June 29, 2008 Indicant Weekly Stock Market Report

Volume 06, Issue 05 ISSN 1526 6516 © The Indicant Stock Market Report

The Next Bullish Rally

The stock market has a penchant for climbing walls of worry, so the saying goes. The additional two to three billion additional capitalist is justification for expecting bullish behavior. Unfortunately, these additional capitalists want what the western cultures have enjoyed for centuries; raw commodities.

Transforming raw commodities into products of appeal is what most capitalists do. Socialists, on the other hand, reward “intellectualism” and “academic regurgitation abilities.”  Imagine a coffee shop full of intellectuals intellectualizing. The only capital gain from that effort is the sale of coffee, which does induce some wealth from the required extraction of coffee beans.

Imagine a person driving a bulldozer, extracting raw materials, other than coffee beans, from the earth, such as iron ore or shale oil. Several capital gains will follow that, including the sale of more bulldozers. The bulldozer operator may not be sharp, but he is the one creating wealth, while the intellectuals are consumers of wealth. Without the bulldozer operator there would be no coffee shop to gather for the chitchat.

The question now for those desiring, at the very least, short-term bullish behavior is at what point in time does the next bull cycle start? The longer-term conventional investor is more concerned about the next long-term bull trend?

Currently, the stock market is confined to both a short-term bearish cycle and the trend is south. Last Wednesday, the Dow was slightly configured to argue with the bear. On Thursday, the bear smacked any remaining life out of the bull. The last time that happened was in October 1987. Fortunately, the market did not crash on Friday, which suggests the bear’s recent victories were not pain free. (Those two to three billion additional capitalists will impose an emotional drain on the bear). Other than pleasantries provided by nature, all good material things we enjoy in life came from capitalists. (By the way, keep in mind that species extinction is natural. Most of us are unconsciously pleased there was no one around preventing the extinction of the tyrannosaurus. That would add risks to the morning jog in the park).

The fundamental point is this; governmental regulations have imposed excessive constraints on oil exploration, oil drilling, and refining capacity. Although there is purported ample refining capacity around the world, the logistics of marrying raw oil to the refineries is inefficient and therefore costly.

At $36-oil in late 1980, there were nearly 5,000-U.S. Rotary rigs at work in North America. Today, the count is less than 2,000 at $140-oil. That is due to the federal and some state governments making it very difficult to be in the business.

Real economic wealth is delivered in only three ways; extraction, manufacturing, and agriculture. All other forms of commercial existence are middlemen and do not create wealth. Some, such as transportation, help facilitate expediency in wealth creation but do not directly contribute to it. The manufacturers who build the planes, trains, trucks, and ships create the wealth.

What you have here is direct interferences from governmental regulations that impedes wealth creation in the U.S. As the stock market continues to reflect this sadness, the quality of life will reduce for many. Cars left stranded due to the high cost of fuel are the early signs of reduced quality of life. We hope none of them were on the way to the hospital to have a new born.

If there were no governmental regulations, which is a risk-free process and therefore, by default, deficient, the supply of energy would increase and the price would at the very least stabilize so that the productivity factor could catch up and thus improve the quality of life.

The 1980’s OPEC interfered with “extraction.” Sheik Yamani wanted Saudi Arabia to become the “swing nation.” That is, the design was to lower oil prices so low that the U.S. would no longer be interested in production. That would then allow OPEC to determine the appropriate levels of supply and demand. Now, they (OPEC) are getting a little nervous about this, as they know that hungry people will do what it takes to satisfy whatever needs they may have. The salient point here, is “take.”

The average break-even point for a barrel of oil, which included all related capital spending at in 1980 was around $18 per barrel. Sheik Yamani and OPEC drove the price down to around $9 per barrel by the mid-1980’s. The stock market enjoyed that. The 5,000 or so N.A. Rotary Rig count crashed to pre historic numbers by 1986; less than the rig count of the 1920’s. OPEC was successful. They drove the U.S. out of the petro-producing business.

The Sheik was Harvard educated and his success at driving the Great Satan out of the oil producing business must have been very gratifying to his ego. The Saudi King fired him anyway, as $9 oil did not satisfy allowance needs for the King’s pals. The Saudi King then dictated $18 oil where it stood for several years. Notice the $18 was right at breakeven so he must have been paying attention to the Sheik. That maintained a depressant to oil production activities around the world; especially in the U.S. .

As oil prices crept back up in the 1990’s, the U.S. government, more or less, continued supporting the OPEC theme of keeping North America out of the business. Politicians, especially long-term incumbents, continued with increased legislation that accelerated difficulties in developing a sound oil business. Today, it is more a legal thing, than punching a hole in the ground and thus no wealth creation.

The U.S. is a consuming nation; the dilettante CEO’ exported manufacturing to the Far East. They had to as their leadership fawned inefficiencies beyond belief and added high costs and poor quality. Now, they import poor quality and the U.S. is rapidly losing one of the wealth creators; manufacturing.

Governmental regulations has made “extraction” more difficult and thus suffocating another element of wealth creation.

Governmental interference with the high cost of oil has misdirected the natural forces of capitalistic economies and has directly led to higher costs of food. This interference has adversely impacted yet another wealth creator; agriculture.

If there is a stock market bullish rally, it will be appropriate to consider it a short-lived contrarian spurt to bearish trend and bearish cycle. This will be true as long as there is international sentiment that North America should be wealthy. Once the rest of the world recognizes this is actually not a necessity, be prepared for declining quality of life in the U.S., as non-producers are typically on the low side of the economic spectrum and rightfully so.

The dilettante managers who exported manufacturing took the first step toward eliminating their jobs, as many management teams around the world are a lot more competent. The grand children of those dilettantes will most likely be driving wagons carrying relief packages from the orient to the hungry and poor (their huts) in the U.S. The golf course business is about to crash.

The soft, non-calloused hands of the politicians, who pass through the doors of Washington D.C., will continue to attempt to be proactively involved with all our problems. Most of them have never been directly involved with the three wealth creation activities. Therefore, by default, their stupidity to the process will invoke more stupidity and thus the southerly spiral will continue.

The public is pretty stupid themselves. They tend to gravitate and vote for the politicians who use the word, give. Therein lays one problem. Fortunately, the system is getting better after the FDR fiasco of the 1930’s. The public is getting a little smarter in the recognition that Washington D.C.’s contribution to wealth creation is a negative number. In other words, without them (in character or lack thereof), everyone would be richer. So, those in power now will be voted out this November and again in 2010, 2012, etc. That is one organization where high personnel turnover is favorable. Regardless of political inclinations, all incumbents should lose the next election. That would help stabilize the messes they have created and possibly get a good crew in there to start reducing legislative constraints on wealth creation.

Last week, the Dow again contacted its breakdown line. That is bearish. The chart is still under development with its inherent algorithms. It is displayed to reveal both the short-term bearish cycle and trend now underway.

The NASDAQ, on the other hand, has yet to contact its breakdown line. However, the script is obvious. Regardless of the 20% decline or not, the cycle is bearish and the trend is bearish.

Keep your eye on the daily stock market report. It will help you differentiate sustainability versus spurts regardless of the directional intensity underway.

Weekly Buy/Sell Summary – Stocks and Funds – Mid-term Indicant

Click this sentence for a graphical summary of what follows. Simply scroll down the page to see graphical and detail content of this section.

The Mid-term Indicant generated no buy signals and 56-sell signals. There have been 92-buy signals since February 1, 2008. There have been 310-sell signals since October 26, 2007.

Although there were no buy signals, the Mid-term Indicant is signaling hold for only 104 of the 345-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 254.5%. That annualizes to 74.7%. The Mid-term Indicant has been signaling hold for these 104-stocks and funds for an average of 177.1-weeks.

In addition to the sell signals, the Mid-term Indicant is avoiding 185-stocks and funds of the 345- tracked by the Indicant. The avoided stocks and funds are down an average of 17.9% since the Mid-term Indicant signaled sell an average of 24.1-weeks ago.

One year ago, on June 29, 2007, the Mid-term Indicant was holding 308-stocks and funds out of the 345 tracked for an average of 110.0-weeks. They were up by an average of 135.2% (annualized at 63.9%). There were 31-avoided stocks and funds at that time. Those avoided stocks and funds were down an average of 15.6% since their respective sell signals an average of 29.6-weeks earlier.

The Mid-term Indicant was signaling hold for 208-stocks and funds of the 345-tracked two years ago on June 30, 2006. They were up by an average of 151.4% (annualized at 69.7%) since their respective buy signals an average of 113.0-weeks earlier. The Mid-term Indicant was avoiding 136-stocks and funds at that time. They were down an average of 5.0% since their respective sell signals an average of 15.2-weeks earlier.

There were 196-stocks and funds with hold signals on July 1, 2005 since their buy signals an average of 95.7-weeks earlier. They were up by an average of 108.0% (annualized at 58.7%). There were 122-avoided stocks and funds at that time. They were down by an average of 26.4% from their respective sell signals an average of 60.3-weeks earlier.

On June 25, 2004, the Mid-term Indicant was signaling hold for 248-stocks and funds out of 296-tracked. They were up by an average of 73.9% (annualized at 72.5%) since their buy signals an average of 53.0-weeks earlier. The Mid-term Indicant was avoiding 44.9-stocks and funds at that time. They were down by an average of 30.4% since their sell signals an average of 44.9-weeks earlier.

Five years ago, on June 27, 2003, there were 289-hold signals for stocks and funds out of the 296 tracked by the Mid-term Indicant at that time. They were up an average of 44.5% (annualized at 110.4%) since their respective buy signals an average of 21.0-weeks earlier. There were only three avoided stocks and funds then. They were down an average of 27.5% since their respective sell signals an average of 27.2-weeks earlier.

On June 28, 2002, there were only 71-stocks and funds with hold signals from the listing of 294-tracked by the Mid-term Indicant at that time. They were up 39.9%, annualizing at 51.3%. There were 213-avoided stocks and funds then. They were down by an average of 17.6%.

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

Comments about Mid-term Indicant Buy and Sell Signals This Weekend

Well, there were no buy signals this weekend, but there were a few additional sell signals.

Some of the sell signals this weekend were for stocks that are no longer traded. These signals were possible from a measurement metric view in the sense bearish conditions would have most likely induced their sales. The Indicant typically replaces such stock in October, which is about the time of the annual heart and soul of bullish seasonality. Some performance measurement businesses discourage changing tracked securities so that internal performance metrics are not misleading. We fully support that effort.

As stated the past three weeks, some mutual funds and stock with avoid signals are experiencing small gains. The Short-term Indicant Tangential model is now influencing the Mid-term Indicant. That is due, in part, for continuing to avoid these. The Tangential model is significantly bearishly biased.

All of the major indices are now without tangential protection against the bear. Fundamental factors may be shaping up for a new bull cycle to start very soon. The last bull cycle and the new bear cycle are very close right now where volatile expressions are commonplace. So, be guarded against extreme near-term plays.

Last week’s aggressive bearish behavior was consistent with expectations within the tangential model. As previously stated, keep your eye on the daily stock market report.

The Quick/Short-term Indicant Stock Market Report

The Indicant website maintains the last twelve months of daily reports on an annual basis. These weekly reports are maintained on the website for much longer periods. Beginning in March 2006, the daily stock market report for the last trading day of each week is imbedded in this weekly report. This allows web-based retention records of the daily report for much longer than the last twelve months.

The Daily Indicant Stock Market Report for the last trading day of the current week is near the conclusion of this weekly stock market report. It is emailed each weekend, separately, so you can read it, either as a separate document, or in this document.

The Indicant Stock Market Report’s Secular Market Blend

The Dow is up 55.7% since its secular low on October 9, 2002. The NASDAQ is up 107.8% and the S&P500 is up 64.6% since then. The small cap index, S&P600, is up 115.9%. Even with the S&P600’s dynamic bearish behavior the last several months, it still leads the major indices in bullish performance since the birth of the secular bull on October 9, 2002. However, the NASDAQ100 and S&P400-Mid-caps are up more than even the S&P600, right now. That means those two indices will probably move at a greater bearish rate than the other major indices.

As stated the past several months, the secular bull that originated on October 9, 2002 no longer remains solid. A secular bear could indeed be unfolding.

The Dow is down 19.9% since its last closing peak on Oct 9, 2007. The NASDAQ is down 19.0% since its last peak on Oct 31, 2007. The S&P600 is down 17.2% since its last closing peak value on Jul 19, 2007. The Small Caps Index was bearish last week with a 4.1%-loss, while the blue chips were more bearish with a 4.2%-loss.  The NASDAQ was also bearish with a 3.8%-loss.

The NASDAQ is down 54.1% since its last weekly secular peak on March 9, 2000. The S&P500 is down 16.3% since its similar secular peak on March 23, 2000. The Dow is down by 3.2% since January 13, 2000 when it peaked from the 1990’s roaring bull. The Dow had been expressing no timidity in roaming above the new peak area, while the S&P500 set a new record in early 2007 and then immediately succumbed to non-bullish influences. The NASDAQ needs to climb 118.8% to achieve a new record high. As stated the past several years in this report, do not be surprised if this occurs after the year, 2025.

The major indices are very close to “official” bear market status.

The Dow is down 14.5% so far this year. The NASDAQ is down 12.7% this year. These conditions are incongruent with historical standards. This year should be a bullish year, based on those standards. The stock market occasionally delights in violating historical standards. This always happens when such standards gain in popularity. As stated for several years now, the phenomenon of commonality disallows stock market victories by the masses.

The short-term bullish cycle ending three weeks ago had been lending support to historical standards. As stated several times in prior weekly reports, that bullishness will be challenged during the dog days of summer. Recent bearishness is a testament to that. Summer is now here and with full bearish support.

The NASDAQ year-to-date performance was bearish by 16.0% through this week in 2001. Keep in mind the NASDAQ finished 2001 down by 23.3%.  This year was configuring with 2001 similarity, but the recent bull cycle disrupted that similarity for several weeks. As previously stated, there will be additional bearish cycles in 2008. As stated the past several weeks, do not be surprised at increased bearishness in the next few weeks, but with significant volatility. You have been witnessing that the past few weeks and especially the past two weeks.

The NASDAQ was down by 25.2% through this weekend in 2002. Some of you recall the dynamic bear market in 2002, where the NASDAQ finished that year down by 31.5%. The NASDAQ YTD 2003 performance was up by 21.7%. It finished up in that solidly bullish year by 50.0%. It was up on this weekend by a paltry 1.1% in 2004. It was also down by 6.0% in 2005. Many of you recall that 2004 and 2005 were meandering bear markets. In 2006, it was down by 4.8% and up by 7.9% at this time last year.  

As previously stated, so far this year, the DOW30 is down 14.5% and the NASDAQ down 12.7%.

This paragraph, originating in the March 30, 2008 Weekly Stock Market Report, will remain unchanged until it becomes irrelevant. Bearish behavior this year contradicts historical standards whereby the presidential election year is typically bullish. The political establishment and their appointees are doing their part to support bullish behavior with interest rate cuts and tax rebates. On the other hand, the stock market appears to be short of buyers, who at one time refinanced their homes to buy stocks. Their replacement buyers are expected to be foreign investors, where the weak dollar is an added bonus for those who desire bullish market behavior. However, rising commodity prices could dampen that potential bullish effect.

May 2, 2008 comment regarding the previous paragraph. The Fed’s “mild” interest rate adjustment to the south indeed strengthened the dollar. Keep in mind the U.S. is a net importer. This increases the supply of dollars abroad. As long as the U.S. is a net importer, there will be a continuing increase in supply of dollars, which will continuously keep a “real economic” lid on its value.

The bullish bias shift on August 15, 2006 expired on January 4, 2008. The heart and soul of bullish seasonality also expired on January 4, 2008.  The Dow increased 14.0% since the bullish bias shift on August 15, 2006. The S&P500 was up 9.8% and the NASDAQ up by 18.4%.

As you can see, most of those gains from August 2006 have been wiped-out by the newly evolving bearish trend, originating in October 2007 and confirmed on January 4, 2008.

The Quick-term Indicant signaled sell for ETF’s that correlate with blue chips and large caps a few weeks ago in anticipation of increasing bearish bias. It signaled sell for all non-contrarian ETF’s to major market indices in anticipation of increased bearishness about two weeks ago. This could be reversed quickly depending on OPEC actions on the immediate horizon. The daily stock market report will keep you informed.

As stated last week, the presidential pre-election year of 2007 was below average (+10.5%) with the Dow gaining 6.4%. This was the smallest gain since Reagan’s 2.3% gain in 1987, when the market endured sharp sell off in October of that year. These seasonal standards appear to be losing their influence due to the phenomenon of commonality.

Where is the market headed in 2008, the presidential election year, which is the second most bullish year on the four-year presidential election cycle? If historical standards prevail, which is bullish, the market is setting up nicely for a tremendous profit this year. All that is needed is a bottom to this bear, as 2008 should finish up on the year, based on historical standards and falling interest rates. The problem confronting this scenario is two fold; economic conditions and inflation.

Depending on bearish magnitude and breadth, a violation to historical standards could be underway. Also, CNBC and other similar publications to the masses continue to destroy the integrity of old methods that once worked well. That is why we are shifting our models to extreme esotericism.

The fundamental requirements are limited inflation and economic stabilization. Fundamental influences will always be the primary force of directional stock market intensity. Three of the big four are okay for the time being; inflationary threats have cooled but again threatening with a significant increase in the CPI, as oil continues setting new highs, but the Saudi influence could help this. Interest rates remain low, which is bullishly favorable. Deflation is not threatening. In addition to a resurging CPI, another unfavorable condition for stock market bullishness is the weak economy. The unknown is voodoo bookkeeping. The market reacts to corporate earnings. If those earnings are perceived as fiction, the market will move bearishly. Fictional financial representations will enhance stock market bearishness. The capital market system requires absolute honesty from the bookkeepers.

Keep your eye on the daily stock market report.

Stop Loss Management

The Mid-term Indicant recommends a stop loss of 10% due to increasing bearish influences.

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 U.S. Dollar has stabilized the past few weeks. The underlying theme is the necessity to strengthen it to help soften the inflationary threat from its weakness. There is what appears to be a cyclical shift underway. Unfortunately from an inflationary perspective, the weakening trend is solidly in place.

Gold prices have been softening, while the other “real” commodities continue setting new record highs as the additional two to three-billion capitalists desire them. That is positive; not negative. Extraction and conversion to saleable product adds economic wealth. Good old fashion demand/supply laws continue to unfold. Any political interference with those laws will worsen the problems.

The stock market will eventually respond bullishly to the idea the increasing number of capitalists in spite of the immediate inflationary threats being imposed by the short-term inequality between supply and demand. Capitalist delivered all meaningful solutions to real problems since the beginning of commerce. No politician, dictator, or bureaucrat of any type has ever provided any solution to any problem. They have created many, though.

So, long-term, even the in the face of a bearish stock market and short-term problems,  it is comforting to know that there are now billions of potential solutions as opposed to just a few hundred million.

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 is up 434.0% since the April 13, 2001 buy signal. Its annualized growth since that buy signal is 59.4%. It moved to the north in 56 of the past 94-weeks. It has been bullish in 27 of the last 45-weeks. This fund has been bullish in 12 of the last 20-weeks. It was strongly bullish the past two weeks, following two weeks of solid bearishness.

Fidelity Gold, Fund #28, is up 18.0% since its buy signal on September 7, 2007. It is annualized at 22.0% since that buy signal. This fund was solidly bullish in 11 of the past 20-weeks. It enjoyed bullish behavior the last two weeks, following bearishness in the previous three weeks.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 482.2% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 81.0%. This fund has been bullish in ten of the last 18-weeks. It has been bullish the past five weeks.

Vanguard Energy #18, VGENX, is up 283.3% (annualized at 53.5%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 284.2% (annualized at 61.4%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 238.1% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 48.2%.

These energy related funds were solidly bullish last week and there is nothing on the horizon that suggests any reversals to their trends.

Investors in these funds are supporting a 1970’s type of market with high inflation and high oil prices. 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. However, keep in mind OPEC can very quickly reverse this trend. They have done it before and remain capable of doing it again.

The SQI (Consolidated Short-term and Quick-term Indicant) model signaled buy for the GLD-ETF#11 on August 3, 2005. It is up 110.1% since then. It is annualized at 37.4%. This fund has been bullish in 31 of the past 44-weeks. It has been solidly bullish in 12 of the last 19-weeks. It was bullish last week.

The SQI signaled buy for ETF#03 – Energy and Natural Resources on March 26, 2003. It is up 305.3% (annualized at 57.3%). This fund has been bearish in 14 of the past 24-weeks, following two weeks of bearish behavior.

Mid-term Indicant Positions – Ten U.S. Indices

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

The Mid-term Indicant signaled bull on March 20, 2008 for all ten major indices. However, since then there have been several bear signals. Three of the five remaining bull signals perished this weekend. They were up by an average of 7.8% since the March 20, 2008 bull signals as of last week, but bearish attributes are too strong at this time for bullish retention. All five were annualizing at 30.8% as of last weekend.

There remains two bull signals, as the Mid-term Indicant did not shift enough attributes strongly enough to signal bear. Those two bulls are showing considerable resistance to bearish ambition, but that is most likely temporary. They should succumb to the bear in a next week or two. They are the Dow Transports and the Dow Utilities. At any rate, they are up by an average of 5.2% since the Mid-term Indicant signaled bull 14-weeks ago for those two indices.

The other five indices are down by an average of 6.2% since the Mid-term Indicant signaled bear an average of three weeks ago.

