January 2007 - Indicant Weekly Stock Market Report

Jan 28, 2007 Indicant Weekly Stock Market Report

Volume 01, Issue 04 ISSN 1526 6516 © The Indicant Stock Market 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.

Although there were no buy signals this weekend, the Mid-term Indicant is signaling hold for 313 of the 345-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 105.8%. That annualizes to 60.6%. The Mid-term Indicant has been signaling hold for these 313-stocks and funds for an average of 90.9-weeks.

One year ago on January 20, 2006, the Mid-term Indicant was holding 279-stocks and funds out of the 320 tracked at that time for an average of 93.1-weeks. Those 279-stocks and funds were up by an average of 116.9% (annualized at 65.3%). The Mid-term Indicant was signaling hold for 230-stocks and funds of the 320-tracked two years ago on January 21, 2005. They were up by an average of 88.6% (annualized at 67.5%) since their respective buy signals an average of 71.6-weeks earlier. There were 288-stocks and funds with hold signals on January 17, 2004 since their buy signals an average of 37.4-weeks earlier. They were up 67.5% (annualized at 93.8%). The Indicant was only tracking 296 stocks and funds in 2002-2003. On January 18, 2003, the Mid-term Indicant was signaling hold for 289-stocks and funds out of 296-tracked. They were up by an average of 19.6% (annualized at 63.4%) since their buy signals an average of 16.1-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

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 Stock Market Report’s Secular Market Blend

Current Indicant configurations suggest the market is in the process of honoring the historical normalcy of the heart and soul of bullish seasonality. It got off to an early start, showing little respect for the historical standards of deep bearish seasonality. Since August 15, 2006, the Dow is up 11.9%. The NASDAQ is up 15.9%.

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. Expect greater gains than that in the current heart and soul of bullish seasonality, which is underway. As earlier stated, the Dow, S&P500, and NASDAQ are up 11.9%, 11.3%, and 15.9% since the current heart and soul of bullish seasonality began on August 15, 2006. However, the heart and soul of bullish seasonality will expire around the end of this month. 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 72.5% from the 2002 mid-term presidential election year bottom. The NASDAQ is up 122.5% since October 9, 2002. The S&P600, small caps, is up even more by 134.1% since October 9, 2002.

The NASDAQ is down 51.4% from its historical high of 5048.62 on March 9, 2000. The Dow is up by 7.2% 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 6.3% 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 106.0% and S&P500 by 6.8% 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, assuming zero inflation. 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.

As earlier stated, the Dow is up 11.9% since the Quick-term bias shifted to bullish bias on August 15, 2006. The S&P500 and NASDAQ are up 11.3% and 15.9%, respectively since that bias shift. The NASDAQ was down sharply last week.

Since August 18, 2006, the Mid-term Indicant generated 148-buy signals and only eleven-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.

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.

Stock and Fund Update

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.

Oil prices continue nose-diving. Prices remain in bearish domains (bullish for stock equities). Other commodities are configuring bearishly. That configuration supports the stock market’s bullish bias.

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 was up 75.2% two-hundred and thirty weeks ago since the MTI buy signal on April 13, 2001. Last week it closed up 277.9%. The current annualized growth rate since the April 13, 2001 buy signal is 47.5%. It moved to the north in ten of the past 14-weeks. It moved to the north the past two weeks after two weeks of deep bearish expressions.

Fidelity Gold, Fund #28, is up 39.0% since the Mid-term Indicant signaled buy on August 26, 2005. That annualizes to 27.4%. This fund also enjoyed a bullish rebound the past two weeks after bearish dominance in the previous four weeks.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 149.8% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 33.4%. This fund has moved slightly north last week after recent extreme bearishness.

Vanguard Energy #18, VGENX, is up 162.3% (annualized at 42.2%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 111.1% (annualized at 35.1%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 112.7% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 32.4%.

The energy related funds were slightly bullish last week.

The SQI (Consolidated Short-term and Quick-term Indicant) model signaled buy for the GLD-ETF#11 on August 3, 2005. It is up 43.2% since then. It is annualized at 29.1%. 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 two weeks.

