July 29, 2007
Indicant Weekly Stock Market Report
Volume 07, Issue 05 ISSN 1526 6516 © The
Indicant Stock Market 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 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 continues moving mildly to the north. As stated the
past few week, this increase in short-term interest rates did not
discourage the bull from maintaining its dominance. Friday’s aggression by
the bear was induced by poor corporate performance.
As stated the
past five 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 seven 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 first a rapid inflationary spiral and then a rapid increase in
rates to stifle the inflation.
As stated the
past nine 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 three 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
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.
This paragraph
is repeated from the past seven weeks. Productivity improvements are
evolutionary, whereas commodity prices can be revolutionary. The sudden
increase in the number of capitalists is revolutionary. However, it takes
time and a lot of effort to increase productivity. The exponentially
increased demand for commodities can out-pace the impending productivity
increases and thus set off inflation. This is an issue confronting both
the Fed and the stock market. The prevailing stock market perception is
that productivity will be the economic savior.
Overall,
economic conditions appear shifting in favor of a continuation of this
strong bull market.
Last Friday’s
bearish behavior was induced by poor corporate performance. Contemporary
research suggests these problems relate more to operational incompetence
as opposed to economic fundamentals.
Fear
Metrics: Economics and Terrorism
Vanguard Gold and Precious Metals (VGPMX) - #19 is up 380.4% since the
April 13, 2001 buy signal. Its annualized growth since that buy signal is
59.8%. It moved to the north in 29 of the past 40-weeks. This fund was
bearish last week after three weeks of solid bullish behavior.
Fidelity Gold, Fund #28, is up 50.4% since the Mid-term Indicant
signaled buy on August 26, 2005. That annualizes to 26.2%. This fund was
aggressively bullish the past three weeks.
State Street Research Global #9, SSGRX, which is isolated in the
energy sector, is up 321.7% since the Mid-term Indicant signaled buy on
August 16, 2002. It is annualizing at 64.4%.
Vanguard Energy #18, VGENX, is up 238.7% (annualized at 54.8%) since
the Mid-term Indicant signaled buy on April 5, 2003.
Fidelity Energy Services #40, FSESX, is up 206.3% (annualized at
52.6%) since the Mid-term Indicant signaled buy on December 6, 2003.
Fidelity Energy #39, FSENX, is up 181.7% since the Mid-term Indicant
signaled buy on August 16, 2003. It is annualized at 45.0%.
These energy
related funds were mostly bearish last 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 55.2% since then. It is
annualized at 27.8%. This ETF has been bearish in five of the past ten
weeks. It was bullish the past three weeks.
The SQI
signaled buy for
ETF#03 – Energy and Natural Resources on March 26, 2003. It is up
244.2% (annualized at 55.7%). This fund was also bullish the past three
weeks.
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 34.1% since the Mid-term
Indicant signaled bull an average of 105-weeks ago. That annualizes to
17.0%, 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 $41,958,241.
That beats buy
and hold performance of $2,117,269 on a $10,000 investment in the Dow
stocks in 1900. The
MTI S&P500 is at $198,074. That beats buy and hold’s $150,269 on a
December 31, 1971 $10,000 investment. The
MTI-NASDAQ is at $224,874. That beats buy and hold’s $93,190 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
Last week
endured bearish convergence with most sectors moving south. This followed
the prior week’s solid bullish convergence. The market finds it
distasteful that management performance was substandard with last week’s
corporate profits.
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
378.5% (annualized at 24.0%) since the Long-term Indicant signaled bull
820-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: Eighteen of thirty;
bullish bias remains, although weakening.
Quick-term
Yellow Bears: Three; the market
remains to near-maximum non-bearish support.
Short-term/Quick-term Non-Bearishness:
Countering sustainable bearish ambition.
Force
Vectors: Shifting south,
suggesting a pause in bullish expressions.
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 bull on May 21, 2007 for both the Dow and
NASDAQ. They are up 2.3% and 4.2%, respectively, since then.
Configurations continue supporting bullish.
Please read
on. Click here to see the
Short-term Indicant’s history.
Both
Indicant Volume Indicator’s are now in the early stages of robust
movement. Today’s increased volume supports that, but most of this
robustness is supportive of bullish bias at this time. As stated for the
past several months, configurations continue to support bullish bias.
SQI Report Card (Consolidated Short/Quick), Status, and Charts
There were no
buy signals and no sell signals. Although there were no buy signals, the
SQI is signaling hold for 28-ETF’s. They are up 77.5% (annualized at
32.6%) since their respective buy signals an average of 122.5-weeks ago.
Although there were no sell signals, the SQI is avoiding two ETF’s. They
are down 0.2% since their sell signals an average of 4.2-weeks ago.
The SQI model is the one that most of you will prefer for your trading
decisions. It generates fewer signals than the other two models and
represents consistencies in the Quick-term and Short-term outlooks for the
specific ETF’s. It also beats buy and hold on a regular basis, although
there is only eight years of proof. The quality of that proof is high
since this period includes a powerful bull and bear. The model sours a
little during meandering markets with an excessive number of signals from
time to time. Research toward perfecting continues.
Short-term Indicant Report Card, Status, and Charts
There were no
buy signals and no sell signals. Although there were no buy signals, the
Short-term Indicant is signaling hold for 28-ETF’s. They are up an average
of 85.0% (annualized 36.7%) since the STI signaled, buy, an average of
119.2-weeks ago. Although there were no sell signals, there are two avoid
signals. They are flat since their sell signals an average of 4.2-weeks
ago.
The
Short-term Indicant is more active in buying/selling than the Consolidated
model. The Quick-term Indicant, which follows, is even more active.
Quick-term Report Card, Status, and Charts
There were no
buy signals and no sell signals. Although there were no buy signals, the
Quick-term Indicant is signaling hold for 28-ETF’s. They are up by an
average of 25.6% (annualized at 24.0%) since the QTI signaled buy an
average of 54.9-weeks ago. Although there were no sell signals, the
Quick-term Indicant is avoiding two ETF’s. They are down by an average of
2.1% since their sell signals an average of 6.9-weeks ago.
Conflicts
Between the Short-term and Quick-term Indicants
There are no
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
Three 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 10.5%. This
remains configured in support of the market’s non-bearish posture. There
is minimal support for sustainable bearish assertions.
Eighteen
ETF’s are above their respective bullish red curves. That is down by five
from last Thursday. This configuration solidly supports the underlying
bullish bias, although weakened. All thirty ETF average positions are 2.2%
above 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 fifty-nine of the last seventy-six
trading days remains supportive of bullish bias.
The average
distance from breakout contact is a meager 2.7%. This remains in support
of the bullish bias.
None of the
ETF’s are contacting their respective breakdown lines. The average
distance from the price and breakdown is 29.1%. 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.
This
attribute remains solidly non-bearish, regardless of recent bearish
behavior.
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.
Six of the thirty ETF Force Vectors continue toward bullish domains. As
stated last Thursday, Force Vectors are now decreasing, which suggests a
pause in bullish expressions. The underlying bias remains bullish.
To understand
potential financial opportunities,
click here to learn to identify Robust Force Vectors. They are visible
on the
Quick-term Indicant charts.
ETF Force
Vectors/Vector Pressure Crossings/Option Signals
Remember, the
links contained herein are more visible when reading this on the website.
Click this sentence for Vector Pressure Option Signals. There were no
option signals.
Twenty-five
ETF Vector Pressures are in bullish
domains. The current configurations remain in support the Quick-term
bullish bias shift from August 15, 2006, although favoring increasing
bearish spurt activity. 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.
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
All bull
markets endure bearish spurts from time to time. Last Friday’s bearish
behavior was induced by disappointing corporate earnings. Although this is
a fundamental issue with the bull, it is not a time for panic selling.
Management incompetence surfaces from time to time as many of them think
times are good right now and more or less relax. Not too many of them
worry about the long-term.
However, this
should be considered as another bearish spurt until the various Indicant
models suggest otherwise. Vector Pressure continues to support the bullish
bias. It has been doing that since August 15, 2006.
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
07/22/07
July 15, 2007
Indicant Weekly Stock Market Report
Volume 07, Issue 03 ISSN 1526 6516 © The
Indicant Stock Market Report
This Week’s
Report
The Bullish
Bias Prevails – Part V
The stock
market was volatile last week with the bull expressing more dominance than
the bear. The bearish expressions were accompanied by more volume than the
follow-on bullish responses. However, later in the week, bullish
expressions were accompanied by yet higher volume. The bull was victorious
and openly expressed its dominance in full support of the underlying
bullish bias.
The sub-prime
lending markets fostered bearish encouragement. Loan defaults excite the
bear. Downgrading the sub-prime investment instruments provides the bear
fuel for increasing energy in it unrelenting battle with the bull.
Short-term
psychology suggests that the Fed will be forced to reduce interest rates
to replace the economic stimulants now be vacated by home equity loans and
related consumer spending, as well as investment potential. That is the
reason for increased volume on bullish expressions; that is the belief the
Fed will be pressured to bolster the economy with rate reductions in the
face of increasing loan defaults. Mortgage lenders’ investors are
demanding more interest premiums for their increasing investment risk in
sub-prime markets.
Of course,
this psychological impact will eventually be replaced by logical and
rational conclusions. If the Fed is accommodating with rate reductions,
the CPI may move unfavorably to the north. Most of the commodity prices,
including oil, are not accommodating the idea of interest rate reductions.
The Fed is constantly faced with finding the optimum point between
economic health and inflation. That is a constant conflict. Rising
commodity prices with a rate reduction may excite the CPI to unacceptable
levels. The bear will act on rising rates, economic recession, or
increased inflation. The bull cannot counter unfavorable behavior in those
three areas.
However, the
bull seldom needs much encouragement, as long as there is some steadiness
in these economic dynamics. As long as capitalism continues to increase
along with the corresponding increased productivity, the bull will
continue to be armed enough to stave off bearish desires. However, an
unfavorable blip on capitalistic influences or faltering productivity, the
bull would expire in the face of increasing bearish pressure.
Keep your eye
on the daily stock market report where technical reason anticipates
fundamental cause.
Weekly
Buy/Sell Summary – Stocks and Funds
The Mid-term
Indicant generated no buy signals and one sell signal.
In addition
to the sell signal, the Mid-term
Indicant is avoiding 37-stocks and funds of the 345- tracked by the
Indicant. The avoided stocks and funds are down an average of 8.3% since
the Mid-term Indicant signaled sell an average of 28.1-weeks ago.
There were
143-stocks and funds avoided at this time last year. Those avoided stocks
and funds were down an average of 8.2% since their respective sell signals
an average of 16.8-weeks earlier.
Two years ago,
on July 15, 2005, the Mid-term Indicant was avoiding 97-stocks and funds
that were down an average of 6.2% since their respective sell signals an
average of 16.5-weeks earlier. Three years ago on July 16, 2004 there were
only 50-avoided stocks and funds. They were down by an average of 29.2%
from their respective sell signals an average of 45.0-weeks earlier. On
July 12, 2003, the Mid-term Indicant was avoiding only 10-stocks and funds
out of 296-tracked at that time. They were down by an average of 29.0%
since their sell signals an average of 29.1-weeks earlier. Five years ago
on July 12, 2002, there were 220-avoided stocks and funds. They were down
an average of 26.6% since their respective sell signals an average of
10.7-weeks earlier.
