June 24, 2007
Indicant Weekly Stock Market Report
Volume 06, Issue 04 ISSN 1526 6516 © The
Indicant Stock Market Report
The Bullish
Bias Prevails – Part II
There are a
few concerns; last Friday’s volume was high on aggressive bearishness.
Those combined attributes are bearish. Of course, only one day of that
combination does not mean the market will turn bearish. Cyclical
sustainability requires support from the Indicant Volume Indicator. If it
demonstrates robust configurations on bearish behavior, a sustainable
bearish cycle will continue.
Recent
Indicant Volume Indicator configurations have been lethargic. Lethargy
supports status quo. Since the current bias is bullish, that lethargy
supports the underlying bullish bias. That helps differentiate bearish
spurts from the real thing.
Click the
following link to view the Indicant Volume Indicator.
http://www.indicant.net/Members/Updates/STI-Mkts/IVI.htm
Another
concern is the faltering of the Dow Utilities. Bearish aggression is
exerting its influence on that index. Many are selling off the strong
dividend yields they garnished from their late 2002 buys. Some econometric
modeling may be suggesting that investments in equities will deliver
higher yields over the next few years than the relatively high dividend
yields from the late 2002 buy signals. Click the following link to view
its chart.
http://www.indicant.net/Members/Updates/MTIRYS-Mkts-US/MTI-RYS-07-DJU-Curr.htm
As you can
see, the Dow Utilities is moving sharply to the south. Although it
continues in bullish domains, bearish ambitions threaten that lofty
position.
As you can
also see, the utilities remain higher than the trip lines (dashed green
line). You will also notice the index is resting directly on top of its
lower trading range limit. Although statistical prognosis is not yet
available, indices and securities the past few years have tended to
meander after passing below the lower range limit.
Click back to
the Indicant Volume Indicator.
http://www.indicant.net/Members/Updates/STI-Mkts/IVI.htm
You will
notice NYSE and NASDAQ have invoked new lower trading range limits. You
can intuitively see the possibility of the market moving south toward
those limits. Those of you with longer-term hold positions from three or
four years ago with most non-contrarian securities would view that
movement as benign. Those of you who bought the past few weeks would find
that movement unpleasant.
Bearish
movements during bull markets are common. Once the market or security
starts moving south, the question always is, when will it stop moving
south? Few, if any know the answer to that question. The Indicant
constantly researches certain milestones that help differentiate cyclical
sustainability from spurts. Some spurts pass through major milestones such
as the trip line and then quickly reverse. Every now and then, the market
or security continues moving deeply to the south and thus is not a spurt.
Keep your eye
on the Quick-term Indicant. It will help you differentiate spurt behavior
from sustainable behavior. That helps one know when to hold them and when
to fold them.
Weekly
Buy/Sell Summary – Stocks and Funds
The Mid-term
Indicant generated no buy signals and one sell signal.
In addition
to the sell signal, the Mid-term
Indicant is avoiding 31-stocks and funds of the 345- tracked by the
Indicant. The avoided stocks and funds are down an average of 14.7% since
the Mid-term Indicant signaled sell an average of 28.8-weeks ago.
There were
132-stocks and funds avoided at this time last year. Those avoided stocks
and funds were down an average of 6.4% since their respective sell signals
an average of 14.4-weeks earlier.
Two years ago,
on June 24, 2005, the Mid-term Indicant was avoiding 110-stocks and funds
that were down an average of 26.6% since their respective sell signals an
average of 61.0-weeks earlier. Three years ago on June 25, 2004 there were
only 35-avoided stocks and funds. They were down by an average of 30.4%
from their respective sell signals an average of 44.0-weeks earlier. On
June 21, 2003, the Mid-term Indicant was avoiding only 3-stocks and funds
out of 296-tracked at that time. They were down by an average of 27.5%
since their sell signals an average of 27.2-weeks earlier. Five years ago
on June 21, 2002, there were 201-avoided stocks and funds. They were down
an average of 24.0% since their respective sell signals an average of
9.5-weeks earlier.
Although
there were no buy signals, the Mid-term Indicant is signaling hold for 313 of the 345-stocks and
funds tracked by the Indicant. The stocks and funds with hold signals are
up an average of 127.9%. That annualizes to 62.5%. The Mid-term Indicant
has been signaling hold for these 313-stocks and funds for an average of
106.4-weeks.
One year ago,
on June 23, 2006, the Mid-term Indicant was holding 207-stocks and funds
out of the 345 tracked for an average of 112.4-weeks. Those 207-stocks and
funds were up by an average of 143.6% (annualized at 66.5%). The Mid-term
Indicant was signaling hold for 196-stocks and funds of the 320-tracked
two years ago on June 24, 2005. They were up by an average of 106.1%
(annualized at 57.9%) since their respective buy signals an average of
95.3-weeks earlier. There were 248-stocks and funds with hold signals on
June 25, 2004 since their buy signals an average of 53.0-weeks earlier.
They were up by an average of 73.9% (annualized at 72.5%). The Indicant
was only tracking 296-stocks and funds in 2002-2003, and early 2004. On
June 21, 2003, the Mid-term Indicant was signaling hold for 289-stocks and
funds out of 296-tracked. They were up by an average of 44.5% (annualized
at 111.4%) since their buy signals an average of 21.0-weeks earlier. Five
years ago, on Jun 21, 2002, there were 81-hold signals for stocks and
funds out of the 294 tracked by the Mid-term Indicant. They were up 37.2%
(annualized at 51.2%) since their respective buy signals an average of
37.6-weeks earlier.