The Mid-term Indicant Dow Jones Industrial Average performance is at $36,661,279

That beats buy and hold performance of $1,726,230 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $180,217. That beats buy and hold’s $125,221 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $227,792. That beats buy and hold’s $80,292 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 2,023.8%, 43.9%, and 183.7%, respectively, for these indices as of this past week.

You will notice the percentages changed from last week since the buy and hold values worsened while the Indicant maintained its values. The reason the Mid-term Indicant gained a competitive advantage over buy and hold is due to the market’s bearish behavior since signaling bear.

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 over 2,000% covering 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.

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.

Note from April 5, 2008: Enron will be removed from Indicant tracking later this year. It was removed from the Dow Utility Index several years ago. It is now a penny stock, but the Indicant kept tracking it at the request of members. Its low cost nature is not friendly to Mid-term Indicant assessment due to small price changes and corresponding large percentage impact. The Mid-term Indicant is not designed for penny stocks. Although recovery is always possible, this stock has become too busy to track. This position will be re-accessed based on member feedback as the year progresses.

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 signaled buy for ProFunds Ultra Short on January 18, 2008. It was down 32.3% since the Mid-term Indicant signaled sell on September 15, 2006 until the buy signal on January 18, 2008. Historical norms of market cyclicality suggested the next buying opportunity for this fund should not occur until 2009.

Uncharacteristically, the Mid-term Indicant again signaled buy for this fund last weekend. The Mid-term Indicant is influenced in part by seasonal and historical influences. This year should be bullish, based on historical standards, which would be bearish for this fund. However, the Tangential model is gaining influence and thus the reason for the buy signal. The Tangential model is bearishly biased now and will be more tolerate of fluttering behavior than the buy and sell signals earlier this year.

This fund is up 7.6% since the buy signal last weekend.

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 292.1% (annualized at 17.5%) since the Long-term Indicant signaled bull 869-weeks ago. Economic data is the primary influence on the Long-term Indicant. Recessions, deflation, inflation, and unreasonable interest rates 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: Two of thirty. Zero non-contrarian red bulls; thorough non-bullish attribute.

Quick-term Yellow Bears/Threats: Twenty-one of thirty.  Non-bearish support non-existent with majority yellow bears.

Quick-term Non-Bearishness: QTI differential is bearish 11.2%. Solid bearish support.

Short-term Non-Bearishness: Breakout/breakdown differential is bearish 8.3%; solid bearish support.

Force Vectors: Favoring bearish behavior.

Vector Pressure: Five in bullish domains. After holding steady with bullish support since early April, this attribute continues to wane in that support. It is with minority support, which is increasingly non-bullish. It is offering no resistance to bearish aggression.

STI Tangential Support: All major indices are without tangential protection. Bear can roam at free will.

Immediate Tactics: Buy signals for non-contrarian ETF’s will be limited with the bearish bias now underway. Sell signals for the most part are nearing completion. There are just a few more non-contrarian ETF’s expressing obstinate behavior to bearish influence, but those final few, which were longer term hold positions were sold last Thursday.

Current Quick-term Bias: Bearish.

Overall Market Status: Solid bearish bias.

Profit Potential from Naked Options: Volatility should be expected until all bearish yellow curves are sloping bearishly. Utilities are now succumbing to bearish pressure.

Volume: Losing lethargy, which is inconsistent with seasonal behavior and thus even more bearish.

Quick-term/Short-term Indicant Stock Market Report Details

To view the STI-Tangential Protection for ten major indices, click here.  

As stated the past several days/weeks, all major indices continue with bearish configurations. Bearish yellow is cycling south. Force Vectors are in bearish domains. Vector Pressure is in bearish domains. None have tangential protection against bearish ambition.

Last Thursday’s market endured bearish synergy with all major indices succumbing to dynamic bearish aggressions. Although Friday’s bearish behavior was mild, it was a continuation of expressing the unrelenting ambition of the bear. The market is forecasting recession or inflation or both.

As stated the past few days, the STI-Tangential model will not signal bull until Force Vectors are higher than X and the index is higher than Red. This feature reduces fluttering. Configurations are nowhere near signaling bull.

The two large caps, S&P100 and S&P500, are the weaker indices with both contacting their respective breakdown lines. Such configurations suggest a recession with sector breadth. In other words rather than isolated rolling recessionary behavior in specific sectors, the stock market is projecting little immunity.

From May 4, 2008-Weekly Stock Market Report – At that time there was a 97% probability the major indices and most of the non-contrarian ETF’s would be below their early April values at some future point.  (As you can now see, most have done that during the month of June 2008). However, the NASDAQ, NASDAQ100, S&P400, and S&P600 have yet to produce this bearish result. They made a giant leap forward with dynamic bearish aggression the past few days. Although unsettling, it was good to know this weeks before it occurred.

From June 19, 2008 Daily Stock Market Report. There is an 80% probability the NASDAQ will fall below 2330 in this bearish cycle from 2462 or by 6.6%. It closed below 2330 this past week at 2315.

From June 20, 2008 Daily Stock Market Report-There is a 59% probability the NAS100 will fall below 1774 or by 8.0% from this date. The S&P400 has a 63% probability of falling below 817 or by another 4.4%.  The April 28, 2008 Daily Stock Market Reported stated, there was a 97% probability the S&P600 would be below its early April values and repeated in the May 4, 2008 Weekly Stock Market Report. On April 9, 2008, the S&P600 closed at 363.99. In the ensuing Short-term Bull cycle, it peaked at 401.93 for a 10.4% gain. Although the Indicant does not do forecasting, the Reverse Tangential line (declining green line) suggests the S&P600 will fall back below its April 9 closing of 363.99 at some future point. Recent daily reports indicated it was unknown if the future point will occur in the current bear cycle underway or in 2009. Such a prognosis, regardless of timing, suggests there is no meaningful or sustainable bull market on the foreseeable horizon. However, as of June 27, 2008, the S&P600 is only five points away from its April 9-closing price of 363.99

The Short-term Indicant signaled bear on May 20, 2008 for the Dow Jones Industrial Average and on May 21, 2008, for the NASDAQ. The Short-term Indicant is influenced, in part, by historical seasonality, which has become too popular to be effective. It will eventually be replaced by the more esoteric tangential model. The Dow is down 11.6% and the NASDAQ is down 6.4% since their respective bear signals. As stated the past several days, the bear has moved from having a tactical advantage to a position of dominance.

Please read on. Click here to see the Short-term Indicant’s history.

As stated in last Wednesday’s daily stock market report, both Indicant Volume Indicators  are configuring robustly and in support of bearish bias.

SQI Report Card (Consolidated Short/Quick), Status, and Charts

There were no buy signals and no sell signals. Although there were no buy signals, the SQI is signaling hold for five-ETF’s. They are up by an average of 41.4% (annualized at 14.3%) since their respective buy signals an average of 149.3-weeks ago. Although there were no sell signals, the SQI is avoiding 26-ETF’s at this time. They are down by an average of 6.9% since their sell signals an average of 4.9-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 nine 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 five-ETF’s. They are up an average of 302.5% (annualized 104.4%) since the STI signaled, buy, an average of 149.0-weeks ago.  Although there were no sell signals, there are 26-ETF’s with avoid signals. They are down by an average of 7.2% since their sell signals an average of 5.3-weeks ago.

The Short-term Indicant is more active in buying/selling than the Consolidated model. The Quick-term Indicant, which follows, is even more active.

Quick-term Report Card, Status, and Charts

There were no buy signals and no sell signals.  Although there were no buy signals, the Quick-term Indicant is signaling hold for four-ETF’s. They are up by an average of 75.3% (annualized at 45.3%) since the QTI signaled buy an average of 85.5-weeks ago.  Although there were no sell signals, the Quick-term Indicant is avoiding 27-ETF’s. They are down by an average of 6.9% since their sell signals an average of 3.9-weeks ago.

Current Strategy – No change. All major indices do not have tangential support. Most are yellow bears. Any bullish expressions should be viewed as bullish spurts in the face of bearish trend and bearish cyclicality.  However, several of the ETF’s, including a few of the non-contrarians, are not possessing increasing bearish attributes. Some of them will not go down with a bear market.

From June 25, 2008 Daily Stock Market Report- (Today’s) mild bullish behavior was significant. The first half of the day was indeed bullish ahead of the Federal Reserve Board’s announced “no change” in policy or interest rates. The economy will need to improve on its own merits. An improving economy, coupled with high oil prices, will be inflationary. That is the big problem confronting the bulls. Significant bullishness throughout the day waned in the final hour of trading, netting a nearly flat day. The dual threat by inflation and recession is fundamental cause supportive of bearish behavior. Continue to consider bullish expressions as mere spurts in the face of bearish trend and cycle.

From June 26 25, 2008 Daily Stock Market Report-  (Today’s) bearish aggression fomented additional bearish configurations, suggesting this Short-term Bear cycle will be sustainable and rather deep.

Conflicts Between the Short-term and Quick-term Indicants

A solid bearish bias originated on Thursday, June 12, 2008, with all major indices without tangential support. From all three Indicant models, there are a combined 11-hold signals and 79-avoid signals for ETF’s and thus with a significant bearish bias.

Quick-term Indicant Bull/Bear Health Report

Click the above heading to view the charts.

Twenty-one of the 30-ETF’s are below their respective bearish yellow curves. The average relative position of all thirty ETF’s is below bearish yellow by 2.8%. This is without non-bearish support and with bearish support.

Two ETF’s are above their bullish red curves. This attribute remains solidly non-bullish. All thirty ETF average positions are below bullish red by 8.5%. which is non-bullish.

The two Red Bulls are contrarian, ETF#03-Natural Resources and ETF#11-Gold and Precious Metals. It only takes one non-contrarian red bull to stifle dynamic bearish behavior. As stated the past few days, none exist. The bear is currently dominating.

The QTI differential is bearish by 11.2%. This is the fourteenth consecutive trading day of a bearish reading.

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, which is no longer providing bullish support.

The average distance from breakout contact is 18.0%. Double digit variances from breakout contact for 121-consecutive trading-days has been non-bullish. 

Eight of the thirty ETF’s are contacting their breakdown lines, which is bearish. This is the sixth consecutive day with breakdown contact, offering further support for an ambitious bear.

The average distance between the price and breakdown is 9.7%. After providing non-bearish support since March 2003, this is the second consecutive trading day of non-double digit reading, which is bearish. As stated the past few days, configurations are forming similar to those in the early stages of the 2001-02 bear market. As stated the past few days, emotional bearishness can become influential regardless of fundamental reason with a single digit reading. Unfortunately, fundamental factors are also supportive of the bear.

The breakout/breakdown differential is bearish by 8.3%. This is solidly supporting bearish ambition.

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.

Three Force Vectors are in bullish domains, which is non-bullish. As stated the past few days, their configurations support bearish bias.

To understand potential financial opportunities, click here to learn to identify Robust Force Vectors. They are visible on the Quick-term Indicant charts.

ETF Force Vectors/Vector Pressure Crossings/Option Signals

Remember, the links contained herein are more visible when reading this on the website.

Click this sentence for Vector Pressure Option Signals. There were two call option buy signals after Friday’s close.  Both are for contrarian ETF’s, numbers 3 and 11, Energy and Gold respectively. It is more difficult to trade such options as the broader market indices are not participative in the process. Contrarian securities tend to march to their own cadence.

As stated in Thursday’s daily stock market report, we did not get the bullish spurt to accommodate Thursday’s put option buy signals.

Five of the thirty ETF Vector Pressures are in bullish domains. This minority position is not supportive of any bullish inclination. It is now configured with solid bearish support.

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

A solid new bearish bias shift was born today, June 11, 2008.

ProFunds Ultra Short mutual fund moves inversely to the QQQQ by exponential amounts. See the Mid-term Indicant for its status.

The Quick-term and Short-term Indicant tracks ETF#31, QID, which is the ETF cousin to ProFunds Ultra Short. This ETF is relatively new and has not yet developed enough data to formally track its outlook. It is excluded from overall ETF statistics because it is purely contrarian. It is designed to move bullishly during bear markets and bearishly during bull markets. This exclusion is required for convergent/divergent monitoring.

The Indicant signaled buy for QID  on June 11, 2008. It is up by 6.0% since then. Its Force Vector remains bullish. Its Vector Pressure crossed into bullish domains last Wednesday, which could invoke an unfavorable response. There was a minor one incurred on Friday. However, as stated yesterday, configurations continue supporting bullish expectations for this ETF. The buy signal was premature, but committed. If the market shifts to bullish bias, this ETF will receive a quick sell signal. Keep in mind its behavior is exponential to market behavior.

Other Contrarian Funds

ETF#03-Natural Resources   - is up 53.5% (annualized at 31.5%) since the Quick-term Indicant signaled buy on Oct 25, 2006. After bearish expressions the past three days, it was bullish on Friday. It remains in a perfect holding pattern for those of you who bought in late 2006. It is a Red Bull. Bearish expressions are mere spurts.

ETF#11-Gold and Precious Metals   is up 110.2% since the Quick-term Indicant signaled buy on August 3, 2005. It is annualizing at 37.4%. It was solidly bullish the past two days.  It is setting up nicely for continued bullish behavior.

ETF#14-Long Government  is up 0.6% since the May 5, 2008 sell signal. Its Vector Pressure remains inside bearish domains. Its Force Vector crossed above yellow last Wednesday. The configuration remains weak, but improving. It has been bullish the past three days. The Quick-term Indicant will signal buy as soon as its Vector Pressure crosses into bullish domains and possibly after Force Vectors go through at least one bearish cycle. This fund has some strategic risk. The dollar’s weakness and inflationary threats will eventually stimulate increased interest rates. With that, this fund, fundamentally, would endure bearish behavior. The contrarian movement to that fundamental prognosis would be high demand for safety purposes, depending on the nature of economic behavior. Do not be surprised at jawboning the dollar up, but the U.S. remains a net-importer and thus the continual downward pressure on the dollar, which fundamentally supports long-term upward pressure on interest rates.

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

Short-term Indicant for Tangential Analysis

Divergence versus Convergence

Combined bullish convergence and divergence in ten of a recent thirteen week period was powerfully bullish. This bullish convergence with some bullish divergence configurations during that bull cycle suggests 2008 still had a significant chance to finish the year on a bullish note.

However, the stock market endured bearish divergence the past two weeks. Energy and commodities were bullish while most other stock equity sectors were bearish.

As stated the past two weeks, the Quick-term Indicant and Short-term Indicant suggest some potential bearishness on the near-term horizon. As you have witnessed, there is little doubt the bear is in charge of the stock market right now.

Nothing has changed; expect more bearishness. Keep in mind, OPEC is the wild card.

Indicant Conclusion

Commentary here has been bearish the past several weeks. However, OPEC can influence a reversal to bullish bias very quickly and dynamically.

Keep up with the daily stock market report as the Quick-term attributes can shift quickly. As stated the past few weeks, they are increasingly favoring the bear.

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 

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

06/29/08

June 22, 2008 Indicant Weekly Stock Market Report

Volume 06, Issue 04 ISSN 1526 6516 © The Indicant Stock Market Report

This Week’s Report

The Next Short-term Bear Cycle

Although the fundamental shift with increased OPEC production has merit, technical stock market factors are favoring increased bearish biasness. There are unfavorable economic fundamentals confronting the stock market beyond the growing energy crisis.

As stated last week, OPEC’s ability to increase production and lower prices could impose an immediate and dynamic confrontation to the current bear market. The last bullish cycle that lasted for about 12-weeks has expired. The bear is again dominant on a short-term basis. Technical indicators suggest this dominance will be deep and somewhat sustainable.

If OPEC becomes very friendly to energy hungry cultures, the stock market could react very bullishly. Depending on the nature of OPEC’s behavior, such bullishness could very well be sustainable. This could propel the stock market into a bullish cycle that would conform to historical standards. The presidential election year is traditionally bullish and it is the second most bullish year along the four-year cycle.

OPEC is not under the direct influence of western societies. OPEC is strongly independent and for the most part, they have disdain for their customers, who are not as passionate about the Koran. However, most of OPEC’s leadership worships money more than the Koran.

As stated last week, there are two views of OPEC’s money flow stream. Their short-term views are congruent to the normalcy of greed. The higher the price of oil, the richer they become.

Many in OPEC’s leadership are beginning to take a strategic view of their money flow. None of them wants to return to the camel as their primary mode of transportation. Their Mercedes, Lear Jets, and even some Boeing 747-Jets provide much more comfort and enjoyment.

It does not take much imagination on their part to see potential competitive threats unfolding from energy-starved societies. Air powered engines manufactured by an Australian engineer is of some concern. Low fuel automobiles are being introduced into India next year. The stupidity of the U.S. Congress and other political forces, they understand, can be wiped out in the next election. Well, let’s pause for a second here. Stupidity in political environments will never be wiped out. Nevertheless, a movement, in a big way, can happen with the next election that would be unfavorable to OPEC’s strategic desires to maintain a healthy cash flow for a long period. Eighty-dollar oil would do the trick and they know it.

The $140-oil is nice right now for the OPEC folks, but they also understand the profound abilities of free capital markets to solve any problem. Right now, they understand they are a problem to economic health; not only in the West, but in the East as well.

In addition to the Australian air genius, long-term demand for OPEC oil could start degenerating within a few years due to increased interest in Nuclear power, wind farms, and other alternate methods of energy. T. Boone Pickens is investing around $9-billion into the next largest wind farm. T. Boone is not worried about the birds. It will be interesting to see the hypocritical green peace folks jump in his face about that. (The only green peace advocate one should pay attention to is one who lives in a teepee, builds their own fires from “dead wood” and eats from the tools of their hand-crafter bows and arrows. Such folks have credibility, as they would never even flush a toilet. All others are hypocrites and should be ignored).

Strategic matters are usually slow in developing, but once trends develop on a secular basis, they become very difficult to reverse. So, the long-term strategic thinkers within the OPEC ranks will take a look at their grandchildren and maybe conclude the camel should not be their only choice for transportation. Once they run out of oil, they will return to the true dessert, if they don’t change their underlying behavior. Some of them even know that.

Technically, though, and regardless of any bullish OPEC news in the coming days, weeks, and months, do not be surprised at a continuation of bearish influences on the stock market. There are several other fundamental reasons for this.

Financial institutions are in trouble. They have reintroduced Enron type ethics of conveying their worth. Valuing assets should not be tricky, but they have introduced tricks and since they add absolutely nothing to real economic wealth, the depth and breadth of the current bearish bias could indeed be record setting.

As stated many times before, real economic wealth is delivered in only three ways; extraction, manufacturing, and agriculture. All three of those elements are in trouble. The middlemen, such as financial institutions, who add zero value, are in deeper trouble. Fundamentals and technical configurations are harmonistically aligned with the desires of the bear.

Keep your eye on the daily stock market report. It will help you differentiate sustainability versus spurts regardless of the directional intensity underway.

Weekly Buy/Sell Summary – Stocks and Funds – Mid-term Indicant

Click this sentence for a graphical summary of what follows. Simply scroll down the page to see graphical and detail content of this section.

The Mid-term Indicant generated one buy signal and 22-sell signals. There have been 92-buy signals since February 1, 2008. There have been 254-sell signals since October 26, 2007.

In addition to the buy signal, the Mid-term Indicant is signaling hold for 159 of the 345-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 192.7%. That annualizes to 63.6%. The Mid-term Indicant has been signaling hold for these 159-stocks and funds for an average of 157.4-weeks.

In addition to the sell signals, the Mid-term Indicant is avoiding 163-stocks and funds of the 345- tracked by the Indicant. The avoided stocks and funds are down an average of 17.8% since the Mid-term Indicant signaled sell an average of 27.9-weeks ago.

One year ago, on June 22, 2007, the Mid-term Indicant was holding 313-stocks and funds out of the 345 tracked for an average of 106.4-weeks. They were up by an average of 127.9% (annualized at 62.5%). There were 31-avoided stocks and funds at that time. Those avoided stocks and funds were down an average of 14.7% since their respective sell signals an average of 28.8-weeks earlier.

The Mid-term Indicant was signaling hold for 207-stocks and funds of the 345-tracked two years ago on June 23, 2006. They were up by an average of 143.6% (annualized at 66.5%) since their respective buy signals an average of 112.4-weeks earlier. The Mid-term Indicant was avoiding 132-stocks and funds at that time. They were down an average of 6.4% since their respective sell signals an average of 14.4-weeks earlier.

There were 196-stocks and funds with hold signals on June 24, 2005 since their buy signals an average of 95.3-weeks earlier. They were up by an average of 106.1% (annualized at 57.9%). There were 110-avoided stocks and funds at that time. They were down by an average of 26.6% from their respective sell signals an average of 61.0-weeks earlier.

On June 18, 2004, the Mid-term Indicant was signaling hold for 249-stocks and funds out of 296-tracked. They were up by an average of 72.0% (annualized at 70.8%) since their buy signals an average of 52.8-weeks earlier. The Mid-term Indicant was avoiding 42-stocks and funds at that time. They were down by an average of 18.2% since their sell signals an average of 26.3-weeks earlier.

Five years ago, on June 20, 2003, there were 289-hold signals for stocks and funds out of the 296 tracked by the Mid-term Indicant at that time. They were up an average of 44.6% (annualized at 116.3%) since their respective buy signals an average of 20.0-weeks earlier. There were only two avoided stocks and funds then. They were down an average of 26.1% since their respective sell signals an average of 26.6-weeks earlier.

On June 14, 2002, there were only 81-stocks and funds with hold signals from the listing of 294-tracked by the Mid-term Indicant at that time. They were up 37.2%, annualizing at 51.4%. There were 201-avoided stocks and funds then. They were down by an average of 24.0%.

