March 25,
2007 Indicant Weekly Stock Market Report
Volume 03, Issue 04 ISSN 1526 6516 © The
Indicant Stock Market Report
This Week’s
Report
Is Bullish
Behavior Sustainable?
In last weeks
Weekly Stock Market Report, the question was asked, "is bearish
behavior sustainable?" The answer was “not likely.”
Reasons were cited in last week’s stock market report. The stock market
did not wait too long to support the answer to last week’s question. Last
week’s bullishness was the strongest in nearly a year.
One week’s
performance is not a trend. However, last week’s bullishness conformed to
the expectations from historical standards and current economic
fundamentals. In other words, last week’s bullishness conformed to the
underlying bullish bias while recent bearish aggressions were a mere
bearish spurt in the face of a strong bull market.
Force Vector
behavior was surprising last week. The configuration that unfolded is
uncommon for this time of year. Last week’s report noted that Force
Vectors shifted back to the south. The Quick-term Indicant expected that
southerly trek to continue for a few days. However, rather than following
seasonal normalcy, they took off to the north and even developed a robust
bullish cycle. That configuration prevented the expectation of bearish
behavior last week.
The Daily
Stock Market Report suggested that more bearishness was immediate with
this anticipated drop in Force Vectors. That did not happen. As previously
stated, Force Vectors only endured two days of decline and then zoomed
northward ahead of bullish aggressions. The error detection process was
within a day and that requires improvement.
The Daily
Stock Market Report has been consistent in pointing out the strength of
the underlying bullish bias. The error was attempting to predict a bearish
spurt in the face of an underlying bull market. The Quick-term Indicant
only signaled sell for just one ETF, which was configured with strong
bearish attributes at the time. The bull occasionally will respond to such
bearish configurations, while at other times, the bull succumbs to bearish
dominance. In this particular case, the bull responded with a savage-like
onslaught against bearish ambition.
The Quick-term
Indicant continued signaling hold for the remaining ETF’s, even though
there was an anticipated bearish spurt in the offing. That is because the
hold positions were stronger than any damage offered by a bearish spurt.
Fortunately, that bearish spurt did not occur. It is unfortunate for the
put option signals generated early last week.
Last week’s
theme was to monitor the downward cycle of the Force Vectors. Rather than
enduring a significant downward cycle, the Force Vectors galloped strongly
to the north. Click the following link and continue reading.
http://www.indicant.net/Members/Updates/QTI-ETF-Charts/QTI-ETF1-Charts.htm#1
You will
notice declining Force Vectors in May 2006. You will notice a rise shortly
thereafter when they pinnacled near the Indicant line. Force Vectors then
shifted back to the south and more bearishness followed. A major
difference was this was a yellow bear, while current configurations are
not yellow bears. On the contrary, red bulls existed.
Looking back
at the chart again, you will notice rising Force Vectors after July 2006.
You will notice the first up cycle was followed by a small downward cycle
that was followed by another robust northerly cycle. That configuration
detected the shift from bearish bias to bullish bias in August 2006.
You will
notice a similar configuration occurred just last week. It configured with
even stronger bullish sentiment than the double north cycle last August.
Southerly
moving Force Vectors in bullish domains (above the Indicant Line) are
irrelevant. This is especially true when the ETF’s are predominantly red
bulls and Vector Pressure is positive. Bearish Force Vector relevancy is
when the ETF’s are yellow bears and with negative Vector Pressure. That
was a predominant configuration prior to August 2006. As you will later
see, those bearish cycles were still contained within the broader indexes
trading ranges.
There will be
bearish spurts from time to time. The trick is being able to differentiate
spurts from sustainability to the underlying theme. Right now, the theme
remains bullish bias and any bearish expressions are considered as bearish
spurts. It appears bearish behavior two weeks ago was orchestrated and the
resulting damage was a mere bearish spurt.