Although
there were no 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 145.0%. That annualizes to 67.3%. The Mid-term Indicant
has been signaling hold for these 307-stocks and funds for an average of
112.1-weeks.
One year ago,
on July 14, 2006, the Mid-term Indicant was holding 177-stocks and funds
out of the 345 tracked for an average of 120.7-weeks. Those 177-stocks and
funds were up by an average of 156.0% (annualized at 67.2%). The Mid-term
Indicant was signaling hold for 203-stocks and funds of the 320-tracked
two years ago on July 15, 2005. They were up by an average of 107.9%
(annualized at 59.8%) since their respective buy signals an average of
93.8-weeks earlier. There were 246-stocks and funds with hold signals on
July 16, 2004 since their buy signals an average of 59.6-weeks earlier.
They were up by an average of 79.1% (annualized at 69.0%).
The Indicant
was only tracking 296-stocks and funds in 2002-2003, and early 2004. On
July 12, 2003, the Mid-term Indicant was signaling hold for 278-stocks and
funds out of 296-tracked. They were up by an average of 47.5% (annualized
at 103.2%) since their buy signals an average of 23.9-weeks earlier. Five
years ago, on July 12, 2002, there were only 50-hold signals for stocks
and funds out of the 294 tracked by the Mid-term Indicant. They were up
40.3% (annualized at 46.6%) since their respective buy signals an average
of 45.0-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
This section
is a repeated each week with a few modifications, reflecting recent
secular influences and performance data. Although appearing redundant at
times, it is important to read this section to keep abreast of secular
market shifts. Quantifications and qualifications are updated, weekly.
Remember, secular shifts can last twenty-five or more years. Fortunately,
secular market movements do not deter mid-term, short-term, and quick-term
profit opportunities. However, they can wreak havoc to the long-term
investors’ plans and those that buy and hold.
The current
Mid-term Bull market and buying barrage started in late 2002. The mid-term
election year of 2002 conformed perfectly to historical standards with
deep bearish expressions and a cyclical bottom. That contrasts to the
meandering bear market from late January through mid-August 2006; the more
recent mid-term election year.
Deep bearish
seasonality was not influential in 2006, which usually occurs from late
August through early October. Last August, the Quick-term Indicant
obviated a bullish bias, contrary to the historical standards of deep
bearish seasonality. Many buy signals occurred in late August - early
September 2006, which was unusual for that time of year. Those buy signals
matured into financially successful hold signals.
As earlier
stated, the market synchronized with near perfection to normal seasonality
in the mid-term election year of 2002. The rolling half of May-October
2002 was typically bearish. The 2002 seasonal bear leg was dynamic and
configured perfectly to historical standards, although the depth of that
bearish cycle was deeper than normal. That NASDAQ bear cycle approached
the magnitude of the 1930-32 Dow bear cycle. The 2000-2002 NASDAQ bear leg
lasted several weeks longer than the depression-laden 1930-32 Dow.
The mid-term
election year of 2006 fundamentally supported historical standards for the
first two thirds. Although mild bearishness exerted its historical
influence in 2006, it was nowhere as deep as 2002’s bearishness. The
meandering bear in the first two-thirds of 2006 supported the historical
standard of bearishness to non-bullishness. That bearish support was mild.
As of
mid-August 2006, hard economic fundamentals shifted in support of a
bullish onslaught for the heart and soul of bullish seasonality and the
normally bullish presidential pre-election year of 2007. Bullishness
during the week of March 5, sandwiched between two bearish weeks (February
26 and March 12), provided some insight on bearish sustainability. The
bullish bounce on the week of March 5 suggested the bearish aggressions
were going to be mild and not sustainable. In other words, that bearish
behavior was a mere bearish spurt. It was simply talking the market down
by those who enjoy their influence and the one-dimensional media. Also,
commission hungry brokers enjoy that sort of volatility and tend to jump
on the bandwagon.
The heart and
soul of bullish seasonality from mid-October 2005 through January 31, 2006
demonstrated bullish normalcy. The market was a meanderer from January 31,
2006 until mid-August 2006, when the Quick-term Indicant shifted from
bearish to bullish bias.
The heart and
soul of bullish seasonality, ending January 31, 2007, produced significant
and expected gains since the August 15, 2006 bullish bias shift. The Dow,
S&P500, and NASDAQ finished up by 12.4%, 11.9%, and 16.5% at the
conclusion of that heart and soul of bullish seasonality cycle.
How has the
market fared after the conclusion of the heart and soul of bullish
seasonality? From January 31, 2002 through September 30, 2002, the Dow
fell 23.5%. The NASDAQ was down 39.4%. The bull market of 2003 did not
incur normal seasonality, as it conformed perfectly to the presidential
pre-election year’s bullish phenomenon. So far, the presidential
pre-election year of 2007 is mirror imaging the presidential pre-election
year bullishness of 2003. There is more about that later.
From January
31, 2004 until September 30, 2004, the NASDAQ fell 8.2%, while the Dow was
down 3.9%. From January 31, 2005 to June 30, 2005, the Dow was down 2.0%
and the NASDAQ down 0.4%. From January 31, 2006 through August 1, 2006,
the NASDAQ was flat while the Dow was up a respectable 6.1%.
From January
31, 2003 through September 30, 2003, the Dow was up 15.2%, while the
NASDAQ was up 35.3%. The last presidential pre-election year was 2003.
Presidential pre-election years are traditionally bullish. Post “heart and
soul bullish seasonality” in the pre-election year of 2003 did not drag
energy from the bull. So far in this presidential pre-election year, the
Dow is up 10.2% since January 31, 2007 and the NASDAQ is up 9.9%.
Aggressive
bearish expressions twenty weeks ago and again eighteen weeks ago pushed
the major indices into negative territory, which can happen after the
heart and soul of bullish seasonality expires. Those particular bearish
expressions were mere spurts and lacked sustainability. The bearish
expression during the week of June 3, 2007 and four weeks ago are
configured as bearish spurts. Spurts occur from time to time as the crowd
has fits of momentary influence on the market’s direction.
Historical
standards suggest the market will go much higher this year. Political and
economic fundamentals also support this prognosis.
As you can
see, until mid-August 2006, most major market indices have been slightly
bullish since late 2003 with pronounced meandering behavior. The only
significant bullish expressions, not followed by bearish expressions,
occurred in the heart and soul of bullish seasonality (Nov-Jan) in 2004,
2005, and 2006. Other than those “heart and soul” bullish cycles, the
market was relatively flat from early 2004 through August 2006. However,
this is a presidential pre-election year, where meandering to bearish
behavior should not occur. The theme is bullish expectations even in the
face of periodic bearish spurts.
The Dow30
found bottom in the last presidential mid-term election year on October 9,
2002 at 7,286.27. The NASDAQ found bottom on the same day at 1114.11.
Finding cyclical bottoms in mid-term election years is common.
Fortunately, the bottom of 2006 was minimal and not sharp when compared to
that of 2002. The Dow is up 90.9% from the 2002 mid-term presidential
election year bottom. The NASDAQ is up 143.0% since October 9, 2002. The
S&P600, small caps, is up even more by 160.6% since October 9, 2002.
The NASDAQ is
down 46.4% from its historical weekending high of 5048.62 on March 9,
2000. The Dow is up by 18.6% from its previous weekending historical high
of 11723 on January 13, 2000. It took over five-and-a-half years for the
DJIA to establish a new high. The S&P500 is up 1.6% since its previous
all-time-weekly-closing-high of March 23, 2000. So far, the new century,
2000 inclusive, has not been kind to long-term investors. The NASDAQ needs
to climb 86.5% to equal its all-time high. The S&P500 is struggling a bit
into its uncharted record setting domain.
Historical
standards suggest the NASDAQ will not return to its historical high until
2025 or so. A 2000 buyer and holder will not be back to break-even until
then. Including inflation, a thirty-year-old investor will be in his or
her eighties before the NASDAQ profits from early 2000 investment dollars,
which assumes minimal inflation. However, the late 2002 investor is up
triple digit amounts. Timing is indeed important.
Economic and
corporate earnings fundamentals did not support the stock market’s
meteoric rise in the 1990’s in many sectors. Unprecedented demand for
stocks skewed the supply-demand ratio and, thus, the powerful bull leg of
the 1990’s enjoyed sustainability. The simple law of supply and demand
propelled stock prices dynamically to the north in the 1990’s. The great
bear leg of 2001 and 2002 depressed those prior sources of demand for at
least one generation of investors. The market now has to wait for a new
generation of investors to enjoy dynamic secular bullishness even though
it has been bullish since late 2002.
The great bull
leg of 2003 was a relatively short bull cycle that has not enjoyed dynamic
follow-on bullish behavior due to this lack of demand. As you can see from
the
NYSE trading range, the northerly sloping cycle is not as strong as
the trading ranges from late 2002 through most of 2003. However, bullish
expressions occur during the heart and soul of bullish seasonality
regardless of any technical or fundamental reason. The meandering segments
of 2002, 2003, 2004, 2005, and 2006 were appropriately followed by
historically significant bullishness in each of those years.
As earlier
stated, the Indicant began its buying barrage in October – November 2002
just after the market bottomed from the severe 2000-2002 Bear Market.
There were 239-buy signals between October 5, 2002 and November 9, 2002
out of the 296 stocks and funds tracked by the Mid-term Indicant at that
time. Even badly managed companies received a buy signal, which is a
common attribute of sustainable new bull markets. As many of you noticed,
those companies eventually dipped back to the south after the euphoria of
new bullishness.
Since August
18, 2006, the Mid-term Indicant generated 220-buy signals and only 88-sell
signals. That is an unusually high number of buy signals when considering
historical seasonal market influences. This is a testament to the strength
of the underlying bull market. All Indicant models supported this recent
buying surge just as they did in October 2002 and March 2003.
Now that the
heart and soul of bullish seasonality has expired, the resistance to
generate sell signals has softened. There remains minor resistance to buy
signals since the market is now enduring normal bearish seasonality. This
resistance is minor since the market is enjoying the normal bullishness of
presidential pre-election years.
Some of you
recall the Indicant Stock Market Report tracking the
Short-term Indicant Bear for the NASDAQ in 2002. It was the longest in
history. It even exceeded the Dow’s 1929-1932 Short-term Indicant Bear in
breadth and approached it in magnitude. The good news is that the NASDAQ’s
decline did not lead to a depression, which is a clear indication of how
little influence tech stocks have on the economy.
There are two
important axioms to remember and are always repeated in this report. 1)
Real economic wealth is created in only three ways - manufacturing,
agriculture, and extraction. 2) The only positive influence politicians
have on the economy is to undo their prior damage. That is also why the
presidential pre-election year is historically the most bullish on the
four-year cycle. If the strength of the current Mid-term Bull can be
subjected only to meandering behavior, like 2004, 2005, and 2006, then it
is possible for the current Mid-term Bull to be a record setting one in
terms of duration.