Summary of
Stocks and Funds with Buy and Sell Signals This past Week
To maintain
appropriate security, you can see the Mid-term Indicant "buy/sell" signals
for stocks and funds for this week by clicking the following link. It is
in the member’s only section.
http://www.indicant.net/Members/Updates/All%20Update%20Forms/Buy-Sell%20Summary%20This%20Week.htm
As repeatedly
stated, do not hold more than 10% of your investment resources in a single
stock and do not hold more than 20% of your investment resources into a
single mutual fund. Also, never fall in love with a stock or fund. Only
love the value of your portfolio. Never love its contents. Management
stupidity can wreak havoc on any stock or fund at any time.
All updated
information can be found from a single page at Indicant.Net. Click the
below link to that page. You will need your login ID and password.
http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20Summary.htm
The
Quick/Short-term Indicant Stock Market Report
The Indicant website maintains the last twelve months of daily reports on
an annual basis. These weekly reports are maintained for much longer
periods. Beginning in March 2006, the daily stock market report for the
last trading day of each week is imbedded in this weekly report. This
allows retention records of the daily report for much longer than the last
twelve months.
The Daily
Indicant Stock Market Report for the last trading day of the current week
is near the conclusion of this weekly stock market report. It is emailed
each weekend, separately, so you can read it, either as a separate
document, or in this document.
The
Indicant Stock Market Report’s Secular Market Blend
This section
is a repeated each week with a few modifications, reflecting recent
secular influences and performance data. Although appearing redundant at
times, it is important to read this section to keep abreast of secular
market shifts. Quantifications and qualifications are updated, weekly.
Remember, secular shifts can last twenty-five or more years. Fortunately,
secular market movements do not deter mid-term, short-term, and quick-term
profit opportunities. However, they can wreak havoc to the long-term
investors’ plans and those that buy and hold.
The current
Mid-term Bull market and buying barrage started in late 2002. The mid-term
election year of 2002 conformed perfectly to historical standards with
deep bearish expressions and a cyclical bottom. That contrasts to the
meandering bear market from late January through mid-August 2006; the more
recent mid-term election year.
Deep bearish
seasonality was not influential in 2006, which usually occurs from late
August through early October. Last August, the Quick-term Indicant
obviated a bullish bias, contrary to the historical standards of deep
bearish seasonality. Many buy signals occurred in late August - early
September 2006, which was unusual. Those buy signals matured into very
financially successful hold signals.
As earlier
stated, the market synchronized with near perfection to normal seasonality
in the mid-term election year of 2002. The rolling half of May-October
2002 was typically bearish. The 2002 seasonal bear leg was dynamic and
configured perfectly to historical standards, although the depth of that
bearish cycle was deeper than normal. That NASDAQ bear cycle approached
the magnitude of the 1930-32 Dow bear cycle. The 2000-2002 NASDAQ bear leg
lasted several weeks longer than the depression-laden 1930-32 Dow.
The mid-term
election year of 2006 fundamentally supported historical standards for the
first two thirds. Although mild bearishness exerted its historical
influence in 2006, it was nowhere as deep as 2002’s bearishness. The
meandering bear in the first two-thirds of 2006 supported the historical
standard of bearishness to non-bullishness. That support was extremely
mild.
As of
mid-August 2006, hard economic fundamentals shifted in support of a
bullish onslaught for the heart and soul of bullish seasonality and the
normally bullish presidential pre-election year of 2007. Bullishness
during the week of March 5, sandwiched between two bearish weeks (February
26 and March 12), provided some insight on bearish sustainability. The
bullish bounce on the week of March 5 suggested the bearish aggressions
were going to be mild and not sustainable. In other words, that bearish
behavior was a mere bearish spurt. It was simply talking the market down
by those who enjoy their influence and the one-dimensional media. Also,
commission hungry brokers enjoy that sort of volatility as well.
The heart and
soul of bullish seasonality from mid-October 2005 through January 31, 2006
demonstrated bullish normalcy. The market was a meanderer from January 31,
2006 until mid-August 2006, when the Quick-term Indicant shifted from
bearish to bullish bias.
Te heart and
soul of bullish seasonality, ending January 31, 2007, produced significant
and expected gains since the August 15, 2006 bullish bias shift. The Dow,
S&P500, and NASDAQ finished up by 12.4%, 11.9%, and 16.5% at the
conclusion of that heart and soul of bullish seasonality cycle.
How has the
market fared after the conclusion of the heart and soul of bullish
seasonality? From January 31, 2002 through September 30, 2002, the Dow
fell 23.5%. The NASDAQ was down 39.4%. The bull market of 2003 did not
incur normal seasonality, as it conformed perfectly to the presidential
pre-election year’s bullish phenomenon. So far, the presidential
pre-election year of 2007 is mirror imaging the presidential pre-election
year bullishness of 2003. There is more about that later.
From January
31, 2004 until September 30, 2004, the NASDAQ fell 8.2%, while the Dow was
down 3.9%. From January 31, 2005 to June 30, 2005, the Dow was down 2.0%
and the NASDAQ down 0.4%. From January 31, 2006 through August 1, 2006,
the NASDAQ was flat while the Dow was up a respectable 6.1%.
From January
31, 2003 through September 30, 2003, the Dow was up 15.2%, while the
NASDAQ was up 35.3%. The last presidential pre-election year was 2003.