Let’s look at
the broader indexes trading ranges. Click on the following link.
http://www.indicant.net/Members/Updates/STI-Mkts/IVI.htm
As you can
see, the NYSE’s bullish response to recent bearish threats has
repositioned prices near the upper limit of the trading range. The same is
true for the NASDAQ.
As previously
stated, do not be surprised at a retreat to the lower limit of the trading
range. Since the trading range is northerly sloped, aggressive bearish
behavior toward the lower limit of the trading range would trigger only a
few sell signals for weaker securities.
It is not
likely the upper limit of the trading range will be penetrated. If current
bullish expressions penetrate the upper limit of the trading range, one
would expect even more bullish aggressions. Probabilities suggest the
broader indices will be biased toward the lower end of the trading ranges.
This is mostly due to seasonal forces, as opposed to economic
fundamentals. However, the market always eventually breaks out of any
pattern it establishes. It will be interesting to see how this market
reacts to its near contact with the upper trading range limit.
Keep your eye
on the daily stock market report as it will track the above attributes and
keep you informed.
Weekly
Buy/Sell Summary – Stocks and Funds
The Mid-term
Indicant generated eight buy signals and no sell signals. Some of last
week’s sell signals were reversed by last week’s bullish aggression.
Although there
were no sell signals, the Mid-term Indicant is avoiding only 68-stocks and
funds of the 345 tracked by the Indicant. The avoided stocks and funds are
down an average of 5.9% since the Mid-term Indicant signaled sell an
average of 13.0-weeks ago.
There were
57-stocks and funds avoided at this time last year. The avoided stocks and
funds one year ago were down an average of 8.0% since their respective
sell signals an average of 23.2-weeks earlier.
Two years ago,
on March 25, 2005, the Mid-term Indicant was avoiding 84-stocks and funds
that were down an average of 28.6% since their respective sell signals an
average of 52.3-weeks earlier. Three years ago on March 27, 2004 there
were only 43-avoided stocks and funds. They were down by an average of
24.7% from their respective sell signals an average of 39.3-weeks earlier.
On March 22, 2003, the Mid-term Indicant was avoiding 36-stocks and funds
out of 296-tracked. They were down by an average of 28.3% since their sell
signals an average of 26.6-weeks earlier.
In addition to
the buy signals this weekend, the Mid-term Indicant is signaling hold for
266 of the 345-stocks and funds tracked by the Indicant. The stocks and
funds with hold signals are up an average of 126.8%. That annualizes to
63.2%. The Mid-term Indicant has been signaling hold for these 266-stocks
and funds for an average of 104.3-weeks.
One year ago,
on March 24, 2006, the Mid-term Indicant was holding 288-stocks and funds
out of the 345 tracked at that time for an average of 96.3-weeks. Those
288-stocks and funds were up by an average of 115.4% (annualized at
62.3%). The Mid-term Indicant was signaling hold for 232-stocks and funds
of the 320-tracked two years ago on March 25, 2005. They were up by an
average of 85.8% (annualized at 59.3%) since their respective buy signals
an average of 75.3-weeks earlier. There were 249-stocks and funds with
hold signals on March 27, 2004 since their buy signals an average of
48.7-weeks earlier. They were up by an average of 71.0% (annualized at
75.8%). The Indicant was only tracking 296-stocks and funds in 2002-2003,
and early 2004. On March 22, 2003, the Mid-term Indicant was signaling
hold for 141-stocks and funds out of 296-tracked. They were up by an
average of 29.8% (annualized at 74.8%) since their buy signals an average
of 20.7-weeks earlier.
There were
119-buy signals on March 22, 2003.
Summary of
Stocks and Funds with Buy and Sell Signals This past Week
To maintain
appropriate security, you can see the Mid-term Indicant "buy/sell" signals
for stocks and funds for this week by clicking the following link. It is
in the member’s only section.
http://www.indicant.net/Members/Updates/All%20Update%20Forms/Buy-Sell%20Summary%20This%20Week.htm
As repeatedly
stated, do not hold more than 10% of your investment resources in a single
stock and do not hold more than 20% of your investment resources into a
single mutual fund. Also, never fall in love with a stock or fund. Only
love the value of your portfolio. Never love its contents. Management
stupidity can wreak havoc on any stock or fund at any time.
