June 27, 2004 Indicant.Net Weekly Update

Volume 6, Issue 4 ISSN 1526 6516 © The Indicant Stock Market Report

Is This Bull Nearing the End?

The Indicant does not forecast, as any accurate forecast is luck. The Indicant is only concerned if the market is a bull or bear. The Indicant does not care if a bear is a 5% drop or a 70% drop. A bear is a bear and a bull is a bull, regardless of magnitude or breadth. A small drop can generate a bear signal depending on the many attributes tracked by the Indicant.

The current Mid-term Bull was born on March 22, 2003. This bull has not demonstrated dynamic bullish expressions. It is a jogger, as opposed to being a sprinter. It has already lived a relatively long life, but some historical bulls have lasted three to five years. This bull is a little over one-year and three-months old.

This bull has never stressed itself with sprinting like action to the north. It has been very steady and has paced itself very well in spite of abnormal confrontations, such as international and domestic terrorism. The Long-term Indicant was born about three years before the Waco incident where innocent people were killed. That did not detract from the bull’s strength. Other domestic terrorist acts did not adversely impact the bulls of the 1990’s.

The current Mid-term Bull was born in the same month as the invasion of Iraq. The war with Iraq had no adverse impact on the current Mid-term Bull. The bull seemingly ignored that war.

There will be two major news events this coming week. The Fed is expected to raise interest rates anywhere between 25 to 50 basis points. If Greenspan is more aggressive than that, the market will be disappointed. The market has been anticipating the 25 to 50 basis point rise for about six months. As you can see, the market does not like to anticipate interest increases, although any increase at this time would still be historically low.

The government of Iraq will change hands this coming week. If the transition is perceived as smooth, a bullish response would not be out of line. The question is, how does one define smooth? The Iraqi’s and others in the Middle East want the occupiers to leave, while the market has had difficulty digesting Iraqi responses. The Iraqis had absolutely nothing to do with their newfound freedom. It is unlikely that if left alone, the Iraqi’s will not keep it, since they had nothing to do with getting their freedom in the first place. The market only addresses hard logic. It will implement cold choices regardless of a more desirable path. It the transfer of power in Iraq is followed by civil war and accelerated terrorism on an international scale, the market will react bearishly, on a Quick-term basis. The market can easily tolerate delays in twenty or so million Iraqis delaying their ventures into capitalism on a Mid-term Indicant basis.

In addition to the potential of accelerated terrorist acts, voodoo bookkeeping has not been in the news lately. Have all the dilettantes and voodoo bookkeepers all of a sudden found honest methods? That is not likely, as there has been an absence of massive firings by their cozy board members. Do not be surprised if more stories about voodoo bookkeeping crop up in the months ahead.

Wall Street is focused more on cash flow as opposed to just E.B.I.T. (earnings before interest and taxes) for valuing companies. Although that removes some of the tricks by voodoo bookkeepers, it is hard work for Wall Street. If a company has to invest in significant capital, Wall Street has do adjust their paper work to add that cash drain back into computations. Also, with the rising market, some cash strapped companies may sell their treasury stocks that can confound the cash flow calculations.

If Greenspan raises interest rates by more than 50 basis points and civil war erupts in Iraq, expect a Quick-term Indicant bearish response. To make matters worse, if a new voodoo bookkeeping story surfaces shortly thereafter, this Mid-term Bull could expire. The stock market has no room for fiction. Its behavior is shrouded in reality although from time to time, even it can get caught up in hype.  To add to such depressing thoughts, keep in mind that 2005 is a post presidential election year, which is the most bearish on the presidential election cycle.

There is one little attribute we have in our favor.  With the exception of the 1929 and 1987 stock market crashes and using the Dow Jones Industrial Average as the bench mark, Mid-term Indicant Bulls always fall below their bullish red curve at least twice before spiraling deeply to the south. This Mid-term Bull fell below its bullish red curve a few weeks ago. There is a 96% chance the market will not fall prey to aggressive bearish behavior until it falls below bullish red a second time on the Mid-term Indicant scale.

The market does not always slide deeply to the south when it falls below the Mid-term Bullish Red curve a second time following bull legs. Sometimes it just moves laterally and then followed by another Mid-term Bull cycle. Sometimes it flutters with several signals as it moves laterally. So, do not think its second crossing below its bullish red curve means a deep bear will soon follow. The message here is that we have some time before it may become necessary to start dumping stocks and funds.

Watch this Fridays close. The market will signal its reaction to the upcoming news this weekend. It will take a few weeks for it to embody a decisive and longer-term reaction on a Mid-term Indicant basis, while it could be somewhat nasty on a Quick-term basis.

The market has been promulgating its anticipation of this news since last February. Adjustments have already been made, provided the news delivers what the market is expecting. The market does not like surprises. If it is unfavorably surprised, it will immediately begin making adjustments for what it sees the world will be like at year-end and in early 2005. Greenspan, Iraqi’s, and terrorist all can surprise the market.

Weekly Buy/Sell Summary

The Mid-term Indicant generated ten buy signals and three sell signals for stocks. This includes one buy signal for mutual funds. Again, do not be aggressive with these buy signals. Be conservative in any buying at this time as we remain in bearish seasonality and the post-election-year phenomenon is now in the market’s sight. Also, place your stop loss order immediately on buying and each week thereafter.

In addition to the sell signals, the Mid-term Indicant is avoiding thirty-five stocks and funds of the 296 tracked by the Indicant. The avoided stocks and funds are down an average of 30.4% since the Mid-term Indicant signaled sell an average of 44.9 weeks ago.

There were only three stocks and funds avoided at this time last year in addition to fifteen sell signals. The avoided stocks and funds one year ago were down an average of 26.9% since their respective sell signals an average of 27.6 weeks earlier. This contrasts strongly with the avoided stocks and funds two years ago. On June 28, 2002, the Mid-term Indicant was avoiding two-hundred and thirteen stocks and funds that were down 17.6% since their respective sell signals an average of 10.0 weeks earlier.

In addition to the buy signals this weekend, the Mid-term Indicant is currently signaling hold for 248 of the 296 stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 73.9%. That annualizes to 72.5%, which is down from 124.1% reported on June 7, 2003, but up from 50.2% reported over a year ago on February 15, 2003. The Mid-term Indicant has been signaling hold for these 248 stocks and funds for an average of 53.0 weeks.

There was one buy signal on this weekend one year ago. At that time, the Mid-term Indicant was holding 277 stocks and funds for an average of 22.2 weeks. They were up 42.6% (annualized at 99.7%). The contrasts significantly with the Mid-term Indicant signaling hold for seventy-one stocks and funds two years ago on June 28, 2002. They were up by an average of 39.9% since their respective buy signals an average of 40.4 weeks earlier.

This paragraph is a repeat from last several weeks with a few modifications. The current bull market and buying barrage in late 2002 followed the predicted market bottom in 2002. The mid-term presidential election year phenomenon was consistent with history. Even more impressive was how the market synchronized with near perfection with normal seasonality in 2002. The Dow30 found bottom on October 9, 2002 at 7286.27. The NASDAQ found bottom on the same day at 1114.11. 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. Some of you recall the Short-term Indicant Bear for the NASDAQ was the longest in history. It even exceeded the Dow’s 1929-1932 Short-term Indicant Bear in breadth. The good news is that the NASDAQ’s decline did not lead to a depression, which is a clear indication of how little influence the tech stocks have on the economy.

This paragraph is repeated from the past several weeks, but it does not hurt to reread it each week during bearish seasonality. You will notice many of the mutual fund buy signals occurred in March 2003. Many of you recall how the market did not synchronize very well with the heart and soul of bullish seasonality from November 2002 through February 2003. After that asynchronous performance in 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 during bearish seasonality. It is unlikely we will enjoy back-to-back asynchronous market behavior with seasonal normalcy. Bearish expressions on a Mid-term basis in 2004 between May and October should not be surprising.

The second most bullish year along the presidential election cycle is the election year, which is underway in 2004. We are anticipating enjoyment of that as well, but its bullish fervor may not unfold until just before the election this year. The following link will take you to charts that explain this phenomenon, which is currently underway and for you to enjoy. It is in a “members only” section. This paragraph will repeat throughout this year.

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. So far, we do not expect 2004 to be an exception. If it becomes an exception, the Quick-term Indicant and the other Indicant models will let you know. Right now, the Mid-term Indicant continues to signal bull. There is more about that later in this report.

Stop Loss Management

The Mid-term Indicant continues recommending a stop loss of 5% because of bearish seasonality. If you are up by 50% or more you still may find it advantageous to set your stop loss at 10% from your current hold position. If you sold a stock on the stop loss and the Indicant continues to signal hold, do not buy the stock until the next Quick-term Indicant Bull Signal.

Use either a 5% (or 10%) trailing stop loss or the yellow or green values you will find on the tables. 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 8% 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 8% trailing stop loss. If you are up by triple digit amounts and enjoy your ownership of the stock or fund, then use a 15% 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.

