Jan 2008 Indicant Weekly Stock Market Report

January 27, 2008 Indicant Weekly Stock Market Report

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

This Week’s Report

Political Election-Year Meddling

As stated many times in the past, the only economic contribution by politicians is to undo their prior damage. In the face of free-market recession-concerns, politician’s vote-getting gluttony are about to flood the market with more “milk and bread” U.S. dollars. The Federal Reserve Board, under political pressure, has slashed interest rates. Politicians are sending you a check in the mail. It will not help you pay off your house or buy a new car, but it may put some food on the table.

Once the vote-getting gluttony becomes irrelevant, most politicians become concerned with their legacies. They want an endearing legacy. Few get it because they are politicians. Vocational paradigms are more powerful than individualistic desires. Regardless of the substance of the person behind the politician, the legacy evidence is left to the interpretation of historians, who may or may not be capable of serving logic and honesty.

Last Monday, when the U.S. Markets were asleep with a holiday interruption, international markets succumbed to deep bearish influences. The Federal Reserve woke up last Tuesday morning. They were bent on stopping the perception of economic-bleeding. Interest rates were slashed and it was not a mere gesture. They were cut by three-quarters of a point. That is huge.

By mid-week, Democrats, who resumed control of Congress in 2006 for the first time in several years, became concerned about their tenure. The probability of re-election is low for incumbents during economic hardship, regardless of party. Therefore, Congress was eager to spend the money in hopes of garnishing re-election votes later this year.

The president’s motive to work with the “other party” had nothing to do with votes, as lame duck terms are not concerned with matters, such as getting votes. However, speculation regarding normal ego suggests lame ducks prefer their last year in office not be with recession or deep bear markets.

Although the executive office does absolutely nothing to build/grow economies, its policies can be destructive. The only positive contribution is to undo prior damage. This is not an individual element, but the accumulation of badness over a long period. Tax rebates can be interpreted as taking too much in the first place. The problem is, “where are the government budget cuts to offset these tax rebates?” Rest assured there are none and the consequential economic erosion will continue. There will be a price for political stupidity someday. At some point, the fakeness of it all will breech whatever accommodating capacity there is. The problem with accommodating capacity is that it is finite, but until breeched, the false assumption of infinity prevails.

The current administration, like most, did not contribute to the impending economic downturn on a relativistic scale. A relativistic scale suggests an accumulation of bad practices over a long period, as opposed to a single act by an individual or a group of people. The bull market of 2003 was extraordinary and countered historical standards of bearishness. The meandering bear of 2005’s presidential-post-election-year was bullish. Historical standards result in bearish conclusions. From a historical perspective, the current administration can relate legacy desires to economic robustness. However, that can be wiped out in the lame-duck year and that is the concern of the current administration.

Political leadership’s dilettante brethren contributed significantly to the threat of economic downturn. Specifically, those who lead financial institutions and especially those related to the mortgage industry, contributed to the threatening recession and directly to the bearish expressions in the stock market. In 2006, most of those folks in the financial/mortgage industry rose up from a good nights sleep thinking there was no problem.

Not knowing there is a problem when there is one is unforgivable in most management circles. The free-markets always punish, as they should. Punishment is one of the elements of economic optimization. Politicians want the votes of the punished and the votes of the victims of stupidity and everyone else not in those two groups. They get on their “give-away” bandwagons and tyranny by the majority takes hold, furthering the cause of economic hardship in the face of political interference.

If it were not for the hard-working people around the world, political interference would cast this planet into worldwide recession/depression/economic collapse/civil chaos.

The gradual decline in the western hemisphere’s organizational abilities to compete continues. From cars to televisions, the west continues to weaken in competitiveness. The overpaid white collar management continues to point at the high wages in the U.S. while foreign manufacturers continue to expand manufacturing in the U.S. and Canada. However, the rate of production reduction moves much faster than production acceleration. It only takes a few days/weeks to shut down a plant. It takes months/years to build a new one. This dynamic continues to impose economic degradation on the middle class, while politicians jawbone the middle class, since that is where the most votes are. This political mantra imposes economic hardship on developing economies in the short-run, but they will recover as a function of hard work; not attending rallies by politicians looking for votes. The middle class will attend those rallies because…..well, they are middle class.

