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
Volume 01, Issue 03 ISSN 1526 6516 © The
Indicant 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.
In addition
to the sell signals, the Mid-term
Indicant is avoiding 173-stocks and funds of the 345- tracked by the
Indicant. The avoided stocks and funds are down an average of 17.2% since
the Mid-term Indicant signaled sell an average of 14.8-weeks ago.
One year ago,
on Jan 19, 2007, the Mid-term Indicant was holding 313-stocks and funds
out of the 345 tracked for an average of 90.9-weeks. They were up by an
average of 105.8% (annualized at 60.6%). There were only 32-stocks and
funds avoided at this time last year. Those avoided stocks and funds were
down an average of 13.5% since their respective sell signals an average of
21.2-weeks earlier.
The Mid-term
Indicant was signaling hold for 279-stocks and funds of the 344-tracked
two years ago on Jan 20, 2006. They were up by an average of 116.9%
(annualized at 65.3%) since their respective buy signals an average of
93.1-weeks earlier. The Mid-term Indicant was avoiding 52-stocks and funds
at that time. They were down an average of 11.4% since their respective
sell signals an average of 24.7-weeks earlier.
There were
230-stocks and funds with hold signals on Jan 22, 2005 since their buy
signals an average of 48.7-weeks earlier. They were up by an average of
88.6% (annualized at 64.4%). There were 85-avoided stocks and funds at
that time. They were down by an average of 27.6% from their respective
sell signals an average of 40.4-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 67.5% (annualized at
93.8%) since their buy signals an average of 37.4-weeks earlier. The
Mid-term Indicant was avoiding only eight-stocks and funds. They were down
by an average of 28.9% since their sell signals an average of 37.4-weeks
earlier.
Five years
ago, on Jan 18, 2003, there were 289-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 19.6% (annualized at 63.4%) since their respective buy signals
an average of 16.1-weeks earlier. There were only six avoided stocks and
funds then. They were down an average of 33.8% since their respective sell
signals an average of 25.8-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
66.1% since its secular low on October 9, 2002. The NASDAQ is up 110.0%
and the S&P500 is up 70.6%. The small cap index, S&P600, is up 105.4%. As
stated the past several weeks, the secular bull that originated on October
9, 2002 no longer remains solid.
The Dow is
down 14.6% since its last weekly closing peak. The NASDAQ is down 18.2%
since its last cyclical peak. The S&P600 is down 21.2% since its last
closing weekly peak value. The Small Caps is now an official bear market.
Configurations remain in support of those that are consistent with a bear
market.
The NASDAQ is
down 53.7% since its last weekly secular peak on March 9, 2000. The S&P500
is down 13.2% 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 3.2%
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 115.8% to achieve a new record high. Do not be
surprised if this occurs after the year, 2025.
The NASDAQ was
up 12.1% 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 1.0% through this weekend in 2002. Some of you recall the dynamic
bear market in 2002. The NASDAQ YTD 2003 performance was up by 3.0%. It
was again up on this weekend in 2004 by 6.8%, but down 3.2% in 2005. Both
2004 and 2005 were meandering bear markets. In 2006, it was again up by
3.4% and by 1.2% in 2007. So far this year, the DOW30 is down 8.8% and the
NASDAQ down 11.8%.
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 last week. Gold, oil, and some of the major indices fell.
This is most likely due to a prognosis of recession, where demand falls
and prices follow.
As stated the
past ten 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.
Interest rates
fell sharply last week with an obvious bias to thwart the so-called
impending recession.
Surprisingly,
the U.S. Dollar configured with strength the past two weeks. That is most
likely an aberration. If the Fed cuts interest rates by a half a point in
a few weeks, rest assured the U.S. Dollar will resume its cycle of
weakness.
These dynamics
took their toll on the bull last week, feeding the bear with fuel to
sustain its ambition.
Fear
Metrics: Economics and Terrorism
Vanguard Gold and Precious Metals (VGPMX) - #19 is up 331.2% since the
April 13, 2001 buy signal. Its annualized growth since that buy signal is
48.8%. It moved to the north in 43 of the past 71-weeks. It has been
bullish in fourteen of the last twenty-two weeks. It was very bearish last
week.
Fidelity Gold, Fund #28, is up 12.8% since its buy signal on September
7, 2007. It is annualized at 34.8% since that buy signal. This fund was
solidly bearish last week, following three consecutive bullish weeks.
State Street Research Global #9, SSGRX, which is isolated in the
energy sector, is up 259.0% since the Mid-term Indicant signaled buy on
August 16, 2002. It is annualizing at 47.1%. It has been solidly bearish
the past two weeks.
Vanguard Energy #18, VGENX, is up 208.1% (annualized at 42.8%) since
the Mid-term Indicant signaled buy on April 5, 2003.
Fidelity Energy Services #40, FSESX, is up 160.8% (annualized at
35.8%) since the Mid-term Indicant signaled buy on December 6, 2003.
Fidelity Energy #39, FSENX, is up 160.8% since the Mid-term Indicant
signaled buy on August 16, 2003. It is annualized at 35.8%.
These energy
related funds were bearish last week while precious metals and other
commodities were bullish.
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 100.8% since then. It is
annualized at 40.4%. This fund has been bullish in sixteen of the past
twenty-one weeks. It was mildly bearish last week.
The SQI
signaled buy for
ETF#03 – Energy and Natural Resources on March 26, 2003. It is up
220.5% (annualized at 45.1%). It has been bearish the past two weeks.
Mid-term
Indicant Positions – Ten U.S. Indices
There were no new bull signals and no
new bear signals.
This lone bull
is up 21.2% since the Mid-term Indicant signaled bull on June 2, 2006. It
is annualizing at 12.9%.
The Mid-term
Indicant is signaling bear for nine of the ten major indices. They are
down by an average of 6.3% since their bear signals an average of
2.9-weeks ago. The S&P600 is down 12.3% since its bear signal ten weeks
ago.