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

Comments about Mid-term Indicant Buy and Sell Signals This Weekend

As stated the past two weeks, some mutual funds and stock with avoid signals are experiencing small gains. The Short-term Indicant Tangential model is now influencing the Mid-term Indicant. That is due, in part, for continuing to avoid these. The Tangential model is significantly bearishly biased.

All of the major indices are now without tangential protection against the bear. Fundamental factors may be shaping up for a new bull cycle to start very soon. A last bull cycle and the new bear cycle are very close right now where volatile expressions are commonplace. So, be guarded against extreme near-term plays.

Last Friday’s aggressive market behavior was consistent with expectations within the tangential model, while bullish expressions during the middle of last week were mere bullish spurts.

The Quick/Short-term Indicant Stock Market Report

The Indicant website maintains the last twelve months of daily reports on an annual basis. These weekly reports are maintained on the website for much longer periods. Beginning in March 2006, the daily stock market report for the last trading day of each week is imbedded in this weekly report. This allows web-based retention records of the daily report for much longer than the last twelve months.

The Daily Indicant Stock Market Report for the last trading day of the current week is near the conclusion of this weekly stock market report. It is emailed each weekend, separately, so you can read it, either as a separate document, or in this document.

The Indicant Stock Market Report’s Secular Market Blend

The Dow is up 62.5% since its secular low on October 9, 2002. The NASDAQ is up 116.0% and the S&P500 is up 69.7% since then. The small cap index, S&P600, is up 125.0%. Even with the S&P600’s dynamic bearish behavior the last several months, it still leads the major indices in bullish performance since the birth of the secular bull on October 9, 2002.

As stated the past several months, the secular bull that originated on October 9, 2002 no longer remains solid. A secular bear could indeed be unfolding.

The Dow is down 16.4% since its last closing peak on Oct 9, 2007. The NASDAQ is down 15.8% since its last peak on Oct 31, 2007. The S&P600 is down 13.7% since its last closing peak value on Jul 19, 2007. The Small Caps Index was bearish last week with a 0.7%-loss, while the blue chips were more bearish with a 3.8%-loss.  The NASDAQ was also bearish with a 2.0%-loss.

The NASDAQ is down 52.3% since its last weekly secular peak on March 9, 2000. The S&P500 is down 13.7% since its similar secular peak on March 23, 2000. The Dow is up by a mere 1.0% since January 13, 2000 when it peaked from the 1990’s roaring bull. It has expressed no timidity in roaming above the new peak area, while the S&P500 set a new record in early 2007 and then immediately succumbed to non-bullish influences. The NASDAQ needs to climb 109.8% to achieve a new record high. Do not be surprised if this occurs after the year, 2025.

The Dow is down 10.7% so far this year. The NASDAQ is down 9.3% this year. These conditions are incongruent with historical standards. This year should be a bullish year, based on those standards. The stock market occasionally delights in violating historical standards. This always happens when such standards gain in popularity.

The bullish cycle ending two weeks ago had been lending support to historical standards. As stated several times in prior weekly reports, that bullishness will be challenged, during the dog days of summer. Recent bearishness is a testament to that. Summer is now here and full bearish support.

The NASDAQ year-to-date performance was bearish by 17.8% through this week in 2001. Keep in mind the NASDAQ finished 2001 down by 23.3%.  This year was configuring with 2001 similarity, but the recent bull cycle disrupted that similarity for several weeks. As previously stated, there will be additional bearish cycles in 2008. As stated the past several weeks, do not be surprised at increased bearishness in the next few weeks, but with significant volatility. You have been witnessing that the past few weeks and especially late last week.

The NASDAQ was down by 24.9% through this weekend in 2002. Some of you recall the dynamic bear market in 2002, where the NASDAQ finished that year down by 31.5%. The NASDAQ YTD 2003 performance was up by 23.2%. It finished up in that solidly bullish year by 50.0%. It was down on this weekend by 0.8% in 2004. It was also down by 4.0% in 2005. Many of you recall that 2004 and 2005 were meandering bear markets. In 2006, it was down by 4.5% and up by 7.6% at this time last year.  

As previously stated, so far this year, the DOW30 is down 10.7% and the NASDAQ down 9.3%.

This paragraph, originating in the March 30, 2008 Weekly Stock Market Report, will remain unchanged until it becomes irrelevant. Bearish behavior this year contradicts historical standards whereby the presidential election year is typically bullish. The political establishment and their appointees are doing their part to support bullish behavior with interest rate cuts and tax rebates. On the other hand, the stock market appears to be short of buyers, who at one time refinanced their homes to buy stocks. Their replacement buyers are expected to be foreign investors, where the weak dollar is an added bonus for those who desire bullish market behavior. However, rising commodity prices could dampen that potential bullish effect.

May 2, 2008 comment regarding the previous paragraph. The Fed’s mild interest rate adjustment to the south indeed strengthened the dollar. Keep in mind the U.S. is a net importer. This increases the supply of dollars abroad. As long as the U.S. is a net importer, there will be a continuing increase in supply of dollars, which will continuously keep a “real economic” lid on its value.

The bullish bias shift on August 15, 2006 expired on January 4, 2008. The heart and soul of bullish seasonality also expired on January 4, 2008.  The Dow increased 14.0% since the bullish bias shift on August 15, 2006. The S&P500 was up 9.8% and the NASDAQ up by 18.4%.

As you can see, half of those gains from August 2006 have been wiped out by the newly evolving bearish trend, originating in October 2007 and confirmed on January 4, 2008.

The Quick-term Indicant signaled sell for ETF’s that correlate with blue chips and large caps the past three weeks ago in anticipation of increasing bearish bias. It signaled sell for all non-contrarian ETF’s to major market indices in anticipation of increased bearishness. This could be reversed quickly depending on OPEC actions on the immediate horizon.

As stated last week, the presidential pre-election year of 2007 was below average (+10.5%) with the Dow gaining 6.4%. This was the smallest gain since Reagan’s 2.3% gain in 1987, when the market endured sharp sell off in October of that year. These seasonal standards appear to be losing their influence due to the phenomenon of commonality.

Where is the market headed in 2008, the presidential election year, which is the second most bullish year on the four-year presidential election cycle? If historical standards prevail, which is bullish, the market is setting up nicely for a tremendous profit this year. All that is needed is a bottom to this bear, as 2008 should finish up on the year, based on historical standards and falling interest rates. The problem confronting this scenario is two fold; economic conditions and inflation.

Depending on bearish magnitude and breadth, a violation to historical standards could be underway.

The fundamental requirements are limited inflation and economic stabilization. Fundamental influences will always be the primary force of directional intensity. Three of the big four are okay for the time being; inflationary threats have cooled but again threatening with a significant increase in the CPI, as oil continues setting new highs, but the Saudi influence could help this. Interest rates remain low, which is bullishly favorable. Deflation is not threatening. In addition to a resurging CPI, another unfavorable condition for stock market bullishness is the weak economy. The unknown is voodoo bookkeeping. The market reacts to corporate earnings. If those earnings are perceived as fiction, the market will move bearishly. Fictional financial representations will enhance stock market bearishness. The capital market system requires absolute honesty from the bookkeepers.

Keep your eye on the daily stock market report.

Stop Loss Management

The Mid-term Indicant recommends a stop loss of 10% due to increasing bearish influences.

Use a 10% trailing stop loss or the yellow or green values you will find on the tables for your longer-term hold positions. If your stock or fund is above the bearish yellow curve and below the green curve, set your stop loss equal to the greater of the yellow curve and the trailing stop loss. If your stock or fund is above the green curve, set your stop loss at no less the value of the green curve or 10% trailing, whichever is greater. If your stock or fund is above the red curve and you bought at the Mid-term Buy signal, you should use the 10% trailing stop loss.

If you are up by triple digit amounts and enjoy your ownership of the stock or fund, then use a 20% trailing stop loss or the slow moving blue curve price. If you really enjoy holding the stock, keep a close eye on the management. Dilettante managers have a way of worming into the business. Watch closely for cronyism and lazy-hazy management dialog. Keep your eye on lavish spending and excessive concerns about social issues. Those types are more interested in burning your money for their pleasures, as opposed to making you money. High performing companies remain focused on honoring the investments made by their shareholders.

In a few instances, you will see a hold signal for a stock or fund that is down from its buy signal or below one of the above conditions for selling. If you are more of a trader than an investor, feel free to buy stocks and funds with those “bearish” attributes. They are configured for a possible rebound, while at the same time, it is important to set the stop losses mentioned in this report. Use the Quick-term Indicant as a guide in your decision-making processes. If the stock price is falling in a Quick-term Bear market, it is not advisable to buy.

Do not short on stocks if they are up from an avoid signal. Stocks go up more often than they go down. Stocks have a tendency to march to their own drumbeat when rising. Some stocks rise and continue to rise in the most severe of bear markets. Short selling opens up an opportunity for the snakes on Wall Street to take everything you own. They can cause a stock to rise at their whim and without any regard to fundamental reason. It usually does not make sense to bet against the sweat and toil of hard-working people.

Stock and Fund Update

Click the following link to see sorted performance of stocks and funds with hold/avoid signals. In the past, they were included in this email message but now display them on the website. This is available to the public, while the specific buy and sell transactions are limited to members only. The below table is public information and not updated on a frequent basis.

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

Economic Conditions – Inflation, Currency, Interest Rates

Click the above heading for a summary of hard economic indicators.

As stated the past thirty-two weeks, falling interest rates typically accompany stock market bullish behavior. The primary exception to stock market bullishness with declining interest rates is inflation or deflation.

Commodity prices continue to skyrocket. That, coupled with the pitfalls of voodoo bookkeeping and fake wealth from real estate, justifies a bearish stock market. The more the government caters to the losers in this, the more bearish the stock market will behave.

As stated last week, economic health is becoming more of an issue. As the election year winds down, do not expect legislative stimulant in 2009. Government continues to spend and spend. Most of those dollars are inefficient. Rising energy costs, coupled with excessive regulatory constraints is going to collide with economic requirements for stock market bullishness. Once that happens, the bear market, now underway, will gain momentum. That coupled with the threat of inflation could expand this bear market for several years. The last time the government meddled in capitalistic imperfections sustained a bear market lasting over a quarter of a century. Even then, it took a world war to stop the madness. It usually takes madness to stop madness.

Also as stated last week, there are many “non-productive” dollars covering unbelievable stupidity in the financial markets. That, along with being an “importer” should further erode the U.S. dollar. That will eventually lead to a weakening economy in addition to inflationary threats. Universal law holds that the weak should expire from participation. The Federal Reserve and politicians are violating Universal Law.

As stated the past seven weeks, 2009 is setting up to be a solid recession and bear market. Historical standards support rising interest rates next year that will encourage the bear. Increased political mumbo-jumbo of protectionism enhances the probability of stock market calamity.

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 is up 421.2% since the April 13, 2001 buy signal. Its annualized growth since that buy signal is 57.8%. It moved to the north in 55 of the past 93-weeks. It has been bullish in 26 of the last 44-weeks. This fund has been bullish in 11 of the last 19-weeks. It was strongly bullish last week, following two weeks of solid bearishness.

Fidelity Gold, Fund #28, is up 8.4% since its buy signal on September 7, 2007. It is annualized at 10.5% since that buy signal. This fund was solidly bullish in 10 of the past 19-weeks. It enjoyed bullish behavior last week, following bearishness in the previous three weeks.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 477.1% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 80.4%. This fund has been bullish in nine of the last 17-weeks. It has been bullish the past four weeks.

Vanguard Energy #18, VGENX, is up 278.6% (annualized at 52.7%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 273.7% (annualized at 59.4%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 233.8% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 47.5%.

These energy related funds were mixed last week, following bullish behavior in the previous four weeks.

Investors in these funds are supporting a 1970’s type of market with high inflation and high oil prices. 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. However, keep in mind OPEC can very quickly reverse this trend. They have done it before and remain capable of doing it again.

The SQI (Consolidated Short-term and Quick-term Indicant) model signaled buy for the GLD-ETF#11 on August 3, 2005. It is up 104.4% since then. It is annualized at 35.7%. This fund has been bullish in 30 of the past 43-weeks. It has been solidly bullish in 11 of the last 18-weeks. It was bullish last week.

The SQI signaled buy for ETF#03 – Energy and Natural Resources on March 26, 2003. It is up 298.3% (annualized at 56.1%). This fund has been bearish in 13 of the past 23-weeks. It has been bearish the past two weeks.

Mid-term Indicant Positions – Ten U.S. Indices

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

The Mid-term Indicant signaled bull on March 20, 2008 for all ten major indices. However, since then there have been several bear signals. There are four remaining bull signals. They are up by an average of 7.8% since the March 20, 2008 bull signals. They are annualizing at 30.8%. The most bullish is the S&P400 index. It is up 11.0%. It incurred only minor bearishness during last week’s bearish aggressions. The Mid-term Indicant attributes did not shift bearishly enough to prompt bear signals for the remaining bulls.

The Mid-term Indicant Dow Jones Industrial Average performance is at $36,661,279

That beats buy and hold performance of $1,801,718 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $180,217. That beats buy and hold’s $129,095 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $227,792. That beats buy and hold’s $83,429 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 1,934.8%, 39.6%, and 173.0%, respectively, for these indices as of this past week.

You will notice the percentages changed from last week since the buy and hold values worsened while the Indicant maintained its values. The reason the Mid-term Indicant gained a competitive advantage over buy and hold is due to the market’s bearish behavior last 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% covering 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.

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.

Note from April 5, 2008: Enron will be removed from Indicant tracking later this year. It was removed from the Dow Utility Index several years ago. It is now a penny stock, but the Indicant kept tracking it at the request of members. Its low cost nature is not friendly to Mid-term Indicant assessment due to small price changes and corresponding large percentage impact. The Mid-term Indicant is not designed for penny stocks. Although recovery is always possible, this stock has become too busy to track. This position will be re-accessed based on member feedback as the year progresses.

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 signaled buy for ProFunds Ultra Short on January 18, 2008. It was down 32.3% since the Mid-term Indicant signaled sell on September 15, 2006 until the buy signal on January 18, 2008. Historical norms of market cyclicality suggested the next buying opportunity for this fund should not occur until 2009.

Uncharacteristically, the Mid-term Indicant again signaled buy for this fund this weekend. The Mid-term Indicant is influenced in part by seasonal and historical influences. This year should be bullish, based on historical standards, which would be bearish for this fund. However, the Tangential model gaining influence and thus the reason for the buy signal. The Tangential model is bearishly biased now and will be more tolerate of fluttering behavior than the buy and sell signals earlier this year.

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 309.1% (annualized at 18.5%) since the Long-term Indicant signaled bull 868-weeks ago. Economic data is the primary influence on the Long-term Indicant. Recessions, deflation, inflation, and unreasonable interest rates 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: One of thirty. Zero non-contrarian; thorough non-bullish attribute.

Quick-term Yellow Bears/Threats: Seventeen of thirty.  Non-bearish support non-existent with majority yellow bears.

Quick-term Non-Bearishness: QTI differential is bearish 5.9%. Solid bearish support.

Short-term Non-Bearishness: Breakout/breakdown differential is bearish 3.6%; solid bearish support.

Force Vectors: Favoring bearish behavior.

Vector Pressure: Nine in bullish domains. After holding steady with bullish support since early April, this attribute continues to wane in that support. It is now with minority support, which is increasingly non-bullish. It is now offering no resistance to bearish aggression.

STI Tangential Support: All major indices are without tangential protection. Bear can roam at free will.

Immediate Tactics: Buy signals for non-contrarian ETF’s will be limited with the bearish threat now underway. Sell signals are aggressively applied.

Current Quick-term Bias: Bearish.

Overall Market Status: Solid bearish bias.

Profit Potential from Naked Options: Volatility should be expected until all bearish yellow curves are sloping bearishly.

Volume: Lethargic, but consistent, with seasonal behavior.

Quick-term/Short-term Indicant Stock Market Report Details

To view the STI-Tangential Protection for ten major indices, click here.  

As stated the past several days, all major indices continue with bearish configurations. Bearish yellow is cycling south. Force Vectors are in bearish domains. None have tangential protection against bearish ambition.

The STI-Tangential model will not signal bull until Force Vectors are higher than X and the index is higher than Red. This feature reduces fluttering. Keep in mind volatile behavior is most common at the beginning and ending of each cycle. A bull cycle has now ended and a new bear cycle is now underway. So, as stated the past few days, do not be surprised at wild fluctuations.

From May 4, 2008-Weekly Stock Market Report – At that time there was a 97% probability the major indices and most of the non-contrarian ETF’s would be below their early April values at some future point.

From June 19, 2008 Daily Stock Market Report. There is an 80% probability the NASDAQ will fall below 2330 in this bearish cycle from 2462 or by 6.6%.

From June 20, 2008 Daily Stock Market Report-There is a 59% probability the NAS100 will fall below 1774 or by 8.0% from this date. The S&P400 has a 63% probability of falling below 817 or by another 4.4%.  The April 28, 2008 Daily Stock Market Reported stated, there was a 97% probability the S&P600 would be below its early April values and repeated in the May 4, 2008 Weekly Stock Market Report. On April 9, 2008, the S&P600 closed at 363.99. In the ensuing Short-term Bull cycle, it peaked at 401.93 for a 10.4% gain. Although the Indicant does not do forecasting, the Reverse Tangential line (declining green line) suggests the S&P600 will fall back below its April 9 closing of 363.99 at some future point. It is unknown if the future point will occur in the current bear cycle underway or in 2009. Such a prognosis, regardless of timing, suggests there is no meaningful or sustainable bull market on the foreseeable horizon.

The Short-term Indicant signaled bear on May 20, 2008 for the Dow Jones Industrial Average and on May 21, 2008, for the NASDAQ. The Short-term Indicant is influenced, in part, by historical seasonality, which has become too popular to be effective. It will eventually be replaced by the more esoteric tangential model. The Dow is down 7.7% and the NASDAQ is down 1.7% since their respective bear signals. The bear has moved from having a tactical advantage to a position of dominance.

Please read on. Click here to see the Short-term Indicant’s history.

Both Indicant Volume Indicators  are in the early stages of escaping their lethargy. Today’s volume was high on bearish aggression. That suggests the bear is gaining propulsive intensity.

SQI Report Card (Consolidated Short/Quick), Status, and Charts

There were no buy signals and one sell signal. Although there were no buy signals, the SQI is signaling hold for nine-ETF’s. They are up by an average of 46.5% (annualized at 24.7%) since their respective buy signals an average of 97.1-weeks ago. In addition to the sell signal, the SQI is avoiding 21-ETF’s at this time. They are down by an average of 4.7% since their sell signals an average of 5.0-weeks ago.

The reason the time lapse between buy signals dropped from 103.7-weeks to 88.0-weeks was due to Thursday’s sell signal for ETF#08. It was bought on June 6, 2006 at $35.53. It received a sell signal on Thursday at $72.33 for a gain of 103.6%. This also hurt the hold percentage gain since its performance was above the average performance. Its holding gain is eliminated from the averages when it is sold. It will now join the “avoid” averages.

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 nine 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 seven-ETF’s. They are up an average of 220.4% (annualized 92.1%) since the STI signaled, buy, an average of 123.1-weeks ago.  Although there were no sell signals, there are 24-ETF’s with avoid signals. They are down by an average of 4.4% since their sell signals an average of 4.7-weeks ago.

Since Thursday’s ETF#08 holding gain of 103.6% was below average in this category, the overall average increased as its sell signal eliminated it from the holding averages. It is now among the “avoid” statistics.

The Short-term Indicant is more active in buying/selling than the Consolidated model. The Quick-term Indicant, which follows, is even more active.

Quick-term Report Card, Status, and Charts

There were no buy signals and one sell signal.  Although there were no buy signals, the Quick-term Indicant is signaling hold for eight-ETF’s. They are up by an average of 42.8% (annualized at 37.5%) since the QTI signaled buy an average of 58.8-weeks ago.  In addition to the sell signal, the Quick-term Indicant is avoiding 22-ETF’s. They are down by an average of 4.9% since their sell signals an average of 3.7-weeks ago.

ETF#08 received a Quick-term sell signal on June 6, 2008 and did not disrupt the averages in this category. It is down 4.8% since that particular sell signal.

Current Strategy – All major indices do not have tangential support. Most are yellow bears. Any bullish expressions should be viewed as bullish spurts in the face of bearish trend and bearish cyclicality.  However, several of the ETF’s, including a few of the non-contrarians, are not possessing increasing bearish attributes. Some of them will not go down with a bear market.

There is some fluttering, as the bull and bear are waging significant battles to win dominance over the other. The Quick-term Indicant has been and will continue to be quick to sell.

Conflicts Between the Short-term and Quick-term Indicants

A solid bearish bias originated last Thursday, June 12, 2008, with all major indices without tangential support. There are now only 19-hold signals and 70-avoid signals for ETF’s and thus with a significant bearish bias.

Quick-term Indicant Bull/Bear Health Report

Click the above heading to view the charts.

Seventeen of the 30-ETF’s are below their respective bearish yellow curves. This is non-bearish. The average relative position of all thirty ETF’s is below bearish yellow by 0.0001%. This is now without non-bearish support following fifty-six consecutive trading day with non-bearish support. This is now solidly supporting bearish behavior.

Only one ETF is above its bullish red curve. This attribute is now solidly non-bullish. All thirty ETF average positions are below bullish red by 5.9%. which is non-bullish.

The lone Red Bull is contrarian, ETF#03-Natural Resources. It only takes one non-contrarian red bull to stifle dynamic bearish behavior. Now, none exist.

The QTI differential is bearish by 5.9%. This is the ninth consecutive trading day of a bearish reading after thirty-six consecutive trading days of bullish support.

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, which is no longer providing bullish support.

