July 28, 2002 Indicant.Net Weekly Update

Volume 7, Issue 4 ISSN 1526 6516 © The Indicant Stock Market Report

Aristotle, a great man, once said, “if the only tool you have is a hammer, you will tend to see every problem as a nail.” That is the problem with many executives in corporate America . The only tool they have is an eraser, whereby they erase the “real” numbers and then with their manicured, un-calloused hands practice their voodoo bookkeeping.

The Board of Directors at Halliburton prior to 1970 consisted of some people who knew how to handle a 48-inch pipe wrench. When 1970’s CEO, John Harbin, took over, he replaced 48-inch pipe wrench type Board of Directors with dilettante types. One was Anne Armstrong. Another one was Sir somebody of royal descent. Now, some are former football players and chain smoking airline CEO’s. John Harbin could control those dilettante types because they were ignorant about what Halliburton did. When attending board meetings, the dilettantes would either look at the ceiling or be snoozing.

Halliburton stock soared in the 1970’s as the price of oil zoomed to the north. John Harbin and the board took credit for this, but all the credit should be given to OPEC. They increased oil prices and anyone with a line of credit could make money. Even the dilettantes participated in the rapid wealth cycle. When the crash came in the 1980’s those same dilettantes were on the losing end. The boom/bust cycle was all about OPEC price manipulation, as opposed to smug intellectualism.

Boards of Directors and CEO’s is all about PR (Public Relations). Jack Welch, the former CEO of General Electric, was made favorably famous through GE press releases, much like Fidelity does press releases. The press, as written by the GE Marketing Department, called Mr. Welch a great manager. This was a way to get more investors to buy GE Stock. It worked. GE stock went up. But, the whole stock market went up. GE stock went up more or less due to the promotion tactics of the GE Marketing Department. Welch had little to do with it. Well, lets give him credit for bad-mouthing corporate bureaucracies.

From time to time, it is important to put things in perspective. He was more or less a portfolio manager. He sold off much of the manufacturing and bought NBC and Jay Leno, who makes fun of everybody, but Jack Welch. A real CEO would have figured out a way to make the toaster at a profit, as opposed to just selling the toaster division and buying a comedian.

We have gone downhill from there as far as CEO hirelings go. The 1980’s and 1990’s saw an acceleration in corporate credentialism and board room cronyism. With those two elements in place at the market’s top, the soft-handed corporate elite pulled out the only tool they knew how to use; their erasers and went to work. What they really needed to use was the 48-inch pipe wrench. But they don’t even know what one looks like.

The sheer volume of voodoo bookkeeping led to a voodoo stock market. The sad part of this is the tremendous number of people who based their retirement plans on a 5,000 NASDAQ and 10,000 Dow, most of which was created by those with those voodoo erasers.

That concludes the fundamental analysis for the week. Now, lets take a look at the technical developments for the stock market.

Technically, the stock market is entering an interesting time. It is beginning to look more and more like a secular bear market, as far as the Dow goes. It hung around its top for about three years. It now appears to be making a dive similar to that of the 2000 to current NASDAQ dive.

It is a waste of time to speculate if a market is secularly bearish or bullish. If the Quick-term, Short-term, and Mid-term Indicants say it is a bull, then it is a bull. If the market goes up 20% or 500%, who cares? The magnitude (how high and low it goes) is impossible to predict. That is all about supply and demand. Earlier this year many pundits were predicting the market to zoom off to the north, as there was about two trillion setting in money market accounts. They pointed to the five-hundred billion that propelled the markets to the north in the late 1990’s as their reason.

As the number of American homes owning stocks increased from less than 30% in the 1980’s to over 50% in the 1990’s the stock market grew with the tremendous increase in the demand for stocks. By the late 1990’s, the majority of American homes owned stock. That growth helped push stock prices higher. Many got paper rich. But, the majority cannot be right. Now many are paper poor. The stock market is not a democracy and will not succumb to the tyranny of the majority.

August is historically the most bearish month. But, we don’t have to be concerned about that because the Quick-term, Short-term, and Mid-term Indicants say it is still a bear. There have been some Quick-term bull legs and some spurts to the north since the secular bear began.

There are a couple of major bullish indicators brewing right now. This is a mid-term election year. Since the 1920’s, the market has always found a bottom during a mid-term election year. Many ask the question, “where is the bottom?” The answer is who cares? A bottom is a bottom, regardless if it is at a 5,000 Dow or a 7,000 Dow.

Secondly, the Volatility Index is at its highest point in more than two years. That signals a bull cycle is nearing. It could be just a Quick-term or Mid-term cycle. Or, it could be another secular bull market? Who knows? The thing that is different this time is the magnitude of voodoo bookkeeping. If it was limited to Enron and Imclone or even to ten or fifteen companies, then the market could rebound with some gusto. However, voodoo bookkeeping appears to be more the rule than the exception in the Fortune 500 family. That can spell disaster for the stock market. Why would a fundamentalist pay any attention to any financial report? A Zane Grey novel contains more substance of reality than the fiction of their financial reports.

Some CEO’s, such as non-hirelings, Larry Ellison (Oracle), Michael Dell (Dell), Bill Gates (Microsoft), and even some hirelings, do a outstanding and honest job for their companies. Even Jack Welch was good as he continued his epistle against corporate bureaucracies. It is never good to stereotype a group of people, including Fortune 500 CEO’s. Some of them are good and honest. Those seldom make the news, unless they have the aggression of the GE Marketing Department of the 1990’s. This newsletter the past few weeks has been very critical of those who we use to trust, CEO’s, Executives, and Boards of Directors. As always, it is up to each of you to do your fundamental homework. Study the resumes of the board members of the companies you like. If they have a political or non-related business background, recognize their contribution ranges from minimal to parasitical. Do the same for the officers of the corporation.

When you read the annual reports watch for altruistic commentary. If the content contains how they are supporting various social programs and the underprivileged, chances are it is a “dilettante-run” company. If the commentary is strictly about what they do to make money and what they are doing to make more and more money faster and faster, then the company is most likely run by “real” people. That is what the fundamental investor should look for.

Divergence versus Convergence

All sectors continue to decline. Gold and precious metals have held up well but they are expressing some weakness at their cyclical highs. Commodities are more difficult to express voodoo numbers on and thus those type of investments are the most trusted at this time. That is why they have not crashed along with everything else. But they are softening quite a bit. The element of fear is relaxing. The threat of OPEC militancy is relaxing. Rising interest rates are being anticipated by the markets.