Presidential pre-election years are traditionally bullish. Post “heart and
soul bullish seasonality” in the pre-election year of 2003 did not drag
energy from the bull. So far this year, the Dow is up 5.9% since January
31, 2007 and the NASDAQ is up 5.1%.
Aggressive
bearish expressions seventeen weeks ago and again fifteen weeks ago pushed
the major indices into negative territory, which can happen after the
heart and soul of bullish seasonality expires. Those particular bearish
expressions were mere spurts and lacked sustainability. The bearish
expression during the week of June 3, 2007 and this past week are
configured as bearish spurts, as well, and at this time. Spurts occur from
time to time as the crowd has fits of momentary influence on the market’s
direction.
Historical
standards suggest the market will go much higher this year. Political and
economic fundamentals also support this prognosis.
As you can
see, until mid-August 2006, most major market indices have been slightly
bullish since late 2003 with pronounced meandering behavior. The only
significant bullish expressions, not followed by bearish expressions,
occurred in the heart and soul of bullish seasonality (Nov-Jan) in 2004,
2005, and 2006. Other than those “heart and soul” bullish cycles, the
market was relatively flat from early 2004 through August 2006. However,
this is a presidential pre-election year, where meandering to bearish
behavior should not occur. The theme is bullish expectations even in the
face of periodic bearish spurts.
The Dow30
found bottom in the last presidential mid-term election year on October 9,
2002 at 7,286.27. The NASDAQ found bottom on the same day at 1114.11.
Finding cyclical bottoms in mid-term election years is common.
Fortunately, the bottom of 2006 was minimal and not sharp when compared to
that of 2002. The Dow is up 83.4% from the 2002 mid-term presidential
election year bottom. The NASDAQ is up 132.4% since October 9, 2002. The
S&P600, small caps, is up even more by 153.5% since October 9, 2002.
The NASDAQ is
down 48.7% from its historical weekending high of 5048.62 on March 9,
2000. The Dow is up by 14.0% from its previous weekending historical high
of 11723 on January 13, 2000. It took over five-and-a-half years for the
DJIA to establish a new high. The S&P500 is down 1.6% since its previous
all time weekly closing high of March 23, 2000. So far, the new century,
2000 inclusive, has not been kind to long-term investors. The NASDAQ needs
to climb 95.0% to equal its all-time high. The S&P500 is struggling a bit
into its uncharted record setting domain.
Historical
standards suggest the NASDAQ will not return to its historical high until
2025 or so. A 2000 buyer and holder will not be back to break-even until
then. Including inflation, a thirty-year-old investor will be in his or
her eighties before the NASDAQ profits from early 2000 investment dollars,
which assumes minimal inflation. However, the late 2002 investor is up
triple digit amounts. Timing is indeed important.
Economic or
corporate earnings fundamentals did not support the stock market’s
meteoric rise in the 1990’s in many sectors. Unprecedented demand for
stocks skewed the supply-demand ratio and, thus, the powerful bull leg of
the 1990’s enjoyed sustainability. The simple law of supply and demand
propelled stock prices dynamically to the north in the 1990’s. The great
bear leg of 2001 and 2002 depressed those prior sources of demand for at
least one generation of investors. The market now has to wait for a new
generation of investors to enjoy dynamic secular bullishness even though
it has been bullish since late 2002.
The great bull
leg of 2003 was a relatively short bull cycle that has not enjoyed dynamic
follow-on bullish behavior due to this lack of demand. As you can see from
the
NYSE trading range, the northerly sloping cycle is not as strong as
the trading ranges from late 2002 through most of 2003. However, bullish
expressions occur during the heart and soul of bullish seasonality
regardless of any technical or fundamental reason. The meandering segments
of 2002, 2003, 2004, 2005, and 2006 were appropriately followed by
historically significant bullishness in each of those years.
As earlier
stated, the Indicant began its buying barrage in October – November 2002
just after the market bottomed from the severe 2000-2002 Bear Market.
There were 239-buy signals between October 5, 2002 and November 9, 2002
out of the 296 stocks and funds tracked by the Mid-term Indicant at that
time. Even badly managed companies received a buy signal, which is a
common attribute of sustainable new bull markets. As many of you noticed,
those companies eventually dipped back to the south after the euphoria of
new bullishness.
Since August
18, 2006, the Mid-term Indicant generated 219-buy signals and only 81-sell
signals. That is an unusually high number of buy signals when considering
historical seasonal market influences. This is a testament to the strength
of the underlying bull market. All Indicant models supported this recent
buying surge just as they did in October 2002 and March 2003. Now that the
heart and soul of bullish seasonality has expired, the resistance to
generate sell signals has softened. There remains minor resistance to buy
signals since the market is now enduring normal bearish seasonality. This
resistance is minor since the market is enjoying the normal bullishness of
presidential pre-election years.
Some of you
recall the Indicant Stock Market Report tracking the
Short-term Indicant Bear for the NASDAQ in 2002. It was the longest in
history. It even exceeded the Dow’s 1929-1932 Short-term Indicant Bear in
breadth and approached it in magnitude. The good news is that the NASDAQ’s
decline did not lead to a depression, which is a clear indication of how
little influence tech stocks have on the economy.
There are two
important axioms to remember and are always repeated in this report. 1)
Real economic wealth is created in only three ways - manufacturing,
agriculture, and extraction. 2) The only positive influence politicians
have on the economy is to undo their prior damage. That is also why the
presidential pre-election year is historically the most bullish on the
four-year cycle. If the strength of the current Mid-term Bull can be
subjected only to meandering behavior, like 2004, 2005, and 2006, then it
is possible for the current Mid-term Bull to be a record setting one in
terms of duration.