The Mid-term Indicant Dow Jones Industrial Average performance is at
$37,116,204
That beats buy
and hold performance of $1,840,758 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 $129,806 on a
December 31, 1971 $10,000 investment. The
MTI-NASDAQ is at $209,566. That beats buy and hold’s $81,138 on an
October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy
and hold by 1,916.4%, 35.7%, and 158.3%, 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 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 this 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.
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
318.0% (annualized at 19.5%) since the Long-term Indicant signaled bull
846-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-two of thirty. Bearish support.
Short-term
Non-Bearishness:
Breakout/breakdown differential -8.5%. There is no non-bearish support and
increasing bearish support.
Force
Vectors: Zero in bullish
domains. No bullish support.
Vector
Pressure: Three in bullish
domains. Minimal bullish 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 bear.
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 5.5% and the NASDAQ is down 6.6%,
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.
Please read
on. Click here to see the
Short-term Indicant’s history.
Both
Indicant Volume Indicator’s robustness is again accelerating. This is
obviating increasingly bearish bias. Please beware, though, of a technical
bullish response, including governmental economic stimulants on a
near-term basis, like next week. Bear markets do not dominate without
bullish resistance, which is due.
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 13-ETF’s. They are up by an average of 46.4%
(annualized at 15.6%) since their respective buy signals an average of
152.7-weeks ago. Although there were no sell signals, the SQI is avoiding
17-ETF’s at this time. They are down by an average of 7.2% since their
sell signals an average of 4.3-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 14-ETF’s. They are up an average
of 117.3% (annualized 37.7%) since the STI signaled, buy, an average of
160.3-weeks ago. Although there were no sell signals, there are 16-ETF’s
with avoid signals. They are down by an average of 7.5% since their sell
signals an average of 4.6-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 eight-ETF’s. They are up by an
average of 40.5% (annualized at 28.3%) since the QTI signaled buy an
average of 73.6-weeks ago. Although there were no sell signals, the
Quick-term Indicant is avoiding 22-ETF’s. They are down by an average of
7.6% since their sell signals an average of 3.5-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 six
conflicts, whereby the Short-term Indicant and the Quick-term Indicant are
in disagreement between hold and avoid status. This is no longer
harmonious. The bullish bias shift on August 15, 2006 expired on January
4, 2008. Please read on.
Quick-term Indicant Bull/Bear Health Report
Twenty-two 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 4.6%.
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 12.0% 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, but it is also in bullish
domains.
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.
None of the
thirty ETF’s are contacting their breakout lines. There is no bullish
support from this attribute at this time. Last Wednesday was configured
with complete bearish convergence. Last Thursday and Friday were
configured with near-complete bearish convergence. This has been providing
no bullish support.
This was the
twenty-seventh consecutive trading day of non-contrarian non-contact. As
stated earlier this past week, this is leaning toward bearish bias.
The average
distance from breakout contact is 17.5%. Double digit variances from
breakout contact for eleven consecutive days is not supportive of the
bull.
Twelve of the
ETF’s are contacting their breakdown lines. This is supportive of bearish
ambition. Non-contrarian contact in eight of the last eleven trading days
is bearish.
The average
distance from the price and breakdown is 9.0%. 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 8.5%. This supports bearish
ambition.
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 moving bullishly. The configuration no longer supports
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 was one
put option buy signal after Friday’s close. The total put option buy
signals are twenty-seven in the last fifteen trading days.
Three of the
ETF Vector Pressures are in bullish
domains. This is no longer providing near-unanimous or majority bullish
support. This offers minimal 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.
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.
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
7.1% since that buy signal.
QID is down
33.4% since the Short-term Indicant and Consolidated STI/QTI signaled sell
79.1-weeks ago.
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
convergence occurred this past week. This follows bearish divergence and
bearish convergence in the past four 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 five weeks.
There was one week of bearish divergence.
As stated last
week, there is an increasing probability of a solid bear market with the
current configurations.
Keep in mind,
the bull should be getting angry and should announce it has not become
extinct in the near-term. That does not mean it will resume dominance. But
it is nearing that time when it at the very least lets one know that it
has not become extinct-just losing a few battles.
Indicant
Conclusion
The major
market indices continue configuring with bearish sustainability. The
impending interest rate reductions by the Federal Reserve could reverse
this. A bullish response to that would most likely be short-lived.
Inflationary pressures are depressing bullish trend desires.
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
01/20/08
January 13,
2008 Indicant Weekly Stock Market Report
Volume 01, Issue 02 ISSN 1526 6516 © The
Indicant Stock Market Report
This Week’s
Report
Only Two
Options: Inflation or Recession
The impending
Federal Reserve Board’s interest rate reduction should spark bullish
behavior within a few days. Current configurations suggest such a bullish
response would be short-lived. This is due to inflationary threats.
Reduced
consumer spending should facilitate demand reductions and dampen
inflationary fears. This consumption reduction depends on the depth of the
impending recession that is driving bearish ambition. The stock market
smells a recession in the offing and thus one reason for its bearish
behavior.
Right now, it
looks as if there are only two options confronting the economy; recession
or inflation. Either scenario will stimulate stock market bearishness. It
appears economic robustness is not an option at this time.
If there is no
recession, oil prices will continue to move north. That supports
inflation, which will impose a depressant to the stock market. If there is
a recession, demand for oil should drop, relieving inflationary pressures.
Unfortunately, the stock market would continue following bearish
influences similar to what transpired in the 1970’s.
Fundamentally,
a bullish stock market is not finding fundamental support to justify its
existence. On the contrary, fundamentals are supporting bearish
sustainability.
Technically,
several Indicant configurations and detailed attributes suggest an
increasing probability of bearish sustainability. One such attribute is
bearish convergence and bearish divergence. Bearish convergence/divergence
has been increasing its density. Bearish divergence occurred last week,
which offers support for the prognosis of recession. That is the fourth
consecutive week of the combination of bearish divergence and bearish
convergence. Four consecutive weeks of bearish convergence obviates bear
markets. That has not occurred but it has been close. A bullish bounce is
needed to offset these configurations to prevent the stock market from
self-perpetuating doom and gloom.
