July 29, 2007
Indicant Weekly Stock Market Report
Volume 07, Issue 05 ISSN 1526 6516 © The
Indicant Stock Market Report
This Week’s
Report
The Bullish
Bias Threatened
The Short-term
Indicant signaled bear last week. There were several ETF sell signals by
the Quick-term Indicant and a few by the Short-term Indicant. The
Consolidated Quick/Short Indicant also generated a few sell signals. These
events did not occur with the bear scare in late February and March
earlier this year.
Some of the
ETF’s are configuring with ominous bearish attributes. Look at
ETF#05-Financial Institutions. You will notice this fund is falling prey
to a collapsing Force Vector. Click the following link to view this
unhealthy ETF.
http://www.indicant.net/Members/Updates/QTI-ETF-Charts/QTI-ETF1-Charts.htm#5
You will
notice it had a similar Force Vector drop last March. However, that decay
was not accompanied by a fall below its bearish yellow curve. There is a
high probability of bearish sustainability when Force Vectors move
robustly to the south into bearish domains and the underlying security is
below its bearish yellow curve.
The above is
not the only ETF with that configuration. The bear scare in late February
and early March this year did not fool the Quick-term Indicant. There were
only two sell signals at that time and they were quickly followed by
another buy signal. After those buy signals, the market moved solidly to
the north. However, this time, the configurations are favoring bearish
influences on a quick-term basis.
This
particular fund, ETF#05-Financials, is enduring fundamental problems with
the threat of massive defaults on sub-prime loans. This fundamental
weakness is further exacerbated by the perceived boom/bust cycle in real
estate. The contemporary weight is assigned to the bust part of that
cycle. Click the following link to see ETF#17-Real Estate.
http://www.indicant.net/Members/Updates/QTI-ETF-Charts/QTI-ETF3-Charts.htm#13
As you can
see, it is moving aggressively south below its bearish yellow curve. It is
down 11.9% since the Quick-term Indicant signaled sell on June 12, 2007.
With Force Vectors moving rapidly to the south and no bearish yellow curve
below its price, there is no defined pause point to slow or stop its
collapse.
The stock
market is funded, in part, from home equity loans. In other words,
investors refinance their homes and assign much of the capital from their
re-financing to the stock market. That propels demand for stocks
disproportionate to the supply of stocks, which fosters bullish stock
market behavior. The bear is excited about the possibility of loan
defaults and a corresponding rapid decline in stock market cash infusions.
The second
quarter reports highlighted a healthy economy. That depressed the stock
market last week. Fundamentals, such as the above, coupled with economic
robustness suggests the Federal Reserve is now more likely to increase
interest rates. This is especially bad news to the small cap companies,
where borrowing is required for rapid growth.
The worsen
matters, oil prices skyrocketed last week. That suggests inflationary
threats will increase and with that, expect rising interest rates.
All of this
led to the second consecutive week of bearish convergence. Bearish
sustainability typically occurs after four consecutive weeks of bearish
convergence. Energy, precious metals, stock market, real estate, etc. all
endured aggressive bearish behavior last week. Bearish convergence
suggests the market is sniffing recessionary threats and thus its bearish
behavior last week.
The bear is
hoping for two more weeks of bearish convergence. That would zap remaining
bullish energy. The bear would then find easy victories.
However, keep
in mind, this is a presidential pre-election year, which is the most
bullish on the four year cycle. Historical standards suggest the market
will be up this year. Since it is already up, it is possible to endure
sustainable bearish behavior as we approach deep bearish seasonality,
which is due in a few weeks. Historical standards can exert its bullish
influence after deep bearish seasonality and the impending heart and soul
of bullish seasonality that always follows. So, it is possible for the
market to fall precipitously and be followed by dynamic bullishness. The
trick is to avoid the precipitous decline in stock market equities.
So, is this a
bearish spurt? Current configurations support increased bearish influences
over the next few weeks, but also support bullish responses. The overall
effect could be a significant dip to the south, while the historical
standard or presidential pre-election year bullishness will remain in
tact. Keep your eye on the 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 three buy signals and 26-sell signals.