All updated
information can be found from a single page at Indicant.Net. Click the
below link to that page. You will need your login ID and password.
http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20Summary.htm
The
Quick/Short-term Indicant Stock Market Report
The Indicant website maintains the last twelve months of daily reports on
an annual basis. These weekly reports are maintained for much longer
periods. Beginning in March 2006, the daily stock market report for the
last trading day of each week is imbedded in this weekly report. This
allows retention records of the daily report for much longer than the last
twelve months.
The Daily
Indicant Stock Market Report for the last trading day of the current week
is near the conclusion of this weekly stock market report. It is emailed
each weekend, separately, so you can read it either as a separate document
or in this document.
The
Indicant Stock Market Report’s Secular Market Blend
This section
is a repeated each week with a few modifications, reflecting recent
secular influences and performance data. Although appearing redundant at
times, it is important to read this section to keep abreast of secular
market shifts. Quantifications and qualifications are updated, weekly.
Remember, secular shifts can last twenty-five or more years. Fortunately,
secular market movements do not deter mid-term, short-term, and quick-term
profit opportunities. However, they can wreak havoc to the long-term
investors’ plans and those that buy and hold.
The current
Mid-term Bull market and buying barrage started in late 2002. The mid-term
election year of 2002 conformed perfectly to historical standards with
deep bearish expressions. That contrasts to the meandering bear market
from late January through mid-August 2006 in the more recent mid-term
election year.
Deep bearish
seasonality was not influential this past year, which usually occurs from
late August through early October. Last August, the Quick-term Indicant
obviated a bullish bias, contrary to the historical pattern of deep
bearish seasonality. Many buy signals were executed in late August - early
September 2006, which is usually a period of intense selling.
The market
synchronized with near perfection to normal seasonality in the mid-term
election year of 2002. The rolling half of May-October 2002 was typically
bearish. The 2002 seasonal bear leg was dynamic and configured perfectly
to historical standards, although the depth of that bearish cycle was
deeper than normal. That NASDAQ bear cycle approached the magnitude of the
1930-32 Dow bear cycle but the 2000-2002 NASDAQ bear leg lasted several
weeks longer.
The recently
completed mid-term election year of 2006 fundamentally supported
historical standards for the first two thirds of 2006. Although mild
bearishness exerted its historical influence in 2006, it was nowhere as
deep as 2002’s bearishness. The meandering bear in the first two-thirds of
2006 supported the historical standard. That support was extremely mild.
As of
mid-August 2006, hard economic fundamentals shifted in support of a
bullish onslaught for the heart and soul of bullish seasonality and the
normally bullish presidential pre-election year of 2007. The one week of
bullishness, week of March 5, sandwiched between two bearish weeks
(February 26 and March 12), provided some insight on bearish
sustainability. The bullish bounce on the week of March 5 suggests the
bearish aggressions are either going to be mild or not significantly
sustainable. In other words that bearish behavior was a mere bearish
spurt.
The heart and
soul of bullish seasonality from mid-October 2005 through January 31, 2006
demonstrated bullish normalcy. The market was a meanderer from January 31,
2006 until mid-August 2006, when the Quick-term Indicant shifted from
bearish to bullish bias.
The heart and
soul of bullish seasonality, ending on January 31, 2007, produced
significant and expected gains since the August 15, 2006 bullish bias
shift. The Dow, S&P500, and NASDAQ finished up by 12.4%, 11.9%, and 16.5%
at the conclusion of that heart and soul of bullish seasonality.
How has market
fared after the conclusion of the heart and soul of bullish seasonality?
From January 31, 2002 through September 30, 2002, the Dow fell 23.5%. The
NASDAQ was down 39.4%. The bull market of 2003 did not incur normal
seasonality. From January 31, 2004 until September 30, 2004, the NASDAQ
fell 8.2%, while the Dow was down 3.9%. From January 31, 2005 to June 30,
2005, the Dow was down 2.0% and the NASDAQ down 0.4%. From January 31,
2006 through August 1, 2006, the NASDAQ was flat while the Dow was up a
respectable 6.1%.