Economic Outlook

There is little difference to report from last week’s report. All interest rates continue to remain in bullish domains. Southerly moving interest rates the past few years have done nothing to inspire the stock market to move north. Rest assured, northerly moving interest rates definitely will inspire the bear market to continue as is. There will be political pressure on Greenspan to minimize interest rate hikes in this mid-term election year.

The Dow Jones Spot Prices, CRB Bridge Futures, and Reuter UK moved into inflationary territory this past week. After softening the past few weeks, commodity prices renewed their movement to the north. The only solution for that type of inflation is increasing the supply or depressing the demand. Producers do the former and the parasitical elites to the latter. It is good to see commodity prices rising somewhat as that will improve the margins for the high fixed cost operations that extract them. But on the other hand, if they continue to move north, Greenspan will raise interest rates in the only way he knows how to suppress demand.

The Indicant signaled "buy" for Fidelity American Gold (FSAGX) - #28 on December 7, 2001 . Eight weeks ago, it was up 66.1% since the Mid-term Indicant signaled buy. Three weeks ago, it closed up 50.7%. Last week it closed up 12.0%. Some of you probably already sold, but the Indicant still has not signaled sell, as it is still above the long-term Blue curve, albeit ever so slightly.

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% eight weeks ago since the MTI buy signal in April 2001. Two weeks ago, it closed up 46.3%. Last week it closed up 25% since the MTI buy signal of over a year ago.

There are three possible reasons for this. The first is plain old profit taking. The second is an anticipation of increasing interest rates or a second leg of the recession. The third reason is the continuing reduction in fear of terrorists attacks.

The energy sector is also winding down. Most of the oil field service stocks are in decline. The OSX index is now a Mid-term Bear. Exxon stock on the Dow 30 is in a nosedive.

The U.S. Dollar is showing some resiliency against its cyclical decline against more major world currencies. That is a favorable event but the current Mid-term cycle is currently forming a base whereby the dollar will continue to weaken in the next six months if Greenspan does not hike interest rates.

We will leave the following comment in this letter until this paradigm shift completes its cycle. If you do not own either of these funds, you can monitor them to gauge the level of fear by investors during times such as this. As stated the past several months, we will continue to report exclusively on these, as they assist in signaling fear/greed relationships and help us keep an eye on the divergence patterns.

It appears this particular paradigm shift is completing its cycle. There is now a resolve that oil will continue to flow in from the Middle East and that prices will stabilize. There will more about this is coming issues.

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

Quick-term and Short-term Indicant - Markets

All eight indexes are down an average of 31.0% since the Quick-term Indicant signaled bear on April 23, 2002 . Last week all eight indexes were down an average of 30.0%. As you can see, even with the strong rebound last week, the indexes still fell by an additional percentage point. The Dow is down 21.9% since the Short-term Indicant signaled bear on March 20, 2002 . The NASDAQ Composite is down 70.1% since the Short-term Indicant signaled bear over two years ago on March 30, 2000 . This is the longest running Short-term Indicant Bear market in over 100 years. Additional Quick-term and Short-term Indicant information was updated in the preliminary report you received earlier this weekend. If you already deleted it from your email inbox, you can find it and all other back issues at the following link.

http://www.indicant.net/Non-Members/Back%20Issues/A%20Reports.htm

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

Twenty weeks ago, all eight indexes were bulls with an annualized growth of 48.2%. Now all eight indexes are bears and are down 20.4% since their respective bear signals and average of 11.8 weeks ago. The strongest index is the Dow Jones Industrial Average. It is down 13.8% since the Mid-term Indicant signaled bear for that index on June 7, 2002 . The weakest index is the now the NASDAQ100. It is down 27.2% since the Mid-term Indicant signaled bear on April 26, 2002 . The NASDAQ Composite is down 24.1% since the Mid-term Indicant signaled bear on April 26, 2002 .

Until this mid-term election year lapses, we will continue to focus on the market finding a bottom. We really do not care where the bottom is. All we care about is “when” it will occur. The lower the market goes, the greater the buying opportunities.

We are most likely entering a secular bear market, whereby there will be cyclical bulls. The Quick-term, Short-term, and Mid-term Indicants will identify these for you.

For those of you, who have not looked at the mid-term election year phenomenon, please click on the following link. It will take you directly to the charts with market behavior following mid-term election year behavior.

http://www.indicant.net/Members/Updates/History-Seasonal/HS0090.htm

To view Mid-term Indicant charts for U.S. Market Indices, please click here.

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

Mid-term Indicant Positions - International Markets

There was one additional bear signal this past week. The Mid-term Indicant is now signaling "bull" for only six of the twenty-two international markets it tracks.

The six bulls are up 33.3% since the Mid-term Indicant signaled bull an average of 38.0 weeks ago. That is an annualized gain of 45.6%, which is down slightly from 63.0% six weeks ago. In addition to the new bear, the fifteen bear markets are down by an average of 13.2% since their respect bear signals. Eight weeks ago, they were down 1.5%. Those fifteen markets have been bears for an average of 8.0 weeks. Click the following hyperlink to view the status and charts.

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

Mid-term Indicant Positions - Mutual Funds (Timing the Sectors)

There are ten sell signals and no buy signals.

The Indicant continues to signal hold for 6 of the 76 mutual funds it tracks. You received an email earlier this weekend advising you of the specific buy and sell signals.

The 6 funds with hold signals are up an average of 21.1%. The average period with Indicant holds signals is 34.0 weeks. The 21.1% average gain annualizes to 32.2%, which is down from 46.9% eighteen weeks ago when nearly all of the funds were in a hold position. The sixty funds the Indicant recommends avoiding are down 18.5% since the Indicant "sell" signals. Nine weeks ago the “avoided” funds were down only 0.5%. The Indicant has been avoiding these bearish funds for an average of 9.1 weeks.

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

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.