In addition
to the sell signals, the Mid-term
Indicant is avoiding 33-stocks and funds of the 345- tracked by the
Indicant. The avoided stocks and funds are down an average of 18.9% since
the Mid-term Indicant signaled sell an average of 31.7-weeks ago.
There were
171-stocks and funds avoided at this time last year. Those avoided stocks
and funds were down an average of 4.2% since their respective sell signals
an average of 15.0-weeks earlier.
Two years ago,
on July 29, 2005, the Mid-term Indicant was avoiding 91-stocks and funds
that were down an average of 4.2% since their respective sell signals an
average of 18.9-weeks earlier. Three years ago on July 30, 2004 there were
129-avoided stocks and funds. They were down by an average of 13.6% from
their respective sell signals an average of 21.8-weeks earlier. On July
26, 2003, the Mid-term Indicant was avoiding only 16-stocks and funds out
of 296-tracked at that time. They were down by an average of 29.1% since
their sell signals an average of 30.2-weeks earlier. Five years ago on
July 27, 2002, there were 255-avoided stocks and funds. They were down an
average of 29.0% since their respective sell signals an average of
10.9-weeks earlier.
In addition
to the buy signals, the Mid-term
Indicant is signaling hold for 283 of the 345-stocks and funds tracked by
the Indicant. The stocks and funds with hold signals are up an average of
140.1%. That annualizes to 62.2%. The Mid-term Indicant has been signaling
hold for these 283-stocks and funds for an average of 117.0-weeks.
One year ago,
on July 28, 2006, the Mid-term Indicant was holding 168-stocks and funds
out of the 345 tracked for an average of 119.0-weeks. Those 168-stocks and
funds were up by an average of 151.8% (annualized at 66.3%). The Mid-term
Indicant was signaling hold for 224-stocks and funds of the 320-tracked
two years ago on July 29, 2005. They were up by an average of 105.0%
(annualized at 61.3%) since their respective buy signals an average of
89.1-weeks earlier. There were 165-stocks and funds with hold signals on
July 30, 2004 since their buy signals an average of 62.2-weeks earlier.
They were up by an average of 82.9% (annualized at 68.3%).
The Indicant
was only tracking 296-stocks and funds in 2002-2003, and early 2004. On
July 26, 2003, the Mid-term Indicant was signaling hold for 265-stocks and
funds out of 296-tracked. They were up by an average of 46.2% (annualized
at 92.9%) since their buy signals an average of 25.9-weeks earlier. Five
years ago, on July 27, 2002, there were only 24-hold signals for stocks
and funds out of the 295 tracked by the Mid-term Indicant. They were up
54.0% (annualized at 57.3%) since their respective buy signals an average
of 49.0-weeks earlier.
Summary of
Stocks and Funds with Buy and Sell Signals This past Week
To maintain
appropriate security, you can see the Mid-term Indicant "buy/sell" signals
for stocks and funds for this week by clicking the following link. It is
in the member’s only section.
http://www.indicant.net/Members/Updates/All%20Update%20Forms/Buy-Sell%20Summary%20This%20Week.htm
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
82.1% since it secular low on October 9, 2002. The NASDAQ is up 130.0% and
S&P500 up 87.8%. The small cap index, S&P600, is up 140.2%. The NASDAQ is
down 49.2% since it last weekly secular peak on March 9, 2000. The S&P500
is down 4.5% since it last weekly secular peak on March 23, 2000, while
the Dow is up 13.2% since January 13, 2000. The NASDAQ needs to climb
another 97.0% to achieve a new record high.
The Dow is up
6.4% so far this year. The S&P500 is up 2.9% and the NASDAQ up 6.1%. At
this time last year, the Dow was up 3.6% for 2006, with the S&P500 up 1.2%
and the NASDAQ down 6.8%. Even with last week’s bearish behavior, the
major indices are performing better this year than last year.