The SQI signaled buy for ETF#03 – Energy and Natural Resources on March 26, 2003. It is up 162.1% (annualized at 41.8%). This fund also moved slightly north last week after aggressive bearishness two and three 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 21.4% since the Mid-term Indicant signaled bull an average of 79-weeks ago. That annualizes to 14.2%, 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 from the Dow Transports bear signal and recent new bull signal.

The Mid-term Indicant Dow Jones Industrial Average performance is now at $38,064,002. That beats buy and hold performance of $1,921,689 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $184,698. That beats buy and hold’s $140,121 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $205,103 that beats buy and hold’s $84,997 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.

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

There was no distinct pattern last week. Energy was mildly bullish. Commodities were mixed, although oil prices continue moving south. The Dow30 was up mildly, while the NASDAQ succumbed to bearish expressions. The NASDAQ’s performance offers a mild argument for bearish divergence, but it was ever so slight. This attribute suggests meandering influences, which supports the dynamics for nearing the end of the current heart and soul of bullish seasonality.

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.

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 334.1% (annualized at 21.9%) since the Long-term Indicant signaled bull 794-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-six 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

Both Indicant Volume Indicator’s have shifted to a lethargic configuration. This suggests there is little support for recent bearish to meandering behavior. This configuration, although not directly supporting the bullish bias, is not supporting bearish ambition. Do not be surprised at meandering behavior in the immediate future.

The Dow is up 9.3% since the Short-term Indicant signaled bull on September 12, 2006 for both the Dow and NASDAQ. The NASDAQ is up 10.6% since the Short-term Indicant signaled bull on the same day. They are annualizing at 26.3% and 30.1%, respectively, on the current short-term bullish cycle. Click here to see the Short-term Indicant’s history.

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 60.4% (annualized at 31.9%) since their respective buy signals an average of 97.3-weeks ago. The SQI is not avoiding any of the 30-ETF’s.

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 62.2% (annualized 33.9%) since the STI signaled, buy, an average of 94.3-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 signal and no sell signals. Although there were no buy signals, the Quick-term Indicant is signaling hold for 30-ETF’s. They are up by an average of 14.2% (annualized at 23.7%) since the QTI signaled buy an average of 30.9-weeks ago. The Quick-term Indicant is not avoiding any ETF’s at this time, including the contrarians.

Conflicts Between the Short-term and Quick-term Indicants

There are no conflicts, where the Short-term Indicant and the Quick-term Indicant are in disagreement between hold and avoid status. The bias shift on August 15, 2006 remains in favor of the bull.

There are ninety 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

None of the 30-ETF’s are below their bearish yellow curves. The average position of all thirty ETF’s is above bearish yellow by 9.6%. 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-six ETF’s are above their respective bullish red curves, which is an exceedingly healthy bullish attribute.

All thirty ETF average positions are 2.1% 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

Four of the ETF’s are contacting their 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 2.3%, which is not a great distance to find an area friendly for bullish exuberance.

The average distance from the price and breakdown is 20.4%. 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

Twenty-five 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 tenth consecutive trading day.

Twenty-six 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.

Quick-term and Short-term Indicant Summary

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.

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.

Dynamic bullishness should become dominant if and when interest rates begin to plummet.

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

01/21/07

Jan 14, 2007 Indicant Weekly Stock Market Report

Volume 01, Issue 02 ISSN 1526 6516 © The Indicant Stock Market Report

Dear Indicant Members:

This Week’s Report

Historical Norms and Fundamentals Support Bullish Continuance

The stock market bull is garnishing support from historical standards and economic fundamentals. The pre-election year is the most bullish on the four-year presidential election cycle. It is in a league by itself. The stock market knows that politicians understand they are elected by virtue of economic conditions and little else. That is why the pre-election year is the most bullish.

Oil prices are plummeting. El Nino has warmed the climate and lowered demand for heating fuel. OPEC does not want to see too much surge in alternate sources of energy and will bias their behavior with a bearish slant on oil prices. Recent oil discoveries in the Gulf of Mexico have threatened OPEC. Interestingly, these discoveries have diminished interest in the Athabasca Tar Sands in Alberta. That has contributed to a weakening Canadian dollar, which should fare well for Canadian manufacturing.