Mid-term Indicant Positions - Indicant Selected Stocks

07-28-02

July 21, 2002 Indicant.Net Weekly Update

Volume 7, Issue 3 ISSN 1526 6516 © The Indicant Stock Market Report

Dear Indicant Members:

This Week’s Report

The collapse of the S&P600 Small Caps is discerning. Dilettantes, for the most part, do not run these companies. These leaders generally know more about the businesses they run. The S&P400 (Mid-caps) and S&P600 were the stronger Quick-term Bull markets between October 1991 and April 23, 2002 . The velocity and direction of their current declines is ominous, as stated earlier this week. They are the only two major indexes that are still above their annual lows, but the S&P600 is now the second weakest Quick-term Bear and the S&P400 is the weakest Mid-term Bear.

It is not surprising to see the S&P 100 and S&P500 crash. Most of those companies are run by buffoons. Some of them are being handcuffed and will be sent to prison. Nearly all of those companies are guilty of voodoo bookkeeping. This is hard problem for their political brethren. Some of your political leaders are fraternity brothers of those who are going to country club prison. The question is when are those being handcuffed going to rat on their political brethren. Billy Sol Estes never ratted on LBJ and friends. He is still alive and has requested the media to be at his deathbed. He claims he will rat then. Most of these dilettante types know if they talk, they die. So, their lips will stay sealed and they will enjoy a few years in country club prison. They will get out, face a few civil suits, and still enjoy a portion of the millions they stole from their employees and shareholders. That is the system and how the game is played. But the average investor is calling for hard time and maybe this time around it will be provided. That would be good for the stock market as the fear of hard time may prevent annual reports from being books of fiction.

The politicians are uncertain what to do, except do all they can to expose each others business relationships with big business. Dick Cheney and George Bush are the biggest targets. Dick Cheney ran Halliburton for a few years during the 1990’s. He did not understand what Halliburton did. Earle P. Halliburton started the company in the early part of last century. He used a horse drawn wagon to cement piping in oil wells. After he retired, Preacher Meadows, who knew how to cement the oil wells, replaced him. Along the way, Halliburton bought Brown and Root, who had strong ties with Lyndon Johnson. Brown and Root is a huge construction company. In the late 1960’s the president of Brown and Root committed suicide, so they say. Brown and Root had significant government contracts during the Vietnam War. Some people speculate that air strike targets in Vietnam and Cambodia were followed up with Brown and Root reconstruction. Who knows?

It is impossible to be successful in politics without big money support. Democrats are supported by big money from fiction town – Hollywood . Those get up at noon folks with all their PR hype are use to a world where a screw-up is followed by “cut and do-over.” That is a far cry from real life. Politicians can relate to that sort of life very well.

Republicans are supported by big business who publish fictional annual reports. Most of these people are the types who want to continue with their lazy, hazy life styles, as opposed to getting paid by the bushel like the rest of us. They slant laws and lives to stay in control of the rest of us. They want to oversee how many bushels we bring in and levy a tax on us for our hard work.

The terrorist attacks played right into their hands. They have more control and camera time about how they are solving the problem. Remember, they were in charge when the problem was introduced.

If any of you travel, you can see the continuing stupidity at the airports. You can see yawning security guards. You can see pretty girls get to keep their eight-inch long scissors by batting their baby blues at the security screeners and a guy like me can’t keep his nail clippers. There was an instance in LA a few weeks ago whereby the air marshal was allowed to keep his gun but his nail clippers were confiscated. Apparently, the security guard needed a new pair of nail clippers.

Never forget an organism without competition cannot perform.

The quagmire politicians find themselves in is troublesome. About 80% of the voters today own stocks. That contrasts with less than 40% thirty years ago. More people are smarter about business and many are recognizing the worthlessness of politicians. Are those yet in the majority? Although hopeful, this is unlikely. People want to blame their inability to invest with proper timeliness in the stock market on someone other than themselves. Democracy can sometimes be thought of as tyranny by the majority. Remember, we are a republic.

Many retirement plans are in shambles. Many people do not have the common sense that they are at fault with their investment timing. The market has always dictated there has to be losers so there can be winners. It has to remain as such.

Many people want risk free investments. Politicians will play that card. The markets could be sniffing that some idiot politician may rise to power that will have some stupid law that stocks are not allowed to fall more than 10% or some such thing.

Foreign capital is fleeing the equity markets at increasing rates. The stock market needs foreign investments to propel north. The U.S. has historically been recognized as a trustworthy place for investments. Now, foreigners see a country whereby voodoo bookkeeping is practiced. They see the country led by a leader who imposes tariffs on imported steel. This leader protects the weak and lying at the expense of the strong and honest. Don’t think for a minute that foreigners are confused about what America stands for. U.S. politicians with their isolationist policies caused the great depression of the 1930’s. There low effort, non-budget thinking, led directly to World War I and World War II. The stock market is smart and senses a repeat of that stupidity.

Domestic investors simply lack trust. There are very few large caps run by the Earle P Halliburton types - those who know what businesses they run and their successors, such as Preacher Meadows. The third CEO at Halliburton was John Harbin. Although Mr. Harbin had a financial background, he was a long time Halliburton employee and had a good understanding of the business. During his tenure in the 1970’s he led Halliburton from a $1 billion dollar company to a $10 billion dollar company by 1980. While the stock market languished, Halliburton stock rose 800% during this time. Arthur Andersen was the public auditing firm. They did an outstanding job during those years. They tried valiantly to find any hint of voodoo bookkeeping. They could not because Halliburton was honest. So, why has the honest become dishonest?

After Harbin retired, an outsider and lawyer named Cruishank, replaced him. The company shriveled with the petroleum industry recession. The stock collapsed by 90% during his tenure. This buffoon was more intent with partying and had no idea what the company did to make money. The board of directors had no idea what the company did with a few exceptions. There were a few more CEO’s and Dick Cheney arrived with the fall of George Bush’s dad. Mr. Cheney had mostly a governmental background and had no idea what the company did to make money. Dick Cheney is most likely an honest man to the extent a politician can be. He portrays that. But, if a leader does not understand the business process, then he can easily fall victim to underlings who cheat and lie. These CEO’s are paid big bucks. Why pay them the big bucks if they do not know what is going on? How many times did the president of Enron say, “I did not know that” or “I can’t remember?” If their brains are so empty, then why the big bucks?

There are five hundred CEO’s at the Fortune 500 companies. If you imposed a 90% cut in pay on most of them, not one would quit. They would still be overpaid and most know it. There are exceptions, such as Oracle’s Larry Ellison and Microsoft’s Bill Gates, whose salary is less than a million. Those guys are not hirelings. They are self-made people. So, why are hirelings who cheat and lie put on the payroll with the big pay checks?