With the
exception of 2003, the last presidential pre-election year, the major
indices are performing better this year than any year this century. The
NASDAQ through this week of 2001 was down 17.9%. It was down a whopping
35.3% through this week of 2002. It recovered by 29.3% by this weekend of
2003. It was again down 6.7% in 2004 on this weekend. At this time of year
in 2005, it was flat for the year and last year it was again down 6.8%.
This year, it is up 6.1%.
Since the
expiration of the heart and soul of bullish seasonality in late January
2007, the Dow is 5.1%, while the NASDAQ and S&P500 are up 4.0% and 1.4%,
respectively. Even with last week’s bearish behavior, all the major
indices are up since the expiration of the heart and soul of bullish
seasonality.
Where is the
market headed for the remainder of this year? Please read on and keep up
with the Daily Stock Market Report.
Stop Loss
Management
The Mid-term
Indicant recommends a stop loss of 8% on recent buys because of the
Quick-term Indicant’s bullish bias.
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.
The
3-Month T-Bill continued moved solidly to the south last week after a
few weeks of moving north. Its southerly movement paralleled the stock
market’s dip to the south, but unfortunately, not as dramatic. The stock
market needs a dramatic drop in interest rates, while at the same time not
feel threatened by inflation. That scenario is going to be difficult with
rising oil prices.
As stated the
past six weeks, it is unlikely interest rates will rise during this
presidential pre-election year. Unfortunately, their flat configuration
the past several months induces bearish spurts from time to time. Rising
commodity prices are a thorn viewed by the bull and remain as a constant
threat.
As stated the
past eight weeks, the various Indicant attributes are configuring in
support of the historical standards of presidential pre-election-year and
election-year stock market bullishness. The Fed will opt in favor of
economic activity in the presidential pre-election year underway and next
year’s election year. However, in 2009’s post election year, the bear
would find absolute resolve in over-taking the bull if the Fed’s action
manifests a rapid inflationary spiral and followed by a rapid increase in
rates to stifle the inflation.
As stated the
past ten weeks, the Fed is “maintaining” prevailing rates. The problem is
a tough one. Commodity prices continue to rise and the inflation battle is
underway. Rising capitalism should invoke rising productivity. Will this
productivity potential offset the inflationary threats of rising commodity
prices?
As stated the
past four weeks, the oil’s bearish yellow curve has shifted back to the
north. Although its recent northerly cycle has not produced the same
dramatic bearishness of the 1970’s, it consumed bullish energy from the
stock market. If it resumes another cyclical rise, the result should be
unfavorable to the stock market bull. Two bad results will manifest.
Either inflation becomes more than a nuisance or interest rates rise or
both. The bull will be weakened in the event either unfolds. Click the
below link to view the oil charts.
http://www.indicant.net/Members/Updates/Economic/E03.htm
As stated last
week, the CRB Bridge Futures is configuring similarly to oil. That
configuration continues to threaten the bullish stock market bias. The Fed
keeps a close eye on this barometer. Its chart is on the same link. Just
scroll down a little to view it.
Fear
Metrics: Economics and Terrorism
Vanguard Gold and Precious Metals (VGPMX) - #19 is up 333.4% since the
April 13, 2001 buy signal. Its annualized growth since that buy signal is
52.3%. It moved to the north in 29 of the past 41-weeks. This fund was
solidly bearish last week after bearish expressions in the previous week.
Fidelity Gold, Fund #28, is up 39.3% since the Mid-term Indicant
signaled buy on August 26, 2005. That annualizes to 20.2%. This fund was
aggressively bearish last week after three consecutive weeks of solid
bullish performance.
State Street Research Global #9, SSGRX, which is isolated in the
energy sector, is up 289.9% since the Mid-term Indicant signaled buy on
August 16, 2002. It is annualizing at 57.8%.
Vanguard Energy #18, VGENX, is up 215.3% (annualized at 49.2%) since
the Mid-term Indicant signaled buy on April 5, 2003.