This year is shaping up to provide strong bullish support. It would not be surprising to see it emulate the last pre-election year of 2003, where the current bull enjoyed its greatest expression. However, prognostications such as this are not worth much. Keep your eye on the Quick-term and Short-term Indicant, where validations of integrity to prognostications occur.

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 30-stocks and funds of the 345 tracked by the Indicant. The avoided stocks and funds are down an average of 13.3% since the Mid-term Indicant signaled sell an average of 20.6-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 10.6% since their respective sell signals an average of 23.7-weeks earlier. Two years ago, on January 15, 2005, the Mid-term Indicant was avoiding 84-stocks and funds that were down an average of 28.2% since their respective sell signals an average of 66.6-weeks earlier. Three years ago on January 10, 2004, there were only six avoided stocks and funds. They were down 29.0% from their respective sell signals an average of 36.4-weeks earlier. On January 11, 2003, the Mid-term Indicant was avoiding only six stocks and funds out of 296-tracked. They were down by an average of 31.6% since their sell signals an average of 24.9-weeks earlier.

Although there were no buy signals this weekend, the Mid-term Indicant is signaling hold for 313 of the 345-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 105.7%. That annualizes to 61.2%. The Mid-term Indicant has been signaling hold for these 313-stocks and funds for an average of 89.9-weeks.

One year ago on January 13, 2006, the Mid-term Indicant was holding 290-stocks and funds out of the 320 tracked at that time for an average of 87.6-weeks. Those 290-stocks and funds were up by an average of 113.0% (annualized at 67.1%). The Mid-term Indicant was signaling hold for 235-stocks and funds of the 320-tracked two years ago on January 15, 2005. They were up by an average of 89.2% (annualized at 66.6%) since their respective buy signals an average of 69.4-weeks earlier. There were 288-stocks and funds with hold signals on January 10, 2004 since their buy signals an average of 36.4-weeks earlier. They were up 63.5% (annualized at 90.8%). The Indicant was only tracking 296 stocks and funds in 2002-2003. On January 11, 2003, the Mid-term Indicant was signaling hold for 284-stocks and funds out of 296-tracked. They were up by an average of 22.2% (annualized at 76.6%) since their buy signals an average of 15.0-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

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 Stock Market Report’s Secular Market Blend

Current Indicant configurations suggest the market is in the process of honoring the historical normalcy of the heart and soul of bullish seasonality. It got off to an early start, showing little respect for the historical standards of deep bearish seasonality. Since August 14, 2006, the Dow is up 11.8%. The NASDAQ is up 18.3%.

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. The 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 of 2006, fundamentally, supported historical standards for the first two thirds. 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.

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, so far, was minimal and not sharp when compared to that of 2002. The Dow is up 72.3% from the 2002 mid-term presidential election year bottom. The NASDAQ is up 124.6% since October 9, 2002. The S&P600, small caps, is up even more by 135.8% since October 9, 2002.

The NASDAQ is down 50.4% from its historical high of 5048.62 on March 9, 2000. The Dow is up by 7.1% 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 6.3% 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 101.7% and S&P500 by 6.8% to establish new weekly closing highs.

As earlier stated, the Dow is up 11.8% since the Quick-term bias shifted to bullish bias on August 15, 2006. The S&P500 and NASDAQ are up 11.3% and 18.3%, respectively since that bias shift.

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 shift and bullishly evolving economic fundamentals.

Stock and Fund Update

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.

Oil prices are plummeting. Prices are now in bearish domains (bullish domain for stock equities). That should spark a bullish stock market surge. The problem is that the record rise in oil prices did not trigger plummeting stock prices. The stock market apparently anticipated the record rise in oil prices would not remain at those lofty prices. Overall, though, plummeting oil prices is favorable to a continuation of the underlying bullish bias in the stock market.

Other commodity prices are also succumbing to bearish pressures (bullish for stock market).

Interest rates continue teetering on the desired transformation from bearish domains to neutral domains, relative to stock market impact. They continue to reside in bearish domains (above their bullish red curves).