The average distance from breakout contact is 15.7%. Double digit variances from breakout contact for 116-consecutive trading-days has been non-bullish.  After nearing a single digit expression a few weeks ago, the bear was obviously offended by this near excursion with near-complete bullish dominance. The market has been bearish since then.

Two of the thirty ETF’s are contacting their breakdown lines, which is bearish.

The average distance between the price and breakdown is 12.0%. This configuration is providing non-bearish support, which has been the case since March 2003, but being threatened with attributes similar to those preceding the 2001-02 bear market.

The breakout/breakdown differential is bearish by 3.6%. As stated in Thursday’s Daily Stock Market Report, the bear should win the fluttering battle. As you can tell from today’s bearish aggression, the bear won.

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.

Seven Force Vectors are in bullish domains, which is non-bullish. As stated the past few days, their configurations support bearish bias.

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 after Friday’s close.

The market performed perfectly to Wednesday’s put option buy signal with Thursday’s bullishness and Friday’s ambitious bear.

Nine of the thirty ETF Vector Pressures are in bullish domains. After fifty-two consecutive trading days offering bullish majority support, this attribute shifted to majority-bearish support early this past week.

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

A solid new bearish bias shift was born today, June 11, 2008.

ProFunds Ultra Short mutual fund moves inversely to the QQQQ by exponential amounts. See the Mid-term Indicant for its status.

The Quick-term and Short-term Indicant tracks ETF#31, QID, which is the ETF cousin to ProFunds Ultra Short. This ETF is relatively new and has not yet developed enough data to formally track its outlook. It is excluded from overall ETF statistics because it is purely contrarian. It is designed to move bullishly during bear markets and bearishly during bull markets. This exclusion is required for convergent/divergent monitoring.

The Indicant signaled buy for QID  on June 11, 2008. It is down by 0.7% since then. Its Force Vector is solidly bullish even though directionally bearish. Its Vector Pressure remains in bearish domains, but closing in fast on bullish domains. The buy signal was premature, but committed. Until Vector Pressure crosses into bullish domains, there will be volatility. If the market shifts to bullish bias, this ETF will receive a quick sell signal. Keep in mind its behavior is exponential to market behavior. As stated in last Thursday’s Daily Stock Market Report, this fund is increasingly attractive to at the very least touch yellow at $41.71 from its current price of $38.99. It closed $41.06 on Friday.

Other Contrarian Funds

ETF#03-Natural Resources   - is up 50.9% (annualized at 30.3%) since the Quick-term Indicant signaled buy on Oct 25, 2006. Although it cooled off from its sizzling red hot status, it remains a solid red bull. It gave up the last three days of bullish gains with bearish behavior the last two days of the week.

ETF#11-Gold and Precious Metals   is up 104.4% since the Quick-term Indicant signaled buy on August 3, 2005. It is annualizing at 35.7%. It remains in neutral territory with strengthening Force Vectors but negative Vector Pressure. Pressure is shifting toward bullish domains, though. This fund simply lacks quick-term commitments in either direction. It has also been bullish the past five days, but mildly so. The negative Vector Pressure is somewhat of a concern, but not configuring to justify a sell signal.

ETF#14-Long Government  is down 2.1% since the May 5, 2008 sell signal. Its Force Vector and Vector Pressure remain inside bearish domains. It is also a yellow bear. The configuration remains weak. It has been mildly bullish the past three days. This fund has some strategic risk. The dollar’s weakness and inflationary threats will eventually stimulate increased interest rates. With that, this fund, fundamentally, would endure bearish behavior. The contrarian movement to that fundamental prognosis would be high demand for safety purposes, depending on the nature of economic behavior.

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

Short-term Indicant for Tangential Analysis

Divergence versus Convergence

Combined bullish convergence and divergence in ten of the past thirteen weeks was powerfully bullish. This bullish convergence with some bullish divergence configurations during that bull cycle suggests 2008 still has a significant chance to finish the year on a bullish note.

The stock market endured was bearish last week with bearish divergence. Energy and commodities were bullish while most other stock equity sectors were bearish.

As stated last week, the Quick-term Indicant and Short-term Indicant suggest some potential bearishness on the near-term horizon.

Nothing has changed; expect more bearishness. Keep in mind, OPEC is the wild card.

Indicant Conclusion

Commentary here has been bearish the past several weeks. However, OPEC can influence a reversal to bullish bias very quickly and dynamically.

Keep up with the daily stock market report as the Quick-term attributes can shift quickly. As stated last week, they are increasingly favoring the bear.

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 

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

06/22/08

June 15, 2008 Indicant Weekly Stock Market Report

Volume 06, Issue 03 ISSN 1526 6516 © The Indicant Stock Market Report

This Week’s Report

Fundamentals May Shift – The OPEC Wild Card

If the Saudis actually increase production by 500,000-barrells per day, do not be surprised at an emotionally-based bullish rally. Oil prices would fall on the news. The stock market would express significant bullishness; at least for another Short-term Bull cycle. There are a few questions before determining sustainability to such a rally. Would the emotionally-based rally be predecessor to a fundamental bullish shift?

Will increased production lower prices without disrupting consumption patterns? The current high price is influencing demand depressants. Conservation is the order of the day. If price reductions stimulate increased consumption, then fundamental shifts will not occur.

If other OPEC members follow the Saudi lead, then prices could ebb lower. This would do two things. It would reduce inflationary pressures and it would be an economic stimulant.

If the increased production level disappoints the current “rumor” then expect a deep bearish response from the overall stock market.

Technically, the stock market remains a short-term bear. The Mid-term Indicant remains mixed with some bearish and some bullish attributes. Historical standards suggest the market should end 2008 on a bullish note. Rumors are currently conflicting with technical readings. The rumors are bullish and the technical readings are bearish for the most part.

There is an old saying; buy on the rumor and sell on the news. This is generally true. The problem with it is there are thousands of rumors for each one that manifests to reality. If one were to trade on all rumors, one would be a nervous trader and lose a lot of money.

At some future point, either the Middle East oil producing capacity will be depleted or there will be significantly reduced need for oil. Those in power in the Middle East do not find either condition favorably. The former issue is very long-term, while the latter is of a shorter-term potential. At $200-plus oil, the perception of Nuclear power risk will wane. The risk/economic benefit will stimulate Nuclear producing energy in addition to other alternative forms of energy. For example, there are already air-powered auto engines that do not need any gasoline. If that engine could be successfully marketed and developed into the automobile industry, OPEC would be hurting.

OPEC members understand economics. There is a good chance the current rumor of increased production, at the very least, for price stabilization purposes, could manifest. This should depress inflationary threats; at least for a while. The stock market would then be bullish for a cycle or two.

The first major cycle of oil peaked at around $36 per barrel in 1981. OPEC over the next five years lowered it to $9 per barrel. This ignited a secular bull market. OPEC has the potential to contribute economic stimulus much faster and more dynamically than any other organizational entity. The difference is the two-billion or so additional capitalists that wants their oil. It is unlikely OPEC can drive the price down by 75% again, but just mere stability would be bullish and assuming economic stability will accompany such stability.

There are other serious economic issues confronting the U.S. such as the sub-prime lending crisis, Clintonian voodoo bookkeeping, and financial institution’s troubled balance sheets. However, the rising price of oil, if continued unabated, will eventually lead to sour economic conditions around the globe. Regulatory constraints imposed by governments, whose decisions are without risk and consequently poorly thought out and generally destructive also impose economic hardship. That, coupled with the tyranny by the majority inherent in democracies can unleash a powerful bear market. If there is an emotionally based bullish stock market early next week on OPEC actions, keep in mind, the other economic concerns confronting the stock market.

The Quick-term and Short-term Indicant will not generate signals on rumors. It is purely technical. So, one may make a good decision by acting on the rumor. If you do and then a few days or weeks later see the various Indicant models signal along the lines of bullishness, you will be in ahead of the cycle.

Keep your eye on the daily stock market report. It will help you differentiate sustainability versus spurts regardless of the directional intensity underway.

Weekly Buy/Sell Summary – Stocks and Funds – Mid-term Indicant

Click this sentence for a graphical summary of what follows. Simply scroll down the page to see graphical and detail content of this section.

The Mid-term Indicant generated no buy signals and 23-sell signals. There have been 91-buy signals since February 1, 2008. There have been 232-sell signals since October 26, 2007.

Although there were no buy signals, the Mid-term Indicant is signaling hold for 181 of the 345-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 161.3%. That annualizes to 61.5%. The Mid-term Indicant has been signaling hold for these 181-stocks and funds for an average of 136.3-weeks.

In addition to the sell signals, the Mid-term Indicant is avoiding 141-stocks and funds of the 345- 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 32.2-weeks ago.

One year ago, on June 15, 2007, the Mid-term Indicant was holding 314-stocks and funds out of the 345 tracked for an average of 105.3-weeks. They were up by an average of 131.5% (annualized at 64.9%). There were 31-avoided stocks and funds at that time. Those avoided stocks and funds were down an average of 14.2% since their respective sell signals an average of 27.8-weeks earlier.

The Mid-term Indicant was signaling hold for 212-stocks and funds of the 345-tracked two years ago on June 16, 2006. They were up by an average of 142.1% (annualized at 67.0%) since their respective buy signals an average of 110.3-weeks earlier. The Mid-term Indicant was avoiding 124-stocks and funds at that time. They were down an average of 6.0% since their respective sell signals an average of 14.0-weeks earlier.

There were 208-stocks and funds with hold signals on June 17, 2005 since their buy signals an average of 91.1-weeks earlier. They were up by an average of 103.4% (annualized at 59.0%). There were 112-avoided stocks and funds at that time. They were down by an average of 24.7% from their respective sell signals an average of 59.7-weeks earlier.

On June 11, 2004, the Mid-term Indicant was signaling hold for 242-stocks and funds out of 296-tracked. They were up by an average of 72.0% (annualized at 70.6%) since their buy signals an average of 53.0-weeks earlier. The Mid-term Indicant was avoiding 53-stocks and funds at that time. They were down by an average of 14.6% since their sell signals an average of 20.2-weeks earlier.

Five years ago, on June 13, 2003, there were 289-hold signals for stocks and funds out of the 296 tracked by the Mid-term Indicant at that time. They were up an average of 45.4% (annualized at 124.1%) since their respective buy signals an average of 19.0-weeks earlier. There were only three avoided stocks and funds then. They were down an average of 26.1% since their respective sell signals an average of 26.8-weeks earlier.

On June 14, 2002, there were only 93-stocks and funds with hold signals from the listing of 294-tracked by the Mid-term Indicant at that time. They were up 34.7%, annualizing at 49.5%. There were 188-avoided stocks and funds then. They were down by an average of 22.3%.

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

Comments about Mid-term Indicant Buy and Sell Signals This Weekend

As stated last week, some mutual funds and stock with avoid signals are experiencing small gains. The Short-term Indicant Tangential model is now influencing the Mid-term Indicant. That is due, in part, for continuing to avoid these.

All of the major indices are now without tangential protection against the bear. Fundamental factors may be shaping up for a new bull cycle to start very soon. A last bull cycle and the new bear cycle are very close right now where volatile expressions are commonplace. So, be guarded against extreme near-term plays.

The Quick/Short-term Indicant Stock Market Report

The Indicant website maintains the last twelve months of daily reports on an annual basis. These weekly reports are maintained on the website for much longer periods. Beginning in March 2006, the daily stock market report for the last trading day of each week is imbedded in this weekly report. This allows web-based retention records of the daily report for much longer than the last twelve months.

The Daily Indicant Stock Market Report for the last trading day of the current week is near the conclusion of this weekly stock market report. It is emailed each weekend, separately, so you can read it, either as a separate document, or in this document.

The Indicant Stock Market Report’s Secular Market Blend

The Dow is up 68.9% since its secular low on October 9, 2002. The NASDAQ is up 120.3% and the S&P500 is up 75.1% since then. The small cap index, S&P600, is up 126.7%. Even with the S&P600’s dynamic bearish behavior the last several months, it still leads the major indices in bullish performance since the birth of the secular bull on October 9, 2002. As stated the past several months, the secular bull that originated on October 9, 2002 no longer remains solid. A secular bear could indeed be unfolding.

The Dow is down 13.1% since its last closing peak on Oct 9, 2007. The NASDAQ is down 14.2% since its last peak on Oct 31, 2007. The S&P600 is down 13.1% since its last closing peak value on Jul 19, 2007. The Small Caps Index was bearish last week with a 0.8%-loss, while the blue chips were slightly bearish with a 0.8%-loss.  The NASDAQ was bearish with a 0.8%-loss.

The NASDAQ is down 51.4% since its last weekly secular peak on March 9, 2000. The S&P500 is down 11.0% since its similar secular peak on March 23, 2000. The Dow is up by a mere 5.0% since January 13, 2000 when it peaked from the 1990’s roaring bull. It has expressed no timidity in roaming above the new peak area, while the S&P500 set a new record in early 2007 and then immediately succumbed to non-bullish influences. The NASDAQ needs to climb 105.7% to achieve a new record high. Do not be surprised if this occurs after the year, 2025.

The Dow is down 7.2% so far this year. The NASDAQ is down 7.5% this year. These conditions are incongruent with historical standards. This year should be a bullish year, based on those standards. The stock market occasionally delights in violating historical standards. This always happens when such standards gain in popularity. The current bullish cycle is lending support to historical standards, but it will be challenged, during the dog days of summer. We saw the beginning of that four weeks ago and earlier this past week.

The NASDAQ year-to-date performance was bearish by 14.1% through this week in 2001. Keep in mind the NASDAQ finished 2001 down by 23.3%.  This year was configuring with 2001 similarity, but the current bull cycle disrupted that similarity for several weeks. There will be additional bearish cycles in 2008. As stated the past few weeks, do not be surprised at increased bearishness in the next few weeks, but with significant volatility. However, increased OPEC oil production could have an elevating effect on the market, but other economic fundamentals also require address.

The NASDAQ was down by 23.3% through this weekend in 2002. Some of you recall the dynamic bear market in 2002, where the NASDAQ finished that year down by 31.5%. The NASDAQ YTD 2003 performance was up by 21.8%. It finished up in that solidly bullish year by 50.0%. It was down on this weekend by 0.2% in 2004. It was also down by 4.9% in 2005. Many of you recall that 2004 and 2005 were meandering bear markets. In 2006, it was down by 6.0% and up by 6.9% at this time last year.  

As previously stated, so far this year, the DOW30 is down 7.2% and the NASDAQ down 7.5%.

This paragraph, originating in the March 30, 2008 Weekly Stock Market Report, will remain unchanged until it becomes irrelevant. Bearish behavior this year contradicts historical standards whereby the presidential election year is typically bullish. The political establishment and their appointees are doing their part to support bullish behavior with interest rate cuts and tax rebates. On the other hand, the stock market appears to be short of buyers, who at one time refinanced their homes to buy stocks. Their replacement buyers are expected to be foreign investors, where the weak dollar is an added bonus for those who desire bullish market behavior. However, rising commodity prices could dampen that potential bullish effect.

May 2, 2008 comment regarding the previous paragraph. The Fed’s mild interest rate adjustment to the south indeed strengthened the dollar. Keep in mind the U.S. is a net importer. This increases the supply of dollars abroad. As long as the U.S. is a net importer, there will be a continuing increase in supply of dollars, which will continuously keep a “real economic” lid on its value.

The bullish bias shift on August 15, 2006 expired on January 4, 2008. The heart and soul of bullish seasonality also expired on January 4, 2008.  The Dow increased 14.0% since the bullish bias shift on August 15, 2006. The S&P500 was up 9.8% and the NASDAQ up by 18.4%.

A bearish bias shift was identified by the Quick-term Indicant on January 4, 2008. It lasted until March 11, 2008. The Dow was down 5.0% and the NASDAQ was down 9.9% during that time. On March 11, 2008, the Quick-term Indicant shifted away from bearish bias. Although the Quick-term Indicant endured fluttering since the March 11 bearish bias shift expiration, the NASDAQ is up by 8.8% since then. This has been an above average bullish rally. It is now over, but certainly does not mean a new one can start on Monday.

As previously stated in the daily stock market reports, the Quick-term Indicant endured two violations since March 11 and encountered fluttering behavior until April 11. On April 29, 2008, the Quick-term Indicant conformed to its standards of Red Bull recognition with positive Vector Pressure and signaled bullish bias. Several buy signals for ETF’s were generated on that day. Since then, the Dow is down 4.1% and the NASDAQ is up 1.2%. The bullish cycle originating in early March has expired. That does not mean a deep bearish cycle is about to unfold, with meandering behavior as a possible alternative. However, the Saudi increased oil production may indeed be enough to set off a new bullish cycle and fulfill historical standards of an election year bullish conclusion.

The Quick-term Indicant signaled sell for ETF’s that correlate with blue chips and large caps the past two weeks ago in anticipation of increasing bearish bias. It signaled sell for all non-contrarian ETF’s to major market indices in anticipation of increased bearishness. This could be reversed quickly depending on OPEC actions on the immediate horizon.

As stated last week, the presidential pre-election year of 2007 was below average (+10.5%) with the Dow gaining 6.4%. This was the smallest gain since Reagan’s 2.3% gain in 1987, when the market endured sharp sell off in October of that year. These seasonal standards appear to be losing their influence due to the phenomenon of commonality.

Where is the market headed in 2008, the presidential election year, which is the second most bullish year on the four-year presidential election cycle? If historical standards prevail, which is bullish, the market is setting up nicely for a tremendous profit this year. All that is needed is a bottom to this bear, as 2008 should finish up on the year, based on historical standards and falling interest rates. The problem confronting this scenario is two fold; economic conditions and inflation.

Depending on bearish magnitude and breadth, a violation to historical standards could be underway.

The fundamental requirements are limited inflation and economic stabilization. Fundamental influences will always be the primary force of directional intensity. Three of the big four are okay for the time being; inflationary threats have cooled but again threatening with a significant increase in the CPI, as oil continues setting new highs, but the Saudi influence could help this. Interest rates remain low, which is bullishly favorable. Deflation is not threatening. In addition to a resurging CPI, another unfavorable condition for stock market bullishness is the weak economy. The unknown is voodoo bookkeeping. The market reacts to corporate earnings. If those earnings are perceived as fiction, the market will move bearishly. Fictional financial representations will enhance stock market bearishness. The capital market system requires absolute honesty from the bookkeepers.

Keep your eye on the daily stock market report.

Stop Loss Management

The Mid-term Indicant recommends a stop loss of 10% due to increasing bearish influences.

Use a 10% trailing stop loss or the yellow or green values you will find on the tables for your longer-term hold positions. If your stock or fund is above the bearish yellow curve and below the green curve, set your stop loss equal to the greater of the yellow curve and the trailing stop loss. If your stock or fund is above the green curve, set your stop loss at no less the value of the green curve or 10% trailing, whichever is greater. If your stock or fund is above the red curve and you bought at the Mid-term Buy signal, you should use the 10% trailing stop loss.

If you are up by triple digit amounts and enjoy your ownership of the stock or fund, then use a 20% trailing stop loss or the slow moving blue curve price. If you really enjoy holding the stock, keep a close eye on the management. Dilettante managers have a way of worming into the business. Watch closely for cronyism and lazy-hazy management dialog. Keep your eye on lavish spending and excessive concerns about social issues. Those types are more interested in burning your money for their pleasures, as opposed to making you money. High performing companies remain focused on honoring the investments made by their shareholders.

In a few instances, you will see a hold signal for a stock or fund that is down from its buy signal or below one of the above conditions for selling. If you are more of a trader than an investor, feel free to buy stocks and funds with those “bearish” attributes. They are configured for a possible rebound, while at the same time, it is important to set the stop losses mentioned in this report. Use the Quick-term Indicant as a guide in your decision-making processes. If the stock price is falling in a Quick-term Bear market, it is not advisable to buy.

Do not short on stocks if they are up from an avoid signal. Stocks go up more often than they go down. Stocks have a tendency to march to their own drumbeat when rising. Some stocks rise and continue to rise in the most severe of bear markets. Short selling opens up an opportunity for the snakes on Wall Street to take everything you own. They can cause a stock to rise at their whim and without any regard to fundamental reason. It usually does not make sense to bet against the sweat and toil of hard-working people.

Stock and Fund Update

Click the following link to see sorted performance of stocks and funds with hold/avoid signals. In the past, they were included in this email message but now display them on the website. This is available to the public, while the specific buy and sell transactions are limited to members only. The below table is public information and not updated on a frequent basis.

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

Economic Conditions – Inflation, Currency, Interest Rates

Click the above heading for a summary of hard economic indicators.

As stated the past thirty-one weeks, falling interest rates typically accompany stock market bullish behavior. The primary exception to stock market bullishness with declining interest rates is inflation or deflation.

Commodity prices continue to skyrocket. The exception is gold, which has recently been moving counter-productively to other commodities. A short-term explanation for this is that the human species can live just fine without it. Oil, on the other hand, is no longer a luxury. Since whale oil and the candle stick industries were obliterated with the development of petroleum industry, oil is a staple requirement for daily existence. Gold never has been a staple requirement. It is merely a psychological fulfillment. Of course, gold’s appeal has thousands of years of demonstrated growth value that cannot be argued with even though somewhat nonsensical.

Economic health is becoming more of an issue. As the election year winds down, do not expect much legislative stimulant in 2009. Government continues to spend and spend. Rising energy costs, coupled with excessive regulatory constraints is going to collide with economic requirements for stock market bullishness. Once that happens, the bear market now underway will gain momentum. That coupled with the threat of inflation could expand this bear market for several years.