Fidelity Energy Services #40, FSESX, is up 195.1% (annualized at
52.9%) since the Mid-term Indicant signaled buy on December 6, 2003.
Fidelity Energy #39, FSENX, is up 163.9% since the Mid-term Indicant
signaled buy on August 16, 2003. It is annualized at 40.9%.
These energy
related funds were solidly bearish last week, following bearishness in the
previous week.
Investors in
these funds are supporting a 1970’s type of market with high inflation and
high oil prices. Energy and gold always do well during such times.
Fundamentals appear to be shifting in favor of selling the above funds
(09/10/06). Do not sell until the Mid-term Indicant signals sell. They
continue to rebound and from time to time endure fluttering. 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 50.3% since then. It is
annualized at 25.1%. This ETF has been bearish in six of the past eleven
weeks. It was bearish last week, following three consecutive bullish
weeks.
The SQI
signaled buy for
ETF#03 – Energy and Natural Resources on March 26, 2003. It is up
219.3% (annualized at 49.8%). This fund was also solidly bullish last week
after three weeks of bullish behavior.
Mid-term
Indicant Positions – Ten U.S. Indices
There were no new bull signals and no
new bear signals.
All ten major
indices are bulls. They are up by an average of 27.0% since the Mid-term
Indicant signaled bull an average of 106-weeks ago. That annualizes to
13.1%, which is down significantly from the past three years. This is due
to the bear signals for the S&P400 and S&P600 Indexes on July 21, 2006,
which had been receiving a bull signal since October 25, 2002. Those two
indices endured some fluttering after the expiration of the tremendous
bull leg that lasted nearly four years. A new bull leg is underway and may
proceed just as vigorously for these two indices as the bull leg from
October 2002 through July 2006, where the S&P400 and S&P600 increased by
66.3% and 79.3%, respectively.
Dynamic
bullish statistics were also eliminated due to the Dow Transports bear
signal and a new bull signal on January 19, 2007. The Dow Transports
enjoyed a 23.1% gain from its March 21, 2003 bull signal until its bear
signal on March 19, 2004. It fluttered with a new bull signal one week
later on March 26, 2004 and enjoyed an 80.0%-gain until a new bear signal
on December 22, 2006.
The Dow
Utilities increased by 104.4% from its October 25, 2002 bull signal to the
March 21, 2006 bear signal. After some fluttering, it received a new bull
signal on June 2, 2006. Interestingly, the Dow Utilities was the best
performing index since the October 25, 2002 Mid-term Indicant bullish bias
shift. Utility stocks have been consistent high performers since the bull
market’s birth on October 25, 2002.
The Mid-term Indicant Dow Jones Industrial Average performance is now
at $40,184,288.
That beats buy
and hold performance of $2,028,176 on a $10,000 investment in the Dow
stocks in 1900. The
MTI S&P500 is at $188,037. That beats buy and hold’s $142,908 on a
December 31, 1971 $10,000 investment. The
MTI-NASDAQ is at $214,385. That beats buy and hold’s $88,843 on an
October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy
and hold by 1,881.4%, 31.8%, and 141.3%, respectively, for these indices
as of this past week.
The Indicant’s
percentage advantage over buy and hold does not change during bull
signals. The advantage changes only during bear signals. That is because
the buy and hold model has to keep holding, while the MTI-RYS model avoids
bear markets. The only purpose of the 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.
Divergence
versus Convergence
Bearish
convergence occurred for two consecutive weeks. Nearly all sectors moved
bearishly to the south. That is somewhat ominous for the stock market.
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 34.4% since the Mid-term
Indicant signaled sell on September 15, 2006. Historical norms of market
cyclicality suggest the next buying opportunity for this fund may not
occur until 2009.
Click here for
Mid-term Indicant Table of Mutual Funds.
Always
remember never to keep more than 20% of your investment resources into a
single mutual fund. Sector investing in mutual funds is an extremely good
way to mix your investments.
Long Term
Indicant Positions - Dow Jones Industrial Average
The blue-chip
Long-term Indicant Bull signal was at 2895 for the DJIA in November 1991.