Falling commodity prices should bias the Federal Reserve Board to relaxing policy, which should induce a bullish response from stock prices.

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% two-hundred and twenty-nine weeks ago since the MTI buy signal on April 13, 2001. Last week it closed up 273.4%. The current annualized growth rate since the April 13, 2001 buy signal is 46.9%. It moved to the north in nine of the past 13-weeks. It moved to the north last week after two weeks of deep bearish expressions.

Fidelity Gold, Fund #28, is up 38.8% since the Mid-term Indicant signaled buy on August 26, 2005. That annualizes to 26.9%. This fund also enjoyed a bullish rebound last week after bearish dominance in the previous four weeks..

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 147.6% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 33.0%. This fund has moved slightly north last week after recent extreme bearishness.

Vanguard Energy #18, VGENX, is up 159.3% (annualized at 41.6%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 106.5% (annualized at 33.8%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 108.3% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 31.3%.

The energy related funds were mixed to slightly bearish last week.

The SQI (Consolidated Short-term and Quick-term Indicant) model signaled buy for the GLD-ETF#11 on August 3, 2005. It is up 42.8% since then. It is annualized at 29.3%. 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 last week.

The SQI signaled buy for ETF#03 – Energy and Natural Resources on March 26, 2003. It is up 157.9% (annualized at 40.9%). This fund also moved slightly south last week after aggressive bearishness in the prior two weeks.

Mid-term Indicant Positions – Ten U.S. Indices

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

Nine of the ten major indices are bulls. They are up by an average of 24.4% since the Mid-term Indicant signaled bull an average of 78-weeks ago. That annualizes to 14.7%, 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 from the Dow Transports bear signal three weeks ago have weakened overall performance statistics.

The Mid-term Indicant Dow Jones Industrial Average performance is now at $38,035,376. That beats buy and hold performance of $1,920,251 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $184,727. That beats buy and hold’s $140,444 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $209,413 that beats buy and hold’s $86,783 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.

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

Prior bearish convergence was superseded this past week with bullish divergence. That dampens bearish potential significantly and is supportive of historical standards.

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.

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 333.8% (annualized at 21.9%) since the Long-term Indicant signaled bull 793-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-five 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

As stated the past few days, both Indicant Volume Indicator’s continue configuring with robust intentions. Expect continued support for the current bullish bias on a Quick-term basis.

The Dow is up 9.2% since the Short-term Indicant signaled bull on September 12, 2006 for both the Dow and NASDAQ. The NASDAQ is up 13.0% since the Short-term Indicant signaled bull on the same day. They are annualizing at 27.5% and 38.8%, respectively, on the current short-term bullish cycle. Click here to see the Short-term Indicant’s history.

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 60.1% (annualized at 32.1%) since their respective buy signals an average of 96.2-weeks ago. The SQI is not avoiding any of the 30-ETF’s.

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 61.8% (annualized 34.1%) since the STI signaled, buy, an average of 93.3-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 signal and no sell signals. Although there were no buy signals, the Quick-term Indicant is signaling hold for 30-ETF’s. They are up by an average of 14.1% (annualized at 24.3%) since the QTI signaled buy an average of 29.9-weeks ago. The Quick-term Indicant is not avoiding any ETF’s at this time, including the contrarians.

Conflicts Between the Short-term and Quick-term Indicants

There are no conflicts, where the Short-term Indicant and the Quick-term Indicant are in disagreement between hold and avoid status. The bias shift on August 15, 2006 remains in favor of the bull.

There are ninety 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

None of the 30-ETF’s are below their bearish yellow curves. The average position of all thirty ETF’s is above bearish yellow by 9.8%. This is maintaining the market’s non-bearish posture. This non-bearish configuration is strong with near zero threat of bearish behavior.

Twenty-five ETF’s are above their respective bullish red curves, which is an exceedingly healthy bullish attribute.

All thirty ETF average positions are 2.4% 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

Nine of the ETF’s are contacting their 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 2.2%, which is not a great distance to find an area friendly for bullish exuberance.

The average distance from the price and breakdown is 20.3%. 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

Twenty-one of the thirty ETF Force Vectors are in bullish domains. 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 sixth consecutive trading day.