Political
institutions reduce wealth. Politicians continually attempt to
redistribute wealth, which flies in the face of the laws of nature. They
promote “middle class” attainment. The larger the middle class, the more
power politicians and their academic brethren have. The communists tried
that, resulting 99% poverty, while the ruling 1% lived like kings.
Socialism rewards an ability to intellectualize, while capitalism rewards
the results of appealing effort. As long as the world’s populace moves in
the direction of capitalism, the stock market will continue with a
long-term bullish bias. If the market smells an increased interests in
socialism and similar concepts, it will turn bearish.
The remainder
of this section, Secular Market Blend, is repeated, in part, from the past
several months, but it does not hurt to reread it each week. As time
progresses and conditions change, there will be modifications to it to
maintain a balanced frame of reference.
You will
notice many of the
mutual fund buy signals occurred in March 2003. Many of them endured
sell signals for the first time since early 2003 during the mildly bearish
meandering behavior in mid-2005. However, the bull’s resiliency minimized
selling activity. The Mid-term Indicant is now signaling hold for nearly
all mutual funds it tracks.
Many of you
recall how the market did not synchronize with the heart and soul of
bullish seasonality from November 2002 through February 2003. December
2002 was the most bearish since 1931, but not nearly as dynamic as the
1931 bearish expression. After the asynchronous behavior in the November
2002 rolling third of the year, the market turned bullish in March 2003
and again did not synchronize with normal seasonality. The Mid-term
Indicant continued signaling bull/hold during bearish seasonality in 2003.
The market continued moving north during that time, contrary to historical
seasonal standards, but consistent with political cycle standards. As
stated in most of 2004, bearish expressions on a Mid-term basis between
May and October 2004 should not be surprising. That is exactly what
occurred. The result was a meandering market with a slight bearish bias
during most of 2004 and 2005 and the first two-thirds of 2006. This
presidential pre-election year will be fundamentally tested in the face of
war, terrorist threats, and rising oil prices.
The Quick-term
Indicant’s bearish bias during most of 2006 was replaced with a bullish
bias in mid-August 2006. Several buy signals ensued shortly after that
bias shift. Bullish behavior occurred, as expected, since mid-August 2006.
As stated since that bullish bias shift, the various Indicant models,
economic fundamentals, and historical standards suggest significant
bullishness in the coming months.
The Dow is up
19.0% since the Quick-term Indicant bullish bias shift on August 15, 2006.
The NASDAQ is up 22.4% since then. The S&P500 is up 16.9%.
Keep up with
the Daily Stock Market Report.
http://www.indicant.net/Members/Updates/History-Seasonal/HS0001.htm
Make certain
you read the entire pages on the above link. You will see there are
exceptions.
Stop Loss
Management
The Mid-term
Indicant recommends a stop loss of 8% on recent buys because of the
Quick-term Indicant’s bullish bias and bullishly evolving economic
fundamentals.
Use a 10%
trailing stop loss or the yellow or green values you will find on the
tables for your longer-term hold positions. If your stock or fund is above
the bearish yellow curve and below the green curve, set your stop loss
equal to the greater of the yellow curve and the trailing stop loss. If
your stock or fund is above the green curve, set your stop loss at no less
the value of the green curve or 10% trailing, whichever is greater. If
your stock or fund is above the red curve and you bought at the Mid-term
Buy signal, you should use the 10% trailing stop loss.
If you are up
by triple digit amounts and enjoy your ownership of the stock or fund,
then use a 20% trailing stop loss or the slow moving blue curve price. If
you really enjoy holding the stock, keep a close eye on the management.
Dilettante managers have a way of worming into the business. Watch closely
for cronyism and lazy-hazy management dialog. Keep your eye on lavish
spending and excessive concerns about social issues. Those types are more
interested in burning your money for their pleasures, as opposed to making
you money. High performing companies remain focused on honoring the
investments made by their shareholders.
In a few
instances, you will see a hold signal for a stock or fund that is down
from its buy signal or below one of the above conditions for selling. If
you are more of a trader than an investor, feel free to buy stocks and
funds with those “bearish” attributes. They are configured for a possible
rebound, while at the same time, it is important to set the stop losses
mentioned in this report. Use the Quick-term Indicant as a guide in your
decision-making processes. If the stock price is falling in a Quick-term
Bear market, it is not advisable to buy.
Do not short
on stocks if they are up from an avoid signal. Stocks go up more often
than they go down. Stocks have a tendency to march to their own drumbeat
when rising. Some stocks rise and continue to rise in the most severe of
bear markets. Short selling opens up an opportunity for the snakes on Wall
Street to take everything you own. They can cause a stock to rise at their
whim and without any regard to fundamental reason. It usually does not
make sense to bet against the sweat and toil of hard-working people.
Stock and
Fund Update
Click the
following link to see sorted performance of stocks and funds with
hold/avoid signals. In the past, they were included in this email message
but now display them on the website. This is available to the public,
while the specific buy and sell transactions are limited to members only.
The below table is public information and not updated on a frequent basis.
http://www.indicant.net/Non-Members/Performance/Top-Bot.htm
Economic Conditions – Inflation, Currency, Interest Rates
Click the
above heading for a summary of hard economic indicators.
The
3-Month T-Bill again fell in bearish domains (bullish for stock
market). This attribute is favorable to the underlying bullish stock
market bias.