Political
institutions reduce wealth. Politicians continually attempt to
redistribute wealth, which flies in the face of the laws of nature. They
promote “middle class” attainment. The larger the middle class, the more
power politicians and their academic brethren have. The communists tried
that, resulting in 99% poverty, while the ruling 1% lived like kings.
Socialism rewards an ability to intellectualize, while capitalism rewards
the results of appealing effort. As long as the world’s populace moves in
the direction of capitalism, the stock market will continue with a
long-term bullish bias. If the market smells increased interests in
socialism and similar concepts, it will turn bearish.
The remainder
of this section, Secular Market Blend, is repeated, in part, from the past
several months, but it does not hurt to reread it each week. As time
progresses and conditions change, there will be modifications to it to
maintain a balanced frame of reference.
You will
notice many of the
mutual fund buy signals occurred in March 2003. Many of them endured
sell signals for the first time since early 2003 during the mildly bearish
meandering behavior in mid-2005. However, the bull’s resiliency minimized
selling activity. The Mid-term Indicant is now signaling hold for nearly
all mutual funds it tracks.
Many of you
recall how the market did not synchronize with the heart and soul of
bullish seasonality from November 2002 through February 2003. December
2002 was the most bearish since 1931, but not nearly as dynamic as the
1931 bearish expression. After the asynchronous behavior in the November
2002 rolling third of the year, the market turned bullish in March 2003
and again did not synchronize with normal seasonality. The Mid-term
Indicant continued signaling bull/hold during bearish seasonality in 2003.
The market continued moving north during that time, contrary to historical
seasonal standards, but consistent with political cycle standards. As
stated in most of 2004, bearish expressions on a Mid-term basis between
May and October 2004 should not be surprising. That is exactly what
occurred. The result was a meandering market with a slight bearish bias
during most of 2004 and 2005 and the first two-thirds of 2006. This
presidential pre-election year is being fundamentally tested in the face
of war, terrorist threats, and rising oil prices.
The Quick-term
Indicant’s bearish bias during most of 2006 was replaced with a bullish
bias in mid-August 2006. Several buy signals ensued shortly after that
bias shift. Bullish behavior occurred, as expected, since mid-August 2006.
As stated since that bullish bias shift, the various Indicant models,
economic fundamentals, and historical standards suggest significant
bullishness in the coming months.
The Dow is up
23.8% since the Quick-term Indicant bullish bias shift on August 15, 2006.
The NASDAQ is up 28.0% since then. The S&P500 is up 20.8%.
Keep up with
the Daily Stock Market Report.
http://www.indicant.net/Members/Updates/History-Seasonal/HS0001.htm
Make certain
you read the entire pages on the above link. You will see there are
exceptions.
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.
As stated last
week, the
3-Month T-Bill continues moving mildly to the north. As stated last
week and again this week, this increase in short-term interest rates did
not discourage the bull from maintaining its dominance.
As stated the
past four weeks, it is unlikely interest rates will rise during this
presidential pre-election year. Unfortunately, their flat configuration
induces bearish spurts from time to time. Rising commodity prices are a
thorn viewed by the bull and remain as a constant threat.
As earlier
stated, the problems in the sub-prime markets are being perceived as an
economic threat. That threat is fostering an opinion of bullish enthusiasm
that the Fed will have to fill the sub-prime void of economic influence
with a rate reduction. This, on a short-term basis, supports the
prevailing bullish bias. However, if the Fed biases support for economic
growth and allows inflationary pressures to mount, the bear will find
encouragement.
As stated the
past six 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 first a rapid inflationary spiral and then a rapid increase in
rates to stifle the inflation.
As stated the
past eight 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?
Capitalists
transform commodities into products. That transformation is where
productivity potential exists. The result of that should be lower prices
to the buyers of products even though the producer’s raw materials are
higher.
As stated the
past two 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 the
past two weeks, 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.
This paragraph
is repeated from the past seven weeks. Productivity improvements are
evolutionary, whereas commodity prices can be revolutionary. The sudden
increase in the number of capitalists is revolutionary. However, it takes
time and a lot of effort to increase productivity. The exponentially
increased demand for commodities can out-pace the impending productivity
increases and thus set off inflation. This is an issue confronting both
the Fed and the stock market. The prevailing stock market perception is
that productivity will be the economic savior.
Overall,
economic conditions appear shifting in favor of a continuation of this
strong bull market.
Fear
Metrics: Economics and Terrorism
Vanguard Gold and Precious Metals (VGPMX) - #19 is up 389.5% since the
April 13, 2001 buy signal. Its annualized growth since that buy signal is
61.4%. It moved to the north in 29 of the past 39-weeks. This fund was
mildly bullish last week, following bullish aggressions two weeks ago.
Fidelity Gold, Fund #28, is up 46.0% since the Mid-term Indicant
signaled buy on August 26, 2005. That annualizes to 24.1%. This fund was
aggressively bullish in each of the past two weeks.
State Street Research Global #9, SSGRX, which is isolated in the
energy sector, is up 330.5% since the Mid-term Indicant signaled buy on
August 16, 2002. It is annualizing at 66.4%.
Vanguard Energy #18, VGENX, is up 242.3% (annualized at 55.9%) since
the Mid-term Indicant signaled buy on April 5, 2003.
Fidelity Energy Services #40, FSESX, is up 197.3% (annualized at
54.0%) since the Mid-term Indicant signaled buy on December 6, 2003.
Fidelity Energy #39, FSENX, is up 181.9% since the Mid-term Indicant
signaled buy on August 16, 2003. It is annualized at 45.9%.
These energy
related funds were aggressively bullish the past two weeks, which
coincided with stock market bullishness. That is relative bullish
convergence.
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 51.7% since then. It is
annualized at 26.2%. This ETF has been bearish in five of the past nine
weeks. It was bullish the past two weeks.
The SQI
signaled buy for
ETF#03 – Energy and Natural Resources on March 26, 2003. It is up
244.0% (annualized at 55.9%). This fund was also bullish the past two
weeks.
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 35.0% since the Mid-term
Indicant signaled bull an average of 104-weeks ago. That annualizes to
17.6%, 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 $42,128,394.
That beats buy
and hold performance of $2,125,815 on a $10,000 investment in the Dow
stocks in 1900. The
MTI S&P500 is at $200,450. That beats buy and hold’s $152,072 on a
December 31, 1971 $10,000 investment. The
MTI-NASDAQ is at $226,497. That beats buy and hold’s $93,863 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
After three
weeks of combined bullish and bearish convergence/divergence, the market
enjoyed full bullish convergence the past two weeks. That is a strong
commitment to bullish bias. All major sectors moved aggressively to the
north the past two weeks. The contrarian sectors also moved bullishly,
which suggests economic optimism in spite of problems with sub-prime loans
and rising energy costs.
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 is now avoiding
ProFunds Ultra Short. It is down 34.3% since the Mid-term
Indicant signaled sell on September 15, 2006. Historical norms of market
cyclicality suggest the next buying opportunity for this fund may not
occur until 2009.
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
380.4% (annualized at 24.2%) since the Long-term Indicant signaled bull
819-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: Twenty-three of
thirty; bullish bias remains, although weakening.
Quick-term
Yellow Bears: Two; the market
remains to near-maximum non-bearish support.
Short-term/Quick-term Non-Bearishness:
Countering sustainable bearish ambition.
Force
Vectors: Shifting south, which
opens bearish opportunities the next few days.
Vector
Pressure: Supportive of bullish
bias.
Long-term
Hold Positions: Solidly safe.
Current
Quick-term Bias: Bullish
Overall
Market Status: Bullish bias
prevailing.
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 bull on May 21, 2007 for both the Dow and
NASDAQ. They are up 2.7% and up 5.0%, respectively, since then.
Configurations continue supporting bullish bias in spite of last Tuesday’s
bearish aggression. Bullish aggression the past three days suggests little
interest in bearish influence. This is supported by the Quick-term and
Short-term Indicant attributes.
Please read
on. Click here to see the
Short-term Indicant’s history.
Both
Indicant Volume Indicator’s are flattening from their current
lethargic cycle, based on high volume the past four days. That high volume
is concurrent with both bearish and bullish activity, which suggested
indecisiveness by last Wednesday. However, Thursday’s aggressive bullish
behavior enjoyed higher volume than last Tuesday’s aggressive bearish
behavior. The bull signaled loudly to the bear as to who is dominant. That
supports the underlying bullish bias. As stated for the past several
months, configurations continue to support bullish bias.
SQI Report Card (Consolidated Short/Quick), Status, and Charts
There were no
buy signals and no sell signals. Although there were no buy signals, the
SQI is signaling hold for 28-ETF’s. They are up 78.9% (annualized at
33.4%) since their respective buy signals an average of 121.5-weeks ago.
Although there were no sell signals, the SQI is avoiding two ETF’s. They
are up 0.3% since their sell signals an average of 3.2-weeks ago.
The SQI model is the one that most of you will prefer for your trading
decisions. It generates fewer signals than the other two models and
represents consistencies in the Quick-term and Short-term outlooks for the
specific ETF’s. It also beats buy and hold on a regular basis, although
there is only eight years of proof. The quality of that proof is high
since this period includes a powerful bull and bear. The model sours a
little during meandering markets with an excessive number of signals from
time to time. Research toward perfecting continues.
Short-term Indicant Report Card, Status, and Charts
There were no
buy signals and no sell signals. Although there were no buy signals, the
Short-term Indicant is signaling hold for 28-ETF’s. They are up an average
of 86.4% (annualized 37.6%) since the STI signaled, buy, an average of
118.2-weeks ago. Although there were no sell signals, there are two avoid
signals. They are up 0.3% since their sell signals an average of 3.2-weeks
ago.
The
Short-term Indicant is more active in buying/selling than the Consolidated
model. The Quick-term Indicant, which follows, is even more active.
Quick-term Report Card, Status, and Charts
There were no
buy signals and no sell signals. Although there were no buy signals, the
Quick-term Indicant is signaling hold for 28-ETF’s. They are up by an
average of 26.8% (annualized at 25.4%) since the QTI signaled buy an
average of 53.9-weeks ago. Although there were no sell signals, the
Quick-term Indicant is avoiding two ETF’s. They are down by an average of
1.6% since their sell signals an average of 5.9-weeks ago.
Conflicts
Between the Short-term and Quick-term Indicants
There are no
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
Two 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 11.8%. This
remains configured in support of the market’s non-bearish posture. There
is minimal support for sustainable bearish assertions.
Twenty-three
ETF’s are above their respective bullish red curves. This configuration
solidly supports the underlying bullish bias, although weakened. All
thirty ETF average positions are 3.2% above 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.
Fourteen 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 fifty-five of the last seventy-one
trading days remains supportive of bullish bias.
The average
distance from breakout contact is a meager 1.7%. This remains in support
of the bullish bias.
None of the
ETF’s are contacting their respective breakdown lines. The average
distance from the price and breakdown is 30.4%. 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.
This
attribute remains solidly non-bearish, regardless of recent bearish
behavior.
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.
Fourteen of the thirty ETF Force Vectors continue toward bullish domains.
