear signals
for the S&P400 and S&P600 Indexes on July 21, 2006, which had been
receiving a bull signal since October 25, 2002. Those two indices endured
some fluttering after the expiration of the tremendous bull leg that
lasted nearly four years. A new bull leg is underway and may proceed just
as vigorously for these two indices as the bull leg from October 2002
through July 2006.
Also, dynamic
bullish statistics were eliminated due to the Dow Transports bear signal
and recent new bull signal.
The Mid-term Indicant Dow Jones Industrial Average performance is now
at $37,826,176. That beats buy and hold performance of $1,909,744 on a
$10,000 investment in the Dow stocks in 1900. The
MTI S&P500 is at $183,623. That beats buy and hold’s $139,306 on a
December 31, 1971 $10,000 investment. The
MTI-NASDAQ is at $203,780 that beats buy and hold’s $84,448 on an
October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy
and hold by 1,880.7%, 31.8%, and 141.3%, respectively, for these indices
as of this past week.
The Indicant’s
percentage advantage over buy and hold does not change during bull
signals. The advantage changes only during bear signals. That is because
the buy and hold model has to keep holding, while the MTI-RYS model avoids
bear markets. The only purpose of the MTI-RYS model is to avoid the bear
markets. That is why it beat buy and hold by nearly 2,000% over the past
100+ years.
Click here to go to the current Mid-term Indicant assessment of the ten
major indices.
Click here for a tour of the Mid-term Indicant for major market indices.
Divergence
versus Convergence
Bearish
divergence occurred last week with the energy sector expressing bullish
behavior and general stock equities expressing bearish behavior. If this
configuration were to persist, meandering behavior will manifest. Bearish
or bullish divergence is a common attribute in meandering periods. Bearish
convergence for four successive weeks usually results in deep and
protracted bear markets. That configuration has not occurred since 2002.
Mid-term
Indicant Positions - NASDAQ100 Stocks
Click here to see NASDAQ100 report card history.
Click here for
Mid-term Indicant Table of NASDAQ 100 Stocks.
Mid-term
Indicant Positions - Dow Jones 30 Industrial Stocks
Click here to see Dow 30 report card history.
Click here for
Mid-term Indicant - Table of Dow Jones Industrial Average Stocks.
Mid-term
Indicant Positions - Dow Jones 15 Utility Stocks
Click here to see Dow Utilities Report Card history.
Click here for
Mid-term Indicant - Dow Jones Utility Stocks Table.
Mid-term
Indicant Positions - Indicant Selected Stocks
Click here to see Indicant Select Stock Report Card history.
Click here for
Mid-term Indicant Table of Indicant Selected Stocks.
Mid-term
Indicant Positions - Mutual Funds
Click here to see Mutual Fund Report Card history.
The Mid-term
Indicant is now avoiding
ProFunds Ultra Short. It is down 22.9% since the Mid-term
Indicant signaled sell on September 15, 2006. Historical norms of market
cyclicality suggest the next buying opportunity for this fund may not
occur until 2009.
Click here for
Mid-term Indicant Table of Mutual Funds.
Always
remember never to keep more than 20% of your investment resources into a
single mutual fund. Sector investing in mutual funds is an extremely good
way to mix your investments.
Long Term
Indicant Positions - Dow Jones Industrial Average
The blue-chip
Long-term Indicant Bull signal was at 2895 for the DJIA in November 1991.
Keep in mind the Long-term Indicant generated only five bull/bear cycles
since 1920.
The Dow is up
331.4% (annualized at 21.7%) since the Long-term Indicant signaled bull
795-weeks ago. Economic data is the primary influence on the Long-term
Indicant. The recession, deflation, and inflation have not been strong
enough to signal bear. A link to the Long-term Indicant is below:
http://www.indicant.net/Members/Updates/LTI-Markets-DJIA/DJIA.htm
Quick/Short-term Indicant Stock Market Report - Summary
Quick-term
Red Bulls: Twenty-seven of
thirty; solid bullish support remains.
Short-term/Quick-term Non-Bearishness:
Countering “sustainable” deep bearish ambition.