The U.S. Dollar is already weak. Supply and demand always works. Rising productivity in the 1980’s/1990’s contributed significantly to the strong dollar. Politicians had nothing to do with that with the possible exception of those that facilitated entrepreneurialism, which is the prime source of productivity gain. It certainly does not come from the halls of Fortune 500, which is the weakest index.

The combination of flooding the U.S. with more dollars and the Federal Reserve interest rate reductions will have an adverse impact on the U.S. Dollar. Although that may help exports, there are not too many manufacturers left in the U.S. capable of exporting a cost/quality competitive product. That old line of thinking is becoming obsolete.

The problem with the weak dollar is inflationary since most good products are manufactured abroad, from automobiles to television sets. The weak dollar will make those products more expensive. It will help domestic manufacturers sell their products. Western organization’s unfavorable market share losses will not be disrupted, as consumers for the most part, simply want value for their money. In the end, people buy for the greatest value; not the source of production. More and more will be foreign-made products sold in the West, but inflationary forces will soften that activity and thus the perception of recession. The result is slow to no-growth and/or inflation. Keep in mind that cultures, who can manufacture the most and best have always ruled over those that could not.

Regardless of all this concern regarding fundamentals, the stock market can enjoy bullish cycles even in the face of political stupidity and middle class gullibility. It is okay to make money on an emotionally charged bull market, regardless of its short life. If fundamentals shift in favor of bullish behavior during an emotionally charged rally, you are already enjoying hold positions. If fundamentals do not manifest to sustain the bull market, the various Indicant models will spot that deficiency and you will be among the first to enjoy cash positions or growth in the contrarian securities.

Be aware of stock market fluttering. This configuration is common to market uncertainty. Some rallies are extremely short-lived with tremendous volatility. The market always eventually finds its trading range and its preferred trend in support of whatever fundamentals are driving it. The various Indicant models will spot that moment, like it did in October 2002 and again in March 2003.

Do not speculate. Keep your eye on the Indicant’s daily stock market report.

Weekly Buy/Sell Summary – Stocks and Funds

Click this sentence for a graphical summary of what follows. Simply scroll down the page to see graphical and detail content of this section.

The Mid-term Indicant generated no buy signals and four-sell signals.

Although there were no buy signals, the Mid-term Indicant is signaling hold for 149 of the 345-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 173.9%. That annualizes to 58.0%. The Mid-term Indicant has been signaling hold for these 149-stocks and funds for an average of 156.0-weeks.

In addition to the sell signals, the Mid-term Indicant is avoiding 192-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 13.5-weeks ago.

One year ago, on Jan 26, 2007, the Mid-term Indicant was holding 307-stocks and funds out of the 345 tracked for an average of 92.2-weeks. They were up by an average of 107.2% (annualized at 60.5%). There were only 31-stocks and funds avoided at this time last year. Those avoided stocks and funds were down an average of 12.8% since their respective sell signals an average of 21.3-weeks earlier.

The Mid-term Indicant was signaling hold for 280-stocks and funds of the 345-tracked two years ago on Jan 27, 2006. They were up by an average of 118.7% (annualized at 66.9%) since their respective buy signals an average of 92.3-weeks earlier. The Mid-term Indicant was avoiding 58-stocks and funds at that time. They were down an average of 8.7% since their respective sell signals an average of 19.3-weeks earlier.

There were 230-stocks and funds with hold signals on Jan 29, 2005 since their buy signals an average of 49.1-weeks earlier. They were up by an average of 90.0% (annualized at 64.5%). There were 90-avoided stocks and funds at that time. They were down by an average of 26.8% from their respective sell signals an average of 49.1-weeks earlier.

On Jan 17, 2004, the Mid-term Indicant was signaling hold for 288-stocks and funds out of 296-tracked. They were up by an average of 68.6% (annualized at 92.9%) since their buy signals an average of 41.4-weeks earlier. The Mid-term Indicant was avoiding only eight-stocks and funds. They were down by an average of 28.7% since their sell signals an average of 38.4-weeks earlier.