Keep in mind the Long-term Indicant generated only five bull/bear cycles
since 1920.
The Dow is up
358.3% (annualized at 22.7%) since the Long-term Indicant signaled bull
821-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: Nine of thirty;
bullish bias remains, although weakening.
Quick-term
Yellow Bears: Seven;
non-bearish support continues, but being threatened.
Short-term/Quick-term Non-Bearishness:
Countering sustainable bearish ambition.
Force
Vectors: Shifting south,
suggesting a pause in bullish behavior and increasing bearish threats.
Vector
Pressure: Supportive of bullish
bias.
Long-term
Hold Positions: Solidly safe.
Current
Quick-term Bias: Bullish
Overall
Market Status: Bullish bias
prevailing, but weakening.
Profit
Potential from Naked Options:
Increasing volatility is favorable.
Volume:
Configurations remain in
support of underlying bullish bias.
Comments
from April 20, 2007
Both the
NASDAQ and NYSE Indexes passed above their upper trading range limit. That
means a new trading range is being established and is not an indication of
immediate bias.
Force Vectors
and Vector Pressure maintained bullish bias during the Greenspan/China
bearishness that originated in late February and lasted for a few days in
early March. Viewing the Indicant Volume Indicator charts (link is below)
is a testament about how one should not engage trading behavior based on
contemporary news. Only two ETF sell signals were generated from the late
February-early March bearishness that was invoked by news and nothing
substantive. The bullish bias that originated on August 15, 2006 prevails.
Quick-term/Short-term Indicant Stock Market Report Details
The
Short-term Indicant signaled bear yesterday for both the Dow and
NASDAQ when configurations shifted in favor of the bear on the immediate
horizon.
Please read
on. Click here to see the
Short-term Indicant’s history.
Both
Indicant Volume Indicator’s are configuring robustly. As stated last
Wednesday, there is an increased probability in near-term bearish bias.
Even though the Dow is down over 500-points since then, the underlying
configuration continues to support the cyclical bullish bias. Both of the
previous two sentences continue to hold true. Those two truths will not
last long.
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 27-ETF’s. They are up 67.8% (annualized at
27.9%) since their respective buy signals an average of 125.3-weeks ago.
In addition to the sell signal, the SQI is avoiding three ETF’s. They are
down 3.0% since their sell signals an average of 3.5-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 one sell signal. Although there were no buy signals, the
Short-term Indicant is signaling hold for 26-ETF’s. They are up an average
of 77.6% (annualized 32.9%) since the STI signaled, buy, an average of
121.5-weeks ago. In addition to the sell signal, there are two avoid
signals. They are down 3.0% since their sell signals an average of
3.5-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 three sell signals. Although there were no buy signals,
the Quick-term Indicant is signaling hold for 21-ETF’s. They are up by an
average of 21.9% (annualized at 20.4%) since the QTI signaled buy an
average of 55.3-weeks ago. In addition to the sell signals, the Quick-term
Indicant is avoiding six ETF’s. They are down by an average of 3.6% since
their sell signals an average of 2.8-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. The bias shift on August
15, 2006 remains in favor of the bull.
Quick-term Indicant Bull/Bear Health Report
Seven of the
30-ETF’s are below their bearish yellow curves. The average relative
position of all thirty ETF’s is above bearish yellow by 3.9%. This
remains configured in support of the market’s non-bearish posture. There
is no longer minimal support for sustainable bearish assertions. However,
this attribute is not configured with support for sustainable bearish
behavior.
Nine ETF’s
are above their respective bullish red curves. That is down by fourteen
from six-trading days ago. This configuration supports the underlying
bullish bias, although weakened. All thirty ETF average positions are 3.9%
below their bullish red curves.
Bearish
spurts occur from time to time. Until all non-contrarian funds fall below
their bullish red curves, bearish expressions should be considered as mere
spurts. From time to time, other attributes are required to confirm this
prognosis.