There are many “non-productive” dollars covering unbelievable stupidity in the financial markets. That, along with being an “importer” should further erode the U.S. dollar. That will eventually lead to a weakening economy in addition to inflationary threats. Universal law holds that the weak should expire from participation. The Federal Reserve and politicians are violating Universal Law.

As stated the past six weeks, 2009 is setting up to be a solid recession and bear market. Historical standards support rising interest rates next year that will encourage the bear. Increased political mumbo-jumbo of protectionism enhances the probability of stock market calamity.

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 is up 409.6% since the April 13, 2001 buy signal. Its annualized growth since that buy signal is 56.3%. It moved to the north in 54 of the past 92-weeks. It has been bullish in 25 of the last 43-weeks. This fund has been bullish in 10 of the last 18-weeks. It was deeply bearish last week, following bearishness the week before.

Fidelity Gold, Fund #28, is up 5.1% since its buy signal on September 7, 2007. It is annualized at 6.6% since that buy signal. This fund was solidly bullish in nine of the past 18-weeks. It has been bearish the past three weeks.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 456.7% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 77.3%. This fund has been bullish in eight of the last 16-weeks. It has been bullish the past three weeks.

Vanguard Energy #18, VGENX, is up 282.7% (annualized at 53.7%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 263.4% (annualized at 57.4%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 232.0% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 47.4%.

These energy related funds were mixed last week, following bullish behavior in the previous four weeks.

Investors in these funds are supporting a 1970’s type of market with high inflation and high oil prices. 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. However, keep in mind OPEC can very quickly reverse this trend. They have done it before and remain capable of doing it again.

The SQI (Consolidated Short-term and Quick-term Indicant) model signaled buy for the GLD-ETF#11 on August 3, 2005. It is up 97.2% since then. It is annualized at 33.5%. This fund has been bullish in 29 of the past 42-weeks. It has been solidly bullish in 10 of the last 17-weeks. It was bearish last week.

The SQI signaled buy for ETF#03 – Energy and Natural Resources on March 26, 2003. It is up 302.8% (annualized at 57.2%). This fund has been bearish in 12 of the past 22-weeks. It was bearish last week.

Mid-term Indicant Positions – Ten U.S. Indices

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

The Mid-term Indicant signaled bull on March 20, 2008 for all ten major indices. However, since then there have been several bear signals. There are four remaining bull signals. They  are up by an average of 8.6% since the March 20, 2008 bull signals. They are annualizing at 36.8%. The most bullish is the S&P400 index. It is up 11.9%.

The Mid-term Indicant Dow Jones Industrial Average performance is at $36,661,279

That beats buy and hold performance of $1,872,410 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $180,217. That beats buy and hold’s $133,219 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $227,792. That beats buy and hold’s $85,107 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 1,858.0%, 35.3%, and 167.7%, 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% covering 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.

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.

Note from April 5, 2008: Enron will be removed from Indicant tracking later this year. It was removed from the Dow Utility Index several years ago. It is now a penny stock, but the Indicant kept tracking it at the request of members. Its low cost nature is not friendly to Mid-term Indicant assessment due to small price changes and corresponding large percentage impact. The Mid-term Indicant is not designed for penny stocks. Although recovery is always possible, this stock has become too busy to track. This position will be re-accessed based on member feedback as the year progresses.

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 signaled buy for ProFunds Ultra Short on January 18, 2008. It was down 32.3% since the Mid-term Indicant signaled sell on September 15, 2006 until the buy signal on January 18, 2008. Historical norms of market cyclicality suggested the next buying opportunity for this fund should not occur until 2009.

The Mid-term Indicant again signaled buy for this fund on April 12, 2008 and signaled sell on May 2, 2008. Unfortunately, it was sold at a loss of approximately 11.9% on May 2. It is down 1.7% since that sell signal. It may offer more opportunities later this year or early next year.

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 352.8% (annualized at 19.5%) since the Long-term Indicant signaled bull 867-weeks ago. Economic data is the primary influence on the Long-term Indicant. Recessions, deflation, inflation, and unreasonable interest rates 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: Four of thirty with minimal bullish support. This bullish support is an aberration. 

Quick-term Yellow Bears/Threats: Ten of thirty.  Non-bearish support is now non-existent.

Quick-term Non-Bearishness: QTI differential is bearish 1.3%. Solid bearish support.

Short-term Non-Bearishness: Breakout/breakdown differential is bullish by 0.6%; an aberration.

Force Vectors: Favoring bearish behavior.

Vector Pressure: Fifteen in bullish domains. Thirteen lost since May 21.  After holding steady, this attribute’s bullish support is fading.

STI Tangential Support: All major indices are without tangential protection. Bear can roam at free will.

Immediate Tactics: Buy signals for non-contrarian ETF’s will be limited with the bearish threat now underway. Sell signals are aggressively applied.

Current Quick-term Bias: Bearish.

Overall Market Status: Red bull population was extinct this past week, but Friday’s bullishness resuscitated a few; an aberration. Solid bearish bias unfolding.

Profit Potential from Naked Options: Expect increased volatility with tangential support losses.

Volume: Lethargic, but consistent, with seasonal behavior.

Quick-term/Short-term Indicant Stock Market Report Details

To view the STI-Tangential Protection for ten major indices, click here.  

All major indices are now bears on a Short-term Indicant basis. None have tangential protection against bearish ambition. Most are yellow bears. Today’s bullish behavior was a bullish spurt against a bearish cycle.

The STI-Tangential model will not signal bull until Force Vectors are higher than X and the index is higher than Red. This feature reduces fluttering. Keep in mind volatile behavior is most common at the beginning and ending of each cycle. A bull cycle has now ended and a new bear cycle is now underway. So, as stated the past few days, do not be surprised at wild fluctuations.

The Short-term Indicant signaled bear on May 20, 2008 for the Dow Jones Industrial Average and on May 21, 2008, for the NASDAQ. The Short-term Indicant is influenced, in part, by historical seasonality, which has become too popular to be effective. It will eventually be replaced by the more esoteric tangential model. The Dow is down 4.1% and the NASDAQ is up 0.3% since their respective bear signals. The bear has moved from having a tactical advantage to a position of dominance.

Please read on. Click here to see the Short-term Indicant’s history.

Both Indicant Volume Indicators  are configuring again with a lethargic pattern. There was no volume support for today’s bullish behavior.

Keep in mind lethargic volume cycles are seasonal to daylight savings time, allowing the market to moved wildly in either direction without substantive cause. The increasing volume robustness is unseasonable, while demonstrating increasing bearish support.

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 11-ETF’s. They are up by an average of 51.2% (annualized at 25.6%) since their respective buy signals an average of 103.0-weeks ago. Although there were no sell signals, the SQI is avoiding 20-ETF’s at this time. They are down by an average of 1.9% since their sell signals an average of 4.3-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 nine 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 nine-ETF’s. They are up an average of 186.3% (annualized 76.5%) since the STI signaled, buy, an average of 125.2-weeks ago.  Although there were no sell signals, there are 22-ETF’s with avoid signals. They are down by an average of 1.9% since their sell signals an average of 4.1-weeks ago.

The Short-term Indicant is more active in buying/selling than the Consolidated model. The Quick-term Indicant, which follows, is even more active.

Quick-term Report Card, Status, and Charts

There were no buy signals and no sell signals.  Although there were no buy signals, the Quick-term Indicant is signaling hold for nine-ETF’s. They are up by an average of 38.9% (annualized at 38.4%) since the QTI signaled buy an average of 52.1-weeks ago.  Although there were no sell signals, the Quick-term Indicant is avoiding 22-ETF’s. They are down by an average of 2.2% since their sell signals an average of 2.7-weeks ago.

Current Strategy – All major indices do not have tangential support. Most are yellow bears. Any bullish expressions should be viewed as bullish spurts in the face of bearish trend and bearish cyclicality.  However, several of the ETF’s, including a few of the non-contrarians, are not possessing increasing bearish attributes. Some of them will not go down with a bear market.

There is some fluttering, as the bull and bear are waging significant battles to win dominance over the other. The Quick-term Indicant will be quick to sell. There were several sell signals the past few days. 

Conflicts Between the Short-term and Quick-term Indicants

A solid bearish bias originated yesterday with all major indices without tangential support. There are now only 24-hold signals and 66-avoid signals for ETF’s and thus with a significant bearish bias.

The remainder of this section will repeat throughout this week to that you can become familiar with this phenomenon.

The comment about being 97% confident the market will be lower than early April’s values at some future point; most likely in 2009, will be reinserted in this daily stock market report as soon as the current bullish bias expires. Here is one comment; the Dow is already below the stated value of the last tangential interaction. This will be discussed in the tour that is being written and to be published in a few weeks. The model is esoteric, which is a requirement for successful and happy investing.

Here are a few more details. By clicking the following link you will notice a green dash line constructed tangentially through the previous two yellow curves maximum points.

http://www.indicant.net/Members/Updates/STI-Mkts/STI-10-Indices/STI08a-DJ.htm

The successor maximum point is below its predecessor. In other words, this tangential line is decreasing, which is an uncommon one. This green tangential line intersected with the next sinusoidal yellow curve. A vertical green line is drawn from this point to help you spot it on the chart. Looking up from that intersection on April 7, 2008, the Dow rested at 12,612.43. Over the next few days, the Dow rose and peaked on May 6, 2008 at 13,020.83. On May 27, 2008, the Dow closed at 12,548.35, which is below the April 7, 2008 Dow. This phenomena occurs only during bear trends and continued testing suggests the market will be lower at some future point than where it is with such interactions about 70% of the time. The green dashed line is elevated slightly from actual tangential construction to help clarify this phenomenon.

Quick-term Indicant Bull/Bear Health Report

Ten of the 30-ETF’s are below their respective bearish yellow curves. This is no longer non-bearish. The average relative position of all thirty ETF’s is above bearish yellow by 2.3%. This is the fifty-second consecutive trading day with non-bearish support. This attribute is mixed with minimal non-bearish support and obviously weakening in that support.

Only four ETF’s are above their bullish red curves. This attribute is now solidly non-bullish. All thirty ETF average positions are below bullish red by 3.6%. which is non-bullish.

Three of the four Red Bulls are non-contrarian, which is non-bullish. It only takes one non-contrarian red bull to stifle dynamic bearish aggression. The bearish onslaught mentioned the past few days finally occurred last week. There were no non-contrarian Red Bulls last Wednesday and Thursday. The two new ones occurred on Friday, but will most likely succumb to bearish pressure in the next few days.

The QTI differential is bearish by 1.3%. This is the fourth consecutive day of a bearish reading after thirty-six consecutive trading days of bullish support.

Click the heading link in this section to view the charts. As earlier stated, there was no violent bullish response to Vector Pressure crossing into bullish domains from yellow bear status. That supported Quick-term bullishness.

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, which is no longer providing bullish support. After seven consecutive days of breakout contact four weeks ago, the bull became exhausted from such minimal effort. That adds to the recent claims of a tiring bull, which has since expired.

The average distance from breakout contact is 13.8%. Double digit variances from breakout contact for 111-consecutive trading-days has been non-bullish.  After nearing a single digit expression a few weeks ago, the bear was obviously offended by this near excursion with near-complete bullish dominance. The market has been bearish ever since then.

None of the thirty ETF’s are contacting their breakdown lines. Some relief to dynamic bearish potential was offered with mild bullish behavior on Thursday and Friday.

The average distance between the price and breakdown is 14.5%. This configuration is providing non-bearish support, which has been the case since March 2003.

The breakout/breakdown differential is bullish by 0.6%, which resumed bullish support after Tuesday and Wednesday bearish reading.

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.

Two Force Vectors are in bullish domains, which is non-bullish. Their configuration robustly supports bearish bias.

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 after Friday’s close. Friday’s bullish behavior was not friendly to last Wednesday’s put option buy signals. As previously stated, volatile expressions near the beginning and ending of bull or bear cycles are disruptive to expectations.

Fifteen of the thirty ETF Vector Pressures are in bullish domains, which for fifty-one consecutive trading days is offering bullish support. Be cautious, as this is a decrease by thirteen from May 28, 2008 and many are weakening in their bullish strength. Most should fall into bearish domains in the next few days. Sell signals have already been generated in anticipation thereof.

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

A solid new bearish bias shift was born today, June 11, 2008.

ProFunds Ultra Short mutual fund moves inversely to the QQQQ by exponential amounts. The Mid-term Indicant is avoiding this fund for the time being. The Mid-term Indicant will likely signal buy for this fund this coming weekend.

The Quick-term and Short-term Indicant tracks ETF#31, QID, which is the ETF cousin to ProFunds Ultra Short. This ETF is relatively new and has not yet developed enough data to formally track its outlook. It is excluded from overall ETF statistics because it is purely contrarian. It is designed to move bullishly during bear markets and bearishly during bull markets. This exclusion is required for convergent/divergent monitoring.

The Indicant signaled buy for QID last Wednesday. It is down since then, making it a more attractive buy. Keep in mind, though that the bull just expired and its ghost lurks. Its Force Vector is solidly bullish, but its Vector Pressure remains in bearish domains. Until Vector Pressure crosses into bullish domains, there will be volatility. If the market shifts to bullish bias, this ETF will receive a quick sell signal.

Other Contrarian Funds

ETF#03-Natural Resources   - is up 52.6% (annualized at 31.7%) since the Quick-term Indicant signaled buy on Oct 25, 2006. Although it cooled off from its sizzling red hot status, it remains a solid red bull. It was solidly bullish today even though OPEC questioned the high price of oil.

ETF#11-Gold and Precious Metals   is up 97.2% since the Quick-term Indicant signaled buy on August 3, 2005. It is annualizing at 33.5%. It remains in neutral territory with strengthening Force Vectors but negative Vector Pressure. This fund simply lacks quick-term commitments in either direction. It was mildly bullish on Friday.

ETF#14-Long Government  is down 3.1% since the May 5, 2008 sell signal. Its Force Vector and Vector Pressure remain inside bearish domains. The configuration remains weak, but it could be a good buy for the more conservative investor in the event the market turns bearish. It is a yellow bear. Force Vector behavior is not inviting bullish behavior.

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

Short-term Indicant for Tangential Analysis

Divergence versus Convergence

Combined bullish convergence and divergence in ten of the past thirteen weeks was powerfully bullish. However, the bullish convergence during this bull cycle suggests 2008 still has a significant chance to finish the year on a bullish note.

The market endured mixed behavior last week. It was not configured with bullish divergence, bearish divergence, bullish convergence, and bearish convergence last week.

The Quick-term Indicant and Short-term Indicant suggest some potential bearishness on the near-term horizon.

Indicant Conclusion

Commentary here has been bearish the past several weeks. However, OPEC can influence a reversal to bullish bias very quickly and dynamically.

Keep up with the daily stock market report as the Quick-term attributes can shift quickly. Right now they are increasingly favoring the bear.

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 

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

06/15/08

June 8, 2008 Indicant Weekly Stock Market Report

Volume 06, Issue 02 ISSN 1526 6516 © The Indicant Stock Market Report

This Week’s Report

Mixed Short Cycles

Last Friday’s dynamic bearish behavior was unsettling. This was a fundamental expression; whereas last Thursday’s bullish behavior was an emotionally based rally. After that rally, the daily stock market report suggested it was emotionally based and without sustainability.

Fundamentals always dictate the underlying stock market trend. Right now, the trend is bearish, in spite of the short-term bullish cycle that originated in March of this year. That short-term bull cycle was difficult from a technical perspective. It was more difficult than the October 1929 and October 1987 short cycles that led to stock market crashes. The 1929 short cycle was fundamentally charged and the 1987 short cycle was technical. Politicians perpetuated the 1929 crash for years and are threatening to repeat nearly a century later.

Some short cycles occur due to the combination of fundamental and technical reasons. The August 1998 short cycle was a mixture with combined technical drivers and the threat of Russian loan defaults, which was a fundamental issue. Money flow is entirely fundamental.

This particular bearish trend is fraught with significant fundamental issues. Foremost is voodoo bookkeeping. Most investments are based on reports. Those reports are mere sheets of paper or internet pages of information. Paper can contain fiction or fact. Not knowing which is which is bearish.

The financial community, especially banks, used to be solid fortresses of fact-based information. It was easy for them. They would loan money at X%. Collateralized cash or other assets would garnish you Y%. Bank profits were generated by the difference between X and Y with X always being bigger.

During the roaring twenties of last century, some banking officers foreclosed on properties; sometimes ethically and sometimes unethically. The unethical foreclosures gave rise to folks like Bonnie and Clyde and other criminals who hated the criminals in the banking industry. A mini-war more or less transpired.

Real estate is a finite asset. The earth’s land mass is not growing. The earth’s population continues to grow. The demand for finite land continues to increase as long as the population continues to increase. Economics 101 suggests the law of supply and demand is reason to expect a perpetual increase is real estate prices. It is a no brainer to treat the value of real estate as being higher in value next year than it is this year.

That simple Economic 101 law of supply and demand will prevail over time. Unfortunately, the demand component is disrupted from time to time. If the price of real estate accelerates ahead of the populace’s ability to pay for it, prices will decline. That is because demand declines, albeit temporarily. Price elasticity to demand is also an Economic 101 principle.

Real estate contrasts with other assets, such as machinery that depreciates over time. Machinery, such as planes, trains, and automobiles decline in value over time due to the deterioration of their mechanical and chemical features. Real estate, on the other hand, increases in value, as its mechanical and chemical features remain relative constant. Although archeologists and paleontologists would argue, Wall Street types and bankers would turn the deaf ear. Most money minded people are only concerned about the asset value during their lifetime and some of merely focused on the current fiscal quarterly reports.

At some point in the past, with Economics 101 training, financial institutions learned they could make money by printing some boilerplate forms and have homebuyers sign them. When demand softened, the financial institutions changed the boilerplate forms and marketing messages to generate more demand appeal. It was too easy to simply print paper and have folks sign them to take possession of real estate. After all, they reasoned from Economics 101, the value of their assets would continue to move north and they made easy money doing the transactions.

Donald Trump made a fortune in real estate. Many others wanted to join Donald. The problem is this and will always be this. Only 20% of the world’s population will own 80% of the asset value. The 80-20 rule was discussed in the May 18, 2008 weekly report. If you are unfamiliar with this phenomenon, click the link in the previous sentence. It is discussed in the first section of that weekly stock market report.

All attempts to adjust the 80-20 rule through legislative and authoritarian rule always results in frownie faces for the populace. Capitalistic greed also does this, but the frownie faces are limited to a very small portion of the populace and does not last too long. That small portion of the populace becomes crybabies and beg for help. When their screaming becomes loud, legislative and/or authoritarian rule is used to attempt re-balancing to minimize the population of frownie faces. This flies in the face of cyclical capitalistic behavior and as a result, rather than enduring a six to nine month capitalistic crisis, entire generations live in misery.

The financial institutions generated “fake demand” during the past few years for real estate. They did not understand Economic 202 and beyond. Maybe they understood it, but human nature tends to bias behavior toward, “if it is not broken, do not fix it.” That flies in the face of anticipatory requirements in any business. If one manages on the “right now,” one goes out of business. The “right now” seldom persists. Change is always occurring; sometimes to the north and sometimes to the south. Lateral movements are rare in any phenomena.

Mark Cuban, owner of the Dallas Mavericks Basketball Franchise, sold his Yahoo shares just before the NASDAQ bubble burst. He is in the 20% rich group. General Motors is just now shifting from SUV production to car production, based on the rising cost of gasoline. More and more folks in Michigan and other rust belt industries are falling from their former membership in the 20% rich group to the 80% poorer group because their leadership is behind the demand curve.

Most businesses do not survive cyclical behavior. This is especially true during sharp cyclical shifts. That is because most businesses are run by the 80% poorer group trying to join the 20% richer group. The 80-20-rule disallows that ratio to become imbalanced. The 20% richer group consists of those who “accurately” anticipate with an emphasis on the word, accurate. Some try; most don’t, and even fewer anticipate the eventual direction.

Banks and financial institutions are highly regulated. The designed intention of this regulation was to minimize risks inherent in human nature. They are supposed to be immune to sharp cyclical shifts. Unfortunately, they played a game of “easy money” that was outside the scope of regulation. Some of that is re-introducing voodoo bookkeeping. It is definitely introducing recessionary behavior, as the fake demand for real estate fell as sharply as it rose. Fake cycles always do that. The last three months of the NASDAQ bullish surge attracted way too many of the 80% poorer group into the stock market and they were appropriately punished with the NASDAQ decline at the beginning of this century. When everyone is “making money,” watch out. The 80-20 rule always re-balances.

Fundamentally, the economy is in bad shape. To make matters worse, it is a political election year. The crybabies are screaming and since they are members of the 80% poorer group, the politicians will gravitate toward their appeasement. The stock market not only will react to “right now” fundamentals, it will project fundamentals consistent with FDR type of political mumbo jumbo. The trend is bearish.

Keep your eye on the daily stock market report. It will help you differentiate sustainability versus spurts regardless of the directional intensity underway.

Weekly Buy/Sell Summary – Stocks and Funds – Mid-term Indicant

Click this sentence for a graphical summary of what follows. Simply scroll down the page to see graphical and detail content of this section.

The Mid-term Indicant generated no buy signals and ten sell signals. There have been 91-buy signals since February 1, 2008. There have been 209-sell signals since October 26, 2007.

Although there were no buy signals, the Mid-term Indicant is signaling hold for 204 of the 345-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 144.2%. That annualizes to 59.2%. The Mid-term Indicant has been signaling hold for these 204-stocks and funds for an average of 126.6-weeks.

In addition to the sell signals, the Mid-term Indicant is avoiding 131-stocks and funds of the 345- tracked by the Indicant. The avoided stocks and funds are down an average of 18.9% since the Mid-term Indicant signaled sell an average of 33.2-weeks ago.