The S&P600 has more people like Earle P. Halliburton running them. They understand the business. Their accounting is typically accurate and when they take a look at them, they know where to go to solve a cost problem. The S&P100 has more buffoon CEO’s. These dilettantes have no clue about where to look at solving a cost problem. Cheney had no idea that it took seven hours longer to cement an oil well than it should because he never cemented an oil well or swung a forty-eight inch pipe wrench. Earle P. Halliburton would have known about the seven extra hours and would have threatened his crew with a forty-eight inch pipe wrench for being so slow. Most of the S&P100 CEO’s are like that. Even if their financial reports were not fictional, they have no idea where to go look at operational deficiencies. As companies moved more and more into cronyism and credentialism, they wound up with simple criminal minds as their leaders. They are from the same gene pool as your political leaders. They spend all of their time building relationships and contacts as opposed to bringing in their bail of hay, like the rest of us. They have an innate desire to rule over those of us who are bringing in our bales of hay and taxing us for it because they are there with a smile on their face and their hand out.

Why are the small caps crashing when they are not guilty of voodoo bookkeeping? Domestic and foreign investors see the façade of the political and big business cronyism. The stock market is paying the price, including the innocent. Big companies are not spending because they no longer know how to raise funds from operational performance. They became like the government. Oh, you need more money, let’s print up some more stock certificates and sell them to the idiot public. Now, the public is smarter.

Do not despair, though. The general media is finally becoming more bearish. They are even bad-mouthing CEO’s and their crony underlings. The press is really going to attack the Republican incumbents, as that media typically favors Democrats. The Republicans will attempt to tie the loss of morality to Bill Clinton’s leadership example. It is all negative because that is all a politician can do.

Also, we have the perfect record of market bottoms in mid-term election years. Be patient, wait for the cleansing process to be complete. Wait for the Quick-term and Mid-term Indicant to advise you when the markets anticipate this cleansing process is complete.

Divergence versus Convergence

All sectors are in decline the past few weeks. Gold and precious metals have held up well but they are expressing some weakness at their cyclical highs. Commodities are more difficult to express voodoo numbers on and thus those type of investments are the most trusted at this time. That is why they have not crashed along with everything else.

Economic Outlook

After plummeting the past several weeks, the dollar strengthened ever so slightly. At least the slide has been stopped for the time being. Greenspan did not raise interest rates, but the pressure is growing for him to do so.

There is little difference to report from last week’s report. All interest rates continue to remain in bullish domains. Southerly moving interest rates the past few years have done nothing to inspire the stock market to move north. Rest assured, northerly moving interest rates definitely will inspire the bear market to continue as is. There will be political pressure on Greenspan to minimize interest rate hikes in this mid-term election year.

Commodity prices softened last week, but the Mid-term cycle is decidedly inflationary.

The Indicant signaled "buy" for Fidelity American Gold (FSAGX) - #28 on December 7, 2001 . Seven weeks ago, it was up 66.1% since the Mid-term Indicant signaled buy. Two weeks ago it closed up 50.7%. Last week it closed up 43.6%. As you can see, it is not crashing but really softening. This is reason the divergence gap is narrowing. This volatility can be interpreted as either a pause in its northerly march or a topping where a crash is imminent. But it has not weakened enough for the Mid-term Indicant to signal bear.

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% since the MTI buy signal eight weeks ago. Last week it closed up 46.3%. Again, it is either profit taking or the belief that the Fed is on the verge of hiking interest rates.

Or is fear subsiding? The energy sector is slackening with additional bearish attributes. This implies there is a growing belief there will be no anticipated disruption to oil supplies from the Middle East . The domestic petroleum industry’s best quarter is the fourth quarter. Since the market anticipates earnings by six months or more, the stock prices are adjusting to profit expectations in the first quarter of 2003, which is usually down.

We will leave the following comment in this letter until this paradigm shift completes its cycle. If you do not own either of these funds, you can monitor them to gauge the level of fear by investors during times such as this. As stated the past several months, we will continue to report exclusively on these, as they assist in signaling fear/greed relationships and help us keep an eye on the divergence patterns.

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

Quick-term and Short-term Indicant - Markets

All eight indexes are down 30.0% since the Quick-term Indicant signaled bear on April 23, 2002 . The Dow is down 32.2% since the Short-term Indicant signaled bear on March 20, 2002 . The NASDAQ Composite is down 68.8% since the Short-term Indicant signaled bear over two years ago on March 30, 2000 . This is the longest running Short-term Indicant Bear market in over 100 years. Additional Quick-term and Short-term Indicant information was updated in the preliminary report you received earlier this weekend. If you already deleted it from your email inbox, you can find it and all other back issues at the following link.

http://www.indicant.net/Non-Members/Back%20Issues/A%20Reports.htm

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

Nineteen weeks ago, all eight indexes were bulls with an annualized growth of 48.2%. Now all eight indexes are bears and are down 19.7%% since their respective bear signals and average of 10.6 weeks ago. The strongest index is the Dow Jones Industrial Average. It is down 16.4% since the Mid-term Indicant signaled bear for that index on June 7, 2002 . The weakest index is the now the S&P400 (Mid-caps). It is down 24.0% since the Mid-term Indicant signaled bear on May 17, 2002 . The NASDAQ100 had been the weakest Mid-term bear. It is down 22.8% since the Mid-term Indicant signaled bear on April 26, 2002 . The NASDAQ Composite is down 20.7% since the Mid-term Indicant signaled bear on April 26, 2002 .

Until this mid-term election year lapses, we will continue to focus on the market finding a bottom. A few weeks ago, it was not inconceivable to project that bottom with a Dow of 5,000 and a NASDAQ at 800. That projection is becoming more likely with each passing day. We really do not care where the bottom is. All we care about is “when” it will occur. The lower the market goes, the greater the buying opportunities.

For those of you, who have not looked at the mid-term election year phenomenon, please click on the following link. It will take you directly to the charts with market behavior following mid-term election year behavior.

http://www.indicant.net/Members/Updates/History-Seasonal/HS0090.htm

To view Mid-term Indicant charts for U.S. Market Indices, please click here.

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

Mid-term Indicant Positions - International Markets

There were three additional bear signals this past week. The Mid-term Indicant is now signaling "bull" for only seven of the twenty-two international markets it tracks.