Twenty-four 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.

Quick-term and Short-term Indicant Summary

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.

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

Bullish divergent configurations occurred last week. That disrupted the bearish convergence which threatened the market’s underlying bullish theme. Bullish divergence configurations, coupled with historical standards and falling commodity prices bodes well for a continuing bullish theme to the stock market.

The Quick-term Indicant remains solidly in support of the bullish stock market. That bullishness may continue beyond the heart and soul of bullish seasonality, which concludes in the next few weeks.

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

01/14/07

Jan 07, 2007 Indicant Weekly Stock Market Report

Dear Indicant Members:

This Week’s Report

Ignore Folklore

The stock market cares about two things; economic conditions and corporate profitability. The market does not react to current economic conditions. Its direction is a function of probable economic conditions in the next six to nine months. The market does not react to corporate profitability. Its direction is a function of anticipated profits. It will react more to rumor about the future earning as opposed to current reported earnings. The dynamic is the interaction with projected corporate profitability as a function of projected economic conditions. All that, coupled with the supply/demand relationship for stocks makes the stock market a dynamic expression of capitalistic behavior.

The market seldom reacts to anything. From time to time, it will react violently when its movement toward prior anticipations is disrupted by conditions that were not included in its anticipatory movement. For example, the market reacted violently in late 1998 when Russia nearly defaulted on loans.

Sometimes the market punishes the majority. For example, when nearly everyone owned stocks that were rising in the late 1920’s, the market concluded two things. Future economic conditions are out of synch with current stock prices.

The market will never allow a majority of short-term stock owners to make money in stocks. In other words when nearly everyone owns stocks, then where are the future buyers? The market knows this. It will punish stockholders when the demand for stocks is well below the supply of stocks for sell.

The nature of the stock market requires winners and losers. The winners must be a minority of investors; especially those who are focused on the here and now. The market seldom positions itself on the here and now, except when surprised with dynamic dishonesty, such as loan defaults and events, such as 911.

The market does not care about folklore or historical relationships at any particular moment in time. There use to be a saying, “so goes January, so goes the year.” Although there is some statistical support for this, that is all it is; just a statistical phenomenon. When the majority or critical mass of investors react to this prognosis, the market will react opposite to the “popular” expectation.

Years ending with the number five, such as 2005, have a tremendous bullish relationship. That was bantered around in early 2005 by many pundits. Many people subscribed to the belief that 2005 would be exceedingly bullish. Because CNBC and others like to sensationalize the mundane, it was successfully marketed by pundits. The Indicant investigated and confirmed that year-ending five had a historical relationship but also concluded there was no logical or political relationship to the stock market. The Indicant’s advice was to ignore years ending in 5. True to form 2005 was not bullish until the Indicant’s heart and soul of bullish seasonality.

The first week of January of this year was bearish. There will be interpretations and prognostications by many about that. Ignore them. Next week’s, next month’s, next year’s market performance will not be influenced by the first week of January. Some pundits suggest this is influential and the low effort media will jump all over it. Ignore it.

The various Indicant models will keep you posted on the market’s directional propensity within the confines of your frame of reference (now or later).

Weekly Buy/Sell Summary – Stocks and Funds

The Mid-term Indicant generated one buy signal and two sell signals.

In addition to the sell signals, the Mid-term Indicant is avoiding only 30-stocks and funds of the 345 tracked by the Indicant. The avoided stocks and funds are down an average of 13.7% since the Mid-term Indicant signaled sell an average of 21.2-weeks ago.

There were 53-stocks and funds avoided at this time last year. The avoided stocks and funds one year ago were down an average of 10.5% since their respective sell signals an average of 22.5-weeks earlier. Two years ago, on January 7, 2005, the Mid-term Indicant was avoiding 15-stocks and funds that were down an average of 41.1% since their respective sell signals an average of 61.1-weeks earlier. Three years ago on January 3, 2004, there were only six avoided stocks and funds. They were down 28.6% from their respective sell signals an average of 38.6-weeks earlier. On January 4, 2003, the Mid-term Indicant was avoiding only 12-stocks and funds out of 296-tracked. They were down by an average of 25.9% since their sell signals an average of 23.0-weeks earlier.