At this time,
configurations indicate bearish expressions in the immediate future will
be mere spurt behavior. There is no indication of sustainable bearish
behavior.
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. As stated the past
several months, the high concentration of breakout-contact since last
August is solidly bullish. This repeated contact solidly supports the
underlying bullish bias. Contact in sixty of the last eighty trading days
remains supportive of bullish bias. Non-contact with the breakout lines
the past three days suggests the bull is resting.
The average
distance from breakout contact is 8.3%. This remains in support of the
bullish bias.
One of the
ETF’s is contacting its breakdown line. That is the first time this has
configured since 2004.
It is ETF #17-Real Estate. The average distance from the price and
breakdown is 19.6%. This configuration provides tremendous non-bearish
support, which has been the case since March 2003. There have been several
bearish “spurts” since then with no sustainability or dynamic support. The
probability of immediate contact remains low and thus a non-bearish bias
is maintained on a short-term basis, except for those funds with noted
contact.
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.
One of the thirty ETF Force Vectors continue toward bullish domains. As
stated six trading days ago, Force Vectors are now decreasing, which
suggests a pause in bullish expressions. The underlying bias remains
bullish, however.
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. The signals
are listed there. There were three put option buy signals after Friday’s
close.
With Force
Vectors and Vector Pressure moving south, consider bullish expressions as
bullish spurts against a micro-bearish bias. As stated earlier this week,
Force Vectors are moving robustly to the south favoring a bearish bias on
a near term basis. The behavior on the re-bound will advise when this
attribute expires. If Force Vectors move above the Indicant line into
bullish domains, then bullish bias will again be dominant. If Force
Vectors turn back to the south into bearish domains, put option
opportunities will increase. Also, that configuration would support an
increased probability of sustainability by the bear.
Seventeen
ETF Vector Pressures are in bullish
domains. As stated the past few days, the current configurations remain in
support the Quick-term bullish bias shift from August 15, 2006, although
favoring increasing bearish spurt activity. As stated the past few days,
several Quick-term and Short-term attributes have weakened in favor of
bearish behavior. However, keep in mind, overall configurations favor
bullish bias.
It is common
for bull/bear battles when Vector Pressure is being threatened from its
support of the prevailing bias.
As long as
this attribute holds above fifteen within confines of other Quick-term
attributes, bearish expressions are mere spurts, where there is no
sustainability. If and when it falls below fifteen, other attributes will
be evaluated and the bias assessment will be adjusted accordingly.
This
paragraph is repeated from June 26, 2007 daily stock market report. Depth
is a relative term. For those of you who bought several months ago,
holding until bearish yellow is achieved, will be accomplished with ease.
For those of you who bought in the past few weeks may not prefer to wait
for the victor of the bear/bull battle that typically occurs at the
bearish yellow curve.
Make certain
you sell naked options when the Force Vectors shift direction or within
two days of the purchase, whichever occurs first. If you are unfamiliar
with this, take the
options tour.
Remember
options trading is risky. Never offer “market prices.” Always bid low in
hopes of an intraday contrarian movement to the underlying assumption of
directional behavior. Always place day-orders, only. That keeps the floor
folks out of your pocketbook. Do not despair if your order does not take.
There are plenty of opportunities throughout the course of the year.
Remember, stalking is the key to success here. Although not necessary for
stock market success, those of you who have a gambling instinct will enjoy
this. For those of you with a longer-term perspective, it does not hurt to
see what the short-term folks are thinking. The Indicant indicates both
perspectives.
Quick-term
and Short-term Indicant Summary
The shift
from bearish bias to bullish bias started on Tuesday, August 15, 2006
after maintaining a bearish bias from early February 2006 until August 15.
The Quick-term and Short-term Indicant models continue suggesting a
bullish bias.
Do not write
covered call options while Vector Pressure is positive (bullish), which is
the current configuration. Increasing volatility suggests the market is
not ripe for the risk here.
The
Quick-term Bull remains in tact.