Stock and Fund Update

Click the following link to see sorted performance of stocks and funds with hold/avoid signals. In the past, we included them 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. Be patient with this download. It takes a few minutes.

http://www.indicant.net/Non-Members/Performance/Top-Bot.htm

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 update information is on a single page in the web site. 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

Divergence versus Convergence

Foreign indices bounced slightly back to the north last week, after paralleling U.S. stock market behavior for the past several weeks. Even the Internet and Technology sector bounced back into bullish domains last week. Energy, large caps, and generic sectors are all maintaining their bullish domains even though they are depressed for the year. The degree of market divergence depressed last week, favoring a slight bullish bias that is consistent with convergence. Right now, there is more bullish convergence than bearish divergence.

Economic Outlook

The three-month and six-month CD’s continue moving north, but still reside at very low levels. Other interest rates are pausing with cyclical northbound expressions. Overall, the direction of interest rates are not friendly to the bull market, but their depressed state is not at a level the market is use to. In other words, the rising interest rates are still very low.

Commodities are still at cyclical highs, but pausing from their long trek to the north. Some are turning boldly bearish which should hold Greenspan in check when he initiates his rate hikes.

The dollar continues to appear to shifting from a cycle of weakness to a cycle of strength. However, a committed direction of strength will most likely become apparent after Greenspan’s rate hike.

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

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% one-hundred and five weeks ago since the MTI buy signal in April 2001. Ninety-eight weeks ago, it closed up 30.1%. Last week it closed up 91.8%, which is higher than the 75.9% reported forty-nine weeks ago. The current annualized growth rate since the April 13, 2001 buy signal is 28.3%, which is slightly higher than 23.1% reported forty-nine weeks ago. This fund is also down considerably since its most recent peak on December 5, 2003 when it was up 117.3%. This fund was up last week.

The Fidelity Gold Fund #28 is up 5.9% since the Mid-term Indicant signaled sell on April 30, 2004. The last buy/sell cycle was from December 7, 2001 to April 30, 2004 resulted in a 52.7% profit. This fund was also up  this past week, but still receiving the avoid signal.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 101.5% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 53.8%. Vanguard Energy #18, VGENX, is up 45.1% (annualized at 36.3%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 19.1% (annualized at 34.0%) since the Mid-term Indicant signaled buy on December 6, 2003.

There is more about mutual funds later in this report and the links to the mutual fund tables can be found there.

The Gold Index is up 5.9% since the Mid-term Indicant signaled bear on May 8, 2004. This index was down significantly last week. Its contrarian behavior to the Mid-term Indicant signal should be short-lived. It should plummet if the Saudis are successful in elevating their supply of oil. It will plummet even more if Greesnspan aggressively raises interest rates.

As repeatedly stated in this weekly report, gold prices will tumble if terrorism and inflationary threats subside. There is a “perception” that inflationary threats will subside, as demonstrated by the plummeting gold prices of the recent past.

These funds and the gold and silver index should convey the market’s perception of terrorism, inflation, and the economy. As long as they are in solid hold positions, there remains some pessimism regarding the future of the economy.

http://www.indicant.net/Members/Updates/MTI-Mkts-Index%20Options/I05.htm#25

Quick-term and Short-term Indicant Update

The eight major indices are up 3.0% since the Quick-term Indicant signaled bull on May 25, 2004. That annualizes to 35.6%. The DJ-Composite of Sixty-Five Stocks is the most bullish. It is up 3.9% since the Quick-term Bull signal of May 25, 2004. The least bullish is the S&P500 and S&P100 Indices. They are up 1.9% since the May 25, 2004 Quick-term Bull signal. As stated last week, the indices continue to move laterally with little chance of robust bullish expressions on a Quick-term basis. The news this week will definitely influence the Quick-term Indicant.

Five of the eight major indices are red bulls, which is up from one last week. As stated last week, the indices are not expressing much confidence in bullish expressions. However, the battle for confidence is occurring in bullish domains as opposed bearish domains. For more information about the Quick-term Indicant, refer to last week’s daily reports.

Force Vectors continue their northerly direction for four of the eight major indices. That is one more than last week, adding to a slight bullish bias. All eight Force Vectors reside in bullish domains.

Vector Pressure is also in bullish domains, but their direction is now mixed. Five are moving north and three are moving south. Overall, that is a bullish bias, but weakened from two weeks ago when all eight were moving north.

Keep in mind Force Vectors and Vector Pressure are eight dimensional and cannot be plotted. We continue to research methods to convert to two-dimensional arrays so you can see them. About a year ago, one of our members, a Mechanical Engineer, made some suggestions that appear to be promising for plotting. If we can get that done, those of you interested in trading options will find those plots appealing. Until then, we will continue to use words to describe them.

Please review the daily reports for more details regarding the Quick-term Indicant.

To view the Quick-term Indicant charts, please click the following hyperlink:

http://www.indicant.net/Members/Updates/STI-Mkts/QT.htm

Finally, we get to say something other than the summertime doldrums are upon us. You will notice the Indicant Volume Indicator has shed its path of summertime lethargy. It is now moving crisply to the north. Some big money folks are now placing bets on how the market is going to react to Greenspan and Iraq this coming week. Early indications that Greenspan will surprise, favorably, with a 25 basis point increase. The Indicant Volume Indicator’s rise paralleled a rise in the market. Much of the market’s increase was in the NASDAQ, as opposed to the Dow. Of course, we all know that the NASDAQ has much more room for bullish expressions than the Dow.

http://www.indicant.net/Members/Updates/STI-Mkts/IVI.htm

The Dow is down 1.0% since the Short-term Indicant signaled bull on June 7, 2004. The NASDAQ is up 0.2% since the Short-term Indicant signaled bull on the same day. The Dow showed weakness late last week, while the NASDAQ continued with bullish expressions, although mild.

To view the Short-term Indicant charts, please click the following hyperlink:

http://www.indicant.net/Members/Updates/STI-Mkts/STI.htm

A link to the Dow’s Short-term Indicant table is as follows:

http://www.indicant.net/Non-Members/Tours/STI%20Tour/ST-Table%20DJIA1995-2002.htm

A link to the NASDAQ’s Short-term Indicant table is as follows:

http://www.indicant.net/Non-Members/Tours/STI%20Tour/ST-Table%20NAS1995-2002.htm

Perspectives

There is nothing different to report here. The remainder of this paragraph remains unchanged from the last seven weeks. As you can see, the major indices have hit cyclical peaks on a Quick-term basis. Look at the charts. It is encouraging the breakdown curves are increasing. That means any potential bearish expressions will begin at a higher magnitude, which solidifies your hold positions.

To view the Perspective Charts (Quick-term Indicant, please click the following.

http://www.indicant.net/Members/Updates/STI-Mkts/QTP.htm

Overall, this Quick-term Bull is not receiving solid support from the quick-term configurations, which contrasts with said support throughout most of 2003. It could very well be a short-lived bull. However, the fact that the market allowed its birth is favorable to your hold positions.

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

There were no new bull signals and no new bear signals.

All eight major indices are above their respective bullish red curves. This continues as a testimonial for the resiliency of this Mid-term Indicant Bull that began in March 2003 in the face of terrorism, war, Greenspan, and rising oil prices. This bull is indeed maintaining its position in these walls of worry. However, this coming week will produce some news that could potentially devastate this bull.

The eight major indices are up an average of 22.6% for an annualized gain of 22.2% since the MTI Bull signals an average of 53.0 weeks ago. The DJIA, NASDAQ, Dow Composites, and Dow Transports have been Mid-term Bulls since March 22, 2003. The other four indices were also bulls on March 22, 2003, but had some bear signals since then.

The DJIA is up 21.7% (annualized at 17.1%) since the MTI Bull signal on March 22, 2003.  That is up slightly from 14.1% reported thirty-six weeks ago. The Dow pinnacled at 24.7% on February 14, 2004 from the MTI Bull signal on March 22, 2003.  

The NASDAQ Composite continues to be the strongest Mid-term Bull. It is up 42.5% (annualized at 33.6%) since the March 22, 2003 MTI Bull signal, which is up, slightly, from 33.2% reported thirty-six weeks ago. Its most recent cyclical peak was on January 17, 2004 at 50.6% growth since the Mid-term Bull signal of March 22, 2003.

The Dow Transports and Dow Composites are up 39.8% (annualized at 31.4%) and 28.1% (annualized at 22.2%), respectively since the Mid-term Indicant Bull signal on March 22, 2003.

The S&P500 is up 10.1% (annualized at 13.9%) since the Mid-term Bull signal on October 4, 2003. The S&P100 is up 6.1% since the Mid-term Bull signal on November 1, 2003, which annualizes to 9.3%. The Dow Utilities is up 17.5% (annualized at 20.3%) since the Mid-term Bull signal on August 16, 2003.