The seven bulls are up 44.4% since the Mid-term Indicant signaled bull an average of 37.6 weeks ago. That is an annualized gain of 61.4%, which is down slightly from 63.0% five weeks ago. In addition to the three new bears, the twelve bear markets are down by an average of 11.2% since their respect bear signals. Seven weeks ago, they were down 1.5%. Those twelve markets have been bears for an average of 8.8 weeks. As you can see, the strong international markets remain strong with a bullish stance, such as the Russian Moscow Times (MTMS). But who would be surprised? They have a flat income tax.

Click the following hyperlink to view the status and charts.

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

Mid-term Indicant Positions - Mutual Funds (Timing the Sectors)

There are four sell signals and no buy signals.

The Indicant continues to signal hold for 16 of the 76 mutual funds it tracks. You received an email earlier this weekend advising you of the specific buy and sell signals.

The 16 funds with hold signals are up an average of 12.5%. The average period with Indicant holds signals is 28.7 weeks. The 12.5% average gain annualizes to 22.6%, which is down from 46.9% seventeen weeks ago. The fifty-six funds the Indicant recommends avoiding are down 15.0% since the Indicant "sell" signals. Eight weeks ago the “avoided” funds were down only 0.5%. The Indicant has been avoiding these bearish funds for an average of 8.5 weeks.

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

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.

Mid-term Indicant Positions - Indicant Selected Stocks

07-21-02

July 14, 2002 Indicant.Net Weekly Update

Volume 7, Issue 2 ISSN 1526 6516 © The Indicant Stock Market Report

Dear Indicant Members:

This Week’s Report

This mid-term election year is not what the bulls ordered. The political pressures of winning at nearly any costs now has VP Dick Cheney’s name tied to Halliburton’s questionable accounting practices. We do not use the formal term, voodoo bookkeeping, until enough evidence exists to justify that formality. We are not sure if those claims are political rhetoric or real at this point. Moreover, it does not matter. We have learned that members of the executive branch are free of any criminal prosecution from VP Spirow T. Agnew (tax cheater) to Richard Nixon (covering up) to Bill Clinton (lying under oath).

Today, the newspapers talked about how George W. Bush sold stock in 1990 after reading a weekly flash report from Harken Energy, where he was a director. Two months after he sold his stock, the company lost $23 million for the quarter. What disappointed SEC investigators at that time was the stock did not tank when the losses were reported.

Geese, all oil company stocks tanked in 1982 and stayed tanked until 1996 or so. Why would the SEC be surprised about that?

This weekly report is not intended to contain political commentary, except when politicians are destructive to the growth in equity stocks. That is what is occurring right now. Politicians will pay lip service to the evils of corporate greed, but rest assured nothing will be done about it. Significant campaign contributions are derived from corporate donations. Corporations have several lobbyists who bribe congressional representatives. Thus, status quo is the order of the day. Besides new laws on top of existing un-enforced laws proves the point that all you get from Washington DC is mumbo jumbo.

During this election year, it is important to understand why the stock market has an unnatural depressant on prices. The political establishment is confused. They will talk the talk, but will not walk the talk. They cannot find it in themselves to cause harm to their frat buddies, who run the Corporations. However, rest assured they will keep Enron type stories in the papers; both fact and fiction.

This bear market is the longest since the 1930’s, though there are a couple of differences though between now and the 1930’s. This bear market is following an unprecedented bull market. Much of the prior Mid-term Bull cycle was fake. Maybe Greenspan was correct is referring to the bull surge in 1999 as irrational exuberance. There is no doubt he did his part to undo the exuberance. In hindsight, his moves were equally irrational.

We have now learned the markets moved north to historical highs in 1999 and early 2000 on the basis of voodoo bookkeeping. In the late 1990’s corporations were apparently overstating their profits. These voodoo profits created a voodoo bull market. The market is paying the corporate witchdoctors back and once it completes that cycle, it will assess penalties.

Don’t despair. There are some bullish undercurrents working. The news media is now publishing stories of extreme pessimism. This is bullish. The market generally finds bottoms when the news is at its worst. The average investor is nearing exhaustion and rapidly losing interest in the stock market. At about the same time the majority of investors throw up their hands and give-up on the stock market, the market will take off to the north on a robust and dynamic bull surge. This scenario is getting close. Remember, the crowd is always wrong.

The market is down significantly and its growth since 1995 is below historical standards, except from 1929 through 1952, where it took over twenty years to merely breakeven on a pre October 1929 investment. If history repeats, then you are looking at 2026 before the NASDAQ hits 5000 again. There are too many people saying the stock market does great in the long-term. The more people who believe that and continue plowing money into the market in their 401K’s, the more the market will take from them. The crowd has to be wrong. A sixty year old who invested in September 1929 never saw his or her investment break-even according to actuarial tables. They would have had to live to be 85 years and in those years, few made it that long.

If history repeats, investments can be successful between now and 2026. When the secular bull resumes, an investment at a NASDAQ of say 1500 and a bull ride to say a 3500-NASDAQ would provide a nice return. The Quick-term, Short-term, Mid-term, and Long-term Indicants will guide you through that. After hitting say, 3500, it would most likely retreat to say, 1900-2300 range. And by the year 2050, it should be around 10,000 to 50,000 with many bull and bear cycles in between.

It will take about two to five years for Fortune 500 companies to weed out leaders whose specialty is politics, stock price manipulation, and management stupidity. Until that paradigm is complete, politicians will ensure the Enron stories will stay in the press, provided that more than half of the American families still have an interest in the stock market.

Divergence versus Convergence

The past few weeks have demonstrated a move toward bearish convergence. There have been an increasing number of sell signals for oil field service stocks. The oil field services index, which has been the most bullish index this year, has softened right along with general stocks. Gold and precious metals are still strong, but the corresponding mutual funds have indicated some bearish turbulence near the top of their mid-term cycles. There will be more about that later.

Economic Outlook

The dollar continues to plummet against major world currencies. The rate of weakness is alarming. As stated the past few weeks, this will continue to increase pressure on Greenspan to hike interest rates.

There is little difference to report from last week’s report. All interest rates continue to remain in bullish support domains. Southerly moving interest rates the past few years have done nothing to inspire the stock market to move north. But rest assured, northerly moving interest rates will definitely inspire the bear market to continue as is. There will be political pressure on Greenspan to minimize interest rate hikes in this mid-term election year.