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 detail content of this section.
The Mid-term
Indicant generated no buy signals and 15-sell signals.
Although
there were no buy signals, the Mid-term Indicant is signaling hold for 171 of the 345-stocks and
funds tracked by the Indicant. The stocks and funds with hold signals are
up an average of 170.7%. That annualizes to 60.7%. The Mid-term Indicant
has been signaling hold for these 171-stocks and funds for an average of
146.1-weeks.
In addition
to the sell signals, the Mid-term
Indicant is avoiding 159-stocks and funds of the 345- tracked by the
Indicant. The avoided stocks and funds are down an average of 15.6% since
the Mid-term Indicant signaled sell an average of 15.3-weeks ago.
One year ago,
on Jan 12, 2007, the Mid-term Indicant was holding 313-stocks and funds
out of the 345 tracked for an average of 89.9-weeks. They were up by an
average of 105.7% (annualized at 61.2%). There were only 32-stocks and
funds avoided at this time last year. Those avoided stocks and funds were
down an average of 13.3% since their respective sell signals an average of
20.6-weeks earlier.
The Mid-term
Indicant was signaling hold for 290-stocks and funds of the 320-tracked
two years ago on Jan 13, 2006. They were up by an average of 113.0%
(annualized at 67.1%) since their respective buy signals an average of
87.6-weeks earlier. The Mid-term Indicant was avoiding 53-stocks and funds
at that time. They were down an average of 10.6% since their respective
sell signals an average of 23.7-weeks earlier.
There were
236-stocks and funds with hold signals on Jan 15, 2005 since their buy
signals an average of 48.1-weeks earlier. They were up by an average of
89.2% (annualized at 66.6%). There were 84-avoided stocks and funds at
that time. They were down by an average of 28.2% from their respective
sell signals an average of 48.1-weeks earlier.
On Jan 10,
2004, the Mid-term Indicant was signaling hold for 288-stocks and funds
out of 296-tracked. They were up by an average of 63.5% (annualized at
90.8%) since their buy signals an average of 36.4-weeks earlier. The
Mid-term Indicant was avoiding only six-stocks and funds out of
296-tracked at that time. They were down by an average of 29.0% since
their sell signals an average of 39.4-weeks earlier.
Five years
ago, on Jan 11, 2003, there were 284-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 22.2% (annualized at 76.6%) since their respective buy signals
an average of 15.0-weeks earlier. There were only six avoided stocks and
funds then. They were down an average of 31.6% since their respective sell
signals an average of 24.9-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
73.0% since its secular low on October 9, 2002. The NASDAQ is up 119.0%
and the S&P500 is up 80.4%. The small cap index, S&P600, is up 101.9%. As
stated the past several weeks, the secular bull that originated on October
9, 2002 no longer remains solid. The small caps lost nearly twenty
percentage points of gain this past week.
The Dow is
down 11.0% since its last weekly closing peak. The NASDAQ is down 14.7%
since its last cyclical peak. The S&P600 is down 18.1% since its last
closing weekly peak value. It only needs to fall another 1.9% to be an
official bear market for small caps. Configurations are currently
supporting those that are consistent with a bear market.
The NASDAQ is
down 51.7% since its last weekly secular peak on March 9, 2000. The S&P500
is down 8.3% 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 2020. The Dow is up 7.5%
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 106.9% to achieve a new record high. Do not be
surprised if this occurs after the year, 2025.
The NASDAQ was
up 6.9% through this week in 2001. It was up again by 3.7% through this
weekend in 2002. Some of you recall the dynamic bear market in 2002. This early
bullishness in 2002 was certainly misleading. The NASDAQ YTD 2003
performance was up by 8.4%. It was again up on this weekend in 2004 by
4.2%, but down 4.4% in 2005. Both 2004 and 2005 were meandering bear
markets. In 2006 it again up by 5.7% and by 2.9% in 2007.
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%. As previously stated that
bias shift has expired.
This year’s
heart and soul of bullish seasonality disappointed. The Dow was down 4.5%
since the heart and soul of bullish seasonality began on September 17,
2007. The S&P500 was down 4.4% and the NASDAQ down by 3.0%. That is the
first time this century the heart and soul of bullish seasonality
abandoned historical standards.
Where is the
market headed in 2008, the presidential election 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.
Commodities
were mixed last week. Oil prices fell. Golf moved north. Most of the major
commodity indices continued hovering near their peaks or set new peaks.
As stated the
past nine 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.
Interest rates
were mixed again last week with some moving north and come moving south.
However, the current southerly trend is not threatened. As stated last
week, rising commodity prices and falling interest rates will invigorate
inflation.
Surprisingly,
the U.S. Dollar configured with strength last week. That is most likely an
aberration. If the Fed cuts interest rates by a half a point in a few
weeks, rest assured the U.S. Dollar will resume its cycle of weakness.
Overall, the
stock market is holding up fairly with economic elements that tend to
depress it.
Fear
Metrics: Economics and Terrorism
Vanguard Gold and Precious Metals (VGPMX) - #19 is up 357.3% since the
April 13, 2001 buy signal. Its annualized growth since that buy signal is
52.2%. It moved to the north in 43 of the past 70-weeks. It has been
bullish in fourteen of the last twenty-one weeks.
Fidelity Gold, Fund #28, is up 22.5% since its buy signal on September
7, 2007. It is annualized at 64.4% since that buy signal. This fund was
solidly bullish the past three weeks.
State Street Research Global #9, SSGRX, which is isolated in the
energy sector, is up 290.4% since the Mid-term Indicant signaled buy on
August 16, 2002. It is annualizing at 53.0%. It was bearish last week.