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

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

Mid-term Indicant Positions - International Markets

There were no new bull signals and no new bear signals.

Twenty of the twenty-two foreign indexes tracked by the Indicant are Mid-term Bulls. They are up an average of 85.9% since the Mid-term Indicant signaled bull an average of 80.6 weeks ago for an annualized gain of 55.4%, which is less than the 72.9% reported fifty-five weeks ago.

Although there were no new bear signals, two indices have been bears for an average of 3.9 weeks. These two bears are flat since then.

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

June 20, 2004 Indicant.Net Weekly Update

Volume 6, Issue 3 ISSN 1526 6516 © The Indicant Stock Market Report

Dear Indicant Members:

This Week’s Report

Frustrating Bearish Seasonality

In the mid-1980’s the Stock Trader’s Almanac identified bearish seasonality from May 1 through October 31. A $10,000 investment in 1950 in those six bearish months would yield breakeven, whereas that $10,000 would grow to nearly a $500,000 if invested only from November 1 through April 30.

There are exceptions to this seasonality. We enjoyed a major exception last year as the Mid-term Indicant bull continued moving north during this bearish seasonal period. Based on the Stock Trader’s Almanac standard of seasonality, the market generally has difficulty rising during the summer months. The reduced volume and summer time distractions offer some obvious influence in these seasonal phenomena.

After 911, Western civilizations are returning to some degree of normalcy. Vacations are again being enjoyed. Travel is not as fearful or as restricting as it was in 2002 and last year. It is not surprising for the market to return to some degree of normalcy.

This year, the market peaked much earlier that normal seasonality suggests. Since the market peaked, it has been struggling to maintain the current Mid-term Indicant Bull status. Equally important though, the spirit of this bull has demonstrated some noticeable resiliency.

The current Mid-term Bull, which was born in March 2003, never displayed dynamic expressions. It simply maintained a steady northerly path of a gentle nature during 2003 and through January 2004. Corporate profits have risen steadily since then and continue to do so with the improving economic conditions. Also, there is less voodoo bookkeeping going on as analysts are focused appropriately on cash flow. The U.S. went to war in Iraq at about the same time this Mid-term Indicant bull was born. War did not phase it.

This bull has maintained steadiness through the Greenspan onslaught of threatened interest rate hikes. It has maintained steadiness through rising oil prices, sniffing out the fact that the Saudi royal family is going to put a lid on prices.

Just as a sprinter will lose a marathon race, this bull is like the marathon runner. It started out slow and steady, but continues to be in the race. These types of bull markets can be frustrating and sometimes fearful. You know it is just a matter of time before there is a crash or another deep bear market.

The risk/reward ratio of stock market investing offers one to generate significant wealth if they avoid the crashes or steep bearish declines.

So far, the details and patterns are suggesting this bull is not ready to die, while it has little reason to continue to advance to the north. That is frustrating. Patience is the best practice at this time. Continue to enjoy your hold positions.

Weekly Buy/Sell Summary

The Mid-term Indicant generated two buy signals and three sell signals for stocks. There were no signal changes for funds. Again, do not be aggressive with these buy signals. Be conservative in any buying at this time. Also, place your stop loss order immediately on buying and each week thereafter. Volume is low at this time and eases ones ability to manipulate stock prices.

In addition to the sell signals, the Mid-term Indicant is avoiding forty-two stocks and funds of the 296 tracked by the Indicant. The avoided stocks and funds are down an average of 18.4% since the Mid-term Indicant signaled sell an average of 26.3 weeks ago.

There were only three stocks and funds avoided at this time last year in addition to one sell signal. The avoided stocks and funds one year ago were down an average of 27.5% since their respective sell signals an average of 27.2 weeks earlier. This contrasts strongly with the avoided stocks and funds two years ago. On June 21, 2002, the Mid-term Indicant was avoiding two-hundred and one stocks and funds that were down 24.0% since their respective sell signals an average of 9.5 weeks earlier. If you recall, 2002 endured some profound bearish cycles.

In addition to the buy signals this weekend, the Mid-term Indicant is currently signaling hold for 249 of the 296 stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 72.0%. That annualizes to 70.8%, which is down from 124.1% reported on June 7, 2003, but up from 50.2% reported over a year ago on February 15, 2003. The Mid-term Indicant has been signaling hold for these 249 stocks and funds for an average of 52.8 weeks.

There were three buy signals on this weekend one year ago. At that time, the Mid-term Indicant was holding 289 stocks and funds for an average of 21.0 weeks. They were up 44.5% (annualized at 110.4%). The contrasts significantly with the Mid-term Indicant signaling hold for eighty-one stocks and funds two years ago on June 21, 2002. They were up by an average of 37.2% since their respective buy signals an average of 37.6 weeks earlier.

This paragraph is a repeat from last several weeks with a few modifications. The current bull market and buying barrage in late 2002 followed the predicted market bottom in 2002. The mid-term presidential election year phenomenon was consistent with history. Even more impressive was how the market synchronized with near perfection with normal seasonality in 2002. The Dow30 found bottom on October 9, 2002 at 7286.27. The NASDAQ found bottom on the same day at 1114.11. 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. Some of you recall the Short-term Indicant Bear for the NASDAQ was the longest in history. It even exceeded the Dow’s 1929-1932 Short-term Indicant Bear. The good news is that the NASDAQ’s decline did not lead to a depression, which is a clear indication of how little influence the tech stocks have on the economy.

This paragraph is repeated from the past several weeks, but it does not hurt to reread it each week during bearish seasonality. You will notice many of the mutual fund buy signals occurred in March 2003. Many of you recall how the market did not synchronize very well with the heart and soul of bullish seasonality from November 2002 through February 2003. After that asynchronous performance in 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 during bearish seasonality. It is unlikely we will enjoy back-to-back asynchronous market behavior with seasonal normalcy. Bearish expressions on a Mid-term basis in 2004 between May and October should not be surprising.

The second most bullish year along the presidential election cycle is the election year, which is underway in 2004. We are anticipating enjoyment of that as well, but its bullish fervor may not unfold until just before the election this year. The following link will take you to charts that explain this phenomenon, which is currently underway and for you to enjoy. It is in a “members only” section. This paragraph will repeat throughout this year.

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. So far, we do not expect 2004 to be an exception. If it becomes an exception, the Quick-term Indicant and the other Indicant models will let you know. Right now, the Mid-term Indicant continues to signal bull. There is more about that later in this report.

Stop Loss Management

The Mid-term Indicant continues recommending a stop loss of 5% because we are now into bearish seasonality. If you are up by 50% or more you still may find it advantageous to set your stop loss at 10% from your current hold position. If you sold a stock on the stop loss and the Indicant continues to signal hold, do not buy the stock until the next Quick-term Indicant Bull Signal.

Use either a 5% (or 10%) trailing stop loss or the yellow or green values you will find on the tables. 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 8% 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 8% trailing stop loss. If you are up by triple digit amounts and enjoy your ownership of the stock or fund, then use a 15% 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.

Stock and Fund Update

Click the following link to see sorted performance of stocks and funds with hold/avoid signals. In the past, we included them 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. Be patient with this download. It takes a few minutes.

http://www.indicant.net/Non-Members/Performance/Top-Bot.htm

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 update information is on a single page in the web site. 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

Divergence versus Convergence

The general market and large caps are maintaining their bullish position. Technology backed off from its prior week’s bullishness. The energy sector expressed some bullish vigor last week, departing from its recent bearish domains. All in all the market is enduring divergence, which does not lead to robust bullish behavior. Foreign markets expressed increased bearishness last week, although most still reside in bullish domains. The health sector was mildly bullish last week. Divergent behavior, which was shrinking last week, was reversed this week. This influences a return to a mild bearish bias.

Economic Outlook

The mid to long-term interest rates are expressing some robust behavior at their cyclical bottoms. These early configurations suggest a rate hike is imminent.

The three-month and six-month CD are configuring aggressive moves to the north with the six-month being the most aggressive. It is now at 1.82% compared to 1.75% last week.

Commodity prices continue to configure the appearance of a topping, but they refuse to plummet in price with the exception of Reuter U.K. It fell aggressively last the last few days.

As stated last week, the U.S. Dollar also appears to have bottomed. It will continue to strengthen if Greenspan’s impending rate hikes start and then continue on a long narrowed path to the north.

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

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% one-hundred and four weeks ago since the MTI buy signal in April 2001. Ninety-seven weeks ago, it closed up 30.1%. Last week it closed up 88.5%, which is higher than the 75.9% reported forty-eight weeks ago. The current annualized growth rate since the April 13, 2001 buy signal is 27.4%, which is slightly higher than 23.1% reported forty-eight weeks ago. This fund is also down considerably since its most recent peak on December 5, 2003 when it was up 117.3%. This fund was up slightly last week.