As stated last
week, it is unlikely interest rates will rise during this presidential
pre-election year. Unfortunately, their flat configuration induces bearish
spurts from time to time. Rising commodity prices are a thorn viewed by
the bull.
As stated the
past three weeks, this is shaping up to support the historical standards
of presidential pre-election-year and election-year stock market
bullishness.
As stated the
past five weeks, the Fed is “maintaining” prevailing rates. The problem is
a tough one. Commodity prices continue to rise and the inflation battle is
underway. Rising capitalism should invoke rising productivity. Will this
productivity potential offset the inflationary threats of rising commodity
prices? Capitalists transform commodities into products. That
transformation is where productivity potential exists. The result of that
should be lower prices to the buyers of products even though the
producer’s raw materials are higher.
Clicking the
oil link below will show you the bearish yellow curve has shifted back to
the north. Although its recent northerly cycle did not produce the same
dramatic bearishness of the 1970’s, it did consume bullish energy from the
stock market. If it resumes another cyclical rise, the result should be
unfavorable to the stock market bull. Two bad results will manifest.
Either inflation becomes more than a nuisance or interest rates rise or
both. The bull will be severely weakened in the event either unfolds.
http://www.indicant.net/Members/Updates/Economic/E03.htm
The CRB Bridge
Futures is configuring similarly to oil. The Fed keeps a close eye on this
barometer. Its chart is on the same link. Just scroll down a little to
view it.
This paragraph
is repeated from the past four weeks. Productivity improvements are
evolutionary, whereas commodity prices can be revolutionary. The sudden
increase in the number of capitalists is revolutionary. However, it takes
time and a lot of effort to increase productivity. The exponentially
increased demand for commodities can out-pace the impending productivity
increases and thus set off inflation. This is an issue confronting both
the Fed and the stock market. The prevailing stock market perception is
that productivity will be the economic savior.
Overall,
economic conditions appear shifting in favor of a continuation of this
strong bull market.
Fear
Metrics: Economics and Terrorism
Vanguard Gold and Precious Metals (VGPMX) - #19 is up 366.7% since the
April 13, 2001 buy signal. Its annualized growth since that buy signal is
58.4%. It moved to the north in 27 of the past 36-weeks. This fund was
mildly bullish last week after bearish aggressions three weeks ago.
Fidelity Gold, Fund #28, is up 35.6% since the Mid-term Indicant
signaled buy on August 26, 2005. That annualizes to 19.3%. This fund
relatively flat last week.
State Street Research Global #9, SSGRX, which is isolated in the
energy sector, is up 322.6% since the Mid-term Indicant signaled buy on
August 16, 2002. It is annualizing at 65.6%.
Vanguard Energy #18, VGENX, is up 223.0% (annualized at 52.2%) since
the Mid-term Indicant signaled buy on April 5, 2003.
Fidelity Energy Services #40, FSESX, is up 193.9% (annualized at
53.96%) since the Mid-term Indicant signaled buy on December 6, 2003.
Fidelity Energy #39, FSENX, is up 172.7% since the Mid-term Indicant
signaled buy on August 16, 2003. It is annualized at 44.2%.
These energy
related funds were mixed last week. Sector divergent configurations
indicate indecisiveness about the energy sector. Don’t despair though, as
sector divergence seldom last more than a couple of weeks.
Investors in
these funds are supporting a 1970’s type of market with high inflation and
high oil prices. Energy and gold always do well during such times.
Fundamentals appear to be shifting in favor of selling the above funds
(09/10/06). Do not sell until the Mid-term Indicant signals sell. They
continue to rebound and from time to time endure fluttering. As long as
capitalism remains in vogue around the globe and alternative sources of
energy continue to lag exponentially increasing demand, a long-term
perspective on holding strategy is appropriate.
The SQI
(Consolidated Short-term and Quick-term Indicant) model signaled buy for
the
GLD-ETF#11 on August 3, 2005. It is up 48.8% since then. It is
annualized at 25.5%. This ETF has been bearish in four of the past six
weeks. It was mildly bearish last week.
The SQI
signaled buy for
ETF#03 – Energy and Natural Resources on March 26, 2003. It is up
224.4% (annualized at 52.2%). This fund was also bearish last week.
Mid-term
Indicant Positions – Ten U.S. Indices
There were no new bull signals and no
new bear signals.
All ten major
indices are bulls. They are up by an average of 29.3% since the Mid-term
Indicant signaled bull an average of 101-weeks ago. That annualizes to
15.2%, which is down significantly from the past three years. This is due
to the bear signals for the S&P400 and S&P600 Indexes on July 21, 2006,
which had been receiving a bull signal since October 25, 2002. Those two
indices endured some fluttering after the expiration of the tremendous
bull leg that lasted nearly four years. A new bull leg is underway and may
proceed just as vigorously for these two indices as the bull leg from
October 2002 through July 2006, where the S&P400 and S&P600 increased by
66.3% and 79.3%, respectively.
Dynamic
bullish statistics were also eliminated due to the Dow Transports bear
signal and a new bull signal on January 19, 2007. The Dow Transports
enjoyed a 23.1% gain from its March 21, 2003 bull signal until its bear
signal on March 19, 2004. It fluttered with a new bull signal one week
later on March 26, 2004 and enjoyed an 80.0%-gain until a new bear signal
on December 22, 2006.
The Dow
Utilities increased by 104.4% from its October 25, 2002 bull signal to the
March 21, 2006 bear signal. After some fluttering, it received a new bull
signal on June 2, 2006. Interestingly, the Dow Utilities was the best
performing index since the October 25, 2002 Mid-term Indicant bullish bias
shift. Utility stocks have been consistent high performers since the bull
market’s birth on October 25, 2002.