Force
Vectors: Solid support for
sustainable bullish behavior.
Vector
Pressure: Showing significant
resistance to bearish influence.
Long-term
Hold Positions: Solidly safe.
Current
Quick-term Bias: Bullish.
Overall
Market Status: Bullish support
on a Quick-term basis.
Profit
Potential from Naked Options:
Minimal due to the absence of volatility.
Volume:
Configurations support bullish
bias.
Special
Comments Continued from Tuesday, August 15, 2006 – Bias Shift to Bullish
The
Quick-term and Short-term Indicant remain bullishly biased and
increasingly so.
Quick-term/Short-term Indicant Stock Market Report Details
The Dow is up
8.6% since the
Short-term Indicant signaled bull on September 12, 2006 for both the
Dow and NASDAQ. The NASDAQ is up 9.9% since the
Short-term Indicant signaled bull on the same day. They are
annualizing at 23.1% and 26.6%, respectively, on the current short-term
bullish cycle. Click here to see the
Short-term Indicant’s history.
Bearish
aggressions late this week were supported by increased volume. That is the
first time this has occurred in several months. Both
Indicant Volume Indicator’s continue in the current robust cycle. So
far, no other Quick-term and Short-term Indicant attributes have shifted
to a bearish bias.
The
expiration of the heart and soul of bullish seasonality is commonly
followed by bearish to meandering behavior.
SQI Report Card (Consolidated Short/Quick), Status, and Charts
There were no
buy signals and no sell signals. Although there were no buy signals, the
SQI is signaling hold for 30-ETF’s. They are up 60.8% (annualized at
31.8%) since their respective buy signals an average of 98.3-weeks ago.
The SQI is not avoiding any of the 30-ETF’s.
The SQI model is the one that most of you will prefer for your trading
decisions. It generates fewer signals than the other two models and
represents consistencies in the Quick-term and Short-term outlooks for the
specific ETF’s. It also beats buy and hold on a regular basis, although
there is only seven years of proof. The quality of that proof is high
since this period includes a powerful bull and bear. The model sours a
little during meandering markets with an excessive number of signals from
time to time. Research toward perfecting continues.
Short-term Indicant Report Card, Status, and Charts
There were no
buy signals and no sell signals. Although there were no buy signals, the
Short-term Indicant is signaling hold for 30-ETF’s. They are up an average
of 62.6% (annualized 33.8%) since the STI signaled, buy, an average of
95.2-weeks ago. The STI is not avoiding any of the 30-ETF’s.
Keep in mind,
the Short-term Indicant is much more active in buying/selling than the
Consolidated model. The Quick-term Indicant, which follows, is even more
active.
Quick-term Report Card, Status, and Charts
There were no
buy signals and one sell signal. Although there were no buy signals, the
Quick-term Indicant is signaling hold for 30-ETF’s. They are up by an
average of 14.8% (annualized at 23.3%) since the QTI signaled buy an
average of 32.2-weeks ago. The Quick-term Indicant is not avoiding any
ETF’s at this time, including the contrarians, but there was one sell
signal on Friday after the market’s closed. It will become an avoid signal
on Monday, January 29, 2007.
Conflicts
between the Short-term and Quick-term Indicants
There is one
conflict, where the Short-term Indicant and the Quick-term Indicant are in
disagreement between hold and avoid status. This conflict is minor. The
bias shift on August 15, 2006 remains in favor of the bull.
There are
eighty-nine hold signals out of a possible 90, while there are no avoid
signals. This ratio supports sustainable bullish behavior.
Quick-term Indicant Bull/Bear Health Report
One of the
30-ETF’s is below its bearish yellow curves. That is the first time in
several months with this configuration. The average position of all thirty
ETF’s is above bearish yellow by 9.1%. This is maintaining the market’s
non-bearish posture. This non-bearish configuration is strong with near
zero threat of sustainable and deep bearish behavior.
Twenty-seven
ETF’s are above their respective bullish red curves, which is an
exceedingly healthy bullish attribute.