Five years ago, on Jan 25, 2003, there were 194-hold signals for stocks and funds out of the 296 tracked by the Mid-term Indicant at that time. They were up an average of 22.0% (annualized at 61.2%) since their respective buy signals an average of 18.7-weeks earlier. There were only seven avoided stocks and funds then. They were down an average of 24.0% since their respective sell signals an average of 16.6-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 on the website 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 web-based 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

The Dow is up 67.5% since its secular low on October 9, 2002. The NASDAQ is up 108.8% and the S&P500 is up 71.3%. The small cap index, S&P600, is up 110.9%. As stated the past several weeks, the secular bull that originated on October 9, 2002 no longer remains solid.

The Dow is down 13.8% since its last weekly closing peak. The NASDAQ is down 18.6% since its last cyclical peak. The S&P600 is down 19.1% since its last closing weekly peak value. The Small Caps rebounded slightly from last week, when it was an official bear market. As stated the past few weeks, configurations remain in support of those that are consistent with a bear market.

The NASDAQ is down 53.9% since its last weekly secular peak on March 9, 2000. The S&P500 is down 12.9% since its similar secular peak on March 23, 2000. The S&P500 recently set a new peak, but the old peak will be tracked until the NASDAQ sets a new one, which may not occur until after 2025. The Dow is up 4.1% since January 13, 2000 when it peaked from the 1990’s roaring bull. It has expressed no timidity in roaming above the new peak area, until recently. The NASDAQ needs to climb 117.0% to achieve a new record high. Do not be surprised if this occurs after the year, 2025.

The NASDAQ was up 11.5% through this week in 2001. Keep in mind the NASDAQ finished 2001 down by 21.1%. So, do not pay too much attention to those historical myths about how the market fares for the year based on January performance.

The NASDAQ was down by 0.7% through this weekend in 2002. Some of you recall the dynamic bear market in 2002. The NASDAQ YTD 2003 performance was up by 0.5%. It was again up on this weekend in 2004 by 6.0%, but down 7.1% in 2005. Both 2004 and 2005 were meandering bear markets. In 2006, it was again up by 2.5% and by 0.8% at this time last year. So far this year, the DOW30 is down 8.0% and the NASDAQ down 12.3%.

As you can see, this is the most bearish start of any year this century.

The bullish bias shift on August 15, 2006 expired on January 4, 2008. The heart and soul of bullish seasonality also expired on January 4, 2008. The Dow increased 14.0% since the bullish bias shift on August 15, 2006. The S&P500 was up 9.8% and the NASDAQ up by 18.4%.

The presidential pre-election year of 2007 was below average (+10.5%) with the Dow gaining 6.4%. This was the smallest gain since Reagan’s 2.3% gain in 1987, when the market endured sharp sell off in October of that year.

Where is the market headed in 2008, the presidential election year, which is the second most bullish year on the four-year presidential election cycle? If historical standards prevail, which is bullish, the market is setting up nicely for a tremendous profit this year. Keep your eye on the daily stock market report.

Stop Loss Management

The Mid-term Indicant recommends a stop loss of 10% due increasingly bearish behavior.

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. The below table is public information and not updated on a frequent basis.

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.

Commodity prices softened for the second consecutive week. Apparently, commodities’ traders sense a demand reduction with the perception of recession. However, gold did not move south. Propped up gold prices in the face of recession suggests some demand is based on economic turmoil, as opposed to a simple economic recession.

As stated the past eleven weeks, falling interest rates typically accompany stock market bullish behavior. The primary exception to stock market bullishness with declining interest rates is inflation or deflation. Inflation is the primary threat. If the CPI continues to rise, falling interest rates will not stimulate bullish behavior. This paragraph will remain until commodity prices demonstrate a cyclical decline on a Mid-term Indicant basis.

Interest rates fell sharply for the past two weeks with an obvious bias to thwart the so-called impending recession. Last week’s drop was to induced by the Federal Reserve Board’s emergency rate reduction. The Federal Reserve acted, not based on hard economic data, but crashing international stock markets.

The U.S. Dollar was mixed last week. Rest assured it will resume its cycle of weakness as the Fed has made dollars cheap with rate reductions. Politicians are in the process of legislating an increased supply of dollars with tax rebates. All of this “weak” behavior will weaken the dollar and foster bigger problems later on.

The typical short-term view is in place during this presidential election year. Rest assured, the price will eventually be paid. Keep your eye on the daily stock market report so you can be one of the first to know when that price is being paid.