The Mid-term Indicant Dow Jones Industrial Average performance is now
at $40,471,430.
That beats buy
and hold performance of $2,042,597 on a $10,000 investment in the Dow
stocks in 1900. The
MTI S&P500 is at $194,002. That beats buy and hold’s $147,180 on a
December 31, 1971 $10,000 investment. The
MTI-NASDAQ is at $216,620. That beats buy and hold’s $89,770 on an
October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy
and hold by 1,881.4%, 31.8%, and 141.3%, respectively, for these indices
as of this past week.
The Indicant’s
percentage advantage over buy and hold does not change during bull
signals. The advantage changes only during bear signals. That is because
the buy and hold model has to keep holding, while the MTI-RYS model avoids
bear markets. The only purpose of the Mid-term Indicant model is to avoid
the bear markets. That is why it beat buy and hold by nearly 2,000% over
the past 100+ years.
Click here to go to the current Mid-term Indicant assessment of the ten
major indices.
Click here for a tour of the Mid-term Indicant for major market indices.
Divergence
versus Convergence
The market
endured bearish divergence last week. Sectored divergence in the energy
sector was the only reason the market did not succumb to bearish
convergence. Bearish convergence suggests the market is strongly committed
to bearish dominance. Deep and sustaining bearish declines are usually
preceded by four consecutive weeks of bearish convergence. Current
configurations suggest last week’s bearish behavior was a mere spurt. In
other words there is no threat of bearish convergence.
Mid-term
Indicant Positions - NASDAQ100 Stocks
Click here to see NASDAQ100 report card history.
Click here for
Mid-term Indicant Table of NASDAQ 100 Stocks.
Mid-term
Indicant Positions - Dow Jones 30 Industrial Stocks
Click here to see Dow 30 report card history.
Click here for
Mid-term Indicant - Table of Dow Jones Industrial Average Stocks.
Mid-term
Indicant Positions - Dow Jones 15 Utility Stocks
Click here to see Dow Utilities Report Card history.
Click here for
Mid-term Indicant - Dow Jones Utility Stocks Table.
Mid-term
Indicant Positions - Indicant Selected Stocks
Click here to see Indicant Select Stock Report Card history.
Click here for
Mid-term Indicant Table of Indicant Selected Stocks.
Mid-term
Indicant Positions - Mutual Funds
Click here to see Mutual Fund Report Card history.
The Mid-term
Indicant is now avoiding
ProFunds Ultra Short. It is down 26.9% since the Mid-term
Indicant signaled sell on September 15, 2006. Historical norms of market
cyclicality suggest the next buying opportunity for this fund may not
occur until 2009.
Click here for
Mid-term Indicant Table of Mutual Funds.
Always
remember never to keep more than 20% of your investment resources into a
single mutual fund. Sector investing in mutual funds is an extremely good
way to mix your investments.
Long Term
Indicant Positions - Dow Jones Industrial Average
The blue-chip
Long-term Indicant Bull signal was at 2895 for the DJIA in November 1991.
Keep in mind the Long-term Indicant generated only five bull/bear cycles
since 1920.
The Dow is up
361.5% (annualized at 23.0%) since the Long-term Indicant signaled bull
816-weeks ago. Economic data is the primary influence on the Long-term
Indicant. Recessions, deflation, and inflation have not been strong enough
to signal bear since that bull signal. A link to the Long-term Indicant is
below:
http://www.indicant.net/Members/Updates/LTI-Markets-DJIA/DJIA.htm
Quick/Short-term Indicant Stock Market Report - Summary
Quick-term
Red Bulls: Nineteen of thirty;
bullish bias remains, but weakening.
Quick-term
Yellow Bears: Two; overall, the
market remains to near maximum non-bearish support.
Short-term/Quick-term Non-Bearishness:
Countering “sustainable” deep bearish ambition.
Force
Vectors: Moving north on a
quick-term basis. Potential robustness developing.
Vector
Pressure: Supportive of bullish
bias, but trending unfavorably to that bias.
Long-term
Hold Positions: Solidly safe.
Current
Quick-term Bias: Bullish
Overall
Market Status: Bullish bias
prevailing.
Profit
Potential from Naked Options:
Improving with increasing volatility.
Volume:
Configurations remain in
support of underlying bullish bias.
Comments
from April 20, 2007
Both the
NASDAQ and NYSE Indexes passed above their upper trading range limit. That
means a new trading range is being established and is not an indication of
immediate bias.
Force Vectors
and Vector Pressure maintained bullish bias during the Greenspan/China
bearishness that originated in late February and lasted for a few days in
early March. Viewing the Indicant Volume Indicator charts (link is below)
is a testament about how one should not engage trading behavior based on
contemporary news. Only two ETF sell signals were generated from the late
February-early March bearishness that was invoked by news and nothing
substantive. The bullish bias that originated on August 15, 2006 prevails.
Quick-term/Short-term Indicant Stock Market Report Details
The
Short-term Indicant signaled bull on May 21, 2007 for both the Dow and
NASDAQ. They are down 1.5% and up 0.4%, respectively, since then.
Configurations continue supporting bullish bias. Please read on. Click
here to see the
Short-term Indicant’s history.
Both
Indicant Volume Indicator’s are configuring with a relatively steady
state of lethargy. This lethargic configuration is not aggressive and is a
little wavy with some indecisiveness. Some of this indecisiveness is due
do seasonality. Overall, configurations continue to support bullish bias.