All thirty
ETF average positions are 1.6% above their bullish red curves. This
attribute is solidly bullish on a Quick-term Indicant basis.
Short-term Indicant Bull/Bear Health Report for ETF’s
The above
heading is linked to the Short-term Indicant table. This paragraph is
repeated daily as a reminder of accurately interpreting the charts. By
clicking the charts on the table you can review potential contact with the
breakdown lines (bearish) and potential contact with breakout lines
(bullish). It is extremely bearish when several ETF’s are contacting their
respective breakdown lines. The breakdown lines are the yellow lines
(bearish). The breakout lines are the red ones (bullish). Close proximity
to breakout implies an increased probability of an actual breakout
occurring. It is certainly bullish and you will want to be in a hold
position for those few days a year when the breakout occurs. Conversely,
significant contact with yellow (breakdown) suggests “avoid” positions are
best.
One ETF is
contacting its breakout lines. As stated the past several months, the high
concentration of breakout contact the past several months is solidly
bullish.
The average
distance from breakout contact is at a miniscule 2.7%, which is not a
great distance to find an area friendly for bullish exuberance.
The average
distance from the price and breakdown is 20.2%. This configuration
provides tremendous non-bearish support, which has been the case since
March 2003. The probability of immediate contact remains low and thus a
non-bearish bias is maintained on a short-term basis.
This
attribute remains solidly non-bearish.
ETF Force
Vector Configurations
You can scan
the
Quick-term Indicant for Exchange Traded Funds table and click on the
charts to observe Force Vector configurations. Scroll down each of the
charts, where a quick link has been added to take you to the next series
of Quick-term ETF charts. Use you back arrow on your browser to return to
the previous page.
Seven of the thirty ETF Force Vectors are in bullish domains. Although
down slightly the past few days, this configuration solidly supports the
bullish bias.
Force Vector
behavior has not offered any robust cycles in the past several months.
That is one reason for this somewhat tame Quick-term Bull market. However,
this is a steady bull to be enjoyed.
To understand
potential financial opportunities,
click here to learn to identify Robust Force Vectors. They are visible
on the
Quick-term Indicant charts.
ETF Force
Vectors/Vector Pressure Crossings/Option Signals
Remember, the
links contained herein are more visible when reading this on the website.
Click this sentence for Vector Pressure Option Signals. There were no
option signals for the fifteenth consecutive trading day.
Although the
market has been bullish, it is not dynamically so. It is just a simple
steady bull with less magnitudes of follow-on bearishness , which is not
favorable to naked options plays. The absence of volatility is not
friendly to naked options buy/selling. Stalking successfully is the only
way to make money during limited volatility.
Twenty-seven
ETF Vector Pressures are in bullish domains, which supports a bullish
bias. Positive Vector Pressure guards against bearish dominance.
Make certain
you sell naked options when the Force Vectors shift direction or within
two days of the purchase, whichever occurs first. If you are unfamiliar
with this, take the
options tour.
Remember
options trading is risky. Never offer “market prices.” Always bid low in
hopes of an intraday contrarian movement to the underlying assumption of
directional behavior. Always place day-orders only. That keeps the floor
folks out of your pocketbook. Do not despair if your order does not take.
There are plenty of opportunities throughout the course of the year.
Remember, stalking is the key to success here. Although not necessary for
stock market success, those of you who have a gambling instinct will enjoy
this. For those of you with a longer-term perspective, it does not hurt to
see what the short-term folks are thinking. The Indicant indicates both
perspectives.
Quick-term
and Short-term Indicant Summary
The shift
from bearish bias to bullish bias started on Tuesday, August 15, 2006
after maintaining a bearish bias since early February 2006. The Quick-term
and Short-term Indicant models are suggesting bullish bias.
Based on
Vector Pressure configurations and increasing bullish bias, do not write
covered call options at this time.
The
Quick-term Bull remains in tact.
ProFunds Ultra Short mutual fund moves inversely to the QQQQ by
exponential amounts. The Consolidated Indicant model is no longer avoiding
QQQQ, which no longer supports holding contrarian fund, ProFunds Ultra
Short.