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 is up 341.6% since the April 13, 2001 buy signal. Its annualized growth since that buy signal is 49.6%. It moved to the north in 44 of the past 72-weeks. It has been bullish in 15 of the last 23-weeks. It responded bullishly last week to extreme bearishness two weeks ago.

Fidelity Gold, Fund #28, is up 17.0% since its buy signal on September 7, 2007. It is annualized at 43.6% since that buy signal. This fund was also bullish last week.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 275.4% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 49.9%. It was solidly bullish last week after two consecutive weeks of solid bearishness.

Vanguard Energy #18, VGENX, is up 207.6% (annualized at 42.6%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 186.1% (annualized at 44.3%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 164.5% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 36.5%.

These energy related funds were bullish last week in addition to precious metals. However, other commodities were bearish.

Investors in these funds are supporting a 1970’s type of market with high inflation and high oil prices. As long as capitalism remains in vogue around the globe and alternative sources of energy continue to lag exponentially increasing demand, a long-term perspective on holding strategy is appropriate.

The SQI (Consolidated Short-term and Quick-term Indicant) model signaled buy for the GLD-ETF#11 on August 3, 2005. It is up 107.4% since then. It is annualized at 42.7%. This fund has been bullish in seventeen of the past twenty-two weeks. It was mildly bullish last week.

The SQI signaled buy for ETF#03 – Energy and Natural Resources on March 26, 2003. It is up 219.5% (annualized at 44.8%). It has been bearish the past three weeks.

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

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

The lone bull, Dow-Utilities, is up 16.4% since the Mid-term Indicant signaled bull on June 2, 2006. It is annualizing at 9.9%.

The Mid-term Indicant is signaling bear for nine of the ten major indices. They are down by an average of 5.1% since their bear signals an average of 4.0-weeks ago. The S&P600 is down 9.9% since its bear signal 11-weeks ago. It rebounded last week, but nowhere near receiving a bull signal.

The Mid-term Indicant Dow Jones Industrial Average performance is at $37,116,204

That beats buy and hold performance of $1,857,169 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $176,088. That beats buy and hold’s $130,337 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $209,566. That beats buy and hold’s $80,659 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 1,898.5%, 35.1%, and 159.8%, 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 Mid-term Indicant 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.

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 signaled buy for ProFunds Ultra Short last weekend. It was down 32.3% since the Mid-term Indicant signaled sell on September 15, 2006 until the buy signal on January 18, 2008. Historical norms of market cyclicality suggested the next buying opportunity for this fund may not occur until 2009. However, the recent bear signal for several major indices facilitated an earlier buy signal. Do not be surprised if this buy signal is reversed ahead of seasonal normalcy.

At this time, this fund is up 6.0% (annualized at 310.6%) since the Mid-term Indicant signaled buy on January 18, 2008.

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 321.7% (annualized at 19.8%) since the Long-term Indicant signaled bull 847-weeks ago. Economic data is the primary influence on the Long-term Indicant. Recessions, deflation, and inflation have not been strong enough to signal bear since that bull signal. 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: Two of thirty; None are non-contrarian. Zero bullish support.

Quick-term Yellow Bears/Threats: Twenty-four of thirty. Bearish support.

Short-term Non-Bearishness: Breakout/breakdown differential -6.9%. A negative value is bearish bias.

Force Vectors: Zero in bullish domains. No bullish support.

Vector Pressure: Two in bullish domains. Twenty-eight in bearish domains. Bearish support.

Long-term Hold Positions: Continue holding, except where sell signals are noted.

Immediate Tactics: Sell aggressively on signals.

Current Quick-term Bias: Configurations continue favoring the bear with near-term bullish spurt, like last Wednesday and Thursday.

Overall (Long-term) Market Status: 8/15/06 bullish bias expired on 01/04/08.

Profit Potential from Naked Options: Volatility is high, enhancing option opportunities.

Volume: Mixed configurations. Increasing obviation of bearish bias.

Quick-term/Short-term Indicant Stock Market Report Details

The Short-term Indicant signaled bear on Friday, January 4, 2008 for both major indices. The Dow is down 4.6% and the NASDAQ is down 7.1%, respectively, since that bear signal.

January 4, 2008-Unfortunately, natural market forces are backed by economic fundamentals. That is bearish at this time. The bullish bias since August 15, 2006 expired today (01/04/08).