As sated since last Monday, the bullish cycle is now mature and favoring a
slight increased probability of potential bearish behavior. However, the
underlying bias remains bullish.
To understand
potential financial opportunities,
click here to learn to identify Robust Force Vectors. They are visible
on the
Quick-term Indicant charts.
ETF Force
Vectors/Vector Pressure Crossings/Option Signals
Remember, the
links contained herein are more visible when reading this on the website.
Click this sentence for Vector Pressure Option Signals. There were two
call option buy signals after the market close on Friday.
Comment about
last Monday’s call option buy signal: It enjoyed excellent configurations
with aggressive bearish behavior Tuesday. That most likely allowed your
deep discounted buy offer to be transacted during last Tuesday’s
aggressive bear. That bearish behavior was followed by mild bullishness on
Wednesday and dynamic bullishness on Thursday. Following the two-day rule
on selling should have resulted in a nice profit.
Comment about
Friday’s call signals. One is gold, ETF-GLD. It can be a contrarian fund.
It can rise while the stock market falters. Regardless, make certain you
have stalked the option you like and offer deeply discounted buy prices.
Do not despair if your offer is not accepted. There are plenty of
opportunities available throughout the year.
Twenty-three
ETF Vector Pressures are in bullish
domains. The current configurations remain in support the Quick-term
bullish bias shift from August 15, 2006, although favoring increasing
bearish spurt activity. 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.
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 past two
weeks are configured with bullish convergence. The bullish bias remains
very healthy.
Vector
Pressure continues to support the bullish bias. It has been doing that
since August 15, 2006.
Although
recent bearishness has weakened several Quick-term Indicant attributes,
the underlying bullish bias remains in tact. 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
07/15/07
July 08,
2007 Indicant Weekly Stock Market Report
Volume 07, Issue 02 ISSN 1526 6516 © The
Indicant Stock Market Report
This Week’s
Report
The Bullish
Bias Prevails – Part IV
There is very
little to add to last week’s report. As stated last week, historical
standards of presidential pre-election year bullishness continue to be
congruent with expectations. Bull convergence occurred last week with
solid bullish performance in most major sectors; precious metals, energy,
and stocks.
The economy
remains strong in spite of higher oil prices. Corporate earnings are
projected to slow, but law of supply and demand for stocks should continue
to supporting the underlying bullish bias.
Keep up with
the daily stock market report. This year is setting up to be nicely
bullish. Even if bearish spurts act as drag on the underlying bullish
bias, the heart and soul of bullish seasonality will more than offset any
damaging bearish spurts.
Weekly
Buy/Sell Summary – Stocks and Funds
The Mid-term
Indicant generated no buy signals and one sell signal.
In addition
to the sell signal, 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 12.7% since
the Mid-term Indicant signaled sell an average of 27.8-weeks ago.
There were
136-stocks and funds avoided at this time last year. Those avoided stocks
and funds were down an average of 5.9% since their respective sell signals
an average of 16.2-weeks earlier.
Two years ago,
on July 8, 2005, the Mid-term Indicant was avoiding 116-stocks and funds
that were down an average of 25.4% since their respective sell signals an
average of 61.3-weeks earlier. Three years ago on July 9, 2004 there were
only 36-avoided stocks and funds. They were down by an average of 31.2%
from their respective sell signals an average of 45.9-weeks earlier. On
July 5, 2003, the Mid-term Indicant was avoiding only 14-stocks and funds
out of 296-tracked at that time. They were down by an average of 27.4%
since their sell signals an average of 28.3-weeks earlier. Five years ago
on July 5, 2002, there were 217-avoided stocks and funds. They were down
an average of 22.3% since their respective sell signals an average of
10.4-weeks earlier.
Although
there were no buy signals, the Mid-term Indicant is signaling hold for 308 of the 345-stocks and
funds tracked by the Indicant. The stocks and funds with hold signals are
up an average of 140.6%. That annualizes to 65.9%. The Mid-term Indicant
has been signaling hold for these 308-stocks and funds for an average of
110.9-weeks.
One year ago,
on July 7, 2006, the Mid-term Indicant was holding 202-stocks and funds
out of the 345 tracked for an average of 113.8-weeks. Those 202-stocks and
funds were up by an average of 152.4% (annualized at 69.7%). The Mid-term
Indicant was signaling hold for 195-stocks and funds of the 320-tracked
two years ago on July 8, 2005. They were up by an average of 110.7
(annualized at 59.2%) since their respective buy signals an average of
97.3-weeks earlier. There were 246-stocks and funds with hold signals on
July 9, 2004 since their buy signals an average of 53.7-weeks earlier.
They were up by an average of 67.8% (annualized at 65.6%).
The Indicant
was only tracking 296-stocks and funds in 2002-2003, and early 2004. On
July 5, 2003, the Mid-term Indicant was signaling hold for 277-stocks and
funds out of 296-tracked. They were up by an average of 44.7% (annualized
at 100.2%) since their buy signals an average of 23.2-weeks earlier. Five
years ago, on July 5, 2002, there were only 66-hold signals for stocks and
funds out of the 294 tracked by the Mid-term Indicant. They were up 41.0%
(annualized at 47.8%) since their respective buy signals an average of
40.4-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 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
This section
is a repeated each week with a few modifications, reflecting recent
secular influences and performance data. Although appearing redundant at
times, it is important to read this section to keep abreast of secular
market shifts. Quantifications and qualifications are updated, weekly.
Remember, secular shifts can last twenty-five or more years. Fortunately,
secular market movements do not deter mid-term, short-term, and quick-term
profit opportunities. However, they can wreak havoc to the long-term
investors’ plans and those that buy and hold.
The current
Mid-term Bull market and buying barrage started in late 2002. The mid-term
election year of 2002 conformed perfectly to historical standards with
deep bearish expressions and a cyclical bottom. That contrasts to the
meandering bear market from late January through mid-August 2006; the more
recent mid-term election year.
Deep bearish
seasonality was not influential in 2006, which usually occurs from late
August through early October. Last August, the Quick-term Indicant
obviated a bullish bias, contrary to the historical standards of deep
bearish seasonality. Many buy signals occurred in late August - early
September 2006, which was unusual. Those buy signals matured into very
financially successful hold signals.
As earlier
stated, the market synchronized with near perfection to normal seasonality
in the mid-term election year of 2002. The rolling half of May-October
2002 was typically bearish. The 2002 seasonal bear leg was dynamic and
configured perfectly to historical standards, although the depth of that
bearish cycle was deeper than normal. That NASDAQ bear cycle approached
the magnitude of the 1930-32 Dow bear cycle. The 2000-2002 NASDAQ bear leg
lasted several weeks longer than the depression-laden 1930-32 Dow.
The mid-term
election year of 2006 fundamentally supported historical standards for the
first two thirds. Although mild bearishness exerted its historical
influence in 2006, it was nowhere as deep as 2002’s bearishness. The
meandering bear in the first two-thirds of 2006 supported the historical
standard of bearishness to non-bullishness. That bearish support was mild.
As of
mid-August 2006, hard economic fundamentals shifted in support of a
bullish onslaught for the heart and soul of bullish seasonality and the
normally bullish presidential pre-election year of 2007. Bullishness
during the week of March 5, sandwiched between two bearish weeks (February
26 and March 12), provided some insight on bearish sustainability. The
bullish bounce on the week of March 5 suggested the bearish aggressions
were going to be mild and not sustainable. In other words, that bearish
behavior was a mere bearish spurt. It was simply talking the market down
by those who enjoy their influence and the one-dimensional media. Also,
commission hungry brokers enjoy that sort of volatility as well.
The heart and
soul of bullish seasonality from mid-October 2005 through January 31, 2006
demonstrated bullish normalcy. The market was a meanderer from January 31,
2006 until mid-August 2006, when the Quick-term Indicant shifted from
bearish to bullish bias.
The heart and
soul of bullish seasonality, ending January 31, 2007, produced significant
and expected gains since the August 15, 2006 bullish bias shift. The Dow,
S&P500, and NASDAQ finished up by 12.4%, 11.9%, and 16.5% at the
conclusion of that heart and soul of bullish seasonality cycle.
How has the
market fared after the conclusion of the heart and soul of bullish
seasonality? From January 31, 2002 through September 30, 2002, the Dow
fell 23.5%. The NASDAQ was down 39.4%. The bull market of 2003 did not
incur normal seasonality, as it conformed perfectly to the presidential
pre-election year’s bullish phenomenon. So far, the presidential
pre-election year of 2007 is mirror imaging the presidential pre-election
year bullishness of 2003. There is more about that later.
From January
31, 2004 until September 30, 2004, the NASDAQ fell 8.2%, while the Dow was
down 3.9%. From January 31, 2005 to June 30, 2005, the Dow was down 2.0%
and the NASDAQ down 0.4%. From January 31, 2006 through August 1, 2006,
the NASDAQ was flat while the Dow was up a respectable 6.1%.
From January
31, 2003 through September 30, 2003, the Dow was up 15.2%, while the
NASDAQ was up 35.3%. The last presidential pre-election year was 2003.
Presidential pre-election years are traditionally bullish. Post “heart and
soul bullish seasonality” in the pre-election year of 2003 did not drag
energy from the bull. So far in this presidential pre-election year, the
Dow is up 7.8% since January 31, 2007 and the NASDAQ is up 8.2%.
Aggressive
bearish expressions nineteen weeks ago and again seventeen weeks ago
pushed the major indices into negative territory, which can happen after
the heart and soul of bullish seasonality expires. Those particular
bearish expressions were mere spurts and lacked sustainability. The
bearish expression during the week of June 3, 2007 and three weeks ago are
configured as bearish spurts. Spurts occur from time to time as the crowd
has fits of momentary influence on the market’s direction.
Historical
standards suggest the market will go much higher this year. Political and
economic fundamentals also support this prognosis.
As you can
see, until mid-August 2006, most major market indices have been slightly
bullish since late 2003 with pronounced meandering behavior. The only
significant bullish expressions, not followed by bearish expressions,
occurred in the heart and soul of bullish seasonality (Nov-Jan) in 2004,
2005, and 2006. Other than those “heart and soul” bullish cycles, the
market was relatively flat from early 2004 through August 2006. However,
this is a presidential pre-election year, where meandering to bearish
behavior should not occur. The theme is bullish expectations even in the
face of periodic bearish spurts.
The Dow30
found bottom in the last presidential mid-term election year on October 9,
2002 at 7,286.27. The NASDAQ found bottom on the same day at 1114.11.
Finding cyclical bottoms in mid-term election years is common.
Fortunately, the bottom of 2006 was minimal and not sharp when compared to
that of 2002. The Dow is up 86.8% from the 2002 mid-term presidential
election year bottom. The NASDAQ is up 139.3% since October 9, 2002. The
S&P600, small caps, is up even more by 157.8% since October 9, 2002.