Vanguard Energy #18, VGENX, is up 237.5% (annualized at 49.1%) since
the Mid-term Indicant signaled buy on April 5, 2003.
Fidelity Energy Services #40, FSESX, is up 221.7% (annualized at
53.3%) since the Mid-term Indicant signaled buy on December 6, 2003.
Fidelity Energy #39, FSENX, is up 186.9% since the Mid-term Indicant
signaled buy on August 16, 2003. It is annualized at 41.8%.
These energy
related funds were bearish last week while precious metals and other
commodities were bullish.
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 103.5% since then. It is
annualized at 41.8%. This fund has been bullish in sixteen of the past
twenty weeks. It was bullish last week.
The SQI
signaled buy for
ETF#03 – Energy and Natural Resources on March 26, 2003. It is up
252.3% (annualized at 51.8%). It was bearish last week.
Mid-term
Indicant Positions – Ten U.S. Indices
There were no new bull signals and no
new bear signals.
Last week’s
report erroneously indicated the Dow Utilities was a bear. The chart
continued indicating it as a bull. This lone bull is up 30.7% since the
Mid-term Indicant signaled bull on June 2, 2006.
The Mid-term
Indicant is signaling bear for nine of the ten major indices. They are
down by an average of 2.5% since their bear signals an average of
1.9-weeks ago. The S&P600 is down 8.8% since its bear signal nine weeks
ago.
The Mid-term Indicant Dow Jones Industrial Average performance is now
at $37,116,204
That beats buy
and hold performance of $1,917,891 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 $137,234 on a
December 31, 1971 $10,000 investment. The
MTI-NASDAQ is at $209,566. That beats buy and hold’s $84,603 on an
October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy
and hold by 1,835.3%, 23.7%, and 147.7%, 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 continues avoiding
ProFunds Ultra Short. It is down 32.3% 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. However, the recent bear signal for several major
indices suggest an increasing probability of this funds profit production
before 2009.
Do no buy it
just yet. Wait for the Quick-term Indicant to offer support.
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
335.5% (annualized at 20.6%) since the Long-term Indicant signaled bull
845-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: Three of thirty;
only is non-contrarian. Minimal bullish support.
Quick-term
Yellow Bears/Threats: Twenty of
thirty. Bearish support.
Short-term
Non-Bearishness:
Breakout/breakdown differential -0.1%. Minimal bearish support.
Force
Vectors: Zero in bullish
domains. No bullish support.
Vector
Pressure: Five in bullish
domains. Minimal bullish 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 bear.
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. Minimal
obviation with slight 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 0.5% and the NASDAQ is down 2.6%,
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.
Please read
on. Click here to see the
Short-term Indicant’s history.
Both
Indicant Volume Indicator’s are rapidly developing into robust
cycles. The configuration is mixed right now. Last Wednesday’s and
Thursday’s volume on bullish behavior was high, which is supportive of the
bull. However, this robust cycle originated with aggressive bearish
behavior. Reports of a half point interest rate reduction last Wednesday
during bull or even meandering markets usually stimulate more dynamic
bullish behavior than Thursday’s mild bullish expression. As stated last
Thursday, a slight edge remains in favor of the bear on a near-term basis.
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 17-ETF’s. They are up by an average of 60.2%
(annualized at 21.6%) since their respective buy signals an average of
143.1-weeks ago. Although there were no sell signals, the SQI is avoiding
13-ETF’s at this time. They are down by an average of 4.9% since their
sell signals an average of 4.5-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 17-ETF’s. They are up an average
of 118.2% (annualized 39.4%) since the STI signaled, buy, an average of
154.3-weeks ago. Although there were no sell signals, there are 13-ETF’s
with avoid signals. They are down by an average of 5.0% since their sell
signals an average of 4.6-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 eight-ETF’s. They are up by an
average of 49.4% (annualized at 35.0%) since the QTI signaled buy an
average of 72.6-weeks ago. Although there were no sell signals, the
Quick-term Indicant is avoiding 22-ETF’s. They are down by an average of
3.5% since their sell signals an average of 2.5-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
nine conflicts, whereby the Short-term Indicant and the Quick-term
Indicant are in disagreement between hold and avoid status. This is no
longer harmonious. The bullish bias shift on August 15, 2006 expired on
January 4, 2008. Please read on.
Quick-term Indicant Bull/Bear Health Report
Twenty of the
30-ETF’s are below their respective bearish yellow curves. The average
relative position of all thirty ETF’s is equal to bearish yellow. Again,
this is not supporting the bull.
Three of the
ETF’s are above their respective bullish red curves. All thirty ETF
average positions are 7.8% below their bullish red curves. Only one is
non-contrarian. Keep in mind QID is not included in this statistic, but it
is also in bullish domains.
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. It was contrarian ETF#11-Precious
Metals. This is for those with inflationary outlooks.
This was the
twenty-second consecutive trading day of non-contrarian non-contact. As
stated earlier this past week, this is leaning toward bearish bias.
Prior
non-contrarian contact is now irrelevant. The metric underway will monitor
bearish attributes.
The average
distance from breakout contact is 13.3%. Double digit variances from
breakout contact for six consecutive days is not supportive of bull.
Three of the
ETF’s are contacting their breakdown lines. The ten making contact last
Tuesday is the largest number of breakdown contact since 2002. This is
supportive of bearish ambition. Non-contrarian contact in four of the last
six trading days is bearish.
The average
distance from the price and breakdown is 13.2%. 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 0.1%. The coupled with last
Tuesday’s negative differential supports the bear.
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 moving bullishly. The configuration no longer supports
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 two
put option buy signals after Friday’s close. The total put option buy
signals are twenty-two in the last ten trading days.
As stated
last Wednesday, the bull reacted, which was unfavorable to Tuesday’s put
option buy signals. However, its reaction was mild with respect to
interest rate cuts. This supports near-term bearishness.