January 8, 2008- Both major market indices are interacting with the recently developed lower trading range limit again. Each interaction this year was followed by bullish resurgence. Current configurations suggests this will not happen this time. The bear is gaining momentum and could fall to the older trading range limit. Please read on.

January 18, 2008-The NYSE is nearing the lower trading range limit, while the NASDAQ remains a healthy distance away. Either index falling below this limit will foster bearish sustainability and depth. Do not be surprised at bullish resistance to this threat. Although the bearish configuration may indeed occur, the bull should offer some resistance on a near-term basis. The NYSE is down 17.3% since its peak on October 31, 2007. That is within a couple of percentage points of a technical bear market. That suggests this bearish cycle “could” be nearing its conclusion. A solid bullish response with some short-term to quick-term Force Vector support should minimize speculation regarding bearish magnitude and depth.

January 22, 2008-The NYSE fell below the major lower trading range limit today. The NASDAQ continues hovering above its. The NYSE’s configuration is ominous. Depending on how the NASDAQ interacts with its lower trading range limit, for the time being anticipate deep and sustainable bearish behavior.

January 23, 2008-Today’s bullish response should be viewed as technical; not fundamental. The bullish response was not surprising with respect to a near-term expectation. Declining interest rates, although fundamental, do not stand alone. As long as inflationary threats remain passive, the bull should resume control. If the market returns to a perception of only two choices; recession or inflation, the bear will resume control. The bear delights with either choice.

Please read on. Click here to see the Short-term Indicant’s history.

Both Indicant Volume Indicator’s robustness continues accelerating. As stated the past several days, this is obviating increasingly bearish bias. As stated since January 18, 2008 beware of a technical bullish response, including governmental economic stimulants on a near-term basis. Bear markets do not dominate without bullish resistance, which is due. (This bullish resistance occurred on January 23 and 24 so far. There is technical room for a little more bullishness before solidification into a new trading range). Consider bullish expressions as mere spurts in the face of underlying bearish. Please read on.

January 23, 2008-Bullish resistance occurred with today’s Dow gaining 298-points. As you can see, this was expected. This should be viewed as technical, regardless of political, bureaucratic, and journalistic jawboning. Ignore the hype. The issue is clinical. Please read on.

January 24, 2008-Bullish resistance continued today with the Dow’s 108-point gain. Configurations suggest these gains are emotion/political based, which is the least substantive reason for gain. Do not be surprised with resumed bearishness in the next few days. Although not a forecast, it would not be surprising to see the Fed “disappoint” next week as a function of recent market bullishness.

January 25, 2008-As you can see, the prior two day’s bullishness was spurt behavior in the face of a bear market with today’s 171-point loss. However, expect more bullish spurts in the next few days, as the market’s bearish magnitude has been appropriate for the harshest of recessions. And it is debatable if a recession is in the offing. The problem is the market’s perception is always right even when its perception proves to be false. Right now the perception is recession and the market is bearish.

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 12-ETF’s. They are up by an average of 46.3% (annualized at 15.2%) since their respective buy signals an average of 156.9-weeks ago. Although there were no sell signals, the SQI is avoiding 18-ETF’s at this time. They are down by an average of 5.1% since their sell signals an average of 5.0-weeks ago.

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 eight 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 13-ETF’s. They are up an average of 124.3% (annualized 38.8%) since the STI signaled, buy, an average of 164.8-weeks ago. Although there were no sell signals, there are 17-ETF’s with avoid signals. They are down by an average of 5.4% since their sell signals an average of 5.3-weeks ago.

The Short-term Indicant is 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 no sell signals. Although there were no buy signals, the Quick-term Indicant is signaling hold for only five-ETF’s. They are up by an average of 52.4% (annualized at 35.8%) since the QTI signaled buy an average of 75.3-weeks ago. Although there were no sell signals, the Quick-term Indicant is avoiding 25-ETF’s. They are down by an average of 5.8% since their sell signals an average of 4.0-weeks ago.

The Quick-term Indicant is yet more active with buy and sell signals.

Conflicts Between the Short-term and Quick-term Indicants

There are eight conflicts, whereby the Short-term Indicant and the Quick-term Indicant are in disagreement between hold and avoid status. This suggest market disharmony. The bullish bias shift on August 15, 2006 expired on January 4, 2008. Please read on.