The NASDAQ is
down 47.2% from its historical weekending high of 5048.62 on March 9,
2000. The Dow is up by 16.1% from its previous weekending historical high
of 11723 on January 13, 2000. It took over five-and-a-half years for the
DJIA to establish a new high. The S&P500 is up 0.2% since its previous
all-time-weekly-closing-high of March 23, 2000. So far, the new century,
2000 inclusive, has not been kind to long-term investors. The NASDAQ needs
to climb 89.3% to equal its all-time high. The S&P500 is struggling a bit
into its uncharted record setting domain.
Historical
standards suggest the NASDAQ will not return to its historical high until
2025 or so. A 2000 buyer and holder will not be back to break-even until
then. Including inflation, a thirty-year-old investor will be in his or
her eighties before the NASDAQ profits from early 2000 investment dollars,
which assumes minimal inflation. However, the late 2002 investor is up
triple digit amounts. Timing is indeed important.
Economic and
corporate earnings fundamentals did not support the stock market’s
meteoric rise in the 1990’s in many sectors. Unprecedented demand for
stocks skewed the supply-demand ratio and, thus, the powerful bull leg of
the 1990’s enjoyed sustainability. The simple law of supply and demand
propelled stock prices dynamically to the north in the 1990’s. The great
bear leg of 2001 and 2002 depressed those prior sources of demand for at
least one generation of investors. The market now has to wait for a new
generation of investors to enjoy dynamic secular bullishness even though
it has been bullish since late 2002.
The great bull
leg of 2003 was a relatively short bull cycle that has not enjoyed dynamic
follow-on bullish behavior due to this lack of demand. As you can see from
the
NYSE trading range, the northerly sloping cycle is not as strong as
the trading ranges from late 2002 through most of 2003. However, bullish
expressions occur during the heart and soul of bullish seasonality
regardless of any technical or fundamental reason. The meandering segments
of 2002, 2003, 2004, 2005, and 2006 were appropriately followed by
historically significant bullishness in each of those years.
As earlier
stated, the Indicant began its buying barrage in October – November 2002
just after the market bottomed from the severe 2000-2002 Bear Market.
There were 239-buy signals between October 5, 2002 and November 9, 2002
out of the 296 stocks and funds tracked by the Mid-term Indicant at that
time. Even badly managed companies received a buy signal, which is a
common attribute of sustainable new bull markets. As many of you noticed,
those companies eventually dipped back to the south after the euphoria of
new bullishness.
Since August
18, 2006, the Mid-term Indicant generated 220-buy signals and only 87-sell
signals. That is an unusually high number of buy signals when considering
historical seasonal market influences. This is a testament to the strength
of the underlying bull market. All Indicant models supported this recent
buying surge just as they did in October 2002 and March 2003. Now that the
heart and soul of bullish seasonality has expired, the resistance to
generate sell signals has softened. There remains minor resistance to buy
signals since the market is now enduring normal bearish seasonality. This
resistance is minor since the market is enjoying the normal bullishness of
presidential pre-election years.
Some of you
recall the Indicant Stock Market Report tracking the
Short-term Indicant Bear for the NASDAQ in 2002. It was the longest in
history. It even exceeded the Dow’s 1929-1932 Short-term Indicant Bear in
breadth and approached it in magnitude. The good news is that the NASDAQ’s
decline did not lead to a depression, which is a clear indication of how
little influence tech stocks have on the economy.
There are two
important axioms to remember and are always repeated in this report. 1)
Real economic wealth is created in only three ways - manufacturing,
agriculture, and extraction. 2) The only positive influence politicians
have on the economy is to undo their prior damage. That is also why the
presidential pre-election year is historically the most bullish on the
four-year cycle. If the strength of the current Mid-term Bull can be
subjected only to meandering behavior, like 2004, 2005, and 2006, then it
is possible for the current Mid-term Bull to be a record setting one in
terms of duration.
Political
institutions reduce wealth. Politicians continually attempt to
redistribute wealth, which flies in the face of the laws of nature. They
promote “middle class” attainment. The larger the middle class, the more
power politicians and their academic brethren have. The communists tried
that, resulting in 99% poverty, while the ruling 1% lived like kings.
Socialism rewards an ability to intellectualize, while capitalism rewards
the results of appealing effort. As long as the world’s populace moves in
the direction of capitalism, the stock market will continue with a
long-term bullish bias. If the market smells increased interests in
socialism and similar concepts, it will turn bearish.
The remainder
of this section, Secular Market Blend, is repeated, in part, from the past
several months, but it does not hurt to reread it each week. As time
progresses and conditions change, there will be modifications to it to
maintain a balanced frame of reference.
You will
notice many of the
mutual fund buy signals occurred in March 2003. Many of them endured
sell signals for the first time since early 2003 during the mildly bearish
meandering behavior in mid-2005. However, the bull’s resiliency minimized
selling activity. The Mid-term Indicant is now signaling hold for nearly
all mutual funds it tracks.
Many of you
recall how the market did not synchronize with the heart and soul of
bullish seasonality from November 2002 through February 2003. December
2002 was the most bearish since 1931, but not nearly as dynamic as the
1931 bearish expression. After the asynchronous behavior in the November
2002 rolling third of the year, the market turned bullish in March 2003
and again did not synchronize with normal seasonality. The Mid-term
Indicant continued signaling bull/hold during bearish seasonality in 2003.
The market continued moving north during that time, contrary to historical
seasonal standards, but consistent with political cycle standards. As
stated in most of 2004, bearish expressions on a Mid-term basis between
May and October 2004 should not be surprising. That is exactly what
occurred. The result was a meandering market with a slight bearish bias
during most of 2004 and 2005 and the first two-thirds of 2006. This
presidential pre-election year is being fundamentally tested in the face
of war, terrorist threats, and rising oil prices.
The Quick-term
Indicant’s bearish bias during most of 2006 was replaced with a bullish
bias in mid-August 2006. Several buy signals ensued shortly after that
bias shift. Bullish behavior occurred, as expected, since mid-August 2006.
As stated since that bullish bias shift, the various Indicant models,
economic fundamentals, and historical standards suggest significant
bullishness in the coming months.
The Dow is up
21.2% since the Quick-term Indicant bullish bias shift on August 15, 2006.
The NASDAQ is up 26.1% since then. The S&P500 is up 19.0%.
Keep up with
the Daily Stock Market Report.
http://www.indicant.net/Members/Updates/History-Seasonal/HS0001.htm
Make certain
you read the entire pages on the above link. You will see there are
exceptions.
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.
As stated last
week, the
3-Month T-Bill is rebounding. It moved from bearish (bullish for stock
market) domains to neutrality. Interestingly, the increase in short-term
interest rates did not discourage the bull from maintaining its dominance.
As stated last week, do not fight the bullish stock market trend.
As stated the
past three weeks, it is unlikely interest rates will rise during this
presidential pre-election year. Unfortunately, their flat configuration
induces bearish spurts from time to time. Rising commodity prices are a
thorn viewed by the bull.
As stated the
past five weeks, this is shaping up to support the historical standards of
presidential pre-election-year and election-year stock market bullishness.
As stated the
past seven 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?
Capitalists
transform commodities into products. That transformation is where
productivity potential exists. The result of that should be lower prices
to the buyers of products even though the producer’s raw materials are
higher.
As stated last
week, 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
Also, as
stated last week, the CRB Bridge Futures is configuring similarly to oil.
The Fed keeps a close eye on this barometer. Its chart is on the same
link. Just scroll down a little to view it.
This paragraph
is repeated from the past six weeks. Productivity improvements are
evolutionary, whereas commodity prices can be revolutionary. The sudden
increase in the number of capitalists is revolutionary. However, it takes
time and a lot of effort to increase productivity. The exponentially
increased demand for commodities can out-pace the impending productivity
increases and thus set off inflation. This is an issue confronting both
the Fed and the stock market. The prevailing stock market perception is
that productivity will be the economic savior.
Overall,
economic conditions appear shifting in favor of a continuation of this
strong bull market.
Fear
Metrics: Economics and Terrorism
Vanguard Gold and Precious Metals (VGPMX) - #19 is up 384.0% since the
April 13, 2001 buy signal. Its annualized growth since that buy signal is
60.8%. It moved to the north in 28 of the past 38-weeks. This fund
aggressively bullish last week.
Fidelity Gold, Fund #28, is up 41.3% since the Mid-term Indicant
signaled buy on August 26, 2005. That annualizes to 21.9%. This fund was
also extremely bullish last week.
State Street Research Global #9, SSGRX, which is isolated in the
energy sector, is up 323.7% since the Mid-term Indicant signaled buy on
August 16, 2002. It is annualizing at 65.3%.
Vanguard Energy #18, VGENX, is up 232.2% (annualized at 53.8%) since
the Mid-term Indicant signaled buy on April 5, 2003.
Fidelity Energy Services #40, FSESX, is up 194.8% (annualized at
53.6%) since the Mid-term Indicant signaled buy on December 6, 2003.
Fidelity Energy #39, FSENX, is up 175.1% since the Mid-term Indicant
signaled buy on August 16, 2003. It is annualized at 44.4%.
These energy
related funds were bullish last week, which coincided with stock market
bullishness. That is relative bullish convergence.
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 49.2% since then. It is
annualized at 25.2%. This ETF has been bearish in five of the past eight
weeks. It was bullish last week.
The SQI
signaled buy for
ETF#03 – Energy and Natural Resources on March 26, 2003. It is up
231.6% (annualized at 53.3%). This fund was also bullish last week.
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 32.6% since the Mid-term
Indicant signaled bull an average of 103-weeks ago. That annualizes to
16.5%, 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 $41,233,041.
That beats buy
and hold performance of $2,080,847 on a $10,000 investment in the Dow
stocks in 1900. The
MTI S&P500 is at $197,601. That beats buy and hold’s $149,911 on a
December 31, 1971 $10,000 investment. The
MTI-NASDAQ is at $223,109. That beats buy and hold’s $92,459 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
After three
weeks of combined bullish and bearish convergence/divergence, the market
enjoyed full bullish convergence last week. That is a strong commitment to
bullish bias. All major sectors moved aggressively to the north last week.
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 is now avoiding
ProFunds Ultra Short. It is down 27.7% 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
370.2% (annualized at 23.5%) since the Long-term Indicant signaled bull
818-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: Twenty-one of
thirty; bullish bias remains.
Quick-term
Yellow Bears: Two; the market
remains to near maximum non-bearish support.
Short-term/Quick-term Non-Bearishness:
Countering sustainable bearish ambition.
Force
Vectors: Moving north on a
quick-term basis. Potential robustness developing.
Vector
Pressure: Supportive of bullish
bias.
Long-term
Hold Positions: Solidly safe.
Current
Quick-term Bias: Bullish
Overall
Market Status: Bullish bias
prevailing.
Profit
Potential from Naked Options:
Improving with increasing volatility.
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 bull on May 21, 2007 for both the Dow and
NASDAQ. They are up 0.5% and up 3.4%, respectively, since then.
Configurations continue supporting bullish bias. Please read on. Click
here to see the
Short-term Indicant’s history.
As stated the
past few days, both
Indicant Volume Indicator’s were demonstrating an interest in a
robust cycle. That embryonic configuration suggested little resistance to
bearish aggression. That was because the increase in volume was concurrent
with bearish behavior. That cycle did not mature enough to obviate the
market’s directional intention. Holiday volume has now induced the
seasonally lethargic cycle. At this time, configurations continue to
support bullish bias.
