July 2007 Indicant Weekly Stock Market Reports

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

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

All updated information can be found from a single page at Indicant.Net. Click the below link to that page. You will need your login ID and password.

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

The Quick/Short-term Indicant Stock Market Report

The Indicant Stock Market Report’s Secular Market Blend

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.