The Fidelity Gold Fund #28 is up 2.7% since the Mid-term Indicant signaled sell on April 30, 2004. The last buy/sell cycle was from December 7, 2001 to April 30, 2004 resulted in a 52.7% profit. This fund was also up slightly this past week, but still receiving the avoid signal.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 94.7% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 50.7%. Vanguard Energy #18, VGENX, is up 43.7% (annualized at 35.8%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 17.4% (annualized at 32.1%) since the Mid-term Indicant signaled buy on December 6, 2003.

Links to both of the above funds are as follows:

http://www.indicant.net/Members/Updates/MTI-Mutual%20Funds/MF05.htm#28

http://www.indicant.net/Members/Updates/MTI-Mutual%20Funds/MF04.htm#19

The Gold Index is up 10.2% since the Mid-term Indicant signaled bear on May 8, 2004. This index was up last week. Its contrarian behavior to the Mid-term Indicant signal should be short-lived. It should plummet if the Saudis are successful in elevating their supply of oil.

As repeatedly stated in this weekly report, gold prices will tumble if terrorism and inflationary threats subside. There is a “perception” that inflationary threats will subside, as demonstrated by the plummeting gold prices of the recent past. The rebound in gold prices should be viewed as technical, as opposed to underlying fundamental reasons.

These funds and the gold and silver index should convey the market’s perception of terrorism, inflation, and the economy. As long as they are in solid hold positions, there remains some pessimism regarding the future of the economy.

http://www.indicant.net/Members/Updates/MTI-Mkts-Index%20Options/I05.htm#25

Quick-term and Short-term Indicant Update

The eight major indices are up 2.0% since the Quick-term Indicant signaled bull on May 25, 2004. That annualizes to 30.9%. The DJIA is the most bullish. It is up 3.0% since the Quick-term Bull signal of May 25, 2004. The least bullish is the NASDAQ Composites. It is up 1.1% since the May 25, 2004 Quick-term Bull signal. As stated last week, the indices continue to move laterally with little chance of robust bullish expressions on a Quick-term basis.

Four of the eight major indices are red bulls, which is no change from last week. As stated last week, the indices are not expressing much confidence in bullish expressions. However, the battle for confidence is occurring in bullish domains as opposed bearish domains.

Force Vectors continue their northerly direction for three of the eight major indices. That is non-bearish on a Quick-term basis, but not as strongly non-bearish as last week. Vector Pressure is in bullish domains, but last week, they shifted to a southerly direction. That is a shift from a bullish bias to neutral.

Keep in mind Force Vectors and Vector Pressure are eight dimensional and cannot be plotted. We continue to research methods to convert to two-dimensional arrays so you can see them. Until then, we will continue to use words to describe them.

Please review the daily reports for more details regarding the Quick-term Indicant.

To view the Quick-term Indicant charts, please click the following hyperlink:

http://www.indicant.net/Members/Updates/STI-Mkts/QT.htm

As stated the last three weeks, you can tell the summer-time doldrums are upon us with the Indicant Volume Indicator. The market can, and already has endured increased volatility with the declining volume on a Quick-term basis. One single event of a volatile expression can obviate the markets Mid-term and longer-term bias and direction. Once that direction is obvious, sell or buy signals will ensue.

http://www.indicant.net/Members/Updates/STI-Mkts/IVI.htm

The Dow is up 0.2% since the Short-term Indicant signaled bull on June 7, 2004. The NASDAQ is down 1.7% since the Short-term Indicant signaled bull on the same day. This recent bull signal adds to a bullish bias on a short-term and quick-term basis.

To view the Short-term Indicant charts, please click the following hyperlink:

http://www.indicant.net/Members/Updates/STI-Mkts/STI.htm

A link to the Dow’s Short-term Indicant table is as follows:

http://www.indicant.net/Non-Members/Tours/STI%20Tour/ST-Table%20DJIA1995-2002.htm

A link to the NASDAQ’s Short-term Indicant table is as follows:

http://www.indicant.net/Non-Members/Tours/STI%20Tour/ST-Table%20NAS1995-2002.htm

Perspectives

There is nothing different to report here. The remainder of this paragraph remains unchanged from the last six weeks. As you can see, the major indices have hit cyclical peaks on a Quick-term basis. Look at the charts. It is encouraging the breakdown curves are increasing. That means any potential bearish expressions will begin at a higher magnitude, which solidifies your hold positions.

To view the Perspective Charts (Quick-term Indicant, please click the following.

http://www.indicant.net/Members/Updates/STI-Mkts/QTP.htm

Overall, this Quick-term Bull is not receiving support from the quick-term and short-term configurations. It could very well be a short-lived bull. However, the fact that the market allowed its birth is favorable to your hold positions.

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

There were no new bull signals and no new bear signals.

All eight major indices are above their respective bullish red curves. This continues as a testimonial for the resiliency of this Mid-term Indicant Bull that began in March 2003 in the face of terrorism, war, Greenspan, and rising oil prices. This bull is indeed maintaining its position in these walls of worry.

The eight major indices are up an average of 21.3% for an annualized gain of 21.3% since the MTI Bull signals an average of 52.0 weeks ago. The DJIA, NASDAQ, and Dow Composites have been Mid-term Bulls since March 22, 2003.

The DJIA is up 22.2% (annualized at 17.8%) since the MTI Bull signal on March 22, 2003.  That is up slightly from 14.1% reported thirty-five weeks ago. The Dow pinnacled at 24.7% on February 14, 2004 from the MTI Bull signal on March 22, 2003.  

The NASDAQ Composite continues to be the strongest Mid-term Bull. It is up 39.8% (annualized at 31.9%) since the March 22, 2003 MTI Bull signal, which is down, slightly, from 33.2% reported thirty-five weeks ago. Its most recent cyclical peak was on January 17, 2004 at 50.6% growth since the Mid-term Bull signal of March 22, 2003.

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

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

Mid-term Indicant Positions - International Markets

There were no new bull signals and no new bear signals.

Twenty of the twenty-two foreign indexes tracked by the Indicant are Mid-term Bulls. They are up an average of 84.7% since the Mid-term Indicant signaled bull an average of 79.6 weeks ago for an annualized gain of 55.4%, which is less than the 72.9% reported fifty-four weeks ago.

Although there were no new bear signals, two indices have been bears for an average of 2.9 weeks. These two bears are up an average of 0.9%.

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

June 13, 2004 Indicant.Net Weekly Update

Volume 6, Issue 2 ISSN 1526 6516 © The Indicant Stock Market Report

Dear Indicant Members:

This Week’s Report

Interest Rates, Oil, and the Rise of Capitalism

In a 1970’s evening college class, a quest professor from one of the Ivy League schools made the following statement. “You students should work hard to expand your academic credentials. As society becomes more socialistic, your credentials that will separate you from the rest. You will be considered among the chosen and will not have to work as hard as the others.”

How times have changed. Some of the Ronald Reagan memorials brought some old thoughts from the 1970’s and 1980’s. Some of his speeches seemed to promulgate the wave of entrepreneurialism that moved swiftly into the culture in the 1980’s. Not that anyone is against education and expanding credentials, it is ridiculous to promote the concept that not working hard is a good thing. Sure, most people work hard so they do not have to work hard in their later years. If one is lucky enough to find a vocation that is fun, they never really work, if the word, work, is not synonymous to fun.

Societies, who have pockets of struggle, produce great things. Adversity is a primary force that causes that greatness. Microsoft’s near bankruptcy in the early years only made the company stronger. The company was run and still is headed by a college drop out. So much for academic credentials. Oracle was founded, Larry Ellison, who is without a college diploma. The most dynamic growth stock in the history of all stocks was Dell Computer, founded by another college dropout, Michael Dell. College textbooks did not define the system he created for the manufacturing and distribution of personal computers. The textbooks educated students on how to compute inventory carrying costs, while Dell simply eliminated the inventory. Sam Walton of Walmart fame was another one.

Fortune 500 companies recruit the best and brightest students from the best colleges. S&P600 companies and other small company indices contain organizations, for the most part, created by those who do not possess academic credentials. Toyota had no ivy leaguers on their payrolls in the 1980’s when they took market share for ivy league intensive GM, Ford, and Chrysler. The wave of entrepreneurialism was not limited to the U.S. It is a worldwide phenomenon. It has expanded to Russian where Moscow now sports more billionaires than any other city in the world.

Capitalism is on the rise in China. Rest assured that the Far East and Russia has some young Bill Gates, Larry Ellison’s, and Michael Dells. If those countries can rid themselves of corrupt governments and intrusive politicians, the stock markets worldwide with zoom to the north. The salient term in the previous statement, is, if.

Kingdoms are now being threatened by the combined wave of terrorism and the rise in capitalism. The terrorists feel threatened by capitalism, which only rewards the productive and what one is doing “right now.” Past successes are irrelevant in the mind of the capitalists. The nickel being earned right now at this very moment means everything. Only your productive efforts of today and tomorrow mean something to a capitalists, whose primary interest is in making money. Some even have more fun by making money and have fun doing it.