Friday’s
bearish aggression, coupled with Wednesday’s and Thursday’s bullishness
was favorable to your Friday put option sell orders.
Five of the
ETF Vector Pressures are in bullish
domains. This is no longer providing near-unanimous or majority bullish
support. They continue to decline, providing bearish confidence.
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 there will be a bullish bounce on a periodic basis.
The
Quick-term bull is no longer in tact.
ProFunds Ultra Short mutual fund moves inversely to the QQQQ by
exponential amounts. The Consolidated Indicant model is not avoiding QQQQ,
which does not support holding contrarian fund, 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
down 0.9% since that buy signal.
QID is down
38.3% since the Short-term Indicant and Consolidated STI/QTI signaled sell
78.1-weeks ago.
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 in the past three weeks. Four consecutive weeks of
bearish convergence obviates deep and sustainable bear markets. The
bearish divergent configuration sandwiched between the three bearish
convergent configurations leave a small opportunity for the bull to resume
influence. However, there is an increasing probability of a solid bear
market with the current configurations
Indicant
Conclusion
The major
market indices continue configuring with bearish sustainability. The
impending interest rate reductions by the Federal Reserve could reverse
this. A bullish response to that would most likely be short-lived.
Inflationary pressures are depressing bullish trend desires.
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
01/13/08
January 6,
2008 Indicant Weekly Stock Market Report
Volume 01, Issue 01 ISSN 1526 6516 © The
Indicant Stock Market Report
This Week’s
Report
October 25,
2002 Cyclical Bull Market Expires
The Dow
Composite of Sixty-Five received a bear signal this weekend. That is the
first signal since the bull signal on October 25, 2002. There will be more
about that later.
As stated last
week, the S&P600-Small Cap was tracking along southeasterly trading
ranges. That was discerning to those desiring bullish stock market
behavior. Click the following link to view its chart.
http://www.indicant.net/Members/Updates/MTIRYS-Mkts-US/MTI-RYS-10-S&P600-Curr.htm
As you can
see, this index fell below the lower trading range limit. The problem with
this index is that the trading range is sloping bearishly. Breaking below
the lower trading range limit along a bearish trading range is exceedingly
bearish. This bearish expression is dynamic.
The stock
market is forecasting an economic recession. Small caps take it on the
chin first and usually fall deeper than larger cap stocks. The S&P600 is
down 6.6% since the Mid-term Indicant signaled bear on November 9, 2007.
The deep
bearish expressions last week occurred with about four weeks of the heart
and soul of bullish seasonality remaining. The heart and soul of bullish
seasonality has also now expired.
Unfortunately,
last week’s bearish behavior was not just limited to the small caps. The
market endured bearish convergence with respect to major indices. That
suggests the cyclical bull market that was born on October 25, 2002 has
completed its term. The Long-term trend remains up on a secular basis.
However, holding through a 20% to 50% decline is not appropriate for happy
investing. Some of you get unhappy with a 1% decline. Attitudes sour
deeply with double digit declines.
The Dow30
received a bear signal this weekend. 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, the Dow fell below its lower trading range limit. It is also below
the trip line and the bullish red curve. The market is behaving in a way
that is consistent with its anticipatory skills of predicting recession.
The NASDAQ
received its first bear signal this weekend since May 28, 2004 during the
meandering bear market that year. Click the following link to view its
chart.
http://www.indicant.net/Members/Updates/MTIRYS-Mkts-US/MTI-RYS-03-NASDAQ%20Curr.htm
You can
quickly view all of the major index charts by clicking the following link.
You may have to scroll downward to view the table that contains the links
to the charts for each of the major indices.
http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20MTI-RYS.htm
There are
links to historical charts at the top of the above page. Although the
presidential election year is the second most bullish on the four-year
cycle, your research into history will reveal that several bull markets
have expired during the election year. The stock market endured a
meandering, fluttering configuration in the last presidential election
year with a lame duck incumbent. That was Bill Clinton’s 2000, which was
his last year as president.
The sub-prime
lending crisis and inflationary threats are too much for the bull to
stomach. Last week’s unemployment report would have normally been bullish.
Rising unemployment during economic normalcy is typically bullish. The
political bent is applied to the Federal Reserve Board to lower interest
rates to enhance voter’s pocket books. Lame duck politicians are no longer
that interested in such matters and thus little political push during lame
duck presidential election years.
Unfortunately,
the stock market is reasoning that rising commodity prices and especially
oil prices is a major inflationary threat. That threat will put a damper
on lowering interest rates. The stock market will not respond bullishly to
interest rate reductions if it sniffs inflationary pressures. The stock
market does not like either; high interest rates or excessive inflation.
The combine value of interest rates and a CPI exceeding 8%-age points is
generally bearish. So, if interest rates are at, say 3%, and inflation is
at, say 6%, the market has historically behaved bearishly. Although not
relevant at this time, the CPI is an absolute value. That is, a CPI of
negative 6% would stimulate an equally powerful bear. Some of you recall
how deflation was a concern a few years ago.
T. Boone
Pickens recently stated that oil prices would only go down with reductions
in demand. The quickest method to reduce demand is worldwide recession.
That recession must hit China as well. To jump-start the recessionary
cycle, interest rates will most likely stabilize and may even start
increasing to dampen demand for oil.
This recent
bearish expression has significant merit with the bear signal for the Dow
Composite Index. As you can see, it fell below its lower trading range
limit. That is the first bull or bear signal since its last signal, which
was a bull signal, on October 25, 2002. Click the following link to view
its chart.
http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20MTI-RYS.htm
During this
bull cycle from October 25, 2002 through January 4, 2008, this broadest
representation of large caps increased by 80.5%. This is the most stable
index. Signaling bear for this index suggests a very high probability this
cyclical bull that began over five years ago has expired in favor of
bearish influences.
To gain a
little more perspective on this, click the 2000-2004-chart.
http://www.indicant.net/Non-Members/Tours/MTIRYS-Mkts-US/MTIRYS-08-DJC-2000-2004.htm
This
particular index is an excellent broad gauge of projected economic health.