Quick-term Indicant Bull/Bear Health Report

Twenty-four of the 30-ETF’s are below their respective bearish yellow curves. The average relative position of all thirty ETF’s is below bearish yellow by 3.7%. This attribute is not providing any non-bearish support.

Only two of the ETF’s are above their respective bullish red curves. All thirty ETF average positions are 11.0% below their bullish red curves. None are non-contrarian. This attribute is offering no bullish support. Keep in mind QID is not included in this statistic. It is discussed near the end of this report.

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 of the thirty ETF’s is contacting its breakout line. There is no bullish support from this attribute at this time. For the second consecutive day, it is contrarian ETF#11-GLD-Precious Metals

This was the fourteenth consecutive trading day of non-contrarian non-contact, which is a bearish attribute and increasing bearish intensity.

The average distance from breakout contact is 16.9%. Double digit variances from breakout contact for fifteen consecutive trading-days is not supportive of the bull.

None of the ETF’s are contacting their breakdown lines. This is due to bullish bounces last Wednesday and last Thursday. Non-contrarian contact in eleven of the last fifteen trading days is bearish.

The average distance from the price and breakdown is 10.1%. This configuration is providing non-bearish support, which has been the case since March 2003, but barely hanging on to that support.

The breakout/breakdown differential is a negative 6.9%. This supports bearish ambition in spite of recent bullish bounces. A negative value suggests bearish bias.

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.

None of the Force Vectors are in bullish domains. The configuration does not support bullish bias, which expired on January 4, 2008.

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 buy signals after Friday’s close. The total put option buy signals are twenty-eight in the last nineteen trading days, but there have been none since last Tuesday.

Only two of the thirty ETF Vector Pressures are in bullish domains. This is no longer providing near-unanimous or majority bullish support. These are contrarian funds and thus void of any bullish support.

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 bullish bias shift that began on August 15, 2006 expired on January 4, 2008.

Strategy from January 4, 2008. It is okay to write covered call options at this time. Be aware of periodic bullish bounces.

Strategy modification January 23, 2008. Although written cover calls have performed exceedingly well since January 4, 2008, you may want to wait for the ETF’s to start interacting with their bearish yellow curve. Right now, the bounce should take them back to the north (about 3.7%-gain) over the next few days. If this market retains its bearish ambition, the ETF’s will bounce back to the south off of bearish yellow. If the bull’s ambition allows its authority, then the January 4, 2008 strategy should be voided, as the bull will certainly garnish strength with such a victory. Right now, the market is configured with a bearish prognosis in the event there is interaction with the bearish yellow curve.

ProFunds Ultra Short mutual fund moves inversely to the QQQQ by exponential amounts. The Consolidated Indicant model is now avoiding QQQQ. You will notice the Mid-term Indicant signaled buy for this fund last weekend. This buy may have been generated a week or two too early as the bull finally resisted the bearish onslaught. However, continue holding unless you see a buy signal for QQQQ or sell signal for ProFunds Ultra Short.

The Quick-term and Short-term Indicant tracks ETF#31, QID, which is the ETF cousin to ProFunds Ultra Short. This ETF is relatively new and has not yet developed enough data to formally track its outlook. It is excluded from overall ETF statistics because it is purely contrarian. It is designed to move bullishly during bear markets and bearishly during bull markets. This exclusion is required for convergent/divergent monitoring.

The Quick-term Indicant signaled buy on January 8, 2008 for this ETF. It is up 13.4% since that buy signal (annualized at 284.1%).

QID is up 0.5% since the Short-term and Consolidated Indicant signaled buy on January 22, 2008. This is annualized at 63.9%.

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

Divergence versus Convergence

Bearish divergence occurred this past week. This follows bearish divergence and bearish convergence the past five weeks. Four consecutive weeks of bearish convergence obviates deep and sustainable bear markets. The market has endured four weeks of bearish convergence in the past six weeks. Last weeks bearish divergence is the second in this cycle. At least there has not yet been four consecutive weeks of bearish convergence. It is close. There is a glimmer of hope for those desiring bullish behavior.

As stated the past two weeks, there is an increasing probability of a solid bear market with the current configurations.

As expected, the bull announced it is not an extinct species last week. It demonstrated its weakness, but more importantly, it reminded us of its presence.