In other words the market is not about to charge off on a sustainable and
deep bearish cycle.
However,
Friday’s volume was relatively high on aggressive bearishness.
Continuation of that combination of attributes would obsolete the above
paragraph, completely.
SQI Report Card (Consolidated Short/Quick), Status, and Charts
There were no
buy signals and no sell signals. Although there were no buy signals, the
SQI is signaling hold for 29-ETF’s. They are up 75.2% (annualized at
31.7%) since their respective buy signals an average of 122.1-weeks ago.
The SQI is avoiding one ETF. It is down 2.2% since its sell signal
3.0-weeks ago.
The SQI model is the one that most of you will prefer for your trading
decisions. It generates fewer signals than the other two models and
represents consistencies in the Quick-term and Short-term outlooks for the
specific ETF’s. It also beats buy and hold on a regular basis, although
there is only eight years of proof. The quality of that proof is high
since this period includes a powerful bull and bear. The model sours a
little during meandering markets with an excessive number of signals from
time to time. Research toward perfecting continues.
Short-term Indicant Report Card, Status, and Charts
There were no
buy signals and no sell signals. Although there were no buy signals, the
Short-term Indicant is signaling hold for 29-ETF’s. They are up an average
of 79/9% (annualized 34.5%) since the STI signaled, buy, an average of
119.0-weeks ago. There is one avoid signal. That fund is down 2.2% since
its sell signal 3.0-weeks ago.
Keep in mind,
the Short-term Indicant is much more active in buying/selling than the
Consolidated model. The Quick-term Indicant, which follows, is even more
active.
Quick-term Report Card, Status, and Charts
There were no
buy signals and no sell signals. Although there were no buy signals, the
Quick-term Indicant is signaling hold for 28-ETF’s. They are up by an
average of 21.7% (annualized at 21.9%) since the QTI signaled buy an
average of 50.9-weeks ago. Although there were no sell signals, the
Quick-term Indicant is avoiding two ETF’s. They are down by an average of
2.4% since their sell signals an average of 2.9-weeks ago.
Conflicts
Between the Short-term and Quick-term Indicants
There is one
conflict, whereby the Short-term Indicant and the Quick-term Indicant are
in disagreement between hold and avoid status. The bias shift on August
15, 2006 remains in favor of the bull.
There are
86-hold signals out of a possible 90. There are four avoid signals with
three related to the same fund. The bias remains in obvious support of the
bull, although weakened slightly.
Quick-term Indicant Bull/Bear Health Report
Two of the
30-ETF’s are below their respective bearish yellow curves. The average
relative position of all thirty ETF’s is above bearish yellow by 8.7%.
This remains configured in support of the market’s non-bearish posture.
There is minimal support for sustainable bearish assertions.
Nineteen
ETF’s are above their respective bullish red curves. As stated the past
several days, there is no sustainability to recent bearish expressions.
This configuration solidly supports the underlying bullish bias. All
thirty ETF average positions are 0.7% above their bullish red curves.
Although recently threatened somewhat by the bear, this attribute remains
supportive of bullish bias.
Bearish
spurts occur from time to time. Until all non-contrarian funds fall below
their bullish red curves, all bearish expressions should be considered as
mere spurts. From time to time, other attributes are required to confirm
this prognosis.
Short-term Indicant Bull/Bear Health Report for ETF’s
The above
heading is linked to the Short-term Indicant table. This paragraph is
repeated daily as a reminder of accurately interpreting the charts. By
clicking the charts on the table you can review potential contact with the
breakdown lines (bearish) and potential contact with breakout lines
(bullish). It is extremely bearish when several ETF’s are contacting their
respective breakdown lines. The breakdown lines are the yellow lines
(bearish). The breakout lines are the red ones (bullish). Close proximity
to breakout implies an increased probability of an actual breakout
occurring. It is certainly bullish and you will want to be in a hold
position for those few days a year when the breakout occurs. Conversely,
significant contact with yellow (breakdown) suggests “avoid” positions are
best.
None of the
thirty ETF’s are contacting their breakout lines. As stated the past
several months, the high concentration of breakout-contact since last
August is solidly bullish. This repeated contact solidly supports the
underlying bullish bias. Contact in forty-seven of the last fifty-seven
trading days is highly supportive of bullish bias.
The average
distance from breakout contact is 3.5%. This remains in solid support of
the bullish bias.
None of the
ETF’s are contacting their respective breakdown lines. The average
distance from the price and breakdown is 26.3%. This configuration
provides tremendous non-bearish support, which has been the case since
March 2003. There have been several bearish “spurts” since then with no
sustainability or dynamic support. The probability of immediate contact
remains low and thus a non-bearish bias is maintained on a short-term
basis.
This
attribute remains solidly non-bearish, regardless of recent bearish
behavior.
ETF Force
Vector Configurations
You can scan
the
Quick-term Indicant for Exchange Traded Funds table and click on the
charts to observe Force Vector configurations. Scroll down each of the
charts, where a quick link has been added to take you to the next series
of Quick-term ETF charts. Use you back arrow on your browser to return to
the previous page.
Fourteen of the thirty ETF Force Vectors continue toward bullish domains.
Quick-term bullish bias prevails even though weakened slightly on Friday.
To understand
potential financial opportunities,
click here to learn to identify Robust Force Vectors. They are visible
on the
Quick-term Indicant charts.