If the college professor’s from the 1970’s prognosis of the future had been accurate, the Dow would still be bouncing between 750 and 1000. Society would be rewarding one for simply regurgitating classroom rhetoric as opposed to thinking and doing.

Another professor in the late 1970’s spoke of Thruster Groups, which are small pockets of society that threaten contemporary leadership. Hippies of the 1960’s was a Thruster Group. They pressured the leadership to end the Vietnam War. There is a Thruster Group forming in Iran, where religious leadership is being challenged by desires of individual freedom. The mystics of Afghanistan met their fate by their oppressive ways, more quickly than the communists, but with the same result.

With all that going on, one can be bullish on a long-term basis. Can you imagine a society of hundreds of Bill Gates, Larry Ellison’s, and Michael Dell’s? The early part of last century brought us Henry Ford, Thomas Edison, Nicola Tesla, and hundreds of others. The U.S. had the rights to capitalistic greatness a hundred years ago because people were free to express themselves. The rest of the world operated in either oppressive regimes or socialistic stances. The capitalistic wave is now an international event that will most likely continue forever with less interference from the corrupt.

However, manipulations are still upon us. The Saudi’s are going to increase production significantly to influence a southerly flow for the price of oil. Saudi’s royal family will honor their agreement with FDR and do everything they can to maintain stability in the U.S. Whitehouse. They understand George W. Bush, while Kerry is a question mark. The Russians will do the same. The leadership around the world would prefer U.S. political stability. That favors the incumbent George W. Bush. So, all bearish elements from international influences will be guided in favor of a bullish result just before the election this year. That is probably one reason why the presidential election year is the second most bullish in the four-year cycle.

Sure, the terrorist will probably attempt to influence the U.S. election. However, they will be surprised as U.S. voters will do the complete opposite of the Spanish voters after their horrific encounter with terrorism earlier this year. A terrorist attack on U.S. soil before the election will assure the retention of the incumbents.

Greenspan, still working on his legacy, will raise interest rates in the face of declining oil prices. He, of course, is loyal to the incumbent and will not do anything too dramatic that will unfavorably impact the economy in 2004. However, if he is too ambitious with the impending rate hikes, he could damage it in 2005, which is fine with everyone in power because they have four more years of that power regardless of what happens in 2005. That is one reason why the stock market’s most bearish year on a historical basis is in the post election year.

There is little doubt interest rates are about to increase. The Fed has been measuring their statements very well to forewarn the financial community. So, the market has already adjusted to the anticipated rate hikes. As long as the Fed does not disappoint with a more aggressive hike than anticipated, the market not shift direction after the announcement.

Even somewhat aggressive rate hikes will remain at historically low levels. The financial markets are already making adjustments for this with their increase in interest rates. You can see this in the charts. The link to the charts is in the economics section of this report.

The market is having trouble gauging this scenario. It wants to go up on the belief the global economy will be producing hundreds of Henry Fords. It wants to go down knowing that the economy is not an issue just after presidential elections. So, the struggle continues.

You have noticed quite a few buy signals the past few weeks. For the most part, they are mere reversals to recent sell signals as some securities dropped too much to retain the Mid-term hold signals while the market turned bearish beginning last February. Do not be aggressive with these buy signals. It is better to own a little on a rising market than own a lot during a rapidly declining market with recent buys. However, your October 2002 and March 2003 buys are still in solid hold positions. The odds are in favor of a deep southerly turn in a few weeks. More aggressive buying would be appropriate at the conclusion of that bearish cycle if indeed it occurs. The various Indicant models will then help guide us through the upcoming post election year in 2005. 

Weekly Buy/Sell Summary

The Mid-term Indicant generated ten buy signals and four sell signals for stocks. There were no signal changes for funds. Do not be aggressive with these buy signals. Be conservative in any buying at this time. Also, place your stop loss order immediately on buying.

In addition to the sell signals, the Mid-term Indicant is avoiding forty stocks and funds of the 296 tracked by the Indicant. The avoided stocks and funds are down an average of 14.6% since the Mid-term Indicant signaled sell an average of 20.2 weeks ago.

There were only two stocks and funds avoided at this time last year in addition to four sell signals. The avoided stocks and funds one year ago were down an average of 26.1% since their respective sell signals an average of 26.6 weeks earlier. This contrasts strongly with the avoided stocks and funds two years ago. On June 11, 2002, the Mid-term Indicant was avoiding one-hundred and eighty-eight stocks and funds that were down 22.3% since their respective sell signals an average of 9.2 weeks earlier. If you recall, 2002 endured some profound bearish cycles.

In addition to the buy signals this weekend, the Mid-term Indicant is currently signaling hold for 242 of the 296 stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 72.0%. That annualizes to 70.6%, which is down from 124.1% reported on June 7, 2003, but up from 50.2% reported over a year ago on February 15, 2003. The Mid-term Indicant has been signaling hold for these 242 stocks and funds for an average of 53.0 weeks.

There were four buy signals on this weekend one year ago. At that time, the Mid-term Indicant was holding 289 stocks and funds for an average of 20.0 weeks. They were up 44.6% (annualized at 116.3%). The contrasts significantly with the Mid-term Indicant signaling hold for ninety-three stocks and funds two years ago on June 11, 2002. They were up by an average of 34.7% since their respective buy signals an average of 36.4 weeks earlier.

This paragraph is a repeat from last several weeks with a few modifications. The current bull market and buying barrage in late 2002 followed the predicted market bottom in 2002. The mid-term presidential election year phenomenon was consistent with history. Even more impressive was how the market synchronized with near perfection with normal seasonality in 2002. The Dow30 found bottom on October 9, 2002 at 7286.27. The NASDAQ found bottom on the same day at 1114.11. 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. Some of you recall the Short-term Indicant Bear for the NASDAQ was the longest in history. It even exceeded the Dow’s 1929-1932 Short-term Indicant Bear. The good news is that the NASDAQ’s decline did not lead to a depression, which is a clear indication of how little influence the tech stocks have on the economy.

This paragraph is repeated from the past several weeks, but it does not hurt to reread it each week during bearish seasonality. You will notice many of the mutual fund buy signals occurred in March 2003. Many of you recall how the market did not synchronize very well with the heart and soul of bullish seasonality from November 2002 through February 2003. After that asynchronous performance in 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 during bearish seasonality. It is unlikely we will enjoy back-to-back asynchronous market behavior with seasonal normalcy. Bearish expressions on a Mid-term basis in 2004 between May and October should not be surprising.

The second most bullish year along the presidential election cycle is the election year, which is underway in 2004. We are anticipating enjoyment of that as well, but its bullish fervor may not unfold until just before the election this year. The following link will take you to charts that explain this phenomenon, which is currently underway and for you to enjoy. It is in a “members only” section. This paragraph will repeat throughout this year.

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. So far, we do not expect 2004 to be an exception. If it becomes an exception, the Quick-term Indicant and the other Indicant models will let you know. Right now, the Mid-term Indicant continues to signal bull. There is more about that later in this report.

Stop Loss Management

The Mid-term Indicant continues recommending a stop loss of 5% because we are now into bearish seasonality. If you are up by 50% or more you still may find it advantageous to set your stop loss at 10% from your current hold position. If you sold a stock on the stop loss and the Indicant continues to signal hold, do not buy the stock unless the Quick-term Indicant signals bull. You can see from the daily reports and the recent Quick-term behavior, the market is not primed for exhilarating gains in the immediate future, but a continuation of the current technical bullish spurt would not be surprising for the next few weeks.

Use either a 5% (or 10%) trailing stop loss or the yellow or green values you will find on the tables. 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 8% 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 8% trailing stop loss. If you are up by triple digit amounts and enjoy your ownership of the stock or fund, then use a 15% 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. Those types are more interested in burning your money for their pleasures, as opposed to making you money.

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.

Stock and Fund Update

Click the following link to see sorted performance of stocks and funds with hold/avoid signals. In the past, we included them 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. Be patient with this download. It takes a few minutes.

http://www.indicant.net/Non-Members/Performance/Top-Bot.htm

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 update information is on a single page in the web site. 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

Divergence versus Convergence

The general market and large caps are maintaining their bullish position. Foreign markets expressed bullish behavior last week, as well. Technology reversed its recent bearish expressions with solid bullishness last week. Energy remains in bearish domains. All in all the market is enduring divergence, which does not lead to robust bullish behavior. The degree of divergent behavior is shrinking. That removes the bearish bias, while at the same time the configurations are not in support of any robust bullish expressions.

Economic Outlook

Interest rates have passed their cyclical bottom. According to the charts, you would buy now if they were stocks or funds. But by buying now, you would lock into historically low rates and not the thing to do. Take a look at the charts. They reveal the obvious prognosis.