This index fell from its 2001-peak valuation to its 2002-depth by
approximately 35%.
There could be
some stock market fluttering. An example of excessive fluttering was in
2000. Click the following link to view an example of stock market
fluttering, which preceded the great bear market of 2001-2002. It
coincided with the last lame-duck presidency.
http://www.indicant.net/Non-Members/Tours/MTIRYS-Mkts-US/MTIRYS-01-DJI-1996-2000.htm
For those who
prefer to take a long-term view of the stock market, fluttering is a
favorable attribute. Fluttering prevents the bear from gaining complete
influence over the market. As you noticed, though, the fluttering in 2000
preceded the bear market of 2001-2002. So, do not relax if you see
fluttering in the next few weeks and months.
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 detail content of this section.
The Mid-term
Indicant generated no buy signals and 57-sell signals.
In addition
to the sell signals, the Mid-term
Indicant is avoiding 102-stocks and funds of the 345- tracked by the
Indicant. The avoided stocks and funds are down an average of 13.9% since
the Mid-term Indicant signaled sell an average of 19.6-weeks ago.
There were
only 30-stocks and funds avoided at this time last year. Those avoided
stocks and funds were down an average of 13.7% since their respective sell
signals an average of 21.2-weeks earlier.
Two years ago,
on Jan 6, 2006, the Mid-term Indicant was avoiding 53-stocks and funds
that were down an average of 10.5% since their respective sell signals an
average of 22.5-weeks earlier. Three years ago on Jan 7, 2005 there were
only 15-avoided stocks and funds. They were down by an average of 41.1%
from their respective sell signals an average of 61.1-weeks earlier. On
Jan 3, 2004, the Mid-term Indicant was avoiding only six-stocks and funds
out of 296-tracked at that time. They were down by an average of 28.6%
since their sell signals an average of 38.6-weeks earlier. Five years ago
on Jan 4, 2003, there were only 12-avoided stocks and funds. They were
down an average of 25.9% since their respective sell signals an average of
23.0-weeks earlier.
Although
there were no buy signals, the Mid-term Indicant is signaling hold for 186 of the 345-stocks and
funds tracked by the Indicant. The stocks and funds with hold signals are
up an average of 160.9%. That annualizes to 60.5%. The Mid-term Indicant
has been signaling hold for these 186-stocks and funds for an average of
138.2-weeks.
One year ago,
on Jan 5, 2007, the Mid-term Indicant was holding 312-stocks and funds out
of the 345 tracked for an average of 89.0-weeks. Those 312-stocks and
funds were up by an average of 110.8% (annualized at 66.8%). The Mid-term
Indicant was signaling hold for 292-stocks and funds of the 320-tracked
two years ago on Jan 6, 2006. They were up by an average of 110.8%
(annualized at 66.8%) since their respective buy signals an average of
86.3-weeks earlier. There were 236-stocks and funds with hold signals on
Jan 7, 2005 since their buy signals an average of 61.1-weeks earlier. They
were up by an average of 86.7% (annualized at 65.9%).
The Indicant
was only tracking 296-stocks and funds in 2002-2003, and early 2004. On
Jan 3, 2004, the Mid-term Indicant was signaling hold for 286-stocks and
funds out of 296-tracked. They were up by an average of 57.7% (annualized
at 83.9%) since their buy signals an average of 35.8-weeks earlier. Five
years ago, on Jan 4, 2003, there were 277-hold signals for stocks and
funds out of the 296 tracked by the Mid-term Indicant. They were up an
average of 19.1% (annualized at 69.3%) since their respective 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
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
75.7% since its secular low on October 9, 2002. The NASDAQ is up 124.8%
and the S&P500 is up 81.7%. The small cap index, S&P600, is up 118.9%. As
stated the past several weeks, the secular bull that originated on October
9, 2002 no longer remains solid. However, its bullish trend has not been
reversed.
Unfortunately,
the bear signal for the Dow Composites this weekend suggests the bullish
trend is threatened with a fairly solid bearish cycle. The S&P600-Small
Caps is leading the way to the southeast. It is down by 16.1% since its
peak valuation last year. Another 3.9% drop will officially be declared a
bear market.
The NASDAQ is
down 50.4% since its last weekly secular peak on March 9, 2000. The S&P500
is down 7.6% 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. The Dow is up 9.2% 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 101.6%
to achieve a new record high. Do not be surprised if this occurs after the
year, 2025.
The Dow closed
up 6.4% in 2007. The S&P500 closed up 3.5% and the NASDAQ up 9.8%. The Dow
was up 16.3% in 2006, with the S&P500 up 13.6% and the NASDAQ up 9.5%. The
major indices lagged last year’s performance due to recent bearish
aggressions.
The NASDAQ
2001 performance was down 21.1%. It was down 31.5% in 2002. It recovered
with a gain of 50.0% in 2003. After being down most of the year due to the
meandering bear market, the heart and soul of bullish seasonality elevated
it to being up by 8.6% in 2004. In 2005, it was up only by 1.4% due to the
same meandering bear from 2004. In 2006 it again up by 9.5%. It closed up
by 9.8% in 2007.
As you can
see, the only years the NASDAQ has been up this century has been the
presidential pre-election years (2003 and 2007) and last year’s mid-term
election year (2006). This is compliant to historical standards, even
though 2007 underperformed against those standards.
You will
notice the Dow endured less volatility than the NASDAQ this century. The
Dow was down 7.1% in 2001. In 2002, it was down by 16.8%, but with less
severity than the NASDAQ’s 31.5% drop in 2002. In the last presidential
election year of 2003, the NASDAQ’s 50.0% rise delivered more excitement
than the Dow’s 25.3% increase.
The bullish
bias shift on August 15, 2006 expired. 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%. As previously stated that bias shift has
expired.