SQI Report Card (Consolidated Short/Quick), Status, and Charts
There were no
buy signals and no sell signals. Although there were no buy signals, the
SQI is signaling hold for 29-ETF’s. They are up 79.7% (annualized at
33.0%) since their respective buy signals an average of 124.1-weeks ago.
The SQI is avoiding one ETF. It is down 2.6% since its sell signal
5.0-weeks ago.
The SQI model is the one that most of you will prefer for your trading
decisions. It generates fewer signals than the other two models and
represents consistencies in the Quick-term and Short-term outlooks for the
specific ETF’s. It also beats buy and hold on a regular basis, although
there is only eight years of proof. The quality of that proof is high
since this period includes a powerful bull and bear. The model sours a
little during meandering markets with an excessive number of signals from
time to time. Research toward perfecting continues.
Short-term Indicant Report Card, Status, and Charts
There were no
buy signals and no sell signals. Although there were no buy signals, the
Short-term Indicant is signaling hold for 29-ETF’s. They are up an average
of 84.6% (annualized 36.0%) since the STI signaled, buy, an average of
121.0-weeks ago. There is one avoid signal. That fund is down 2.6% since
its sell signal 5.0-weeks ago.
Keep in mind,
the Short-term Indicant is much more active in buying/selling than the
Consolidated model. The Quick-term Indicant, which follows, is even more
active.
Quick-term Report Card, Status, and Charts
There were no
buy signals and no sell signals. Although there were no buy signals, the
Quick-term Indicant is signaling hold for 28-ETF’s. They are up by an
average of 24.5% (annualized at 23.8%) since the QTI signaled buy an
average of 52.9-weeks ago. Although there were no sell signals, the
Quick-term Indicant is avoiding two ETF’s. They are down by an average of
1.8% since their sell signals an average of 4.9-weeks ago.
Conflicts
Between the Short-term and Quick-term Indicants
There is one
conflict, 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.
There are
86-hold signals out of a possible 90. There are four avoid signals with
three related to the same fund. The bias remains in obvious support of the
bull, although weakened recently.
Quick-term Indicant Bull/Bear Health Report
Two 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 10.5%. This
remains configured in support of the market’s non-bearish posture. There
is minimal support for sustainable bearish assertions.
Twenty-one
ETF’s are above their respective bullish red curves. This configuration
solidly supports the underlying bullish bias, although weakened. All
thirty ETF average positions are 2.3% above 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.
Twelve 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 fifty-one of the last sixty-six
trading days remains supportive of bullish bias. An absence of contact in
eight of the past twelve trading days suggests the bear’s ambition is
being thwarted by the bull. The bull remains cyclically dominant.
The average
distance from breakout contact is a meager 2.1%. This remains in support
of the bullish bias.
None of the
ETF’s are contacting their respective breakdown lines. The average
distance from the price and breakdown is 28.4%. 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.
This
attribute remains solidly non-bearish, regardless of recent bearish
behavior.
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.
Twenty-nine of the thirty ETF Force Vectors continue toward bullish
domains. As stated last week, the bearish cycle appears reversing, which
should dampen bearish enthusiasm. Bullish behavior the past four trading
days, albeit not dynamic, confirmed that prognosis.
To understand
potential financial opportunities,
click here to learn to identify Robust Force Vectors. They are visible
on the
Quick-term Indicant charts.
ETF Force
Vectors/Vector Pressure Crossings/Option Signals
Remember, the
links contained herein are more visible when reading this on the website.
Click this sentence for Vector Pressure Option Signals. There was one
call option buy signal after Friday’s close. The many call options last
Monday and Tuesday were supported by bullish Force Vector behavior and
rising Vector Pressure. They are still rising. As stated the past few
days, if your stalked options endured a intraday contrarian price movement
whereby your deeply discounted offer occurred, there is an excellent
chance you should enjoy profits. If you see Force Vectors declining (see
previous section), do not hesitate on selling the options. (Note: Force
Vectors held at 29 on Friday and therefore did not fall).
Twenty
ETF Vector Pressures are in bullish
domains. That is down by two from two weeks ago and down by one since
June 15. This is somewhat of a concern. The current configurations remain
in support the Quick-term bullish bias shift from August 15, 2006,
although favoring increasing bearish spurt activity. 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.
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
Bullish
convergence was enjoyed last week. This was a significant counter-punch to
bullish divergence and bearish convergence in recent weeks. The bullish
bias remains very healthy.
Vector
Pressure continues to support the bullish bias. It has been doing that
since August 15, 2006.
Although
recent bearishness has weakened several Quick-term Indicant attributes,
the underlying bullish bias remains in tact. 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
07/08/07
July 01,
2007 Indicant Weekly Stock Market Report
Volume 07, Issue 01 ISSN 1526 6516 © The
Indicant Stock Market Report
This Week’s
Report
The Bullish
Bias Prevails – Part III
Historical
stock market standards do not always replicate. Variance from standards is
common, regardless of subject. Standards are established by either design
or noticeable repeatability. Bullish stock market behavior is common
during presidential pre-election years. It is the repeatability and
consistency of that phenomenon that suggests it is a historical standard.
The market has
completed the first half of this presidential pre-election year with
classical bullishness. Even the orchestrated manipulations, inducing
bearish behavior in late February and early March, could not shut down the
historical standard of presidential pre-election year stock market
bullishness.
The Dow is up
7.6% at the halfway point this year. The NASDAQ is up 7.8% this year. That
contrasts with the NASDAQ being down by 1.5% at this time of year in last
year’s mid-term election year. So far this year, the historical standard
is being replicated.
The magnitude
of stock market movement is not replicated. For example, twenty years ago
in 1987, the Dow’s bullishness amounted to only a 2.3%-gain. That
particular presidential pre-election year contained the stock market crash
of 1987. Even with that horrendous bearish expression in October 1987, the
Dow performed to the directional historical standard of bullish behavior,
although barely.
Any bullish
conclusion to this year will conform to the historical standard of stock
market bullishness during presidential pre-election years.
Since 1832,
the average stock market gain during presidential pre-election years is
10.6%. If the Dow were to rise a mere few more percentage points for the
remainder of the year, it would be an average performer in terms of
magnitude.
A ten thousand
dollar stock market investment on December 31, 1834 and sold on December
31, 1835 would have netted a $310 pre-commission profit. The first
presidential pre-election year on record with stock market data is 1835
even though the Dow was not yet formulated.
That balance
of $10,310 reinvested again on December 31, 1838 would have resulted in a
loss when sold on December 31, 1839. That particular presidential
pre-election year was a variance to the historical standard of stock
market bullishness. The pre-commission loss amounted to 12.3%.
The balance of
$9,042 was eagerly invested on the eve of the next presidential
pre-election year on December 31, 1842. The presidential pre-election year
investor enjoyed one of the most bullish years with a 45.5% pre-election
year gain. Again, stocks were sold on December 31, 1843 at
$13,111-commission free.
Repeating this
cycle only during presidential pre-election year resulted in a balance of
$283,810 as of December 31, 2003. That is a nice 2,738% gain over the long
haul. However, there were periods of disappointment. For example, the
market fell 37.7% during the 1907 pre-election year. It fell a whopping
52.7% in the 1929 pre-election year. It has not fallen since that 1929
debacle, although there have been a few presidential pre-election years
with meager single digit gains.
This
presidential pre-election year is shaping up to be bullish. The heart and
soul of bullish seasonality has not yet occurred. It would not be
surprising to see the majority of this year’s bullish gains occur during
that time. The market is shaping up for a period of lethargy, which should
provide a fulcrum for maximum bullish thrust during the heart and soul of
bullish seasonality later this year.
Keep up with
the daily stock market report so you can differentiate variance from
historical standards, as spurt or sustainable behavior.
Weekly
Buy/Sell Summary – Stocks and Funds
The Mid-term
Indicant generated one buy signal and five sell signals.
In addition
to the sell signals, the Mid-term
Indicant is avoiding 31-stocks and funds of the 345- tracked by the
Indicant. The avoided stocks and funds are down an average of 15.6% since
the Mid-term Indicant signaled sell an average of 29.6-weeks ago.
There were
136-stocks and funds avoided at this time last year. Those avoided stocks
and funds were down an average of 5.0% since their respective sell signals
an average of 15.2-weeks earlier.
Two years ago,
on July 1, 2005, the Mid-term Indicant was avoiding 122-stocks and funds
that were down an average of 26.4% since their respective sell signals an
average of 60.3-weeks earlier. Three years ago on July 2, 2004 there were
only 35-avoided stocks and funds. They were down by an average of 30.3%
from their respective sell signals an average of 45.1-weeks earlier. On
June 28, 2003, the Mid-term Indicant was avoiding only 3-stocks and funds
out of 296-tracked at that time. They were down by an average of 26.9%
since their sell signals an average of 27.6-weeks earlier. Five years ago
on June 28, 2002, there were 213-avoided stocks and funds. They were down
an average of 17.8% since their respective sell signals an average of
10.0-weeks earlier.
In addition
to the buy signal, the Mid-term
Indicant is signaling hold for 308 of the 345-stocks and funds tracked by
the Indicant. The stocks and funds with hold signals are up an average of
135.2%. That annualizes to 63.9%. The Mid-term Indicant has been signaling
hold for these 308-stocks and funds for an average of 110.0-weeks.
One year ago,
on June 30, 2006, the Mid-term Indicant was holding 208-stocks and funds
out of the 345 tracked for an average of 113.0-weeks. Those 208-stocks and
funds were up by an average of 151.4% (annualized at 69.7%). The Mid-term
Indicant was signaling hold for 196-stocks and funds of the 320-tracked
two years ago on July 1, 2005. They were up by an average of 108.0%
(annualized at 58.7%) since their respective buy signals an average of
95.7-weeks earlier. There were 257-stocks and funds with hold signals on
July 2, 2004 since their buy signals an average of 51.7-weeks earlier.
They were up by an average of 68.9% (annualized at 69.3%).
The Indicant
was only tracking 296-stocks and funds in 2002-2003, and early 2004. On
June 28, 2003, the Mid-term Indicant was signaling hold for 277-stocks and
funds out of 296-tracked. They were up by an average of 42.6% (annualized
at 99.7%) since their buy signals an average of 22.2-weeks earlier. Five
years ago, on Jun 28, 2002, there were only 71-hold signals for stocks and
funds out of the 294 tracked by the Mid-term Indicant. They were up 39.9%
(annualized at 51.3%) since their respective buy signals an average of
40.4-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 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
This section
is a repeated each week with a few modifications, reflecting recent
secular influences and performance data. Although appearing redundant at
times, it is important to read this section to keep abreast of secular
market shifts. Quantifications and qualifications are updated, weekly.
Remember, secular shifts can last twenty-five or more years. Fortunately,
secular market movements do not deter mid-term, short-term, and quick-term
profit opportunities. However, they can wreak havoc to the long-term
investors’ plans and those that buy and hold.