The six-month CD was up 9.6% last week to a smooth 1.75%. The three-month CD was up similarly. The one-month CD made its initial incline earlier and was 5.5% last week.

Commodity prices appear to be topping as China is taking strong measures to cool their economy and consumption of raw materials. That will help the Greenspan plan, along with Saudi’s increased oil production. The stock market is sniffing out some bullish conclusion to the multitude of fundamentally influencing variables.

The U.S. Dollar also appears to have bottomed. It will continue to strengthen if Greenspan’s impending rate hikes start and then continue on a long narrowed path to the north.

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

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% one-hundred and three weeks ago since the MTI buy signal in April 2001. Ninety-six weeks ago, it closed up 30.1%. Last week it closed up 86.4%, which is higher than the 75.9% reported forty-seven weeks ago. The current annualized growth rate since the April 13, 2001 buy signal is 26.9%, which is slightly higher than 23.1% reported forty-seven weeks ago. This fund is also down considerably since its most recent peak on December 5, 2003 when it was up 117.3%. This fund was down slightly last week.

The Fidelity Gold Fund #28 is up 0.6% since the Mid-term Indicant signaled sell on April 30, 2004. The last buy/sell cycle was from December 7, 2001 to April 30, 2004 resulted in a 52.7% profit. As predicted, this fund is down significantly the past two weeks.

Links to both of the above funds are as follows:

http://www.indicant.net/Members/Updates/MTI-Mutual%20Funds/MF05.htm#28

http://www.indicant.net/Members/Updates/MTI-Mutual%20Funds/MF04.htm#19

The Gold Index is up 7.4% since the Mid-term Indicant signaled bear on May 8, 2004. This index was up significantly last week. Its contrarian behavior to the Mid-term Indicant signal should be short-lived. It should plummet if the Saudis are successful in elevating their supply of oil.

As repeatedly stated in this weekly report, gold prices will tumble if terrorism and inflationary threats subside. There is a “perception” that inflationary threats will subside, as demonstrated by the plummeting gold prices of the recent past. The rebound in gold prices should be viewed as technical, as opposed to underlying fundamental reasons.

Terrorism remains an open question. As stated last week, human emotion has integrated with Greenspan’s commentary and thus the bearish perception regarding gold.

http://www.indicant.net/Members/Updates/MTI-Mkts-Index%20Options/I05.htm#25

Quick-term and Short-term Indicant Update

The eight major indices are up 2.1% since the Quick-term Indicant signaled bull on May 25, 2004. The DJIA is the most bullish. It is up 2.9% since the Quick-term Bull signal of May 25, 2004. The least bullish is the S&P600. It is up 1.0% since the May 25, 2004 Quick-term Bull signal. The indices continue to move laterally with little chance of robust bullish expressions on a Quick-term basis.

Four of the eight major indices are red bulls. The indices are flickering above and below their respective bullish of red curves. The indices are not expressing much confidence in bullish expressions. However, the battle of confidence is occurring in bullish domains as opposed bearish domains.

Force Vectors continue their northerly direction for six of the eight major indices. That is non-bearish on a Quick-term basis. Vector Pressure is in bullish domains and is moving north. That is bullish.

Keep in mind Force Vectors and Vector Pressure are eight dimensional and cannot be plotted. We continue to research methods to convert to two-dimensional arrays so you can see them. Until then, we will continue to use words to describe them.

To view the Quick-term Indicant charts, please click the following hyperlink:

http://www.indicant.net/Members/Updates/STI-Mkts/QT.htm

As stated the last two weeks, you can tell the summer-time doldrums are upon us with the Indicant Volume Indicator. The market can, and already has endured increased volatility with the declining volume on a Quick-term basis. One single event of a volatile expression can obviate the markets Mid-term and longer-term bias and direction. Once that direction is obvious, sell or buy signals will ensue.

http://www.indicant.net/Members/Updates/STI-Mkts/IVI.htm

The Dow is up 0.2% since the Short-term Indicant signaled bull on June 7, 2004. The NASDAQ is down 1.0% since the Short-term Indicant signaled bull on the same day. This recent bull signal adds to a bullish bias on a short-term and quick-term basis.

To view the Short-term Indicant charts, please click the following hyperlink:

http://www.indicant.net/Members/Updates/STI-Mkts/STI.htm

A link to the Dow’s Short-term Indicant table is as follows:

http://www.indicant.net/Non-Members/Tours/STI%20Tour/ST-Table%20DJIA1995-2002.htm

A link to the NASDAQ’s Short-term Indicant table is as follows:

http://www.indicant.net/Non-Members/Tours/STI%20Tour/ST-Table%20NAS1995-2002.htm

Perspectives

There is nothing different to report here. The remainder of this paragraph remains unchanged from the last six weeks. As you can see, the major indices have hit cyclical peaks on a Quick-term basis. Look at the charts. It is encouraging the breakdown curves are increasing. That means any potential bearish expressions will begin at a higher magnitude, which solidifies your hold positions.

However, the potential engagement with the breakdown curves has shrunk for the 14% - 20% levels to 12% - 16%.  Some stocks will fall by more than 20%, many will remain flat and a few of them will skyrocket. That is why we are patient before unloading our triple digit gainers and it is best to get Mid-term Indicant confirmation that this bull is dead. Later you will see the Mid-term Indicant continues to signal bull.

To view the Perspective Charts (Quick-term Indicant, please click the following.

http://www.indicant.net/Members/Updates/STI-Mkts/QTP.htm

Overall, this Quick-term Bull is not receiving support from the quick-term and short-term configurations. It could very well be a short-lived bull. However, the fact that the market allowed its birth is favorable to your hold positions.

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

There were no new bull signals and no new bear signals.

Seven of the eight major indices remain above their respective bullish red curves. This is a testament to the resiliency of this Mid-term Indicant Bull that began in March 2003 in the face of terrorism, war, Greenspan, and rising oil prices. This bull is indeed maintaining its position in these walls of worry.

The eight major indices are up an average of 21.0% for an annualized gain of 21.4% since the MTI Bull signals an average of 51.1 weeks ago. The DJIA, NASDAQ, and Dow Composites have been Mid-term Bulls since March 22, 2003.

The DJIA is up 22.2% (annualized at 18.0%) since the MTI Bull signal on March 22, 2003.  That is up slightly from 14.1% reported thirty-four weeks ago. The Dow pinnacled at 24.7% on February 14, 2004 from the MTI Bull signal on March 22, 2003.  

The NASDAQ Composite continues to be the strongest Mid-term Bull. It is up 40.7% (annualized at 33.2%) since the March 22, 2003 MTI Bull signal, which is down, slightly, from 33.2% reported thirty-four weeks ago. Its most recent cyclical peak was on January 17, 2004 at 50.6% growth since the Mid-term Bull signal of March 22, 2003.

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

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

Mid-term Indicant Positions - International Markets

There was one new bull signal and one new bear signal.

Nineteen of the twenty-two foreign indexes tracked by the Indicant are Mid-term Bulls. They are up an average of 86.7% since the Mid-term Indicant signaled bull an average of 82.7 weeks ago for an annualized gain of 54.5%, which is less than the 72.9% reported fifty-three weeks ago.

In addition to the new bear signal, one index has been a bear for 3.9 weeks. It is up 4.3% since that bear signal.

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

June 06, 2004 Indicant.Net Weekly Update

Volume 6, Issue 1 ISSN 1526 6516 © The Indicant Stock Market Report

Dear Indicant Members:

This Week’s Report

Fundamentals and Technical Forces Compete

Fundamental forces are both bearish and bullish. The Mid-term Bull is being held in tact in the face of bearish fundamental forces. The newly evolving bearish fundamental is OPEC’s supply chain reliability. The terrorists are now attacking the Saudi oil fields. The terrorists apparently have some understanding of western economics. They know that a disruption to Saudi’s oil supplies will wreak economic havoc on the “infidel’s” economy. If they are successful in this, the price of oil could zoom to unprecedented heights. This would fuel inflation. The stock market does not like inflation or deflation, as both depress economic activity.

The stock market did not react strongly to these recent attacks in the Saudi oilfields. The stock market yawned a little, but apparently not threatened by the crazy terrorist. The stock market could be reasoning that terrorists are making a grave strategic error by attacking the Saudi’s royal family. The few remaining royal families that exist today are descendents of the most ruthless of ancestors. If that ruthless genetic code in the Saudi royal family has not withered by two generations of amazing wealth, the terrorists are in more trouble than ever before.

The Saudi royal family has the culture and the financial resources available to penetrate the terrorists’ organizations. That would be the eventual demise of the terrorist’s ability to undermine the OPEC supply chain. The royal family will not feel compelled to go through legal proceedings like the “infidels.” They will act as judge and jury. The royal family is faced with two options; lose their cash flow from their exports and eventually their power to anarchy or get rid of the terrorists. The stock market’s non-reaction the past two weeks suggest it is leaning in the expectation of the latter.