This year’s
heart and soul of bullish seasonality disappointed. The Dow was down 4.5%
since the heart and soul of bullish seasonality began on September 17,
2007. The S&P500 was down 4.4% and the NASDAQ down by 3.0%. That is the
first time this century the heart and soul of bullish seasonality
abandoned historical standards.
Where is the
market headed in 2008, the presidential election year? Keep your eye on
the daily stock market report.
Stop Loss
Management
The Mid-term
Indicant recommends a stop loss of 8% due to bearish relaxation and
configurations conforming to historical and seasonal standards.
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 continued their acceleration last week, which is not favorable to
the cause of fending off inflation. Oil touched three digits and the only
solution to that problem is a reduction in demand. Most of the time, the
primary source of reduction is recession. Technology is always evolving,
but too slowly. Recessions are a quicker toward affecting solution.
As stated the
past eight 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.
Interest rates
were mixed last week with some moving north and come moving south.
However, the current southerly trend is not threatened. Rising commodity
prices and falling interest rates will invigorate inflation.
The U.S.
Dollar continues to weaken and will continue to do so as long as interest
rates are in decline.
Overall, the
stock market is holding up fairly with economic elements that tend to
depress it.
Fear
Metrics: Economics and Terrorism
Vanguard Gold and Precious Metals (VGPMX) - #19 is up 351.9% since the
April 13, 2001 buy signal. Its annualized growth since that buy signal is
51.6%. It moved to the north in 42 of the past 69-weeks. It has been
bullish in thirteen of the last twenty weeks. It was solidly bearish the
past four weeks.
Fidelity Gold, Fund #28, is up 16.3% since its buy signal on September
7, 2007. It is annualized at 49.3% since that buy signal. This fund was
solidly bullish the past two weeks.
State Street Research Global #9, SSGRX, which is isolated in the
energy sector, is up 301.7% since the Mid-term Indicant signaled buy on
August 16, 2002. It is annualizing at 55.2%.
Vanguard Energy #18, VGENX, is up 246.4% (annualized at 51.1%) since
the Mid-term Indicant signaled buy on April 5, 2003.
Fidelity Energy Services #40, FSESX, is up 236.3% (annualized at
57.1%) since the Mid-term Indicant signaled buy on December 6, 2003.
Fidelity Energy #39, FSENX, is up 196.0% since the Mid-term Indicant
signaled buy on August 16, 2003. It is annualized at 44.1%.
These energy
related funds were bullish last week while precious metals and other
commodities were mixed.
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 95.5% since then. It is
annualized at 38.9%. This fund has been bullish in fifteen of the past
nineteen weeks.
The SQI
signaled buy for
ETF#03 – Energy and Natural Resources on March 26, 2003. It is up
262.6% (annualized at 54.2%).
Mid-term
Indicant Positions – Ten U.S. Indices
There were no new bull signals and
nine new bear signals.
None of the
ten major indices with a bull signal.
In addition to
the nine bear signals, the lone prior bear index was the S&P600. It is
down by 6.6% since the Mid-term Indicant signaled bear eight weeks ago.
The Mid-term Indicant Dow Jones Industrial Average performance is now
at $37,116,204
That beats buy
and hold performance of $1,957,388 on a $10,000 investment in the Dow
stocks in 1900. The
MTI S&P500 is at $170,992. That beats buy and hold’s $138,273 on a
December 31, 1971 $10,000 investment. The
MTI-NASDAQ is at $209,566. That beats buy and hold’s $88,846 on an
October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy
and hold by 1,796.2%, 23.7%, 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 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 continues avoiding
ProFunds Ultra Short. It is down 26.9% 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. However, the recent bear signal for several major
indices suggest an increasing probability of this funds profit production
before 2009.
Do no buy it
just yet. Wait for the Quick-term Indicant to offer support.
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
342.2% (annualized at 21.1%) since the Long-term Indicant signaled bull
844-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: Three of thirty;
none are non-contrarian. There is no bullish bias support.
Quick-term
Yellow Bears/Threats: Eighteen
of thirty. Attribute is no longer configured with non-bearish support, as
the majority are below bearish yellow.
Quick-term
Non-Bearishness: Weak;
inflationary fears threaten the bull, but the slightest inflationary
weakness will invite vigorous bullish responses. $90 oil would do that,
but unfortunately triple digit pricing for a barrel of oil is underway.
Short-term
Non-Bearishness: The lower
trading range limit has not yet been penetrated. Therefore, there solid
bearish bias is absent at this time.
Force
Vectors: The bearish cycle
continues.
Vector
Pressure: Ten in bullish
domains. They decreased for the third consecutive day.
Long-term
Hold Positions: Continue
holding, except where sell signals are noted.
Immediate
Tactics: Vector Pressure is no
longer supporting aggressive buying.
Current
Quick-term Bias: Configurations
are favoring the bear.
Overall
(Long-term) Market Status:
Bullish bias from August 15, 2006 expired on 01/04/08.
Profit
Potential from Naked Options:
Volatility is high, enhancing option opportunities.
Volume:
Configurations on Friday,
January 4, 2008 support bearish ambition, even though the Indicant Volume
Indicant has not yet obviated bearish sustainability.
Quick-term/Short-term Indicant Stock Market Report Details
The
Short-term Indicant signaled bear on Friday, January 4, 2008 for both
major indices. This was done with about four weeks of standard heart and
soul of bullish seasonality remaining. Economic fundamentals are assuming
control over the stock market’s direction. Inflation and/or recessionary
behavior is too much for the bull to put up a fight against bearish
ambition.
From Dec 11,
2007 daily stock market report, it was stated “a continuation of this bull
cycle should test the upper trading range limit again. This should occur
before the heart and soul of bullish seasonality concludes in late January
2008.” Very recent volume has been more supportive of the bear.
From Dec 20,
2007 daily stock market report. Configurations are suggesting increasing
heart and soul of bullish seasonality influence.