The current
Mid-term Bull market and buying barrage started in late 2002. The mid-term
election year of 2002 conformed perfectly to historical standards with
deep bearish expressions and a cyclical bottom. That contrasts to the
meandering bear market from late January through mid-August 2006; the more
recent mid-term election year.
Deep bearish
seasonality was not influential in 2006, which usually occurs from late
August through early October. Last August, the Quick-term Indicant
obviated a bullish bias, contrary to the historical standards of deep
bearish seasonality. Many buy signals occurred in late August - early
September 2006, which was unusual. Those buy signals matured into very
financially successful hold signals.
As earlier
stated, the market synchronized with near perfection to normal seasonality
in the mid-term election year of 2002. The rolling half of May-October
2002 was typically bearish. The 2002 seasonal bear leg was dynamic and
configured perfectly to historical standards, although the depth of that
bearish cycle was deeper than normal. That NASDAQ bear cycle approached
the magnitude of the 1930-32 Dow bear cycle. The 2000-2002 NASDAQ bear leg
lasted several weeks longer than the depression-laden 1930-32 Dow.
The mid-term
election year of 2006 fundamentally supported historical standards for the
first two thirds. Although mild bearishness exerted its historical
influence in 2006, it was nowhere as deep as 2002’s bearishness. The
meandering bear in the first two-thirds of 2006 supported the historical
standard of bearishness to non-bullishness. That bearish support was mild.
As of
mid-August 2006, hard economic fundamentals shifted in support of a
bullish onslaught for the heart and soul of bullish seasonality and the
normally bullish presidential pre-election year of 2007. Bullishness
during the week of March 5, sandwiched between two bearish weeks (February
26 and March 12), provided some insight on bearish sustainability. The
bullish bounce on the week of March 5 suggested the bearish aggressions
were going to be mild and not sustainable. In other words, that bearish
behavior was a mere bearish spurt. It was simply talking the market down
by those who enjoy their influence and the one-dimensional media. Also,
commission hungry brokers enjoy that sort of volatility as well.
The heart and
soul of bullish seasonality from mid-October 2005 through January 31, 2006
demonstrated bullish normalcy. The market was a meanderer from January 31,
2006 until mid-August 2006, when the Quick-term Indicant shifted from
bearish to bullish bias.
The heart and
soul of bullish seasonality, ending January 31, 2007, produced significant
and expected gains since the August 15, 2006 bullish bias shift. The Dow,
S&P500, and NASDAQ finished up by 12.4%, 11.9%, and 16.5% at the
conclusion of that heart and soul of bullish seasonality cycle.
How has the
market fared after the conclusion of the heart and soul of bullish
seasonality? From January 31, 2002 through September 30, 2002, the Dow
fell 23.5%. The NASDAQ was down 39.4%. The bull market of 2003 did not
incur normal seasonality, as it conformed perfectly to the presidential
pre-election year’s bullish phenomenon. So far, the presidential
pre-election year of 2007 is mirror imaging the presidential pre-election
year bullishness of 2003. There is more about that later.
From January
31, 2004 until September 30, 2004, the NASDAQ fell 8.2%, while the Dow was
down 3.9%. From January 31, 2005 to June 30, 2005, the Dow was down 2.0%
and the NASDAQ down 0.4%. From January 31, 2006 through August 1, 2006,
the NASDAQ was flat while the Dow was up a respectable 6.1%.
From January
31, 2003 through September 30, 2003, the Dow was up 15.2%, while the
NASDAQ was up 35.3%. The last presidential pre-election year was 2003.
Presidential pre-election years are traditionally bullish. Post “heart and
soul bullish seasonality” in the pre-election year of 2003 did not drag
energy from the bull. So far in this presidential pre-election year, the
Dow is up 6.2% since January 31, 2007 and the NASDAQ is up 5.7%.
Aggressive
bearish expressions eighteen weeks ago and again sixteen weeks ago pushed
the major indices into negative territory, which can happen after the
heart and soul of bullish seasonality expires. Those particular bearish
expressions were mere spurts and lacked sustainability. The bearish
expression during the week of June 3, 2007 and two weeks ago are
configured as bearish spurts, as well, and at this time. Spurts occur from
time to time as the crowd has fits of momentary influence on the market’s
direction.
Historical
standards suggest the market will go much higher this year. Political and
economic fundamentals also support this prognosis.
As you can
see, until mid-August 2006, most major market indices have been slightly
bullish since late 2003 with pronounced meandering behavior. The only
significant bullish expressions, not followed by bearish expressions,
occurred in the heart and soul of bullish seasonality (Nov-Jan) in 2004,
2005, and 2006. Other than those “heart and soul” bullish cycles, the
market was relatively flat from early 2004 through August 2006. However,
this is a presidential pre-election year, where meandering to bearish
behavior should not occur. The theme is bullish expectations even in the
face of periodic bearish spurts.
The Dow30
found bottom in the last presidential mid-term election year on October 9,
2002 at 7,286.27. The NASDAQ found bottom on the same day at 1114.11.
Finding cyclical bottoms in mid-term election years is common.
Fortunately, the bottom of 2006 was minimal and not sharp when compared to
that of 2002. The Dow is up 84.0% from the 2002 mid-term presidential
election year bottom. The NASDAQ is up 133.7% since October 9, 2002. The
S&P600, small caps, is up even more by 153.2% since October 9, 2002.
The NASDAQ is
down 48.4% from its historical weekending high of 5048.62 on March 9,
2000. The Dow is up by 14.4% from its previous weekending historical high
of 11723 on January 13, 2000. It took over five-and-a-half years for the
DJIA to establish a new high. The S&P500 is down 1.6% since its previous
all-time-weekly-closing-high of March 23, 2000. So far, the new century,
2000 inclusive, has not been kind to long-term investors. The NASDAQ needs
to climb 93.9% to equal its all-time high. The S&P500 is struggling a bit
into its uncharted record setting domain.
Historical
standards suggest the NASDAQ will not return to its historical high until
2025 or so. A 2000 buyer and holder will not be back to break-even until
then. Including inflation, a thirty-year-old investor will be in his or
her eighties before the NASDAQ profits from early 2000 investment dollars,
which assumes minimal inflation. However, the late 2002 investor is up
triple digit amounts. Timing is indeed important.
Economic or
corporate earnings fundamentals did not support the stock market’s
meteoric rise in the 1990’s in many sectors. Unprecedented demand for
stocks skewed the supply-demand ratio and, thus, the powerful bull leg of
the 1990’s enjoyed sustainability. The simple law of supply and demand
propelled stock prices dynamically to the north in the 1990’s. The great
bear leg of 2001 and 2002 depressed those prior sources of demand for at
least one generation of investors. The market now has to wait for a new
generation of investors to enjoy dynamic secular bullishness even though
it has been bullish since late 2002.
The great bull
leg of 2003 was a relatively short bull cycle that has not enjoyed dynamic
follow-on bullish behavior due to this lack of demand. As you can see from
the
NYSE trading range, the northerly sloping cycle is not as strong as
the trading ranges from late 2002 through most of 2003. However, bullish
expressions occur during the heart and soul of bullish seasonality
regardless of any technical or fundamental reason. The meandering segments
of 2002, 2003, 2004, 2005, and 2006 were appropriately followed by
historically significant bullishness in each of those years.
As earlier
stated, the Indicant began its buying barrage in October – November 2002
just after the market bottomed from the severe 2000-2002 Bear Market.
There were 239-buy signals between October 5, 2002 and November 9, 2002
out of the 296 stocks and funds tracked by the Mid-term Indicant at that
time. Even badly managed companies received a buy signal, which is a
common attribute of sustainable new bull markets. As many of you noticed,
those companies eventually dipped back to the south after the euphoria of
new bullishness.
Since August
18, 2006, the Mid-term Indicant generated 220-buy signals and only 86-sell
signals. That is an unusually high number of buy signals when considering
historical seasonal market influences. This is a testament to the strength
of the underlying bull market. All Indicant models supported this recent
buying surge just as they did in October 2002 and March 2003. Now that the
heart and soul of bullish seasonality has expired, the resistance to
generate sell signals has softened. There remains minor resistance to buy
signals since the market is now enduring normal bearish seasonality. This
resistance is minor since the market is enjoying the normal bullishness of
presidential pre-election years.
Some of you
recall the Indicant Stock Market Report tracking the
Short-term Indicant Bear for the NASDAQ in 2002. It was the longest in
history. It even exceeded the Dow’s 1929-1932 Short-term Indicant Bear in
breadth and approached it in magnitude. The good news is that the NASDAQ’s
decline did not lead to a depression, which is a clear indication of how
little influence tech stocks have on the economy.
There are two
important axioms to remember and are always repeated in this report. 1)
Real economic wealth is created in only three ways - manufacturing,
agriculture, and extraction. 2) The only positive influence politicians
have on the economy is to undo their prior damage. That is also why the
presidential pre-election year is historically the most bullish on the
four-year cycle. If the strength of the current Mid-term Bull can be
subjected only to meandering behavior, like 2004, 2005, and 2006, then it
is possible for the current Mid-term Bull to be a record setting one in
terms of duration.
Political
institutions reduce wealth. Politicians continually attempt to
redistribute wealth, which flies in the face of the laws of nature. They
promote “middle class” attainment. The larger the middle class, the more
power politicians and their academic brethren have. The communists tried
that, resulting 99% poverty, while the ruling 1% lived like kings.
Socialism rewards an ability to intellectualize, while capitalism rewards
the results of appealing effort. As long as the world’s populace moves in
the direction of capitalism, the stock market will continue with a
long-term bullish bias. If the market smells increased interests in
socialism and similar concepts, it will turn bearish.
The remainder
of this section, Secular Market Blend, is repeated, in part, from the past
several months, but it does not hurt to reread it each week. As time
progresses and conditions change, there will be modifications to it to
maintain a balanced frame of reference.
You will
notice many of the
mutual fund buy signals occurred in March 2003. Many of them endured
sell signals for the first time since early 2003 during the mildly bearish
meandering behavior in mid-2005. However, the bull’s resiliency minimized
selling activity. The Mid-term Indicant is now signaling hold for nearly
all mutual funds it tracks.
Many of you
recall how the market did not synchronize with the heart and soul of
bullish seasonality from November 2002 through February 2003. December
2002 was the most bearish since 1931, but not nearly as dynamic as the
1931 bearish expression. After the asynchronous behavior in the November
2002 rolling third of the year, the market turned bullish in March 2003
and again did not synchronize with normal seasonality. The Mid-term
Indicant continued signaling bull/hold during bearish seasonality in 2003.
The market continued moving north during that time, contrary to historical
seasonal standards, but consistent with political cycle standards. As
stated in most of 2004, bearish expressions on a Mid-term basis between
May and October 2004 should not be surprising. That is exactly what
occurred. The result was a meandering market with a slight bearish bias
during most of 2004 and 2005 and the first two-thirds of 2006. This
presidential pre-election year is being fundamentally tested in the face
of war, terrorist threats, and rising oil prices.
The Quick-term
Indicant’s bearish bias during most of 2006 was replaced with a bullish
bias in mid-August 2006. Several buy signals ensued shortly after that
bias shift. Bullish behavior occurred, as expected, since mid-August 2006.