ProFunds Ultra Short mutual fund moves inversely to the QQQQ by
exponential amounts. The Consolidated Indicant model is no longer avoiding
QQQQ, which no longer supports holding contrarian fund, ProFunds Ultra
Short.
To
familiarize yourself with viewing the market from an ETF perspective,
click the following update links.
Quick-term ETF Options
Quick-term Indicant for ETF’s
Short-term Indicant for ETF’s
Consolidated Quick-term/Short-term Indicant for ETF’s
Click here to the report card, which is updated weekly, to link to related
tours.
Links to the
Short-term Indicant and Indicant Volume Indicator are below:
Short-term Indicant for DJIA and NASDAQ
Short-term Indicant Tables for the Dow Jones Industrial Average Index
Short-term Indicant Table for the NASDAQ Composite Index
Indicant Volume Indicator
Indicant
Conclusion
The market’s
bearish behavior last week is most likely unsettling for quite a few of
you. Some are asking, is this another bearish spurt or is this the
beginning of a sustainable bearish cycle? The Quick-term Indicant remains
configured with bullish attributes, although they are weakened.
Vector
Pressure continues to support the bullish bias. It has been doing that
since August 15, 2006. However, Vector Pressure is down quite a bit. Force
Vectors have shifted robustly in favor of bearish support.
There are only
9-Red Bulls on a Quick-term basis, while there are seven ETF’s below the
bearish yellow curve.
The Short-term
Indicant signaled bear last week. This could be a sustainable bear until
late September/early October.
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
In addition,
once you are inside the website, click on "members update" or simply log
in. It is on the top of every page in the web site so you can always find
your way back.
Happy
Investing,
www.indicant.net
07/29/07
July 22,
2007 Indicant Weekly Stock Market Report
Volume 07, Issue 04 ISSN 1526 6516 © The
Indicant Stock Market Report
This Week’s
Report
The Bullish
Bias Prevails – Part VI
Disappointing
corporate earnings unleashed bearish behavior late last week. Many
corporate management teams figure from time to time in their lazy-hazy
methods that things are okay right now and maybe spend a little too much
on their personal possessions/distractions. When earnings disappoint, they
always pin-point the problem, such as supply chain issues, rising material
costs, production disruptions, etc. Those are symptoms.
The real
problem when earnings disappoint is one that you never hear. That is,
corporate management fell asleep at the wheel. There are many instances of
a lack of management focus. When earnings disappoint, Orangutan Management
kicks in. That is one of the specialties of dilettante management. Problem
recognition with outstanding sound-bites is their skill set. The stock
market sees through the façade and punishes accordingly. Boardrooms
operate more slowly since they are pals with the board. Only after the
stock market punishes severely, the boardroom participants are displaced
and the good old boy network is eventually disbanded.
The trick to
Happy Investing is not wait on the board. They are immune to stockholder’s
dissatisfaction well after the stock price has collapsed. You should never
wait for any board of directors to take corrective action. Some do but
they are slow; very slow. Most of them are concerned about their own well
being; not yours. Thus the slowness of the displacement process. Many
adopt, “can we make it one more quarter?” There are not too many 90-hour
week managers around, such as Alfred P. Sloan anymore. Many feel great
because they have learned how to garnish huge salaries, which is the
problem. Paying hirelings over six digits is the root of the problem. Once
you pay a hireling over a million to run an enterprise already in
operation when he or she was hired will, with a few exceptions, result in
mediocre performance.
The stock
market knows all of this and punishes accordingly. Unfortunately, the
immediate punishment is dished out to the shareholder; not those
responsible for the disappointment.
However, do
not despair at this time. The stock market does not consist entirely of
those hirelings who do not earn their money with day-in and day-out
hardworking performance. There are many who do perform; mostly in the
small cap areas, which can encourage bullish trends to continue even
though the S&P500 dilettantes impose a heavy lid on bullish performance.
Even though
earnings were down last week, keep in mind the Dow is up 23.3% since that
August 15, 2006 Quick-term Indicant bullish bias shift. The NASDAQ is up
27.1% since then. The S&P500 lags with a 19.3% growth rate. If corporate
earnings continue to disappoint, keep your eye out for Orangutan
management, where problem identification is openly announced. You, of
course, are now aware that the root cause of the problem is not being
addressed.