The Dow Jones Spot, Reuter-U.K., and CRB Bridge future prices remained in inflationary domains. That coupled with the weakening dollar is putting a bit of a pinch on Greenspan.

Last week’s report stated Greenspan would fight inflation regardless of economic conditions. However, as stated earlier, he will be under severe political pressure to hold off raising rates until after the elections in November. He may raise in the near term, but cut back as the election nears. He may also have to wait until 2004 to adjust rates aggressively to the north due to the same political pressure.

The Indicant signaled "buy" for Fidelity American Gold (FSAGX) - #28 on December 7, 2001 . Eighteen weeks ago, it was up 19.4% since that buy signal. Six weeks ago, it was up 66.1% since the Mid-term Indicant signaled buy. Two weeks ago it closed up 41.8%. Last week it closed up 50.7%. This volatility can be interpreted as either a pause in its northerly march or a topping where a crash is imminent. Right now, it has the attributes of the former.

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 36.0% nineteen weeks ago since the Indicant signaled "buy" on April 13, 2001 . Seven weeks ago, it was up 75.2% since the MTI buy signal. Two weeks ago, it closed up 47.8%. Last week, it closed up 52.2%. Again, it is either profit taking or the belief that the Fed is on the verge of hiking interest rates.

We will leave the following comment in this letter until this paradigm shift completes its cycle. If you do not own either of these funds, you can monitor them to gauge the level of fear by investors during times such as this. As stated the past several months, we will continue to report exclusively on these, as they assist in signaling fear/greed relationships and help us keep an eye on the divergence patterns.

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

Quick-term and Short-term Indicant - Markets

The Quick-term and Short-term Indicant was updated in the preliminary report you received this weekend. If you already deleted it from your email inbox, you can find it and all other back issues at the following link.

http://www.indicant.net/Non-Members/Back%20Issues/A%20Reports.htm

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

Eighteen weeks ago, all eight indexes were bulls with an annualized growth of 48.2%. Now all eight indexes are bears and are down 13.8% since their respective bear signals and average of 9.6 weeks ago. The strongest index is the Dow Jones Industrial Average. It is down 9.4% since the Mid-term Indicant signaled bear for that index on June 7, 2002 . It is down 16.2% since the Quick-term Indicant signaled bear on April 23, 2002 . It is down 18.0% since the Short-term Indicant signaled bear on March 20, 2002 . The weakest index is the NASDAQ100. The NASDAQ Composite is down 17.5% since the Mid-term Indicant signaled bear on April 26, 2002 . It is down 26.0% since the Quick-term Indicant signaled bear on April 23, 2002 . Finally, the NASDAQ Composite Index is down 67.5% since the Short-term Indicant signaled bear over two years ago on March 31, 2000 .

Until this mid-term election year lapses, we will continue to focus on the market finding a bottom. A few weeks ago, it was not inconceivable to project that bottom with a Dow of 5,000 and a NASDAQ at 800. We really don’t care where the bottom is. All we care about is “when” it will occur. The lower the market goes, the greater the buying opportunities will be.

For those of you, who have not looked at the mid-term election year phenomenon, please click on the following link. It will take you directly to the charts with market behavior following mid-term election year behavior.

http://www.indicant.net/Members/Updates/History-Seasonal/HS0090.htm

To view Mid-term Indicant charts for U.S. Market Indices, please click here.

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

Mid-term Indicant Positions - International Markets

There were no bull signal or bear signals. The Mid-term Indicant is now signaling "bull" for only ten of the twenty-two international markets it tracks.

The ten bulls are up 39.0% since the Mid-term Indicant signaled bull an average of 37.6 weeks ago. That is an annualized gain of 53.9%, which is down from 63.0% four weeks ago. Eighteen weeks ago, the annualized gain was 32.7%. The twelve bear markets are down by an average of 8.4%% since their respect bear signals. Six weeks ago, they were down 1.5%. Those twelve markets have been bears for an average of 7.8 weeks.

Click the following hyperlink to view the status and charts.

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

Mid-term Indicant Positions - Mutual Funds (Timing the Sectors)

There are no buy signals and four sell signals. All the buy signals were for international funds.

The Indicant continues to signal hold for 20 of the 76 mutual funds it tracks. You received an email earlier this weekend advising you of the specific buy and sell signals.

The 20 funds with hold signals are up an average of 13.7%. Nineteen weeks ago they were up 10.4%. The average period with Indicant holds signals is 27.5 weeks. The 13.7% average gain annualizes to 26.4%, which is down from 46.9% sixteen weeks ago. The fifty-one funds the Indicant recommends avoiding are down 13.9% since the Indicant "sell" signals. Seven weeks ago the “avoided” funds were down only 0.5%. The Indicant has been avoiding these bearish funds for an average of 26.0 weeks.

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

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.

Mid-term Indicant Positions - Indicant Selected Stocks

07-14-02

July 7, 2002 Indicant.Net Weekly Update

Volume 7, Issue 1 ISSN 1526 6516 © The Indicant Stock Market Report

Dear Indicant Members:  

Last January Frank Capiella of Wall Street Week predicted the Enron type stories would be out of the news by March. Mr. Capiella is a nice guy, but he was wrong on that one. The headlines in this morning’s Ft. Worth Star Telegram, originally reported by the Washington Post, was “Report: Enron board aided fall.”

The Enron debacle became a news item late last year. So, nearly three quarters have passed and Enron is still headline news. There are a couple of important points here.

The first point is that Enron is the first major story of voodoo bookkeeping to break out. Several other large companies have been exposed since Enron’s story originally broke. Imclone, Tyco, and World Com are also recent headline grabbers. More are sure to come, even though hundreds of corporations have resubmitted their earnings estimates. Apparently, the guilty figure that their prior lies can be corrected with some truth three to five years after the fact. Martha Stewart’s tie ins with Imclone will add some fuel to the repetition of head line news. And wait for the lawyers and all those class action lawsuits. This sort of story is nowhere near the final chapter. And as long as such stories make the news, distrust in the stock market will continue to swell. And with that distrust, there will be a continuous lid on stock prices. But don’t despair. Money can be made in the stock market. Let’s wait until the conclusion of the current bear and then have some fun.