In addition to the buy signal this weekend, the Mid-term Indicant is signaling hold for 312 of the 345-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 100.0%. That annualizes to 58.4%. The Mid-term Indicant has been signaling hold for these 312-stocks and funds for an average of 89.0-weeks.

One year ago on January 6, 2006, the Mid-term Indicant was holding 292-stocks and funds out of the 320 tracked at that time for an average of 86.3-weeks. Those 292-stocks and funds were up by an average of 110.8% (annualized at 66.8%). The Mid-term Indicant was signaling hold for 236-stocks and funds of the 320-tracked two years ago on January 7, 2005. They were up by an average of 86.7% (annualized at 65.9%) since their respective buy signals an average of 68.4-weeks earlier. There were 286-stocks and funds with hold signals on January 3, 2004 since their buy signals an average of 35.8-weeks earlier. They were up 57.7% (annualized at 83.9%). The Indicant was only tracking 296 stocks and funds in 2002-2003. On January 4, 2003, the Mid-term Indicant was signaling hold for 277-stocks and funds out of 296-tracked. They were up by an average of 19.1% (annualized at 69.3%) since their buy signals an average of 14.3-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

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 Stock Market Report’s Secular Market Blend

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 to deep bearish expressions. The stock market was a meandering bear from February through mid-August in this mid-term election year of 2006. Deep bearish seasonality was not influential this 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.

Current Indicant configurations suggest the market is in the process of honoring the historical normalcy of the heart and soul of bullish seasonality. It got off to an early start this year, showing little respect for the historical standards of deep bearish seasonality. Since August 14, 2006, the Dow is up 10.4%. The NASDAQ is up 15.1%.

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. The 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 current mid-term election year of 2006, fundamentally, supported historical standards for the first two thirds of this year. Although there was mild bearishness in this mid-term election year, 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.

Ignore recent news about economic lethargy. The stock market may recalibrate expectations six to nine months from now, but it does not care about the current economic situation. It addressed that in the first quarter of 2006 and pretty much had it figured out. That is why the market was a mild bearish meanderer from February through mid-August 2006. Since August, the market has been consistently, but not dynamically, bullish.

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, so far, was minimal and not sharp when compared to that of 2002. The Dow is up 70.2% from the 2002 mid-term presidential election year bottom. The NASDAQ is up 118.5% since October 9, 2002. The S&P600, small caps, is up even more by 130.6% 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 5.8% 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 7.7% 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 107.4% and S&P500 by 7.7% to establish new weekly closing highs.

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 with the exception of normal bullish expressions during the heart and soul of bullish seasonality in 2004, 2005, and the current heart and soul of bullish seasonality since August 2006.

As earlier stated, the Dow is up 10.4% since the Quick-term bias shifted to bullish bias on August 15, 2006. The S&P500 and NASDAQ are up 9.7% and 15.1%, respectively since that bias shift.

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 shift and bullishly evolving economic fundamentals.

Stock and Fund Update

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 economic data is in the process of being recompiled. There is little difference from last week’s report though. Ignore the news about current economic conditions. The market treats it as irrelevant unless underlying data is trending unfavorable to bullish support. The news media will not tell you that because of inabilities.

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% two-hundred and twenty-eight weeks ago since the MTI buy signal on April 13, 2001. Last week it closed up 258.4%. The current annualized growth rate since the April 13, 2001 buy signal is 44.4%. It moved to the north in eight of the past twelve weeks. It moved south the past four weeks with deep bearish expressions the past two weeks.

Fidelity Gold, Fund #28, is up 37.2% since the Mid-term Indicant signaled buy on August 26, 2005. That annualizes to 26.9%. This fund moved south in four of the past five weeks.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 143.7% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 32.3%. This fund has moved deeply to the south the past two weeks.

Vanguard Energy #18, VGENX, is up 159.9% (annualized at 42.0%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 107.2% (annualized at 34.3%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 108.5% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 31.5%.

The energy related funds move solidly to the south with deep bearish expressions.