Indicant Conclusion

The major market indices continue configuring with bearish sustainability. The Federal Reserve lowered rates as expected and the market responded with bullish emotionalism. All forms of emotion are not sustainable. Only solid fundamentals sustain market bullishness.

As stated the past few weeks, the market’s perception is confrontation with only two choices; inflation or recession. The political establishment biased forces in favor of inflation. The only salvation to the short-term gluttony of politicians is massive increases in productivity to offset thee anti-economic growth posture of politicians.

Keep up with the daily stock market report as the Quick-term attributes can shift quickly.

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

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

01/27/08

January 20, 2008 Indicant Weekly Stock Market Report

This Week’s Report

The Cyclical Bull Approaches Lower Trading Range Limit

As you can see from the below link, the NYSE index is approaching its lower trading range limit line.

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

This line is significant since it is the lower base line of the bull cycle that originated in October 2002. It is the orange line on the chart.

Scrolling down on the same webpage, you will notice the NASDAQ has a bit more to travel before contacting its lower trading range limit line. The NASDAQ is more volatile than the NYSE. Its cyclical behavior has produced greater magnitude than that of the NYSE and thus the reason for the greater distance.

If the indices fall below these lower trading range limit lines, there will be little significance to this. A new bull could originate the next day. However, there will be an increased probability of bearish sustainability when indices fall below certain configurations of trading limit lines. This is one of those configurations, but keep in mind the salient point here is probability.

Presidential election year bear’s are rare. Since 1833, only fourteen post-election-years have been bearish. That contrast to the 29-bullish years. Presidential election year bears have been traditionally mild. Only six of them have been double-digit bears. That is when the market drops by ten or more percent. Only two of presidential election years have endured more than a 20% decline within the year.

This historical mildness does not mean this particular presidential election year will be a mild bear. On the contrary, there is no guarantee 2008 will even finish on a bearish note. However, current economic fundamentals favor a bearish prognosis.

The deepest presidential election year bear since 1833 occurred in Woodrow Wilson’s second term in 1920. The Dow fell by 32.9% in 1920, which is the worse performing presidential election year on record. Click on the following link to view the chart.

http://www.indicant.net/Non-Members/Tours/MTIRYS-Mkts-US/MTIRYS-01-DJI-1916-1920.htm

As you can see, it began its trip to the deep south near the conclusion of the pre-election year in 1919, where a strong bullish cycle had just completed. That bull cycle in 1918-1919 had followed a significant and crisp bear market in the mid-term election year of 1917. That particular bearish cycle in 1917 was well ahead of the short recession of 1918. Argumentatively, the 1917-bear-cycle contributed to the recession of 1918.

Some of you will want to compare Wilson’s bear market to the current situation. So, click the following link to view its chart.

http://www.indicant.net/Members/Updates/MTIRYS-Mkts-US/MTI-RYS-01-DJIA-Curr.htm

As you can see, predecessor years to George W. Bush’s final year of his second term were more stable than Wilson’s. Many of you recall the meandering bear markets of 2004 and 2005. Although that meandering bear was painfully boring, it provided market stability. The galloping bull of 2006 and 2007 has nearly been wiped out. However, you do see some similarity in the stock market’s early bearish behavior in 2008 and 1920. Rest assured there is no connection; just coincidental similarities.

Keep in mind, presidents have zero influence on bullish stock market behavior. Their only influence is bearish. The only positive contribution any politician can offer the stock market is undoing their prior damage or that of their predecessors. The only reason president’s names are used is for a relative reference point and occasionally to relate to tremendous economic damage they impart on the free-markets from time to time.

Those desiring bullish behavior wish for no similarity between Wilson’s and Bush’s last year in office.

Do not speculate. Keep your eye on the Indicant’s daily stock market report.

Weekly Buy/Sell Summary – Stocks and Funds

Click this sentence for a graphical summary of what follows. Simply scroll down the page to see graphical and detail content of this section.

The Mid-term Indicant generated one buy signal and 19-sell signals.

In addition to the buy signal, the Mid-term Indicant is signaling hold for 152 of the 345-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 167.2%. That annualizes to 56.7%. The Mid-term Indicant has been signaling hold for these 152-stocks and funds for an average of 153.3-weeks.