The recent rise in oil prices is an obvious bearish fundamental. The Saudi’s are claiming they will increase their production to help stifle continuing price rises. They have a history of stabilizing oil prices within the confines of the post World War II agreement with the West or infidels. This “agreement” was the U.S. assurances the royal family’s retention of power and wealth in return for a steady flow of oil to the West. That agreement has worked fairly well except for a brief period in the early 1970’s. That agreement is being severely tested with the threat of terrorists’ activities in the Saudi oilfields. The market is reacting with confidence the “agreement” will continue.

Another bearish fundamental is the impending rise in interest rates. The market has little experience with rising interest rates to still historically low levels. The fed can jack up interest rates quite a bit and they will still be low. Although the direction of the impending interest rates is fundamentally bearish, the increased interest expense to business will still be low. So, what may appear to be bearish may indeed be bullish.

The market also has little experience in dealing with rapid increases in capitalism. Three-hundred million Russians became capitalists in the last fifteen years. They are now enjoying astounding successes. Over a billion are evolving into a capitalistic state in China. India is evolving at even a faster rate. The bullish part of this is the increased purchasing power of so many people so fast. The bearish part is the inflationary pressures on natural resources with the increased demand. You can see the stock market is still thinking about this. It does not yet know how it should react to these dynamics. Too much too fast can set off unacceptable inflationary spirals. The stock market will not tolerate high levels of inflation.

Terrorists and other societies led by “control freaks” are being weeded out. Their reaction is not surprising with their suicidal responses. Their lack of character is obvious by hiding behind what they deem precious; their temples and other religious facilities. Using women and children as shields is another testament to their lack of character. The stock market understands character. It is the bastion of total honesty. It is a place where the price is never wrong. The stock market favors honesty and strong character. The stock market is anticipating the mean and weak ways remaining on the planet will perish. If there is a hint that honesty, strength, and character will be met in defeat, it will retreat with a bearish fervor. The retention of the Mid-term Indicant Bull suggests the market currently anticipates honesty and character will defeat fanaticism, dishonesty, and terrorism.

Another strong fundamental is Wall Street’s assessment of companies. Finally, they are no longer looking at the bottom line. Voodoo bookkeeping is past us. The question is, “how much cash are you generating?” Wall Street can no longer look at income statements. Too much of it is fiction with those phony debits and credits with some sort of fake margin with each transaction. Nobody cares what you say income is. It has always been about cash anyway. The liars, cheats, and dilettantes are slowly be routed away from mahogany rows in Corporate America. Real people who know how to do the job are evolving into positions of power. The fakes and dilettantes are rapidly vanishing. The people in charge had better know more about generating cash, as opposed to producing fictional income statements. The stock market is picking up on this dynamic shift in principle. So far, it likes it.

Finally, the economy continues to explode off the politically induced recession at the conclusion of the last presidential election cycle. Greenspan raised rates and campaigned “irrational exuberance” at the conclusion of the last presidential election cycle. He is doing the same thing again during this politically friendly election year. He knows that his actions will not put the skids on the economy until after the upcoming election. By then, those retaining political power do not care for they have their jobs for at least four more years. That gives them two years to straighten out their messes and help people get re-employed for the next election. Politicians and their bureaucratic employees understand Americans inability to anticipate. They know Americans vote their pocket books on Election Day and not what their pocket books will be like a year after Election Day. That is the game they play.

The stock market understands this. The current Quick-term Bull cycle is consistent with mitigating a down market during an election year. However, its upward mobility is muted by knowing the post election year is historically not good for business and thus the economy. The Short-term Indicant Bear is smelling that. Although the inflection point is over, the overall market is still considering the new current fundamental dynamics. Its behavior is expressing uncertainty with a bias in favor of good over evil.

Technically, the market is mixed right now. The Quick-term Bull and Short-term Bear are in conflict. Many of Wall Street’s fat cats are on vacation, depressing the Indicant Volume Indicator. Expect some wild gyrations in the coming months on this reduced volume. There will be some wild swings known as “Wall Street Sucker Plays.” The Indicant knows how to spot these and will advise you. If volume is low on wild price swings, ignore the market’s expression. It is fake.

Deep bearish seasonality is still quite a few weeks from now. We will be posting that on the web site before it arrives to give you time to develop the proper mind set to execute your trades accordingly. Of course, if the various Indicant models consistently signal bear before then, you will be the first to know.

Weekly Buy/Sell Summary

The Mid-term Indicant generated one buy signal and no sell signals. Do not be aggressive with these buy signals. Be conservative in any buying at this time. Also, place your stop loss order immediately on buying.

Although there were no sell signals, the Mid-term Indicant is avoiding fifty stocks and funds of the 296 tracked by the Indicant. The avoided stocks and funds are down an average of 12.9% since the Mid-term Indicant signaled sell an average of 18.9 weeks ago.

There were only three stocks and funds avoided at this time last year even though there were no sell signals. The avoided stocks and funds one year ago were down an average of 26.1% since their respective sell signals an average of 26.8 weeks earlier. This contrasts strongly with the avoided stocks and funds two years ago. On June 7, 2002, the Mid-term Indicant was avoiding one-hundred and thirty-five stocks and funds that were down 27.0% since their respective sell signals an average of 11.1 weeks earlier.

In addition to the buy signal this weekend, the Mid-term Indicant is currently signaling hold for 245 of the 296 stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 70.9%. That annualizes to 70.8%, which is down from 124.1% reported on June 7, 2003, but up from 50.2% reported over a year ago on February 15, 2003. The Mid-term Indicant has been signaling hold for these 245 stocks and funds for an average of 52.1 weeks.

There were four buy signals on this weekend one year ago. At that time, the Mid-term Indicant was holding 289 stocks and funds for an average of 19.0 weeks. They were up 45.4% (annualized at 124.1%). The contrasts significantly with the Mid-term Indicant signaling hold for 106 stocks and funds two years ago on June 7, 2002. They were up by an average of 33.6% since their respective buy signals 33.5 weeks earlier.

This paragraph is a repeat from last several weeks with a few modifications. The current bull market and buying barrage in late 2002 followed the predicted market bottom in 2002. The mid-term presidential election year phenomenon was consistent with history. Even more impressive was how the market synchronized with near perfection with normal seasonality in 2002. The Dow30 found bottom on October 9, 2002 at 7286.27. The NASDAQ found bottom on the same day at 1114.11. 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. Some of you recall the Short-term Indicant Bear for the NASDAQ was the longest in history. It even exceeded the Dow’s 1929-1932 Short-term Indicant Bear. The good news is that the NASDAQ’s decline did not lead to a depression, which is a clear indication of how little influence the tech stocks have on the economy.

This paragraph is similar to the past several weeks with a few modifications slanted for 2004 interpretations. We want to make certain you understand this. The mid-term election year phenomenon found the market bottom, right on cue in 2002. The presidential pre-election year phenomenon is the most bullish year on the presidential election cycle. Normal seasonality did not occur in 2003, as the presidential pre-election year exerted its influence with a bullish fervor. We have now completed our enjoyment of that in 2003.

You will notice many of the mutual fund buy signals occurred in March 2003. Many of you recall how the market did not synchronize very well with the heart and soul of bullish seasonality from November 2002 through February 2003. After that asynchronous performance in 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 during bearish seasonality. It is unlikely we will enjoy back-to-back asynchronous market behavior with seasonal normalcy. Bearish expressions on a Mid-term basis in 2004 between May and October should not be surprising.

The second most bullish year along the presidential election cycle is the election year, which is underway in 2004. We are anticipating enjoyment of that as well, but its bullish fervor may not unfold until just before the election this year. The following link will take you to charts that explain this phenomenon, which is currently underway and for you to enjoy. It is in a “members only” section. This paragraph will repeat throughout this year.

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. So far, we do not expect 2004 to be an exception. If it becomes an exception, the Quick-term Indicant and the other Indicant models will let you know. Right now, the Mid-term Indicant continues to signal bull. There is more about that later in this report.

Stop Loss Management

The Mid-term Indicant continues recommending a stop loss of 5% because we are now into bearish seasonality. If you are up by 50% or more you still may find it advantageous to set your stop loss at 10% from your current hold position. If you sold a stock on the stop loss and the Indicant continues to signal hold, do not buy the stock unless the Quick-term Indicant signals bull. You can see from the daily reports and the recent Quick-term behavior, the market is not primed for exhilarating gains in the immediate future, but a continuation of the current technical bullish spurt would not be surprising for the next few weeks.

Use either a 5% (or 10%) trailing stop loss or the yellow or green values you will find on the tables. 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 8% 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 8% trailing stop loss. If you are up by triple digit amounts and enjoy your ownership of the stock or fund, then use a 15% 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. Those types are more interested in burning your money for their pleasures, as opposed to making you money.