The second point is that democrats will not let the Enron story die until after the November elections. There is nothing implicating George W. Bush or Dick Cheney to the Enron mess. However, their prior association and friendship with Enron leader, Ken Lay, will be played out to its fullest extent by the Democrats. There are other Republican connections to Enron that will fester in the news, as we near the election. Former senator, Phil Graham’s wife, was a board member.

Today’s article, as written by Carrie Johnson of the Washington Post, quoted Sen. Carl Levin, D-Michigan, as saying “the failures here were enormous…..The evidence shows that the board knowingly went along with Enron’s high risk accounting, and off-the-books deceptions.” Apparently, the U.S. Congress is going to fix the problem. Now, we can relax knowing that the institution that has generated trillions of dollars of debt for the country is going to stop voodoo bookkeeping. Whew! Now, we can relax.

Now, we have the liars chasing the liars. That is good. Leeches feeding on leeches is a better way. Enron’s attorney makes a good point in his rebuttal to Senator Levin that Congress needs to take a look at their own conduct. The attorney, representing the former directors of Enron claims management and the outside auditors misled the board. The article points out that the directors received $350,000 in cash and stock for their work in 2000. That is about double what normal directors make in a year at other publicly traded companies.

The reason most people become directors is to enhance their resumes or for ego boosting purposes. Seldom do directors understand the business they are supposedly overseeing. There are cases where directorships make business. For example, it would make sense for Bill Gates to be a director at Intel, where his views of software needs could be conveyed to Intel’s management. When there is a natural relationship between businesses is another reason people serve as directors. Very few become directors because they are concerned about the livelihoods and well-being of shareholders.

The proposed regulations by the Senate Subcommittee on Investigations recommends that directors of publicly traded corporations:

 1. Stop accounting practices and transactions that put the company at high risk of not complying with generally accepted accounting principles and resulting in misleading and inaccurate financial statements.

 2. Ban conflict-of-interest arrangements that allow company transactions with a business owned or operated by senior company personnel.

 3. Prohibit off-the-books activity designed to make the company’s financial condition appear better than it is.

 4. Prevent stock-based compensation plans that encourage executives to use improper accounting to improperly increase the company stock price.

 5. Strengthen director independence by requiring that a majority of outside directors be free of material financial ties to the company other than their compensation as directors.

Discussion of #1 above. Accounting is pretty simple. Debits go on the left and credits go on the right of the journal page. If the transaction involves an asset, the debit transactions increases the value of the asset. A credit transaction deflates the asset. The credit transaction works similarly on the liability side of the balance sheet. Sure, there can be complexities that arise in any business, but the basic fundamentals of debits and are always correct. When an accountant strays from those fundamentals, he or she joins the crowd of liars. Sometimes the accountants are told by the executives, “make the numbers look good.” If they follow orders, voodoo bookkeeping and management stupidity is in full swing. The Senate Subcommittee has offered nothing but typical political noise on the first point. Accounting is well-defined and one of the oldest business disciplines there is.

Discussion of #2 above. Management works for the directors who work for the shareholders. If a manager, who is a hireling, finds a great business opportunity, it is his or her responsibility to convey that information to the executives. If the executives reject the opportunity, that manager has two options. 1) Accept their decision and continue working sixty plus hours a week for his or her employer or 2) Quit the company and go work for the good opportunity company. But, all too often the hireling arranges a relationship between the two companies for their self gain and leaves the shareholder out of the loop. Remember, it was shareholders who provided employment to the hireling in the first place. That is where the loyalty should be. When that loyalty is breached, the hireling is guilty of deception and unethical behavior. Again, the Senate Subcommittee on Investigations offered nothing new, but their usual noise.

Discussion of #3 above. Any hireling who arranges off-the-book transactions, who had a normal upbringing and is from this planet, knows it is lying. Has corporate leadership deteriorated so deep in unethical behavior that the Senate now has to write a law stating what is dishonest behavior? We at the Indicant have known for quite some time that the nature of corporate leaders has declined from hard working people to the politically inclined. The Senate Subcommittee on Investigations offers nothing new, but their usual noise.

Discussion of #4. All hirelings from the janitor to the CEO must work hard to increase the value of a companies stock price. Their highest responsibility is to protect the assets of their employer (the shareholders). Those assets plus their hard-working labor is what lays the foundation for increasing stock prices. The general direction of the stock market and investor appeal is what ultimately influences a stock price. It is the CEO’s job to increase shareholder value. The Senate Subcommittee on Investigations apparently does not understand business. They simply cannot take this away.

Discussion of #5 above. As you can see, the above is simply political noise. For the past one-hundred years, the director’s primary responsibility is to represent the shareholder. The directors at Enron did not do that and should be punished as common criminals. If you go into someone’s home and rob them and get caught, you go to prison. What is the difference between robbery and being paid $300,000 plus with your eyes closed. The net effect is the same. Many people lost their life’s savings. Yes, they are guilty of not diversifying, but at the same time, they believed their corporate leaders.

As you can see, the politicians only use catastrophe to build camera time for themselves and their irregular egos. They will not and cannot solve the problems of corporate moral decay. Those problems are being resolved right now. Corporate executives are in the process of being fired. Many will face civil lawsuits. Some may even be criminally prosecuted. Those laws are already there. When executives go before the courts or the Senate panels and repeatedly say, “I don’t recall” when asked questions, shareholders are going to figure out why pay someone millions in salary when they cannot remember anything. The free market system is going to fix this problem; not politicians.

Now back to the two points. The Enron type stories are going to be with us for a few more years. That will keep a lid on stock prices. The politicians will continue to play Enron up during this election year and will do their best to implicate George W. Bush and Dick Cheney. That too will keep a lid on stock prices.

But with this lid there will be the normal bull/bear cycles where money can be made. These cycles will be shorter and shallower than the recent past. Sector divergence will be more pronounced. No more are the days when everything goes up from valueless dot coms to lazy Fortune 500 companies. The days of a direct correlation between honest effort and corresponding reward are about to return to us.

Divergence versus Convergence

The divergence gap narrowed this week with a softening energy prices and reduced inflationary threats. The fear element seems to be fading as a favored sector at this point. But “fear related” investments continue to be in bullish domains and the technology sector continues to remain in bearish domains. There are early signs of returning convergence patterns, but this time they tend to favoring southerly movements.

Economic Outlook

The dollar continues to plummet against major world currencies. The rate of weakness is alarming. As stated the past few weeks, this will continue to increase pressure on Greenspan to hike interest rates.