ETF Force
Vectors/Vector Pressure Crossings/Option Signals
Remember, the
links contained herein are more visible when reading this on the website.
Click this sentence for Vector Pressure Option Signals. There were no
option buy signals. Yesterday’s lone call option most likely triggered a
buy on Friday’s bearish expression. It should have been purchased at deep
discount, depending on the timing of intraday behavior. Friday’s bearish
behavior reconfigured the bullish bias on that particular fund. In this
case, you may want to hold it a few days longer than the normal two days,
depending on the time premium and expiration date. Current configurations
suggest a strong bullish response within eight to ten trading days.
Twenty-two
ETF Vector Pressures are in bullish
domains. That is down by two from last Thursday and down by four since
June 1. This direction is somewhat of a concern. However, the current
configurations remain in support the Quick-term bullish bias shift from
August 15, 2006.
As long as
this attribute holds above fifteen within confines of other Quick-term
attributes, bearish expressions are mere spurts, where there is no
sustainability or depth potential.
Make certain
you sell naked options when the Force Vectors shift direction or within
two days of the purchase, whichever occurs first. If you are unfamiliar
with this, take the
options tour.
Remember
options trading is risky. Never offer “market prices.” Always bid low in
hopes of an intraday contrarian movement to the underlying assumption of
directional behavior. Always place day-orders, only. That keeps the floor
folks out of your pocketbook. Do not despair if your order does not take.
There are plenty of opportunities throughout the course of the year.
Remember, stalking is the key to success here. Although not necessary for
stock market success, those of you who have a gambling instinct will enjoy
this. For those of you with a longer-term perspective, it does not hurt to
see what the short-term folks are thinking. The Indicant indicates both
perspectives.
Quick-term
and Short-term Indicant Summary
The shift
from bearish bias to bullish bias started on Tuesday, August 15, 2006
after maintaining a bearish bias from early February 2006 until August 15.
The Quick-term and Short-term Indicant models continue suggesting a
bullish bias.
Do not write
covered call options while Vector Pressure is positive (bullish), which is
the current configuration.
The
Quick-term Bull remains in tact.
ProFunds Ultra Short mutual fund moves inversely to the QQQQ by
exponential amounts. The Consolidated Indicant model is no longer avoiding
QQQQ, which no longer supports holding contrarian fund, ProFunds Ultra
Short.
To
familiarize yourself with viewing the market from an ETF perspective,
click the following update links.
Quick-term ETF Options
Quick-term Indicant for ETF’s
Short-term Indicant for ETF’s
Consolidated Quick-term/Short-term Indicant for ETF’s
Click here to the report card, which is updated weekly, to link to related
tours.
Links to the
Short-term Indicant and Indicant Volume Indicator are below:
Short-term Indicant for DJIA and NASDAQ
Short-term Indicant Tables for the Dow Jones Industrial Average Index
Short-term Indicant Table for the NASDAQ Composite Index
Indicant Volume Indicator
Indicant
Conclusion
Last week’s
bearish divergence offset the previous week’s bullish convergence.
Configurations currently suggest bearish divergence last week was a mere
spurt.
Vector
Pressure continues to support the bullish bias. It has been doing that
since August 15, 2006.
Although
recent bearishness has weakened several Quick-term Indicant attributes,
the underlying bullish bias remains in tact. Keep up with the daily stock
market report as the Quick-term attributes can shift quickly.
Do not get
lazy and set those stop losses for those stocks and funds that continue to
enjoy hold signals.
The daily
updates are on the following link.
http://www.indicant.net/Non-Members/Back%20Issues/QT.htm
Hyperlinks
To access all
major markets, stocks, funds, economic data, charts, statuses, etc, click
the following hyperlink:
http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20Summary.htm
In addition,
once you are inside the website, click on "members update" or simply log
in. It is on the top of every page in the web site so you can always find
your way back.
Happy
Investing,
www.indicant.net
06/24/07
June 17, 2007
Indicant Weekly Stock Market Report
Volume 06, Issue 03 ISSN 1526 6516 © The
Indicant Stock Market Report
This Week’s
Report
The Bullish
Bias Prevails
Last week the
bull responded mightily to bearish convergence endured the week before
last. This is an expression of significant bullish strength. This
“significance” is due general bearish seasonality, which typically occurs
during the summer months and early autumn. As previously stated, though,
the presidential pre-election year’s historical bullishness typically
influences the market’s direction, regardless of historical seasonal
standards.
The bull has
responded strongly to each of the deep bearish spurts this year. That is
classical presidential pre-election year behavior. The economy is not
significantly different from that of 2005, when the market meandered most
of the year. 2005 was a presidential post election year, which is
historically the most bearish on the four-year cycle.
This bull
market is climbing more economic walls of worry than the meanderer of
2005. Oil prices are about the same as they were in 2005, but not as
volatile as they have been recently. Most other commodities are higher
than in 2005. Interest rates are considerably higher than they were in
2005, but they have flattened so far this year.
However, the
2007 bull market is outperforming the 2005 market. The Dow was down
slightly in 2005. The S&P500 and NASDAQ were up slightly. That is why 2005
is referred to as a meandering market.
The major
indices are up by an average of 9% this year with no significant economic
improvement. The bull is focused on future economic levels, as opposed to
now. Although 2005 was a post election year, oil prices were moving
rapidly to the north. That contrasts with stable energy prices in 2007,
even though 2007 average energy prices are about the same as they were in
2005. Did the Dow meander in 2005 due to rapidly rising energy costs or
due to the historical standard of post-election-year bearishness?