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.

Stock and Fund Update

Click the following link to see sorted performance of stocks and funds with hold/avoid signals. In the past, we included them 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. Be patient with this download. It takes a few minutes.

http://www.indicant.net/Non-Members/Performance/Top-Bot.htm

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 update information is on a single page in the web site. 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

Divergence versus Convergence

The general market and large caps moved in a bullish direction. Technology weakened slightly. That is a divergent expression, which does not lead to robust bullish behavior. All other sectors remained the same. These configurations support a bearish bias, but the current Quick-term Bull configuration is providing protection against any strong bearish ambitions.

Economic Outlook

The Three-Month T-Bill crossed above its bullish red curve this past weekend. You can see the beginning of an unfavorable chart configuration. Before, getting depressed about that, recognize the markets have never encountered the following: worldwide rising capitalism and historically low interest rates. Even rising interest rates are still at very depressed levels. Do not anticipate the markets reaction to rising interest rates. The market will reveal its longer term reaction in a few weeks.

The U.S. Dollar remains configured for a rebound, although it has bounced a little the past few weeks.

As expected gold prices fell last week. Saudi will bring on added production to reduce oil prices. The royal family of Saudi is derived from a gene pool that will likely not be defeated by terrorists. Although they are probably lazy after a generation of plenty, they most likely still have the killer instinct of their ancestors. The terrorists are somewhat foolish in attacking Saudi’s royal family. That act is somewhat bullish on the market. The Saudi King has a higher chance of infiltrating the various terrorist organization than any other nation. He can pay a handsome wage to destroy the enemy of his wealth.

The Reuter UK commodities index is the first to show signs of depressing. The CRB Bridge Futures is also configuring itself to turn south. If these commodity prices start galloping rapidly to the south, the fundamentals will favor a continuation of this long-last bull.

The one-month CD increased the most last week. It is still in the neutral zone, while the three-month and six-month CD’s are now red bulls. However, they are still very near their cyclical bottoms.

All economic data is at the following link:

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

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% one-hundred and two weeks ago since the MTI buy signal in April 2001. Ninety-five weeks ago, it closed up 30.1%. Last week it closed up 88.5%, which is higher than the 75.9% reported forty-six weeks ago. The current annualized growth rate since the April 13, 2001 buy signal is 27.8%, which is slightly higher than 23.1% reported forty-six weeks ago. This fund is also down considerably since its most recent peak on December 5, 2003 when it was up 117.3%. After increasing significantly the past two weeks, it was down last week.

The Fidelity Gold Fund #28 is up 5.4% since the Mid-term Indicant signaled sell on April 30, 2004. The last buy/sell cycle was from December 7, 2001 to April 30, 2004 resulted in a 52.7% profit. As predicted, this fund was also down last week.

Links to both of the above funds are as follows:

http://www.indicant.net/Members/Updates/MTI-Mutual%20Funds/MF05.htm#28

http://www.indicant.net/Members/Updates/MTI-Mutual%20Funds/MF04.htm#19

The Gold Index is up 12.1% since the Mid-term Indicant signaled bear on May 8, 2004. This index was also down last week. Its contrarian behavior to the Mid-term Indicant signal should be short-lived. It should plummet if the Saudis are successful in elevating their supply chain of oil.

As repeatedly stated in this weekly report, gold prices will tumble if terrorism and inflationary threats subside. There is a “perception” that inflationary threats will subside, as demonstrated by the plummeting gold prices of the recent past. The rebound in gold prices should be viewed as technical, as opposed to underlying fundamental reasons.

Terrorism remains an open question. As stated last week, human emotion has integrated with Greenspan’s commentary and thus the bearish perception regarding gold.

http://www.indicant.net/Members/Updates/MTI-Mkts-Index%20Options/I05.htm#25

Quick-term and Short-term Indicant Update

The eight major indices are up 0.8% since the Quick-term Indicant signaled bull on May 25, 2004. The DJIA is the most bullish. It is up 1.2% since the Quick-term Bull signal of May 25, 2004. The least bullish is the S&P600. It is up 0.1% since the May 25, 2004 Quick-term Bull signal. The indices continue to move laterally with little chance of robust bullish expressions on a Quick-term basis.

This Quick-term Bull was born by showing little respect for the prior Quick-term Bear. However, it was non-bullish when the NASDAQ100 touched its bullish red curve last week and then quickly retreated. The Quick-term bullish red curves will most likely act as a lid to any upward movement.

Force Vectors shifted from their northerly direction to the south last week. That is non-bullish on a Quick-term basis. However, Vector Pressure is in bullish domains and is moving north. That is non-bearish. The conflicting configurations of non-bullishness and non-bearishness indicate the market is comfortable in its meandering. It is not ready to commit to either direction in a dynamic way.

Keep in mind Force Vectors and Vector Pressure are eight dimensional and cannot be plotted. We continue to research methods to convert to two-dimensional arrays so you can see them. Until then, we will continue to use words to describe them.

To view the Quick-term Indicant charts, please click the following hyperlink:

http://www.indicant.net/Members/Updates/STI-Mkts/QT.htm

As stated last week, you can tell the summer-time doldrums are upon us with the Indicant Volume Indicator. The market can endure some increased volatility with the declining volume on a Quick-term basis. One single event of a volatile expression can obviate the markets Mid-term and longer-term bias and direction. Once that direction is obvious, sell or buy signals will ensue.

http://www.indicant.net/Members/Updates/STI-Mkts/IVI.htm

The Dow is down 1.3% since the Short-term Indicant signaled bear on April 13, 2004. The NASDAQ is down 2.5% since the Short-term Indicant signaled bear on the same day. As you can see, the Short-term Indicant is not supportive of the Quick-term Bull. Again, these conflicting signals suggest the market is comfortable in its meandering behavior.

To view the Short-term Indicant charts, please click the following hyperlink:

http://www.indicant.net/Members/Updates/STI-Mkts/STI.htm

A link to the Dow’s Short-term Indicant table is as follows:

http://www.indicant.net/Non-Members/Tours/STI%20Tour/ST-Table%20DJIA1995-2002.htm

A link to the NASDAQ’s Short-term Indicant table is as follows:

http://www.indicant.net/Non-Members/Tours/STI%20Tour/ST-Table%20NAS1995-2002.htm

Perspectives

There is nothing different to report here. The remainder of this paragraph remains unchanged from the last five weeks. As you can see, the major indices have hit cyclical peaks on a Quick-term basis. Look at the charts. It is encouraging the breakdown curves are increasing. That means any potential bearish expressions will begin at a higher magnitude, which solidifies your hold positions.

However, there is still room for a 14% to  20% or so drop before the indices engage their respective breakdown curves. Some stocks will fall by more than 20%, many will remain flat and a few of them will skyrocket. That is why we are patient before unloading our triple digit gainers and it is best to get Mid-term Indicant confirmation that this bull is dead.

To view the Perspective Charts (Quick-term Indicant, please click the following.

http://www.indicant.net/Members/Updates/STI-Mkts/QTP.htm

Overall, this Quick-term Bull is not receiving support from the quick-term and short-term configurations. It could very well be a short-lived bull. However, the fact that the market allowed its birth is favorable to your hold positions.

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

There were no new bull signals and no new bear signals.

Six of the eight major indices remain above their respective bullish red curves. This is a testament to the resiliency of this Mid-term Indicant Bull that began in March 2003 in the face of terrorism, war, Greenspan, and rising oil prices. This bull is indeed maintaining its position in the walls of worry.

The eight major indices are up an average of 19.6% for an annualized gain of 20.4% since the MTI Bull signals an average of 50.1 weeks ago. The DJIA, NASDAQ, and Dow Composites have been Mid-term Bulls since March 22, 2003.

The DJIA is up 20.2% (annualized at 16.7%) since the MTI Bull signal on March 22, 2003.  That is up slightly from 14.1% reported thirty-three weeks ago. The Dow pinnacled at 24.7% on February 14, 2004 from the MTI Bull signal on March 22, 2003.  

The NASDAQ Composite continues to be the strongest Mid-term Bull. It is up 39.2% (annualized at 32.4%) since the March 22, 2003 MTI Bull signal, which is down, slightly, from 34.6% reported thirty-three weeks ago. Its most recent cyclical peak was on January 17, 2004 at 50.6% growth since the Mid-term Bull signal of March 22, 2003.

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

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

Mid-term Indicant Positions - International Markets

There were no new bull signals and no new bear signals.

Twenty of the twenty-two foreign indexes tracked by the Indicant are Mid-term Bulls. They are up an average of 83.4% since the Mid-term Indicant signaled bull an average of 78.8 weeks ago for an annualized gain of 55.0%, which is less than the 72.9% reported fifty-two weeks ago.

The two bears are up an average of 1.9% since the Mid-term Indicant bear signals three weeks ago.

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

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