From Dec 21,
2007. The Dow’s 200-plus point jump today substantiates the heart and soul
of bullish seasonality influence.
From Dec 28,
2007. Lethargic volume due to holidays is generating unnatural market
forces. This is common when a few traders are more likely to manipulate
market values. The market should enjoy natural dynamics on January 3,
2008.
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).
Please read
on. Click here to see the
Short-term Indicant’s history.
Both
Indicant Volume Indicator’s continue configuring lethargically.
However, today’s volume was high on aggressive bearish behavior. That
reinforces the robust volume that coupled to aggressive bearishness late
last year. This supports bearish sustainability.
On January 2,
2008 there was a 76% probability of a bullish response within a few days.
Unfortunately, the market fell by more than 0.5% today (January 4, 2008).
There is an 82% chance of sustainable bearish behavior when the market
responds bearishly with configurations greater than a 62.% chance of
moving bullishly. Consequently, do not be surprised at continued
bearishness. The heart and soul of bullish seasonality ended earlier than
normal. It ended today (01/04/08).
SQI Report Card (Consolidated Short/Quick), Status, and Charts
There were no
buy signals and one sell signal. Although there were no buy signals, the
SQI is signaling hold for 23-ETF’s. They are up by an average of 59.5%
(annualized at 25.2%) since their respective buy signals an average of
141.5-weeks ago. In addition to the sell signal, the SQI is avoiding six
ETF’s at this time. They are down by an average of 10.3% since their sell
signals an average of 8.3-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 one sell signal. Although there were no buy signals, the
Short-term Indicant is signaling hold for 23-ETF’s. They are up an average
of 91.8% (annualized 34.4%) since the STI signaled, buy, an average of
137.1-weeks ago. In addition to the sell signal, there are six ETF’s with
avoid signals. They are down by an average of 10.6% since their sell
signals an average of 8.3-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 twelve sell signals. Although there were no buy signals,
the Quick-term Indicant is signaling hold for 12-ETF’s. They are up by an
average of 36.9% (annualized at 28.4%) since the QTI signaled buy an
average of 66.7-weeks ago. In addition to the sell signals, the Quick-term
Indicant is avoiding ten ETF’s. They are down by an average of 7.2% since
their sell signals an average of 4.5-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
eleven conflicts, whereby the Short-term Indicant and the Quick-term
Indicant are in disagreement between hold and avoid status. This is no
longer harmonious. The bullish bias shift on August 15, 2006 has expired.
Quick-term Indicant Bull/Bear Health Report
Eighteen of
the 30-ETF’s are below their respective bearish yellow curves. The average
relative position of all thirty ETF’s is above bearish yellow by a mere
0.6%. Non-bearish support is minimal.
Three of the
ETF’s are above their respective bullish red curves. All thirty ETF
average positions are 7.4% below their bullish red curves. None of these
are non-contrarian, which means there is zero attribute support that
prevents bearish dominance.
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.
None of the
thirty ETF’s are contacting their breakout lines. There is no bullish
support from this attribute at this time.
This was the
seventeenth consecutive trading day of non-contrarian non-contact. This
non-bullish bias suggests shallower bull cycles on a near-term basis. This
attribute is non supportive of the bull.
Prior contact
is now irrelevant. The metric underway will monitor bearish attributes.
The average
distance from breakout contact is 12.7%. Double digit variances from
breakout contact for two consecutive days is not supportive of bull.
Eight of the
ETF’s are contacting their breakdown lines. This is the largest number of
bearish contact in several years. This is supportive of bearish ambition.
The average
distance from the price and breakdown is 13.2%. 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 meager positive 0.5%, which remains
favorable to the bull, but ever so slightly. As stated on Thursday,
January 3, 2008, it is nearing position where bullish responses have
occurred in the recent past. Friday’s aggression by the bear does not bode
well for those desiring bullish behavior. A negative differential will
foster bearish aggression.
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.
Five Force
Vectors are moving bullishly. The configuration no longer supports 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 two
put option buy signals after Friday’s close. This brings the total put
option buy signals to sixteen in the last five trading days.
Unfortunately, bearish aggression on Friday prevented deeply discounted
buy offers from being accepted. There was also no contrarian behavior to
support discounted buy offers on Friday.
Ten
ETF Vector Pressures are in bullish
domains. This is no longer providing near-unanimous or majority bullish
support. Configurations no longer support bullish bias, but ten in bullish
domains prevents complete bearish dominance. Unfortunately, the number in
bullish domains is shrinking.
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 there will be a bullish bounce in the not too distant future.
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 not avoiding QQQQ,
which does not support holding contrarian fund, 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 will be excluded
on overall ETF statistics because it is purely contrarian. It is designed
to move bullishly during bear markets and bearishly during bull markets.
QID inclusion
in overall ETF analysis will distort observations of market divergence and
convergence due to the nature of its design. For example, precious metals
and energy are contrarian but can parallel market direction with
synergistic relationships. That, quite often, relates to market
convergence when some non-contrarian funds are paralleling the general
markets.
QID will
receive Quick-term and Short-term sell signals, but must mature more for
independent near-term observations. This comment will be removed once that
maturity is developed.
QID is down
40.9% since all three models signaled bear upon the initial offering of
this ETF 77.1-weeks ago.
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
convergence occurred this past week. This follows bearish divergence and
bearish convergence in the past two weeks. Four consecutive weeks of
bearish convergence obviates deep and sustainable bear markets. The
bearish divergent configuration sandwiched between the two bearish
convergent configurations leave a small opportunity for the bull to resume
influence. However, there is an increasing probability of a solid bear
market with the current configurations
Indicant
Conclusion
The major
market indices fell through their lower trading range limits on a Mid-term
Indicant basis. The Indicant Volume Indicator’s Short-term lower trading
range limit has not yet been breeched. That offers a small speck of
bullish hope, but it is a dim speck.
There is now a
minimal probability of upper trading range limit engagement with the major
indices.
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
01/06/08