As stated since that bullish bias shift, the various Indicant models,
economic fundamentals, and historical standards suggest significant
bullishness in the coming months.
The Dow is up
19.4% since the Quick-term Indicant bullish bias shift on August 15, 2006.
The NASDAQ is up 23.1% since then. The S&P500 is up 16.9%.
Keep up with
the Daily Stock Market Report.
http://www.indicant.net/Members/Updates/History-Seasonal/HS0001.htm
Make certain
you read the entire pages on the above link. You will see there are
exceptions.
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 is rebounding, but cyclically remaining bearish
(bullish for the stock market). That T-Bill rebound in addition to other
interest rates aroused the bear last week. The idea here is to not fight
the cycle. Also, do not fight the bullish stock market trend.
As stated the
past two weeks, it is unlikely interest rates will rise during this
presidential pre-election year. Unfortunately, their flat configuration
induces bearish spurts from time to time. Rising commodity prices are a
thorn viewed by the bull.
As stated the
past four weeks, this is shaping up to support the historical standards of
presidential pre-election-year and election-year stock market bullishness.
As stated the
past six 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?
Capitalists
transform commodities into products. That transformation is where
productivity potential exists. The result of that should be lower prices
to the buyers of products even though the producer’s raw materials are
higher.
As stated last
week, the bearish yellow curve has shifted back to the north. Although its
recent northerly cycle did not produce 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
severely weakened in the event either unfolds. Click the below link to
view the oil charts.
http://www.indicant.net/Members/Updates/Economic/E03.htm
Also, as
stated last week, the CRB Bridge Futures is configuring similarly to oil.
The Fed keeps a close eye on this barometer. Its chart is on the same
link. Just scroll down a little to view it.
This paragraph
is repeated from the past five weeks. Productivity improvements are
evolutionary, whereas commodity prices can be revolutionary. The sudden
increase in the number of capitalists is revolutionary. However, it takes
time and a lot of effort to increase productivity. The exponentially
increased demand for commodities can out-pace the impending productivity
increases and thus set off inflation. This is an issue confronting both
the Fed and the stock market. The prevailing stock market perception is
that productivity will be the economic savior.
Overall,
economic conditions appear shifting in favor of a continuation of this
strong bull market.
Fear
Metrics: Economics and Terrorism
Vanguard Gold and Precious Metals (VGPMX) - #19 is up 362.3% since the
April 13, 2001 buy signal. Its annualized growth since that buy signal is
57.5%. It moved to the north in 27 of the past 37-weeks. This fund was
mildly bearish last week.
Fidelity Gold, Fund #28, is up 34.7% since the Mid-term Indicant
signaled buy on August 26, 2005. That annualizes to 18.6%. This fund was
also mildly bearish last week.
State Street Research Global #9, SSGRX, which is isolated in the
energy sector, is up 311.1% since the Mid-term Indicant signaled buy on
August 16, 2002. It is annualizing at 63.0%.
Vanguard Energy #18, VGENX, is up 221.1% (annualized at 51.5%) since
the Mid-term Indicant signaled buy on April 5, 2003.
Fidelity Energy Services #40, FSESX, is up 183.9% (annualized at
50.9%) since the Mid-term Indicant signaled buy on December 6, 2003.
Fidelity Energy #39, FSENX, is up 166.5% since the Mid-term Indicant
signaled buy on August 16, 2003. It is annualized at 42.2%.
These energy
related funds were bearish last week, which coincided with mild stock
market bullish behavior. That is bullish divergence.
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 47.6% since then. It is
annualized at 24.7%. This ETF has been bearish in five of the past seven
weeks. It was mildly bearish the past two weeks.
The SQI
signaled buy for
ETF#03 – Energy and Natural Resources on March 26, 2003. It is up
220.9% (annualized at 51.1%). This fund was also bearish the past two
weeks.
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 30.0% since the Mid-term
Indicant signaled bull an average of 102-weeks ago. That annualizes to
15.4%, 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 $40,617,924.
That beats buy
and hold performance of $2,049,954 on a $10,000 investment in the Dow
stocks in 1900. The
MTI S&P500 is at $194,104. That beats buy and hold’s $147,257 on a
December 31, 1971 $10,000 investment. The
MTI-NASDAQ is at $217,814. That beats buy and hold’s $90,265 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
After enduring
bearish divergence two weeks ago, the market enjoyed mild bullish
convergence this past week. General equities moved mildly north, while
energy moved more aggressively to the south. This was the expected
response to the previous week’s bearish convergence with the underlying
bearish spurt configuration.
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 is now avoiding
ProFunds Ultra Short. It is down 27.7% 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
363.2% (annualized at 23.1%) since the Long-term Indicant signaled bull
817-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: Nineteen of thirty;
bullish bias remains, but weakening.
Quick-term
Yellow Bears: Two; overall, the
market remains to near maximum non-bearish support.
Short-term/Quick-term Non-Bearishness:
Countering “sustainable” deep bearish ambition.
Force
Vectors: Moving north on a
quick-term basis. Potential robustness developing.
Vector
Pressure: Supportive of bullish
bias, but trending unfavorably to that bias.
Long-term
Hold Positions: Solidly safe.
Current
Quick-term Bias: Bullish
Overall
Market Status: Bullish bias
prevailing.
Profit
Potential from Naked Options:
Improving with increasing volatility.
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 bull on May 21, 2007 for both the Dow and
NASDAQ. They are down 1.0% and up 0.9%, respectively, since then.
Configurations continue supporting bullish bias. Please read on. Click
here to see the
Short-term Indicant’s history.
As stated the
past few days, both
Indicant Volume Indicator’s were demonstrating an interest in a robust
cycle. That embryonic configuration suggested little resistance to bearish
aggression. That was because the increase in volume was concurrent with
bearish behavior. That cycle did not mature enough to obviate the market’s
directional intention. Holiday volume is kicking in now and a lethargic
cycle is resuming. At this time, configurations continue to support
bullish bias. In other words, the market is not about to charge off on a
sustainable and deep bearish cycle.
Comment from
June 28, 2007-Unfortunately, bullish responses are less in magnitude that
their predecessor bearish expressions. This could result in the effect of
a gentle drift to the southeast on the charts. Even with volatility, the
market’s result should like a gentle drift.
SQI Report Card (Consolidated Short/Quick), Status, and Charts
There were no
buy signals and no sell signals. Although there were no buy signals, the
SQI is signaling hold for 29-ETF’s. They are up 75.1% (annualized at
31.4%) since their respective buy signals an average of 123.1-weeks ago.
The SQI is avoiding one ETF. It is down 0.5% since its sell signal
4.0-weeks ago.
The SQI model is the one that most of you will prefer for your trading
decisions. It generates fewer signals than the other two models and
represents consistencies in the Quick-term and Short-term outlooks for the
specific ETF’s. It also beats buy and hold on a regular basis, although
there is only eight years of proof. The quality of that proof is high
since this period includes a powerful bull and bear. The model sours a
little during meandering markets with an excessive number of signals from
time to time. Research toward perfecting continues.
Short-term Indicant Report Card, Status, and Charts
There were no
buy signals and no sell signals. Although there were no buy signals, the
Short-term Indicant is signaling hold for 29-ETF’s. They are up an average
of 79.7% (annualized 34.2%) since the STI signaled, buy, an average of
120.0-weeks ago. There is one avoid signal. That fund is down 0.5% since
its sell signal 4.0-weeks ago.
Keep in mind,
the Short-term Indicant is much more active in buying/selling than the
Consolidated model. The Quick-term Indicant, which follows, is even more
active.
Quick-term Report Card, Status, and Charts
There were no
buy signals and no sell signals. Although there were no buy signals, the
Quick-term Indicant is signaling hold for 28-ETF’s. They are up by an
average of 21.7% (annualized at 21.4%) since the QTI signaled buy an
average of 51.9-weeks ago. Although there were no sell signals, the
Quick-term Indicant is avoiding two ETF’s. They are down by an average of
2.5% since their sell signals an average of 3.9-weeks ago.
Conflicts
Between the Short-term and Quick-term Indicants
There is one
conflict, 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.
There are
86-hold signals out of a possible 90. There are four avoid signals with
three related to the same fund. The bias remains in obvious support of the
bull, although weakening.
Quick-term Indicant Bull/Bear Health Report
Two of the
30-ETF’s are below their respective bearish yellow curves. The average
relative position of all thirty ETF’s is above bearish yellow by 8.3%.
This remains configured in support of the market’s non-bearish posture.
There is minimal support for sustainable bearish assertions.
Eighteen
ETF’s are above their respective bullish red curves. As stated the past
several days, there is no sustainability to recent bearish expressions at
this time. This configuration solidly supports the underlying bullish
bias, although weakening. As stated last Thursday, do not be surprised at
immediate bearishness. There was bearishness on Friday, but the magnitude
was mild and thus disappointing to those who short the market. All thirty
ETF average positions are 0.4% above 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 favor bearish spurt 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 forty-seven of the last sixty-two
trading days remains supportive of bullish bias. An absence of contact
in eight of the past eight trading days confirms an increasingly
aggressive bear. However, the bull remains cyclically dominant.
The average
distance from breakout contact is 3.6%. This remains in support of the
bullish bias.
None of the
ETF’s are contacting their respective breakdown lines. The average
distance from the price and breakdown is 26.1%. 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.
This
attribute remains solidly non-bearish, regardless of recent bearish
behavior.
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.
Only three of the thirty ETF Force Vectors continue toward bullish
domains. The majority of this directional behavior suggests the bull is
resting in the face of increasing bearish ambitions. As stated yesterday,
the bearish cycle appears reversing, which should dampen bearish
enthusiasm.
To understand
potential financial opportunities,
click here to learn to identify Robust Force Vectors. They are visible
on the
Quick-term Indicant charts.
ETF Force
Vectors/Vector Pressure Crossings/Option Signals
Remember, the
links contained herein are more visible when reading this on the website.
Click this sentence for Vector Pressure Option Signals. There were no
option buy signals today. Last Thursday’s high number of put option buy
signals will most likely did not manifest actual buys. A contrarian market
movement was required for your deeply discounted offers to be accepted.
That did not happen as the market synchronized to bearish expectations.
The perfect configuration would have been to have a bullish stock market
on Friday, followed by deep bearishness this coming Monday. Perfect
configurations occur from time to time. So, do not despair.
Eighteen
ETF Vector Pressures are in bullish
domains. That is down by six from one week ago and down by eight since
June 8. This is somewhat of a concern. The current configurations remain
in support the Quick-term bullish bias shift from August 15, 2006,
although favoring increasing bearish spurt activity.
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.
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.
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
Bullish
divergence was enjoyed last week. Although not very dynamic, it was
positive response to the prior week’s bearish divergence, which was
expected. The bearish spurts are currently more robust than recent bullish
responses.
Vector
Pressure continues to support the bullish bias. It has been doing that
since August 15, 2006.
Although
recent bearishness has weakened several Quick-term Indicant attributes,
the underlying bullish bias remains in tact. 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
07/01/07