One year ago, on June 8, 2007, the Mid-term Indicant was holding 312-stocks and funds out of the 345 tracked for an average of 104.6-weeks. They were up by an average of 127.1% (annualized at 63.2%). There were 27-avoided stocks and funds at that time. Those avoided stocks and funds were down an average of 14.8% since their respective sell signals an average of 28.3-weeks earlier.

The Mid-term Indicant was signaling hold for 221-stocks and funds of the 345-tracked two years ago on June 9, 2006. They were up by an average of 141.9% (annualized at 67.8%) since their respective buy signals an average of 108.9-weeks earlier. The Mid-term Indicant was avoiding 112-stocks and funds at that time. They were down an average of 6.6% since their respective sell signals an average of 14.8-weeks earlier.

There were 207-stocks and funds with hold signals on June 10, 2005 since their buy signals an average of 90.5-weeks earlier. They were up by an average of 100.0% (annualized at 57.5%). There were 112-avoided stocks and funds at that time. They were down by an average of 26.4% from their respective sell signals an average of 58.7-weeks earlier.

On June 4, 2004, the Mid-term Indicant was signaling hold for 245-stocks and funds out of 296-tracked. They were up by an average of 70.9% (annualized at 70.8%) since their buy signals an average of 56.1-weeks earlier. The Mid-term Indicant was avoiding 50-stocks and funds at that time. They were down by an average of 12.9% since their sell signals an average of 18.9-weeks earlier.

Five years ago, on June7, 2003, there were 289-hold signals for stocks and funds out of the 296 tracked by the Mid-term Indicant at that time. They were up an average of 45.4% (annualized at 124.1%) since their respective buy signals an average of 19.0-weeks earlier. There were only three avoided stocks and funds then. They were down an average of 26.1% since their respective sell signals an average of 26.8-weeks earlier.

On June 7, 2002, there were 106-stocks and funds with hold signals from the listing of 294-tracked by the Mid-term Indicant at that time. They were up 33.6%, annualizing at 52.2%. There were 135-avoided stocks and funds then. They were down by an average of 27.0%.

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

Comments about Mid-term Indicant Buy and Sell Signals This Weekend

As stated last week, some mutual funds and stock with avoid signals are experiencing small gains. The Short-term Indicant Tangential model is now influencing the Mid-term Indicant. That is due, in part, for continuing to avoid these.

The Short-term model suggests the blue chips and large caps are now into a bear cycle. The other major indices are maintaining their bullish configurations, but they are nearing extinction. This does not mean the bear will be aggressive. It only means the bull cycle for these other indices should be expiring soon. The Mid-term Indicant inclusion of the Short-term Tangential model will minimize the fluttering effects that occur from time to time.

The Quick/Short-term Indicant Stock Market Report

The Indicant website maintains the last twelve months of daily reports on an annual basis. These weekly reports are maintained on the website for much longer periods. Beginning in March 2006, the daily stock market report for the last trading day of each week is imbedded in this weekly report. This allows web-based retention records of the daily report for much longer than the last twelve months.

The Daily Indicant Stock Market Report for the last trading day of the current week is near the conclusion of this weekly stock market report. It is emailed each weekend, separately, so you can read it, either as a separate document, or in this document.

The Indicant Stock Market Report’s Secular Market Blend

The Dow is up 67.6% since its secular low on October 9, 2002. The NASDAQ is up 122.1% and the S&P500 is up 75.2% since then. The small cap index, S&P600, is up 128.6%. Even with the S&P600’s dynamic bearish behavior the last several months, it still leads the major indices in bullish performance since the birth of the secular bull on October 9, 2002. As stated the past several months, the secular bull that originated on October 9, 2002 no longer remains solid. A secular bear could indeed be unfolding.

The Dow is down 13.8% since its last closing peak on Oct 9, 2007. The NASDAQ is down 13.5% since its last peak on Oct 31, 2007. The S&P600 is down 12.3% since its last closing peak value on Jul 19, 2007. The Small Caps Index was bearish last week with a 1.2%-loss, while the blue chips were more bearish with a 3.4%-loss.  The NASDAQ was bearish with a 1.9%-loss.

The NASDAQ is down 51.0% since its last weekly secular peak on March 9, 2000. The S&P500 is down 10.9% since its similar secular peak on March 23, 2000. The Dow is up by a mere 4.2% since January 13, 2000 when it peaked from the 1990’s roaring bull. It has expressed no timidity in roaming above the new peak area, while the S&P500 set a new record in early 2007 and then immediately succumbed to non-bullish influences. The NASDAQ needs to climb 104.0% to achieve a new record high. Do not be surprised if this occurs after the year, 2025.

The Dow is down 8.0% so far this year. The NASDAQ is down 6.7% this year. These conditions are incongruent with historical standards. This year should be a bullish year, based on those standards. The stock market occasionally delights in violating historical standards. This always happens when such standards gain in popularity. The current bullish cycle is lending support to historical standards, but it will be challenged, during the dog days of summer. We saw the beginnings of that three weeks ago and again last Friday.

The NASDAQ year-to-date performance was bearish by 10.2% through this week in 2001. Keep in mind the NASDAQ finished 2001 down by 21.1%.  This year was configuring with 2001 similarity, but the current bull cycle disrupted that similarity for several weeks. It continues to do so in spite of last Friday’s bearish aggression. There will be additional bearish cycles in 2008. As stated last week and repeated this week, do not be surprised at increased bearishness in the next few weeks, but with significant volatility.

The NASDAQ was down by 20.3% through this weekend in 2002. Some of you recall the dynamic bear market in 2002, where the NASDAQ finished that year down by 31.5%. The NASDAQ YTD 2003 performance was up by 21.9%. It finished up in that solidly bullish year by 50.0%. It was down on this weekend by 1.2% in 2004. It was also down by 4.6% in 2005. Many of you recall that 2004 and 2005 were meandering bear markets. In 2006, it was down by 1.9% and up by 7.1% at this time last year.  

As previously stated, so far this year, the DOW30 is down 8.0% and the NASDAQ down 6.7%.

This paragraph, originating in the March 30, 2008 Weekly Stock Market Report, will remain unchanged until it becomes irrelevant. Bearish behavior this year contradicts historical standards whereby the presidential election year is typically bullish. The political establishment and their appointees are doing their part to support bullish behavior with interest rate cuts and tax rebates. On the other hand, the stock market appears to be short of buyers, who at one time refinanced their homes to buy stocks. Their replacement buyers are expected to be foreign investors, where the weak dollar is an added bonus for those who desire bullish market behavior. However, rising commodity prices could dampen that potential bullish effect.

May 2, 2008 comment regarding the previous paragraph. The Fed’s mild interest rate adjustment to the south indeed strengthened the dollar. Keep in mind the U.S. is a net importer. This increases the supply of dollars abroad. As long as the U.S. is a net importer, there will be a continuing increase in supply of dollars, which will continuously keep a “real economic” lid on its value.

The bullish bias shift on August 15, 2006 expired on January 4, 2008. The heart and soul of bullish seasonality also expired on January 4, 2008.  The Dow increased 14.0% since the bullish bias shift on August 15, 2006. The S&P500 was up 9.8% and the NASDAQ up by 18.4%.

A bearish bias shift was identified by the Quick-term Indicant on January 4, 2008. It lasted until March 11, 2008. The Dow was down 5.0% and the NASDAQ was down 9.9% during that time. On March 11, 2008, the Quick-term Indicant shifted away from bearish bias. Although the Quick-term Indicant endured fluttering since the March 11 bearish bias shift expiration, the NASDAQ is up by 9.7% since then. This has been an above average bullish rally. Until three weeks ago, there was no tangential support threatening. Now there is a major threat to the current bullish cycle.

As previously stated in the daily stock market reports, the Quick-term Indicant endured two violations since March 11 and encountered fluttering behavior until April 11. On April 29, 2008, the Quick-term Indicant conformed to its standards of Red Bull recognition with positive Vector Pressure and signaled bullish bias. Several buy signals for ETF’s were generated on that day. Since then, the Dow is down 4.8% and the NASDAQ is up 2.0%. The bullish cycle originating in early March is positioning its expiration. That does not mean a deep bearish cycle is about to unfold, with meandering behavior as a possible alternative.

The Quick-term Indicant signaled sell for ETF’s that correlate with blue chips and large caps the past few days in anticipation of increasing bearish bias.

As stated last week, the presidential pre-election year of 2007 was below average (+10.5%) with the Dow gaining 6.4%. This was the smallest gain since Reagan’s 2.3% gain in 1987, when the market endured sharp sell off in October of that year. These seasonal standards appear to be losing their influence due to the phenomenon of commonality.

Where is the market headed in 2008, the presidential election year, which is the second most bullish year on the four-year presidential election cycle? If historical standards prevail, which is bullish, the market is setting up nicely for a tremendous profit this year. All that is needed is a bottom to this bear, as 2008 should finish up on the year, based on historical standards and falling interest rates.

Depending on bearish magnitude and breadth, a violation to historical standards could be underway.

The fundamental requirements are limited inflation and economic stabilization. Fundamental influences will always be the primary force of directional intensity. Three of the big four are okay for the time being; inflationary threats have cooled but again threatening with a significant increase in the CPI, as oil continues setting new highs. However, oil prices declined last week along with a drop in other commodities. This influenced the bull. Interest rates remain low, which is bullishly favorable. Deflation is not threatening. In addition to a resurging CPI, another unfavorable condition for stock market bullishness is the weak economy. The unknown is voodoo bookkeeping. The market reacts to corporate earnings. If those earnings are perceived as fiction, the market will move bearishly. Fictional financial representations will enhance stock market bearishness. The capital market system requires absolute honesty from the bookkeepers.

Keep your eye on the daily stock market report.

Stop Loss Management

The Mid-term Indicant recommends a stop loss of 10% due to increasing bearish influences.

Use a 10% trailing stop loss or the yellow or green values you will find on the tables for your longer-term hold positions. If your stock or fund is above the bearish yellow curve and below the green curve, set your stop loss equal to the greater of the yellow curve and the trailing stop loss. If your stock or fund is above the green curve, set your stop loss at no less the value of the green curve or 10% trailing, whichever is greater. If your stock or fund is above the red curve and you bought at the Mid-term Buy signal, you should use the 10% trailing stop loss.

If you are up by triple digit amounts and enjoy your ownership of the stock or fund, then use a 20% trailing stop loss or the slow moving blue curve price. If you really enjoy holding the stock, keep a close eye on the management. Dilettante managers have a way of worming into the business. Watch closely for cronyism and lazy-hazy management dialog. Keep your eye on lavish spending and excessive concerns about social issues. Those types are more interested in burning your money for their pleasures, as opposed to making you money. High performing companies remain focused on honoring the investments made by their shareholders.

In a few instances, you will see a hold signal for a stock or fund that is down from its buy signal or below one of the above conditions for selling. If you are more of a trader than an investor, feel free to buy stocks and funds with those “bearish” attributes. They are configured for a possible rebound, while at the same time, it is important to set the stop losses mentioned in this report. Use the Quick-term Indicant as a guide in your decision-making processes. If the stock price is falling in a Quick-term Bear market, it is not advisable to buy.

Do not short on stocks if they are up from an avoid signal. Stocks go up more often than they go down. Stocks have a tendency to march to their own drumbeat when rising. Some stocks rise and continue to rise in the most severe of bear markets. Short selling opens up an opportunity for the snakes on Wall Street to take everything you own. They can cause a stock to rise at their whim and without any regard to fundamental reason. It usually does not make sense to bet against the sweat and toil of hard-working people.

Stock and Fund Update

Click the following link to see sorted performance of stocks and funds with hold/avoid signals. In the past, they were included in this email message but now display them on the website. This is available to the public, while the specific buy and sell transactions are limited to members only. The below table is public information and not updated on a frequent basis.

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

Economic Conditions – Inflation, Currency, Interest Rates

Click the above heading for a summary of hard economic indicators.

As stated the past thirty weeks, falling interest rates typically accompany stock market bullish behavior. The primary exception to stock market bullishness with declining interest rates is inflation or deflation.

Interest rates are rising, albeit from extremely low levels. Until late this past week, that rise had been strengthening the dollar.  It further weakened on Friday, increasing the chances of inflation. Its weakening trend has not been disrupted. A reversal in this weakening trend will damper inflationary threats, but the extent remains unknown.

There are many “non-productive” dollars covering unbelievable stupidity in the financial markets. That, along with being an “importer” should further erode the U.S. dollar. That will eventually lead to a weakening economy in addition to inflationary threats. Universal law holds that the weak should expire from participation. The Federal Reserve and politicians are violating Universal Law.

As stated the past four weeks, 2009 is setting up to be a solid recession and bear market. Historical standards support rising interest rates next year that will encourage the bear. Increased political mumbo-jumbo of protectionism enhances the probability of stock market calamity.

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 is up 427.5% since the April 13, 2001 buy signal. Its annualized growth since that buy signal is 58.9%. It moved to the north in 54 of the past 91-weeks. It has been bullish in 25 of the last 42-weeks. This fund has been bullish in 10 of the last 17-weeks. It was bearish last week.

Fidelity Gold, Fund #28, is up 12.9% since its buy signal on September 7, 2007. It is annualized at 17.0% since that buy signal. This fund was solidly bullish in nine of the past 17-weeks. It was bearish the past two weeks.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 455.1% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 77.2%. This fund has been bullish in eight of the last 15-weeks. It was bullish the past two weeks.

Vanguard Energy #18, VGENX, is up 286.8% (annualized at 54.7%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 266.3% (annualized at 58.3%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 236.4% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 48.5%.

These energy related funds were mixed last week, following bullish behavior in the previous three weeks.

Investors in these funds are supporting a 1970’s type of market with high inflation and high oil prices. 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 104.5% since then. It is annualized at 36.2%. This fund has been bullish in 29 of the past 41-weeks. It has been solidly bullish in 10 of the last 16-weeks. It was bullish last week.

The SQI signaled buy for ETF#03 – Energy and Natural Resources on March 26, 2003. It is up 300.0% (annualized at 56.9%). This fund has been bearish in 11 of the past 21-weeks. It was mildly bullish last week.

Mid-term Indicant Positions – Ten U.S. Indices

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

The Mid-term Indicant signaled bull on March 20, 2008 for all ten major indices. It signaled bear for three of the indices this past weekend; DJIA, S&P500, and S&P100. The remaining seven major indices are up by an average of 9.6% since the March 20 bull signal. They are annualizing at 44.9%. The most bullish is the NASDAQ100 index. It is up 13.6%. Do not be surprised if the remaining major indices receive bear signals in the next week or two.

The Mid-term Indicant Dow Jones Industrial Average performance is at $36,661,279

That beats buy and hold performance of $1,857,570 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $180,217. That beats buy and hold’s $133,282 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $229,654. That beats buy and hold’s $85,403 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 1,873.6%, 35.2%, and 167.7%, 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% covering 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.

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.

Note from April 5, 2008: Enron will be removed from Indicant tracking later this year. It was removed from the Dow Utility Index several years ago. It is now a penny stock, but the Indicant kept tracking it at the request of members. Its low cost nature is not friendly to Mid-term Indicant assessment due to small price changes and corresponding large percentage impact. The Mid-term Indicant is not designed for penny stocks. Although recovery is always possible, this stock has become too busy to track. This position will be re-accessed based on member feedback as the year progresses.

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 signaled buy for ProFunds Ultra Short on January 18, 2008. It was down 32.3% since the Mid-term Indicant signaled sell on September 15, 2006 until the buy signal on January 18, 2008. Historical norms of market cyclicality suggested the next buying opportunity for this fund should not occur until 2009.

The Mid-term Indicant again signaled buy for this fund on April 12, 2008 and signaled sell on May 2, 2008. Unfortunately, it was sold at a loss of approximately 11.9% on May 2. It is down 1.7% since that sell signal. It may offer more opportunities later this year or early next year.

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 321.8% (annualized at 19.3%) since the Long-term Indicant signaled bull 866-weeks ago. Economic data is the primary influence on the Long-term Indicant. Recessions, deflation, inflation, and unreasonable interest rates 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: Ten of thirty; bullish support waning with minority position here.

Quick-term Yellow Bears/Threats: Seven of thirty.  Non-bearish support but waning.

Quick-term Non-Bearishness: QTI differential is bullish 1.1%. Weakening non-bearish support.

Short-term Non-Bearishness: Breakout/breakdown differential is bullish by 2.6%. Bullish support weakening. The Bear recoiled as stated in Thursday’s stock market report.

Force Vectors: Somewhat of a bearish cycle is underway, but without robustness at this point.

Vector Pressure: Twenty-two in bullish domains. Six lost since May 20.  This bull leg will not expire as long as Vector Pressure remains in bullish domains. Several are barely hanging on to their bullish positions.

STI Tangential Support: All “large cap” indices lost their support. The other major indices still retain theirs. It is generally bearish when large caps lead bearish attributes, but important to not overreact. The NASDAQ and other such indices can lag this by as much as eight weeks.

Immediate Tactics: Buy signals for non-contrarian ETF’s will be limited with the bearish threat now underway.

Current Quick-term Bias: Bullish bias on April 29, 2008 no longer remains solid. This bull is panting now, but not yet dead.

Overall Market Status: Red bull population decline is discerning, but positive Vector Pressure had been countering bearish ambition. Unfortunately, Vector Pressure is leaking now and deflating bullish energy.

Profit Potential from Naked Options: Expect increased volatility with tangential support losses.

Volume: Lethargic, but consistent, with seasonal behavior.

Quick-term/Short-term Indicant Stock Market Report Details

To view the STI-Tangential Protection for ten major indices, click here.  The Dow30 breached tangential protection against bearish aggression on Wednesday, May 21, 2008. On Friday, May 23, 2008, the Dow65-Composites, and the S&P100 also breached tangential protection with aggressive bearish behavior. The NYSE lost tangential protection on June 3. The S&P500 lost tangential protection against the bear on Friday, June 6.  The remaining major indices remain configured with that protection, but barely, with the exception of the mid-caps. Even with Friday’s aggression by the bear, that lone exception is acting as a barrier to bearish onslaught.

As stated on Thursday, June 5, 2008 aggression by the bull appeared to be emotionally-based with respect to technical observations. The major indices, especially the blue chips, remain configured with bearish attributes. The 400-point loss in the Dow on Friday June 6 demonstrated emotional behavior is not sustainable. The Blue Chips are bearish and any bullish behavior should be considered spurt behavior.

The Short-term Indicant signaled bear on May 20, 2008 for the Dow Jones Industrial Average and on May 21, 2008, for the NASDAQ. The Short-term Indicant is influenced, in part, by historical seasonality, which has become too popular to be effective. It will eventually be replaced by the more esoteric tangential model. The Dow is down 4.8% and the NASDAQ is up 1.1% since their respective bear signals. In spite of Friday’s aggression by the bear, neither the bear or bull have synergistic commitment to directional intensity. There is a significant battle underway between the two.

Please read on. Click here to see the Short-term Indicant’s history.

Both Indicant Volume Indicator’s  are configuring with an embryonic movement from its lethargy. Although there is no obviation, this movement is slightly bearishly biased. The Tangential Short-term Indicant continues suggesting a troubling future for this bull. The Blue Chips and Big Board are already configuring bearish support, while the NASDAQ, NASDAQ100, S&P400, and S&P600 continue resisting bearish ambition.

Friday’s volume was moderately heavy. That coupled with bearish aggression promotes bearish bias.

Keep in mind lethargic volume cycles are seasonal to daylight savings time, allowing the market to moved wildly in either direction without substantive cause.

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 22-ETF’s. They are up by an average of 60.3% (annualized at 31.5%) since their respective buy signals an average of 98.3-weeks ago. Although there were no sell signals, the SQI is avoiding nine-ETF’s at this time. They are down by an average of 5.9% since their sell signals an average of 8.9-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 nine 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 20-ETF’s. They are up an average of 99.9% (annualized 47.5%) since the STI signaled, buy, an average of 108.2-weeks ago.  Although there were no sell signals, there are 11-ETF’s with avoid signals. They are down by an average of 5.0% since their sell signals an average of 7.6-weeks ago.

The Short-term Indicant is more active in buying/selling than the Consolidated model. The Quick-term Indicant, which follows, is even more active.

Quick-term Report Card, Status, and Charts

There were no buy signals and three sell signals.  Although there were no buy signals, the Quick-term Indicant is signaling hold for 17-ETF’s. They are up by an average of 22.6% (annualized at 38.2%) since the QTI signaled buy an average of 30.4-weeks ago.  In addition to the sell signals, the Quick-term Indicant is avoiding 11-ETF’s. They are down by an average of 4.9% since their sell signals an average of 4.6-weeks ago.

Current Strategy – All blue chip major indices do not have tangential support. The mid-caps, small-caps, NASDAQ, etc. still enjoy tangential bullish support in spite of Friday’s aggressive bear. However, as stated in last week’s daily stock market report, there is increasing bearish pressure building. However, several of the ETF’s including non-contrarian ones are not possessing these increasing bearish attributes. Some of them will not go down with a bear market.

There is some fluttering, as the bull and bear are waging significant battles to win dominance over the other. The Quick-term Indicant will be quick to sell.

Conflicts Between the Short-term and Quick-term Indicants

There are eight conflicts, whereby the Short-term Indicant and the Quick-term Indicant are in disagreement between hold and avoid status. The combined Short/Quick Indicant models identify 57-hold signals and only 33-avoid signals, providing a bullish bias. The bullish bias shift on August 15, 2006 expired on January 4, 2008, but a potential bullish bias shift was born on March 11, 2008, which expired a few days later with the Bear Stearns voodoo bookkeeping discovery. After some jittery behavior, a new bullish bias shift was born in mid-April 2008, but the measurement of performance will commence on April 29, 2008 when several ETF buy signals were generated.