To
familiarize yourself with viewing the market from an ETF perspective,
click the following update links.
Quick-term ETF Options
Quick-term Indicant for ETF’s
Short-term Indicant for ETF’s
Consolidated Quick-term/Short-term Indicant for ETF’s
Click here to the report card, which is updated weekly, to link to related
tours.
Links to the
Short-term Indicant and Indicant Volume Indicator are below:
Short-term Indicant for DJIA and NASDAQ
Short-term Indicant Tables for the Dow Jones Industrial Average Index
Short-term Indicant Table for the NASDAQ Composite Index
Indicant Volume Indicator
Indicant
Conclusion
Although the
heart and soul of bullish seasonality is nearing its historical cyclical
conclusion, economic fundamentals are configuring to support sustainable
bullishness. Also historical standards of pre-election year bullishness is
supporting this bullish expectation.
Dynamic
bullishness should become dominant if and when interest rates begin to
plummet.
Do not be
alarmed at last week’s bearishness. The Quick-term and Short-term Indicant
continue to express bullish bias.
Do not get
lazy and set those stop losses for those stocks and funds that continue to
enjoy hold signals.
The daily
updates are on the following link.
http://www.indicant.net/Non-Members/Back%20Issues/QT.htm
Hyperlinks
To access all
major markets, stocks, funds, economic data, charts, statuses, etc, click
the following hyperlink:
http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20Summary.htm
In addition,
once you are inside the website, click on "members update" or simply log
in. It is on the top of every page in the web site so you can always find
your way back.
Happy
Investing,
www.indicant.net
01/28/07
Jan 21, 2007
Indicant Weekly Stock Market Report
Volume 01, Issue 03 ISSN 1526 6516 © The
Indicant Stock Market Report
Dear Indicant
Members:
This Week’s
Report
Fundamentals Continue Supporting Dynamic Bullish Potential
Oil prices
continue to fall. This is the most exciting fundamental for those who
desire dynamic bullish expressions. The decline in oil prices is dynamic.
Click the following link to view the chart.
http://www.indicant.net/Members/Updates/Economic/E03.htm
Falling oil
prices should support other favorable fundamental shifts to support a
bullish stock market. You will notice on the same Web page that Gold
prices are also weakening. That is indicative of most of the other
commodity indexes. Scrolling down on the same Web page, you will notice
the CRB Bridge futures in rapid decline. This decline offers no threat of
deflation at this time. It is favorable to reducing inflationary threats.
That accelerates the probability of increasing stock market bullishness.
Clicking the
following link will reveal interest rates are flattening.
http://www.indicant.net/Members/Updates/Economic/E06.htm
That is an
unusual configuration, when comparing to recent history. That configured
indecisiveness is a most likely cause to the stock market’s recent
meandering behavior. Declining commodity prices and especially oil prices
should incite the Federal Reserve Board to start reducing interest rates.
As long as
productivity continues to rise, hard economic fundamentals support future
bullishness for stock prices.
Weekly
Buy/Sell Summary – Stocks and Funds
The Mid-term
Indicant generated no buy signals and no sell signals.
Although there
were no sell signals, the Mid-term Indicant is avoiding only 32-stocks and
funds of the 345 tracked by the Indicant. The avoided stocks and funds are
down an average of 13.5% since the Mid-term Indicant signaled sell an
average of 21.2-weeks ago.
There were
52-stocks and funds avoided at this time last year. The avoided stocks and
funds one year ago were down an average of 11.4% since their respective
sell signals an average of 24.7-weeks earlier. Two years ago, on January
21, 2005, the Mid-term Indicant was avoiding 85-stocks and funds that were
down an average of 27.5% since their respective sell signals an average of
71.6-weeks earlier. Three years ago on January 17, 2004, there were only
eight avoided stocks and funds. They were down 28.9% from their respective
sell signals an average of 40.4-weeks earlier. On January 18, 2003, the
Mid-term Indicant was avoiding only six stocks and funds out of
296-tracked. They were down by an average of 33.8% since their sell
signals an average of 25.8-weeks earlier.