Although the
causative factors of last week’s late bearishness was mostly due to
corporate earnings, economic fundamentals continue supporting bullish
bias. Most of the major indices finished the week on a mild bearish note.
The S&P500 was one of the most bearish with a 1.2% decline, while the
NASDAQ100 was up a paltry 0.2%. Even though last Friday’s bearish
expression was discerning, this remains a bull market. Historical
standards support that prognosis and more importantly the various Indicant
models substantiate that.
Keep your eye
on the daily stock market report, as we are nearing the seasonal period of
deep bearish seasonality.
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 two buy signals and no sell signals.
Although
there were no sell signals, the Mid-term Indicant is avoiding 36-stocks and funds of the 345-
tracked by the Indicant. The avoided stocks and funds are down an average
of 6.3% since the Mid-term Indicant signaled sell an average of 29.3-weeks
ago.
There were
164-stocks and funds avoided at this time last year. Those avoided stocks
and funds were down an average of 7.4% since their respective sell signals
an average of 15.1-weeks earlier.
Two years ago,
on July 22, 2005, the Mid-term Indicant was avoiding 95-stocks and funds
that were down an average of 6.0% since their respective sell signals an
average of 17.3-weeks earlier. Three years ago on July 23, 2004 there were
only 83-avoided stocks and funds. They were down by an average of 26.3%
from their respective sell signals an average of 41.8-weeks earlier. On
July 19, 2003, the Mid-term Indicant was avoiding only 13-stocks and funds
out of 296-tracked at that time. They were down by an average of 28.1%
since their sell signals an average of 29.6-weeks earlier. Five years ago
on July 19, 2002, there were 241-avoided stocks and funds. They were down
an average of 26.6% since their respective sell signals an average of
10.7-weeks earlier.
In addition
to the buy signals, the Mid-term
Indicant is signaling hold for 307 of the 345-stocks and funds tracked by
the Indicant. The stocks and funds with hold signals are up an average of
144.8%. That annualizes to 66.6%. The Mid-term Indicant has been signaling
hold for these 307-stocks and funds for an average of 113.1-weeks.
One year ago,
on July 21, 2006, the Mid-term Indicant was holding 168-stocks and funds
out of the 345 tracked for an average of 124.7-weeks. Those 168-stocks and
funds were up by an average of 159.3% (annualized at 66.4%). The Mid-term
Indicant was signaling hold for 222-stocks and funds of the 320-tracked
two years ago on July 22, 2005. They were up by an average of 103.6%
(annualized at 60.7%) since their respective buy signals an average of
88.7-weeks earlier. There were 166-stocks and funds with hold signals on
July 23, 2004 since their buy signals an average of 62.2-weeks earlier.
They were up by an average of 80.7% (annualized at 67.5%).
The Indicant
was only tracking 296-stocks and funds in 2002-2003, and early 2004. On
July 19, 2003, the Mid-term Indicant was signaling hold for 277-stocks and
funds out of 296-tracked. They were up by an average of 44.4% (annualized
at 93.2%) since their buy signals an average of 24.8-weeks earlier. Five
years ago, on July 19, 2002, there were only 39-hold signals for stocks
and funds out of the 294 tracked by the Mid-term Indicant. They were up
38.4% (annualized at 45.0%) since their respective buy signals an average
of 44.4-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
Stock market
variation to bullish trend is minimal at this time. This section will
resume when indications suggests the market is going to shift secularly.
The data is being maintained by the Indicant. Please read back weekly
issues from 2004 if you are interested in this content. Again, to keep
members from be lulled to sleep with minor variation to trend, this
section will contain this paragraph until such time details will be
resumed.
Stop Loss
Management
The Mid-term
Indicant recommends a stop loss of 8% on recent buys because of the
Quick-term Indicant’s bullish bias.
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 an