Sell signals have been increasing the past few days, as several attributes are favoring a resumption of bearish influence. The Short-term and Quick-term Indicant are re-synchronizing after the Bear Stearns financial misrepresentations skewed their relationship last March. It is believed such fiction is not complete, as the same gene pool provides those sort of characters to more than one organization. Enron cousins lurk.

The comment about being 97% confident the market will be lower than early April’s values at some future point; most likely in 2009, will be reinserted in this daily stock market report as soon as the current bullish bias expires. Here is one comment; the Dow is already below the stated value of the last tangential interaction. This will be discussed in the tour that is being written and to be published in a few weeks. The model is esoteric, which is a requirement for successful and happy investing.

Quick-term Indicant Bull/Bear Health Report

Seven of the 30-ETF’s are below their respective bearish yellow curves. A minority position of yellow bears remains non-bearish. The average relative position of all thirty ETF’s is above bearish yellow by 3,6%. This is the forty-seventh consecutive trading day with non-bearish support.

Ten ETF’s are above their bullish red curves. This is a bullish attribute, but Friday’s bearish aggression weakened that bias. As stated in last Thursday’s daily stock market report, bullish behavior was believed to be emotionally-based and therefore without sustainability. Friday’s bearish aggression is a testament to that observation. All thirty ETF average positions are below bullish red by 0.4%, which is bullish for the first time in several days. As stated in last Thursday’s daily stock market report, do not be surprised if the bear takes offense to this. As you can see, Friday’s 400-point drop in the Dow illustrated the bear’s perception of being in charge.

Nine of the ten Red Bulls are non-contrarian, which remains bullish. It only takes one non-contrarian red bull to stifle dynamic bearish aggression. Friday’s bearish aggression, if similarly prolific next week, will eliminate the remaining non-contrarian Red Bulls. If that happens, prepare for bearish onslaught.

The QTI differential is bullish by 1.1%. This is the thirty-fifth consecutive trading day of bullish support. It resumed its recent weakening with Friday’s bearish aggression.

Click the heading link in this section to view the charts. As earlier stated, there was no violent bullish response to Vector Pressure crossing into bullish domains from yellow bear status. That supported Quick-term bullishness.

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, which is no longer providing bullish support. After seven consecutive days of breakout contact three weeks ago, the bull became exhausted from such minimal effort. That adds to the claim of a tiring bull.

The average distance from breakout contact is 13.0%. Double digit variances from breakout contact for 106-consecutive trading-days has been non-bullish.  After nearing a single digit expression a few weeks ago, the bear was obviously offended by this near excursion with near-complete bullish dominance. As stated in Thursday’s daily stock market report, “this is occurring again…let’s see if the bear offers a counter-punch to this again.” Friday’s 400-point drop in the Dow and 75-point drop in the NASDAQ is a testament to the strength and ego of this bear. Keep in mind the trend is south.

One of the thirty ETF’s is contacting its breakdown line. This is the first day since mid-March with such contact. This is bearish.

The average distance between the price and breakdown is 15.6%. This configuration is providing non-bearish support, which has been the case since March 2003.

The breakout/breakdown differential is bullish by 2.6%, which is supportive of the bull. This has resumed its cycle of weakening.

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.

Ten Force Vectors are in bullish domains, which is non-bullish, but lacking robustness. Recent configurations have been abnormal; most likely due to the threat of voodoo bookkeeping.

To understand potential financial opportunities, click here to learn to identify Robust Force Vectors. They are visible on the Quick-term Indicant charts.

ETF Force Vectors/Vector Pressure Crossings/Option Signals

Remember, the links contained herein are more visible when reading this on the website.

Click this sentence for Vector Pressure Option Signals. There was one put option buy signal after Friday’s close. Thursday’s call options got the desired Friday bearish expression for your deeply discounted buy offers. Unfortunately, the probability of a bullish bounce on Monday is less than 10%. The probability of a dynamic bullish bounce on Monday is less than 1.535%.

Twenty-two of the thirty ETF Vector Pressures are in bullish domains, which for forty-six consecutive trading days is offering bullish support. Be cautious, as this is a decrease by six from May 20, 2008 and many are weakening in their bullish strength.

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 bullish bias shift that began on August 15, 2006 expired on January 4, 2008. However, a new bullish bias was born on March 11, 2008. It is not a thoroughbred, though. It is tainted with Enron-like misguidance from Bear Stearns. The March 11 bullish bias shift expired on April 11, 2008. It was expected to be just another short bullish spurt. The Quick-term Indicant is incapable of ignoring red bulls even though the trend is south. Consequently, a new bullish bias shift was started on April 29, 2008. It is now being threatened by expiring tangential support.

Blue chips and large caps have lost tangential protection. The other major indices are demonstrating tenacity in their bullish commitment, but the bear expressed more tenacity on Friday.

Continue avoiding writing covered options due to expected volatility as the bull and bear are nearing battle stages. Although red bull population has waned the past few days, they usually do not collapse all at once. It is a battle. Vector Pressure, which held steady since March, has been recently weakening the bull. Too many remain in bullish domains that increase the risk of writing covered call options.

ProFunds Ultra Short mutual fund moves inversely to the QQQQ by exponential amounts. The Mid-term Indicant is avoiding this fund for the time being. The next growth opportunity will most likely be in 2009.

The Quick-term and Short-term Indicant tracks ETF#31, QID, which is the ETF cousin to ProFunds Ultra Short. This ETF is relatively new and has not yet developed enough data to formally track its outlook. It is excluded from overall ETF statistics because it is purely contrarian. It is designed to move bullishly during bear markets and bearishly during bull markets. This exclusion is required for convergent/divergent monitoring.

The Indicant signaled sell for QID  on April 29, 2008. It is down by 6.5% since that sell signal. Force Vectors are sneaking up to the north, but still well within bearish domains. Vector Pressure remains within bearish domains and with yellow bear configurations. It will take a lot of Force Vector energy to shift this back into a bullish configuration, but the attempt to do so could invigorate the bear (bull for this ETF). So far, though, this is simply a solid yellow bear with increasing interest to shift out of bearish influences. The interest will not be linear. As long as QQQQ remains a red bull, QID will not receive a buy signal. Even with Friday’s bearish aggression, QQQQ remains a Red Bull.

Other Contrarian Funds

ETF#03-Natural Resources   - is up 51.5% (annualized at 31.4%) since the Quick-term Indicant signaled buy on Oct 25, 2006. Although it cooled off from its sizzling red hot status, it remains a solid red bull. It was aggressively bullish last Thursday and aggressively bearish last Friday, which surprisingly coincided with stock market behavior. This ETF should be contrarian, which is was not late last week.

ETF#11-Gold and Precious Metals   is up 104.5% since the Quick-term Indicant signaled buy on August 3, 2005. It is annualizing at 36.2%. It is in neutral domains and Force Vectors continue their bearish movement. Vector Pressure is now in bearish domains. It was aggressively bullish last Friday.

ETF#14-Long Government  is down 1.1% since the May 5, 2008 sell signal. Its Force Vector and Vector Pressure remain inside bearish domains. You will notice its Force Vectors now moving north which is properly contrarian to bear market behavior. The configuration is weak, but it could be a good buy for the more conservative investor in the event the market turns bearish. It is a yellow bear with humbly rising Force Vectors.

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

Short-term Indicant for Tangential Analysis

Divergence versus Convergence

Combined bullish convergence and divergence in nine of the past twelve weeks was powerfully bullish. However, the bullish convergence during this bull cycle suggests 2008 still has a significant chance to finish the year on a bullish note.

Unfortunately, the market endured bearish divergence last week. Although not as severe as bearish convergence, the current short-term bullish cycle for several sectors appears to be nearing its conclusion.

The Quick-term Indicant and Short-term Indicant suggest some potential bearishness on the near-term horizon.

Indicant Conclusion

As stated the past eight weeks, it is unlikely the stock market’s recent bullish cycle will enjoy significant sustainability. Until the past three weeks, the Quick-term bullish cycle was strong. It has been severely weakened by virtue of the loss of tangential protection against the bear. The bull is wounded and the bear has more opportunity to become to express its ambition.

As stated the past several weeks, severe bearishness is expected in 2009, as the stock market is expected to conform to historical standards. New political leadership will then be in office and rest assured their focus for economic well-being will not be until 2010. Social policies and more regulatory constraints will be enhanced in 2009 and early 2010. That depresses capitalistic enjoyment, which is a bearish stimulant.

Keep up with the daily stock market report as the Quick-term attributes can shift quickly. Right now they are increasingly favoring the bear.

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 

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

06/08/08

June 1, 2008 Indicant Weekly Stock Market Report

Volume 06, Issue 01 ISSN 1526 6516 © The Indicant Stock Market Report

This Week’s Report

Conflicts

Election-years have an excellent track-record for bullish stock markets. Yet, in this election year, the Dow is down 4.7%. The NASDAQ is down 4.9%.

The fundamental reason supporting election year bullishness is simple. Incumbent politicians understand a strong economy wins votes for incumbents. They also understand that recessionary economies cause them to be booted from the offices they hold. The ideals of capitalism are supported during election years, as those ideals are the only reason for economic robustness. Political leadership will bias policy in favor of capitalistic ideals as the Election Day nears. You saw that this year when incumbents from both political parties readily agreed to return some of the tax money you paid the past few years to stimulate the economy.

Since the stock market is down so far this year, one would expect bullish behavior for the balance of the year, based on historical normalcy. However, economic fundamentals suggest historical normalcy may encounter an unfavorable variance this year.

The stock market seldom moves laterally. It never moves linearly with a smooth predictable trend shape. It moves in cycles more often than not. Some cycles are bullish and some are bearish. A bullish cycle has been underway for several weeks. So far its expression has exceeded that of a bullish spurt. This particular cycle has been sustainable for several weeks with a solid bullish configuration.

There have been several bullish cycles similar to the one now underway. They always expire. Fortunately, most are followed by bearish cycles with less magnitude than the previous bull cycle. That is why the stock market goes up more than it goes down. If you are twenty years old, you can comfortably ride the wave of time. However, if you are fifty, these cycles and related trends are something to study.

Sometimes a series of bearish cycles follow with more magnitude than their predecessor bullish cycles. That is rare, but it occurs from time to time. One of the most pronounced was the great bear market that began in 1929, where each bullish cycle was followed with bear cycles having greater magnitude than their predecessor bull cycles. Such bear markets are referred to as secular bears. They last a long time and can go deeply south.

The Dow’s weekly peak occurred on October 9, 2007. There are some fundamental arguments suggesting this peak will not be seen again for another fifteen to twenty years. Most of that reasoning is based on rising oil and commodity prices. In other words, inflation can impose a long lasting lid on stock market movements. Such thinking supports the next bear cycle will have more magnitude that the current bull cycle now underway. That could shift a long-term trend to the south.

There are counter arguments suggesting the Dow will see 30,000 or more in fifteen to twenty years. That would be consistent with the trend that began in 1981. Such arguments are based on the increasing popularity of global capitalism. In 1932, less than one-quarters of the world’s population was engaged in the ideals of capitalism. Socialism was implemented en masse during the 1930’s that stimulated the bear. Socialism was easier then, since communism was gaining in world popularity. The social practices implemented by FDR accelerated and extended the bear market for several decades. The Smoot-Hawley tariff act contributed significantly to the depth of the bear due to the limitations of free trade, which is an absolute requirement for economic robustness. Many attempting to gain political power are suggesting additional limitations on free trade.

Politicians are looking for votes and they tell people what they want to hear; free medicine, free hospitals, free, free, free and more free. Some are even adding, “by the way, you don’t have to pay your mortgage bill…the government will pick up the tab.” Such social causes erode stock market bullish potential. From time to time, vote-counters put the biggest idiot into political power. If the vote counters put enough of them into power at the same time, such as in the 1930’s, the bear will be delighted in 2009. It will be able to roam at free will.

The post election year is the only year along the four-year cycle that has lost money since 1832. That is because most of the social causes are implemented shortly after the election. It takes quite a few years for the capitalists to learn how to work around or simply recover from the causes of socialism. Since the 1930’s and with the help of a world war, capitalistic methods have learned to work around the socialistic causes and continue to do so. Fortunately, other countries are following the wind of Ayn Rand’s Atlas Shrugged. Some corporate headquarters are being relocated to friendlier capitalistic environments. That is bullish, though, since the stock market is all about money. It does not care if it is accumulated in India, South America, or Topeka Kansas.

Market size and profits do not dwindle immediately after social interference. It takes some time for that to happen. However, the stock market never positions its level on the “right now.” It typically looks forward; sometimes wrongly and sometimes correctly. The error detection process is immediate with periodic sudden rises and falls in stock prices.

The stock market does not yet know about the potential for increased socialism in North America. But it does know about the two billion additional capitalists around the world. Much of the profit gains in the past twenty years have been delivered from those additional capitalists. These new capitalists are hungry, eager, and most have lived in anti-capitalistic societies. Once tasted, there is no going back. However, the chubby and not so eager capitalists who for the most part are living off the efforts of their forefathers cannot compete effectively with those who are eager and hungry. This fall, most of the folks in Michigan and Ohio will be centered on football, while their competitors in India, China, Japan, and Mexico will be at work. It is those at work who cause the stock market to go up, while those glued to their TV sets contribute to bear markets. Productivity increases is not an option. It is a requirement. Faster, better, and less expensive is the ideal. The rust belt idea is no comprehende! So, stocks tied to the rust belt sector have been in a secular bear for the past twenty-five years. The neat thing about the stock market is that the victor is handsomely rewarded, while the incompetent are always punished. There are zero politics involved.

As stated many times before, socialism and communism are breeders of poverty. Capitalism breeds wealth. Politicians around the world, including the U.S. are socialist. That is their livelihood. They simply push paper. If one is not directly engaged in manufacturing, agriculture, or extraction, one is not adding to wealth. Most of us are directly and some indirectly engaged in one of those three functions. Most of them never have been.

Politicians are nowhere near the wealth building elements. So, they listen to the weaker members of capitalistic societies, knowing that most capitalists are working hard, do not know what is going on, and for the most part are too busy to vote. So, the politicians tend to talk it up to those who have a lot of time to listen to them. Those are the ones who “take from the sweat of the capitalists.”

Politicians, over the years, have become bitter. They envy the new capitalistic billionaires who have displaced them in the light of respect. Political mumbo-jumbo is sounding more like Karl Marx and less like Thomas Jefferson. At some point, the bear is going to raise its head and catch a sniff of their stench in the air. When it does, the bear’s range of coverage will expand and the bull is gone.

If there is a rapid expansion of social causes after the election, one will look back and find the current bull cycle was a mere bullish spurt in the face of a secular bear market. The current bull cycle has not overcome its predecessor bear cycle, which suggests the trend is south. Is it possible the bear has sniffed the stench?

Keep your eye on the daily stock market report. It will help you differentiate sustainability versus spurts regardless of the directional intensity underway.

Weekly Buy/Sell Summary – Stocks and Funds – Mid-term Indicant

Click this sentence for a graphical summary of what follows. Simply scroll down the page to see graphical and detail content of this section.

The Mid-term Indicant generated one buy signal and no sell signals. There have been 91-buy signals since February 1, 2008. There have been 199-sell signals since October 26, 2007.

In addition to the buy signal, the Mid-term Indicant is signaling hold for 213 of the 345-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 148.1%. That annualizes to 60.8%. The Mid-term Indicant has been signaling hold for these 213-stocks and funds for an average of 126.7-weeks.

Although there were no sell signals, the Mid-term Indicant is avoiding 131-stocks and funds of the 345- tracked by the Indicant. The avoided stocks and funds are down an average of 16.5% since the Mid-term Indicant signaled sell an average of 32.2-weeks ago.

One year ago, on June 1, 2007, the Mid-term Indicant was holding 313-stocks and funds out of the 345 tracked for an average of 101.5-weeks. They were up by an average of 126.4% (annualized at 64.8%). There were 29-avoided stocks and funds at that time. Those avoided stocks and funds were down an average of 13.2% since their respective sell signals an average of 26.7-weeks earlier.

The Mid-term Indicant was signaling hold for 232-stocks and funds of the 345-tracked two years ago on June 2, 2006. They were up by an average of 147.8% (annualized at 73.0%) since their respective buy signals an average of 105.3-weeks earlier. The Mid-term Indicant was avoiding 109-stocks and funds at that time. They were down an average of 4.3% since their respective sell signals an average of 14.1-weeks earlier.

There were 207-stocks and funds with hold signals on June 3, 2005 since their buy signals an average of 89.5-weeks earlier. They were up by an average of 98.8% (annualized at 57.4%). There were 112-avoided stocks and funds at that time. They were down by an average of 26.0% from their respective sell signals an average of 57.8-weeks earlier.

On May 29, 2004, the Mid-term Indicant was signaling hold for 229-stocks and funds out of 296-tracked. They were up by an average of 79.7% (annualized at 73.7%) since their buy signals an average of 56.3-weeks earlier. The Mid-term Indicant was avoiding 50-stocks and funds at that time. They were down by an average of 12.6% since their sell signals an average of 12.6-weeks earlier.

Five years ago, on May 31, 2003, there were 286-hold signals for stocks and funds out of the 296 tracked by the Mid-term Indicant at that time. They were up an average of 41.5% (annualized at 118.7%) since their respective buy signals an average of 18.2-weeks earlier. There were six avoided stocks and funds then. They were down an average of 24.9% since their respective sell signals an average of 27.3-weeks earlier.

On May 31, 2002, there were 157-stocks and funds with hold signals from the listing of 294-tracked by the Mid-term Indicant at that time. They were up 27.6%, annualizing at 50.4%. 123-avoided stocks and funds were down 21.4% at that time.

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

Comments about Mid-term Indicant Buy and Sell Signals This Weekend

Again, Enron received another buy signal by the Mid-term Indicant. The signal is automatic and Enron is not friendly to the Mid-term Indicant model. It is now a penny stock and is highly volatile. It will be discontinued from Indicant tracking in 2009.

Some mutual funds and stock with avoid signals are experiencing small gains. The Short-term Indicant Tangential model is now influencing the Mid-term Indicant. That is due, in part, for continuing to avoid these. The Short-term model suggests the blue chip bull is exhausted. The other major indices are maintaining their bullish configurations, but they are nearing extinction. This does not mean the bear will be aggressive. It only means the bull should be expiring soon. The Mid-term Indicant inclusion of the Short-term Tangential model will minimize the fluttering effects that occur from time to time.

The Quick/Short-term Indicant Stock Market Report

The Indicant website maintains the last twelve months of daily reports on an annual basis. These weekly reports are maintained on the website for much longer periods. Beginning in March 2006, the daily stock market report for the last trading day of each week is imbedded in this weekly report. This allows web-based retention records of the daily report for much longer than the last twelve months.

The Daily Indicant Stock Market Report for the last trading day of the current week is near the conclusion of this weekly stock market report. It is emailed each weekend, separately, so you can read it, either as a separate document, or in this document.

The Indicant Stock Market Report’s Secular Market Blend

The Dow is up 73.5% since its secular low on October 9, 2002. The NASDAQ is up 126.4% and the S&P500 is up 80.3% since then. The small cap index, S&P600, is up 131.4%. Even with the S&P600’s dynamic bearish behavior the last several months, it still leads the major indices in bullish performance since the birth of the secular bull on October 9, 2002. As stated the past several months, the secular bull that originated on October 9, 2002 no longer remains solid. A secular bear could indeed be unfolding.

The Dow is down 10.8% since its last closing peak on Oct 9, 2007. The NASDAQ is down 11.8% since its last peak on Oct 31, 2007. The S&P600 is down 11.3% since its last closing peak value on Jul 19, 2007. The Small Caps Index was bullish last week with a 3.1%-gain, while the blue chips were mildly bullish with a 1.3%-gain.  The NASDAQ100 expressed the strongest bullish behavior last week with a solid 3.8%-gain, wiping out the previous week’s bearishness.

The NASDAQ is down 50.0% since its last weekly secular peak on March 9, 2000. The S&P500 is down 8.3% since its similar secular peak on March 23, 2000. The Dow is up by a mere 7.8% since January 13, 2000 when it peaked from the 1990’s roaring bull. It has expressed no timidity in roaming above the new peak area, while the S&P500 set a new record in early 2007 and then immediately succumbed to bearish influence. The NASDAQ needs to climb 100.1% to achieve a new record high. Do not be surprised if this occurs after the year, 2025.

The Dow is down 4.7% so far this year. The NASDAQ is down 4.9% this year. These conditions are incongruent with historical standards. This year should be a bullish year, based on those standards. The stock market occasionally delights in violating historical standards. This always happens when such standards gain in popularity. The current bullish cycle is lending support to historical standards, but it will be challenged, during the dog days of summer. We saw the beginning of that two weeks ago, but the bull interjected its tenacity last week.

The NASDAQ year-to-date performance was bearish by 15.2% through this week in 2001. Keep in mind the NASDAQ finished 2001 down by 21.1%.  This year was configuring with 2001 similarity, but the current bull cycle has disrupted that similarity. Now, it appears a resumption of standards is occurring. There will be additional bearish cycles in 2008. Do not be surprised at increased bearishness in the next few weeks, but with significant volatility.

The NASDAQ was down by 16.3% through this weekend in 2002. Some of you recall the dynamic bear market in 2002, where the NASDAQ finished that year down by 31.5%. The NASDAQ YTD 2003 performance was up by 19.5%. It finished up in that solidly bullish year by 50.0%. It was down on this weekend by 0.8% in 2004. It was also down by 4.6% in 2005. Many of you recall that 2004 and 2005 were meandering bear markets. In 2006, it was down by 1.8% and up by 7.3% at this time last year.  