All interest rates continue to remain in bullish support domains. Southerly moving interest rates the past few years have done nothing to inspire the stock market to move north. But rest assured, northerly moving interest rates will definitely inspire the bear market to continue as is. Don’t think for one minute that would bother Greenspan. He supports his famous quote of “irrational exuberance” when the NASDAQ hit 5000 a couple of years ago.

The Dow Jones Spot, Reuter-U.K., and CRB Bridge future prices moved from neutral to inflationary domains. That coupled with the weakening dollar is putting a bit of a pinch on Greenspan.

If Greenspan acquiesces on fighting any hint of inflation, the gold prices and related investments will continue to move north. This scenario is highly unlikely, as the Fed has always battled inflation first, even with recessions and increasing unemployment. There are some early signs that Greenspan will wage the battle on inflation, as usual, as opposed to supporting an expanding economy.

The Indicant signaled "buy" for Fidelity American Gold (FSAGX) - #28 on December 7, 2001 . Seventeen weeks ago it was up 19.4% since that buy signal. Eight weeks ago, it was up 49.7%. Five weeks ago, it was up 66.1% since the Mid-term Indicant signaled buy. Three weeks ago, it closed up 57.4%. This past week it closed up 41.8%. Although this investment is on the bullish end of the divergence gap, it is losing some steam. As previously stated, it is either profit taking or a belief that Greenspan will disallow even the slightest movement of inflationary developments.

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 36.0% eighteen weeks ago since the Indicant signaled "buy" on April 13, 2001 . Six weeks ago, it was up 75.2% since the MTI buy signal. Three weeks ago, it closed up 63.3% since the “buy” signal. Last week it closed up 47.8%. Again, it is either profit taking or the belief that the Fed is on the verge of hiking interest rates.

Gold prices are in the inflationary domain on the charts. But those prices are softening on the current Mid-term cycle. The secular trend is still moving favorably to the south. As long as there is no shift in the secular cycle of gold prices or other commodities, you have ever reason to be optimistic about the long-term future.

We will leave the following comment in this letter until this paradigm shift completes its cycle. If you do not own either of these funds, you can monitor them to gauge the level of fear by investors during times such as this. As stated the past several months, we will continue to report exclusively on these, as they assist in signaling fear/greed relationships and help us keep an eye on the divergence patterns.

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

Quick-term and Short-term Indicant - Markets

The Quick-term and Short-term Indicant was updated in the preliminary report you received this weekend. If you already deleted it from your email inbox, you can find it and all other back issues at the following link.

http://www.indicant.net/Non-Members/Back%20Issues/A%20Reports.htm

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

Seventeen weeks ago, all eight indexes were bulls with an annualized growth of 48.2%. Now all eight indexes are bears and are down 7.6% since their respective bear signals and average of 8.6 weeks ago. The strongest index is the Dow Jones Industrial Average. It is down 2.2% since the Mid-term Indicant signaled bear for that index by 2.2% on June 7, 2002 . It is down 7.6% since the Quick-term Indicant signaled bear on April 23, 2002 . And it is down 11.4% since the Short-term Indicant signaled bear on March 20, 2002 . The weakest index is the NASDAQ100. The NASDAQ is down 13% since the Mid-term Indicant signaled bear on April 26, 2002 . It is down 19.5% since the Quick-term Indicant signaled bear on April 23, 2002 . Finally, the NASDAQ Composite Index is down 65.7% since the Short-term Indicant signaled bear over two years ago on March 31, 2000 .

Last Friday’s explosive up day should be considered strictly technical. We will watch the Quick-term Indicant and its supporting indicators, such as the Indicant Volume Indicator, this coming week. Although there were a few buy signals this pass week for the first time in quite some time, it is still a time for caution and relatively tight stop losses. As the Indicant has been advising for the past several weeks, ignore strong up days until we have Quick-term, Short-term, and Mid-term confirmation of such bullish behavior.

Until this mid-term election year lapses, we will continue to focus on the market finding a bottom. A few weeks ago, it was not inconceivable to project that bottom with a Dow of 5,000 and a NASDAQ at 800. We really don’t care where the bottom is. All we care about is “when” it will occur. Last Tuesday’s close could very well have been the bottom. If it indeed was the bottom, we will know it by the various Indicant models.

For those of you, who have not looked at the mid-term election year phenomenon, please click on the following link. It will take you directly to the charts with market behavior following mid-term election year behavior.

http://www.indicant.net/Members/Updates/History-Seasonal/HS0090.htm

To view Mid-term Indicant charts for U.S. Market Indices, please click here.

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

Mid-term Indicant Positions - International Markets

There was one new bull signal and no new bear signal. In addition to the new bull signal, the Mid-term Indicant is now signaling "bull" for only nine of the twenty-two markets it tracks.

The nine bulls are up 43.0% since the Mid-term Indicant signaled bull an average of 40.7 weeks ago. That is an annualized gain of 55.0%, which is down from 63.0% three weeks ago. Seventeen weeks ago, the annualized gain was 32.7%. The international arena continues to perform at a higher level than the U.S. markets. The twelve bear markets are down by an average of 5.3% since their respect bear signals. Five weeks ago, they were down 1.5%. Those thirteen markets have been bears for an average of 6.8 weeks.

Click the following hyperlink to view the status and charts.

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

Mid-term Indicant Positions - Mutual Funds (Timing the Sectors)

There are no four buy signals and no sell signals. All the buy signals were for international funds.

In addition to the buy signals, the Indicant continues to signal hold for 21 of the 76 mutual funds it tracks. You received an email earlier this weekend advising you of the specific buy and sell signals.

The 21 funds with hold signals are up an average of 17.3%. Eighteen weeks ago they were up 10.4%. The average period with Indicant holds signals is 31.5 weeks. The 17.3% average gain annualizes to 28.6%, which is down from 46.9% fifteen weeks ago. The fifty-one funds the Indicant recommends avoiding are down 8.9% since the Indicant "sell" signals. Six weeks ago the “avoided” funds were down only 0.5%. The Indicant has been avoiding these bearish funds for an average of 7.3 weeks.

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

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.

Mid-term Indicant Positions - Indicant Selected Stocks

http://www.indicant.net/Members/Updates/MT-Stocks/S03.htm##13

07-07-02

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