The SQI (Consolidated Short-term and Quick-term Indicant) model signaled buy for the GLD-ETF#11 on August 3, 2005. It is up 38.1% since then. It is annualized at 26.4%. Its bullish position is being threatened on a Quick-term Indicant basis and last week’s bearishness is threatening the current hold position.

The SQI signaled buy for ETF#03 – Energy and Natural Resources on March 26, 2003. It is up 160.0% (annualized at 41.7%). This fund also moved aggressively to the south last week.

Mid-term Indicant Positions – Ten U.S. Indices

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

Nine of the ten major indices are bulls. They are up by an average of 22.2% since the Mid-term Indicant signaled bull an average of 77-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 from the Dow Transports bear signal last two weeks ago have weakened overall performance statistics.

The Mid-term Indicant Dow Jones Industrial Average performance is now at $37,556,544. That beats buy and hold performance of $1,896,203 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $182,013. That beats buy and hold’s $138,085 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $203,676 that beats buy and hold’s $84,405 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.

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

Last week again endured bearish convergence. Just one week is not a trend and not yet threatening to the underlying bullish theme.

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 17.8% 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 328.3% (annualized at 21.6%) since the Long-term Indicant signaled bull 792-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-two 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

Both Indicant Volume Indicator’s are again configuring with robust intentions. Although the market concluded this week on a bearish note and volume was relatively high, there is little support for follow-on bearishness. The expectation is continued support for current bullish bias on a Quick-term basis.

The Dow is up 7.8% 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 24.8% and 31.3%, respectively, on the current short-term bullish cycle. Click here to see the Short-term Indicant’s history.

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 57.2% (annualized at 30/8%) since their respective buy signals an average of 95.3-weeks ago. The SQI is not avoiding any of the 30-ETF’s.

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 58.8% (annualized 32.8%) since the STI signaled, buy, an average of 92.3-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 signal and no sell signals. Although there were no buy signals, the Quick-term Indicant is signaling hold for 30-ETF’s. They are up by an average of 12.0% (annualized at 21.4%) since the QTI signaled buy an average of 28.9-weeks ago. The Quick-term Indicant is not avoiding any ETF’s at this time, including the contrarians.

Conflicts Between the Short-term and Quick-term Indicants

There are no conflicts, where the Short-term Indicant and the Quick-term Indicant are in disagreement between hold and avoid status. The bias shift on August 15, 2006 remains in favor of the bull.

There are ninety 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

None of the 30-ETF’s are below their bearish yellow curves. The average position of all thirty ETF’s is above bearish yellow by 8.2%. This is maintaining the market’s non-bearish posture. This non-bearish configuration is strong with near zero threat of bearish behavior.

Twenty-two ETF’s are above their respective bullish red curves, which is an exceedingly healthy bullish attribute. Although down by five from last Friday, this remains in support of bullish bias.

All thirty ETF average positions are 0.9% above their bullish red curves. This attribute is solidly bullish on a Quick-term Indicant basis, although weakening this past week.

Short-term Indicant Bull/Bear Health Report for ETF’s

None of the ETF’s are contacting their breakout lines. As stated the past several weeks, the high concentration of breakout contact the past few weeks/months is solidly bullish.

The average distance from breakout contact is at a miniscule 3.7%, which is not a great distance to find an area friendly for bullish exuberance.

The average distance from the price and breakdown is 18.3%. 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

Ten of the thirty ETF Force Vectors are in bullish domains. This configuration solidly supports the bullish bias, although down considerably this week.

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 today. However, today’s bearish behavior was favorable to yesterday’s call option buy signal for QQQQ. Depressed pricing should have executed buys at discounted prices.

Twenty-seven ETF Vector Pressures are in bullish domains, which supports a bullish bias. Positive Vector Pressure guards against bearish dominance. Positive Vector Pressure weakened slightly this past week, but still strongly in favor of bullish bias.

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.

Quick-term and Short-term Indicant Summary

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.

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

Bearish convergence returned last week, although the NASDAQ oriented securities were more stable.

The Quick-term Indicant remains solidly in support of the bullish stock market. That bullishness may continue beyond the heart and soul of bullish seasonality, which concludes in the next few weeks.

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

01/07/07