As previously stated, so far this year, the DOW30 is down 4.7% and the NASDAQ down 4.9%.

This paragraph, originating in the March 30, 2008 Weekly Stock Market Report, will remain unchanged until it becomes irrelevant. Bearish behavior this year contradicts historical standards whereby the presidential election year is typically bullish. The political establishment and their appointees are doing their part to support bullish behavior with interest rate cuts and tax rebates. On the other hand, the stock market appears to be short of buyers, who at one time refinanced their homes to buy stocks. Their replacement buyers are expected to be foreign investors, where the weak dollar is an added bonus for those who desire bullish market behavior. However, rising commodity prices could dampen that potential bullish effect.

May 2, 2008 comment regarding the previous paragraph. The Fed’s mild interest rate adjustment to the south indeed strengthened the dollar. Keep in mind the U.S. is a net importer. This increases the supply of dollars abroad. As long as the U.S. is a net importer, there will be a continuing increase in supply of dollars, which will continuously keep a “real economic” lid on its value.

The bullish bias shift on August 15, 2006 expired on January 4, 2008. The heart and soul of bullish seasonality also expired on January 4, 2008.  The Dow increased 14.0% since the bullish bias shift on August 15, 2006. The S&P500 was up 9.8% and the NASDAQ up by 18.4%.

A bearish bias shift was identified by the Quick-term Indicant on January 4, 2008. It lasted until March 11, 2008. The Dow was down 5.0% and the NASDAQ was down 9.9% during that time. On March 11, 2008, the Quick-term Indicant shifted away from bearish bias. Although the Quick-term Indicant endured fluttering since the March 11 bearish bias shift expiration, the NASDAQ is up by 11.8% since then. This has been an above average bullish rally. Until two weeks ago, there was no tangential support threatening. Now there is a major threat to the current bullish cycle.

As previously stated in the daily stock market reports, the Quick-term Indicant endured two violations since March 11 and encountered fluttering behavior until April 11. On April 29, 2008, the Quick-term Indicant conformed to its standards of Red Bull recognition with positive Vector Pressure and signaled bullish bias. Several buy signals for ETF’s were generated on that day. Since then, the Dow is down 1.5% and the NASDAQ is up 4.0%. The bullish cycle originating in early March is positioning its expiration. That does not mean a deep bearish cycle is about to unfold, with meandering behavior as a possible alternative.

As stated last week, the presidential pre-election year of 2007 was below average (+10.5%) with the Dow gaining 6.4%. This was the smallest gain since Reagan’s 2.3% gain in 1987, when the market endured sharp sell off in October of that year. These seasonal standards appear to be losing their influence due to the phenomenon of commonality.

Where is the market headed in 2008, the presidential election year, which is the second most bullish year on the four-year presidential election cycle? If historical standards prevail, which is bullish, the market is setting up nicely for a tremendous profit this year. All that is needed is a bottom to this bear, as 2008 should finish up on the year, based on historical standards and falling interest rates.

The fundamental requirements are limited inflation and economic stabilization. Fundamental influences will always be the primary force of directional intensity. Three of the big four are okay for the time being; inflationary threats have cooled but again threatening with a significant increase in the CPI, as oil continues setting new highs. However, oil prices declined last week along with a drop in other commodities. This influenced the bull. Interest rates remain low, which is bullishly favorable. Deflation is not threatening. In addition to a resurging CPI, another unfavorable condition for stock market bullishness is the weak economy. The unknown is voodoo bookkeeping. The market reacts to corporate earnings. If those earnings are perceived as fiction, the market will move bearishly. Fictional financial representations will enhance stock market bearishness. The capital market system requires absolute honesty from the bookkeepers.

Keep your eye on the daily stock market report.

Stop Loss Management

The Mid-term Indicant recommends a stop loss of 8% due to current bullish cycle.

Use a 10% trailing stop loss or the yellow or green values you will find on the tables for your longer-term hold positions. If your stock or fund is above the bearish yellow curve and below the green curve, set your stop loss equal to the greater of the yellow curve and the trailing stop loss. If your stock or fund is above the green curve, set your stop loss at no less the value of the green curve or 10% trailing, whichever is greater. If your stock or fund is above the red curve and you bought at the Mid-term Buy signal, you should use the 10% trailing stop loss.

If you are up by triple digit amounts and enjoy your ownership of the stock or fund, then use a 20% trailing stop loss or the slow moving blue curve price. If you really enjoy holding the stock, keep a close eye on the management. Dilettante managers have a way of worming into the business. Watch closely for cronyism and lazy-hazy management dialog. Keep your eye on lavish spending and excessive concerns about social issues. Those types are more interested in burning your money for their pleasures, as opposed to making you money. High performing companies remain focused on honoring the investments made by their shareholders.

In a few instances, you will see a hold signal for a stock or fund that is down from its buy signal or below one of the above conditions for selling. If you are more of a trader than an investor, feel free to buy stocks and funds with those “bearish” attributes. They are configured for a possible rebound, while at the same time, it is important to set the stop losses mentioned in this report. Use the Quick-term Indicant as a guide in your decision-making processes. If the stock price is falling in a Quick-term Bear market, it is not advisable to buy.

Do not short on stocks if they are up from an avoid signal. Stocks go up more often than they go down. Stocks have a tendency to march to their own drumbeat when rising. Some stocks rise and continue to rise in the most severe of bear markets. Short selling opens up an opportunity for the snakes on Wall Street to take everything you own. They can cause a stock to rise at their whim and without any regard to fundamental reason. It usually does not make sense to bet against the sweat and toil of hard-working people.

Stock and Fund Update

Click the following link to see sorted performance of stocks and funds with hold/avoid signals. In the past, they were included in this email message but now display them on the website. This is available to the public, while the specific buy and sell transactions are limited to members only. The below table is public information and not updated on a frequent basis.

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

Economic Conditions – Inflation, Currency, Interest Rates

Click the above heading for a summary of hard economic indicators.

As stated the past twenty-nine weeks, falling interest rates typically accompany stock market bullish behavior. The primary exception to stock market bullishness with declining interest rates is inflation or deflation.

Interest rates are rising, albeit from extremely low levels. However, that rise is strengthening the dollar.  As stated last week, the U.S. Dollar continues in its embryonic cycle of strengthening. However, its weakening trend has not been disrupted. A reversal in trend will damper inflationary threats, but the extent remains unknown.

As stated the past four weeks, 2009 is setting up to be a solid recession and bear market. Historical standards support rising interest rates next year that will encourage the bear. Increased political mumbo-jumbo of protectionism enhances the probability of stock market calamity.

Interestingly, gold, oil, and Reuters-Commodities Index fell sharply last week, highlighting renewed anti-inflationary synergy.

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 is up 438.5% since the April 13, 2001 buy signal. Its annualized growth since that buy signal is 60.6%. It moved to the north in 54 of the past 90-weeks. It has been bullish in 25 of the last 41-weeks. This fund has been bullish in ten of the last 16-weeks. It was bullish last week.

Fidelity Gold, Fund #28, is up 13.1% since its buy signal on September 7, 2007. It is annualized at 17.7% since that buy signal. This fund was solidly bullish in nine of the past 16-weeks. It was bearish last week.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 426.6% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 72.6%. This fund has been bullish in seven of the last 14-weeks. It was bullish last week.

Vanguard Energy #18, VGENX, is up 289.1% (annualized at 55.3%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 261.3% (annualized at 57.5%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 229.3% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 47.2%.

These energy related funds were mixed last week, following bullish behavior in the previous three weeks.

Investors in these funds are supporting a 1970’s type of market with high inflation and high oil prices. 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 100.9% since then. It is annualized at 35.2%. This fund has been bullish in 28 of the past 40-weeks. It has been solidly bullish in nine of the last 15-weeks. It was bearish last week.

The SQI signaled buy for ETF#03 – Energy and Natural Resources on March 26, 2003. It is up 299.5% (annualized at 57.0%). This fund has been bearish in ten of the past 20-weeks. It was bearish the past two weeks, following two weeks of dynamic bullishness.

Mid-term Indicant Positions – Ten U.S. Indices

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

The Mid-term Indicant signaled bull on March 20, 2008. All ten major indices are up by an average of 9.4% since then. They are annualizing at 48.4%. The most bullish is the NASDAQ100 index. It is up 16.0%. The DOW30 is the weakest. It is up just 2.2%. Do not be surprised if these major indices receive bear signals in the next week or two.

The Mid-term Indicant Dow Jones Industrial Average performance is at $37,947,926

That beats buy and hold performance of $1,922,926 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $185,475. That beats buy and hold’s $137,171 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $234,118. That beats buy and hold’s $87,471 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 1,873.6%, 35.2%, and 167.7%, 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% covering 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.

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.

Note from April 5, 2008: Enron will be removed from Indicant tracking later this year. It was removed from the Dow Utility Index several years ago. It is now a penny stock, but the Indicant kept tracking it at the request of members. Its low cost nature is not friendly to Mid-term Indicant assessment due to small price changes and corresponding large percentage impact. The Mid-term Indicant is not designed for penny stocks. Although recovery is always possible, this stock has become too busy to track. This position will be re-accessed based on member feedback as the year progresses.

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 signaled buy for ProFunds Ultra Short on January 18, 2008. It was down 32.3% since the Mid-term Indicant signaled sell on September 15, 2006 until the buy signal on January 18, 2008. Historical norms of market cyclicality suggested the next buying opportunity for this fund should not occur until 2009.

The Mid-term Indicant again signaled buy for this fund on April 12, 2008 and signaled sell on May 2, 2008. Unfortunately, it was sold at a loss of approximately 11.9% on May 2. It is down 5.4% since that sell signal. It may offer more opportunities later this year or early next year.

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 336.6% (annualized at 20.2%) since the Long-term Indicant signaled bull 865-weeks ago. Economic data is the primary influence on the Long-term Indicant. Recessions, deflation, inflation, and unreasonable interest rates 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: Sixteen of thirty; offering bullish support; no longer solid with significant population losses in the past two weeks.

Quick-term Yellow Bears/Threats: Four of thirty.  Non-bearish support, but dwindling.

Quick-term Non-Bearishness: QTI differential is bullish 5.9%. Weakening non-bearish support.

Short-term Non-Bearishness: Breakout/breakdown differential is bullish by 6.7%. Solid, but weakening, bullish support.

Force Vectors: Somewhat of a bearish cycle is underway, but without robustness at this point.

Vector Pressure: Twenty-six in bullish domains. They are holding steady but two were lost in the past few days.  This bull leg will not expire as long as Force Vectors remain above Vector Pressure.

STI Tangential Support: Three major indices lost their support lines last week. The other major indices still retain theirs. It is generally bearish when large caps lead bearish attributes, but important to not overreact.

Immediate Tactics: Buy signals for non-contrarian ETF’s will be limited with the bearish threat now underway. There were a few sell signals this week, mostly within the blue chip category.

Current Quick-term Bias: Bullish bias on April 29, 2008 no longer remains solid. This bull is panting now, but not yet dead.

Overall Market Status: Red bull population decline is discerning, but positive Vector Pressure remains, although its recent dominance is being challenged.

Profit Potential from Naked Options: Expect increased volatility with tangential support losses.

Volume: Lethargic, but consistent, with seasonal behavior.

Quick-term/Short-term Indicant Stock Market Report Details

To view the STI-Tangential Protection for ten major indices, click here.  The Dow30 breached tangential protection against bearish aggression last Wednesday, 2008-05-21. On Friday, May 23, 2008, the Dow65-Composites, and the S&P100 also breached tangential protection with aggressive bearish behavior. The remaining major indices remain configured with that protection, but barely, with the exception of the mid-caps. That lone exception is acting as a barrier to bearish onslaught.

Vector Pressure remains in bullish domains with most of the major indices, providing some protection against bearish ambition. However, the blue chip’s Vector Pressure has crossed into bearish domains, forming bearish alliances.

You should take a look at the S&P400, which was the most bullish index on this cycle. It still has some room before breaching tangential protection. The magnitude of each indices bearish cycle are not the same. However, their directional bullish or bearish intensity are in harmony with the smaller caps falling faster and deeper than the blue chips during bearish cycles and conversely during bull cycles.

In this case, the mid-caps was the leader of the current bullish cycle, which appears nearing  expiration. The small caps lagged in this Short-term Indicant bull cycle. The blue chips are taking it on the nose first, which indicates an increased probability of a major bearish cycle in the not too distant future. Keep in mind, though, that volatile expressions should not be surprising, as they occur more often at the beginning and ending of each bullish and bearish cycle.

As stated the past several days, the bull is tiring, but a Short-term Bull nonetheless. VIX bounced north off breakdown, suggesting no major cyclical shifts. This favors a resumption of a bearish stock market in the not too distant future.

The Short-term Indicant signaled bear on May 20, 2008 for the Dow Jones Industrial Average and on May 21, 2008, for the NASDAQ. The Short-term Indicant is influenced, in part, by historical seasonality, which has become too popular to be effective. It will eventually be replaced by a more esoteric tangential model. The Dow is down 1.5% and the NASDAQ is up 3.0% since their respective bear signals. Neither the bear or bull have synergistic commitment to directional intensity. There is a significant battle underway between the two.

Please read on. Click here to see the Short-term Indicant’s history.

Both Indicant Volume Indicator’s  remain lethargic. There is little volume support favoring bull or bear. The NASDAQ volume was a little above average on today’s mild bullishness due to Dell’s increased earnings announcement. The bull reacted humbly, which is a common attribute to a tiring Short-term configuration.

Keep in mind lethargic volume cycles are seasonal to daylight savings time, allowing the market to moved wildly in either direction without substantive cause.

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 24-ETF’s. They are up by an average of 63.6% (annualized at 41.6%) since their respective buy signals an average of 78.6-weeks ago. Although there were no sell signals, the SQI is avoiding seven-ETF’s at this time. They are down by an average of 6.3% since their sell signals an average of 10.4-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 nine 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 22-ETF’s. They are up an average of 95.6% (annualized 50.2%) since the STI signaled, buy, an average of 97.9-weeks ago.  Although there were no sell signals, there are nine ETF’s with avoid signals. They are down by an average of 3.8% since their sell signals an average of 8.3-weeks ago.

The Short-term Indicant is more active in buying/selling than the Consolidated model. The Quick-term Indicant, which follows, is even more active.

Quick-term Report Card, Status, and Charts

There were no buy signals and one sell signal.  Although there were no buy signals, the Quick-term Indicant is signaling hold for 24-ETF’s. They are up by an average of 17.3% (annualized at 40.4%) since the QTI signaled buy an average of 22.0-weeks ago. In addition to the sell signal, the Quick-term Indicant is avoiding six-ETF’s. They are down by an average of 5.8% since their sell signals an average of 7.7-weeks ago.

Current Strategy - As of  May 21, 2008, the Dow30’s tangential support expired. Two other major indices expired on Friday, May 23, 2008. However, the other major indices remain in tact, but they will eventually expire. When they expire, the Quick-term Indicant will signal sell for most of the non-contrarian ETF’s that were bought since last April and early May, unless their individual attributes remain strongly bullish.

Conflicts Between the Short-term and Quick-term Indicants

There are five conflicts, whereby the Short-term Indicant and the Quick-term Indicant are in disagreement between hold and avoid status. The combined Short/Quick Indicant models identify 68-hold signals and only 21-avoid signals, providing a bullish bias. The bullish bias shift on August 15, 2006 expired on January 4, 2008, but a potential bullish bias shift was born on March 11, 2008, which has now expired. After some jittery behavior, a new bullish bias shift was born in mid-April 2008, but the measurement of performance will commence on April 29, 2008 when several ETF buy signals were generated.

The comment about being 97% confident the market will be lower than early April’s values at some future point; most likely in 2009, will be reinserted in this daily stock market report as soon as the current bullish bias expires. In the meantime, it is time to enjoy this bull leg until expiration, which is nearing.

Quick-term Indicant Bull/Bear Health Report

Four of the 30-ETF’s are below their respective bearish yellow curves. That is non-bearish, but the increase in yellow bears the past few days is discerning. The average relative position of all thirty ETF’s is above bearish yellow by 6.0%. This is the forty-second consecutive trading day with non-bearish support.

Sixteen ETF’s are above their bullish red curves. All thirty ETF average positions are below bullish red by a mere 0.1%, which is non-bullish, but barely.

Fifteen of the sixteen Red Bulls are non-contrarian, which is remains bullish. It only takes one non-contrarian red bull to stifle dynamic bearish aggression.

The QTI differential is bullish by 5.9%. This is the thirtieth consecutive trading day of bullish support.

Click the heading link in this section to view the charts. As earlier stated, there was no violent bullish response to Vector Pressure crossing into bullish domains from yellow bear status. That supported Quick-term bullishness.

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, which is no longer providing bullish support. After seven consecutive days of breakout contact two weeks ago, the bull became exhausted from such minimal effort.

The average distance from breakout contact is 11.3%. Double digit variances from breakout contact for 101-consecutive trading-days has been non-bullish.  After nearing a single digit expression earlier this past week, which is solidly bullish, the bear was obviously offended by this near excursion with near-complete bullish dominance.

None of the thirty ETF’s are contacting their breakdown lines, which is non-bearish.

The average distance between the price and breakdown is 18.0%. This configuration is providing non-bearish support, which has been the case since March 2003.

The breakout/breakdown differential is bullish by 6.7%, which is supportive of the bull, but this bullish support has been relaxing, but held steady this past week.

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.

Twelve Force Vectors are in bullish domains, which is non-bullish, but lacking bearish robustness. Recent configurations have been abnormal; most likely due to the threat of voodoo bookkeeping.

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 three call option buy signals after Friday’s close. There have been 11-call option buy signals since last Thursday.

Today’s flat market was not friendly for transacting discounted buy offers for yesterday’s signals. Options need volatility, which should be increasing in the next few days.

Twenty-six of the thirty ETF Vector Pressures are in bullish domains, which for forty consecutive trading days is offering bullish support. Be cautious, as this is a decrease by two from late last week and many are weakening in their bullish strength.

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 bullish bias shift that began on August 15, 2006 expired on January 4, 2008. However, a new bullish bias was born on March 11, 2008. It is not a thoroughbred, though. It is tainted with Enron-like misguidance from Bear Stearns. The March 11 bullish bias shift expired on April 11, 2008. It was expected to be just another short bullish spurt. The Quick-term Indicant is incapable of ignoring red bulls even though the trend is south. Consequently, a new bullish bias shift was started on April 29, 2008. It is now being threatened by expiring tangential support.

Blue chips and large caps have lost tangential protection.

Continue avoid writing covered options due to expected volatility as the bull and bear are nearing battle stages. Although red bull population has waned the past few days, they usually do not collapse all at once. It is a battle.

ProFunds Ultra Short mutual fund moves inversely to the QQQQ by exponential amounts. The Mid-term Indicant is avoiding this fund for the time being. The next growth opportunity will most likely be in 2009.

The Quick-term and Short-term Indicant tracks ETF#31, QID, which is the ETF cousin to ProFunds Ultra Short. This ETF is relatively new and has not yet developed enough data to formally track its outlook. It is excluded from overall ETF statistics because it is purely contrarian. It is designed to move bullishly during bear markets and bearishly during bull markets. This exclusion is required for convergent/divergent monitoring.

The Indicant signaled sell for QID  on April 29, 2008. It is down by 10.2% since that sell signal. Force Vectors are moving south. Vector Pressure remains within bearish domains and with yellow bear configurations. It will take a lot of Force Vector energy to shift this back into a bullish configuration, but the attempt to do so could invigorate the bear (bull for this ETF). So far, though, this is simply a solid yellow bear with increasing interest to shift out of bearish influences. The interest will not be linear.

Other Contrarian Funds

ETF#03-Natural Resources   - is up 51.3% (annualized at 31.7%) since the Quick-term Indicant signaled buy on Oct 25, 2006. Although it cooled off from its sizzling red hot status, it remains a solid red bull.

ETF#11-Gold and Precious Metals   is up 100.9% since the Quick-term Indicant signaled buy on August 3, 2005. It is annualizing at 35.2%. Interestingly, it is in neutral domains and Force Vectors are moving bearishly.

ETF#14-Long Government  is down 1.7% since the May 5, 2008 sell signal. Its Force Vector and Vector Pressure remain inside bearish domains, with unconventional, non-descript Force Vectors. The configuration is weak, but it could be a good buy for the more conservative investor in the event the market turns bearish. It fell to yellow bear last Thursday.

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

Short-term Indicant for Tangential Analysis

Divergence versus Convergence

Combined bullish convergence and divergence in nine of the past twelve weeks was powerfully bullish. However, the bullish convergence during this bull cycle suggests 2008 still has a significant chance to finish the year on a bullish note. The Quick-term Indicant and Short-term Indicant suggest some potential bearishness on the near-term horizon.

Indicant Conclusion

As stated the past seven weeks, it is unlikely the stock market’s recent bullish cycle will enjoy significant sustainability. Until the past two weeks, the Quick-term bullish cycle was strong. It has been severely weakened by virtue of the loss of tangential protection against the bear. The bull is wounded and the bear has more opportunity to become carnivorous.

As stated the past several weeks, severe bearishness is expected in 2009, as the stock market is expected to conform to historical standards. New political leadership will then be in office and rest assured their focus for economic well-being will not be until 2010. Social policies and more regulatory constraints will be enhanced in 2009 and early 2010. That depresses capitalistic enjoyment, which is a bearish stimulant.

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 

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

06/01/08

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