From January
31, 2003 through September 30, 2003, the Dow was up 15.2%, while the
NASDAQ was up 35.3%. The last presidential pre-election year was 2003.
Presidential pre-election years are traditionally bullish. So far this
year, the Dow is down 1.5% since January 31, 2007 and the NASDAQ is down
0.3%. Aggressive bearish expression four weeks ago and two weeks ago
pushed the major indices into negative territory, which can happen after
the heart and soul of bullish seasonality expires. Keep your eye on the
Quick-term Indicant, which right now, suggests this is a simple
correction. Historical standards suggest the market will go much higher
this year. Economic fundamentals also support this prognosis.
As you can
see, until mid-August 2006, most major market indices have been slightly
bullish since late 2003 with pronounced meandering behavior. The only
significant bullish expressions, not followed by bearish expressions,
occurred in the heart and soul of bullish seasonality (Nov-Jan) in 2004,
2005, and 2006. Other than those “heart and soul” bullish cycles, the
market was relatively flat from early 2004 through August 2006. However,
this is a presidential pre-election year, where meandering to bearish
behavior should not occur. The theme is bullish expectations even in the
face of bearish behavior four weeks ago and two weeks ago.
The Dow30
found bottom in the last presidential mid-term election year on October 9,
2002 at 7,286.27. The NASDAQ found bottom on the same day at 1114.11.
Finding cyclical bottoms in mid-term election years is common.
Fortunately, the bottom of 2006 was minimal and not sharp when compared to
that of 2002. The Dow is up 71.3% from the 2002 mid-term presidential
election year bottom. The NASDAQ is up 122.2% since October 9, 2002. The
S&P600, small caps, is up even more by 143.8% since October 9, 2002.
The NASDAQ is
down 51.3% from its historical weekending high of 5048.62 on March 9,
2000. The Dow is up by 6.5% from its previous weekending historical high
of 11723 on January 13, 2000. It took over five-and-a-half years for the
DJIA to establish a new high. The S&P500 is down 6.0% since its all time
high of March 23, 2000. So far, the new century, 2000 inclusive, has not
been kind to long-term investors. The NASDAQ needs to climb 105.5% and
S&P500 by 6.4% to establish new weekly closing highs.
Historical
standards suggest the NASDAQ will not return to its historical high until
2025 or so. A 2000 buyer and holder will not be back to break-even until
then. Including inflation, a thirty-year-old investor will be in his or
her eighties before the NASDAQ profits from early 2000 investment dollars,
which assumes minimal inflation. However, the late 2002 investor is up
triple digit amounts. Timing is indeed important.
Economic or
corporate earnings fundamentals did not support the stock market’s
meteoric rise in the 1990’s in many sectors. Unprecedented demand for
stocks skewed the supply-demand ratio and thus the powerful bull leg of
the 1990’s enjoyed sustainability. The simple law of supply and demand
propelled stock prices dynamically to the north in the 1990’s. The great
bear leg of 2001 and 2002 depressed those prior sources of demand for at
least one generation of investors. The market now has to wait for a new
generation of investors to enjoy dynamic secular bullishness.
The great bull
leg of 2003 was a relatively short bull cycle that has not enjoyed dynamic
follow-on bullish behavior due to this lack of demand. As you can see from
the NYSE trading range, the northerly sloping cycle is not a strong as the
trading ranges from late 2002 through most of 2003. However, bullish
expressions occur during the heart and soul of bullish seasonality
regardless of any technical or fundamental reason. The meandering segments
of 2002, 2003, 2004, 2005, and 2006 were appropriately followed by
historically significant bullishness in each of those years.
As earlier
stated, the Indicant began its buying barrage in October – November 2002
just after the market bottomed from the severe 2000-2002 Bear Market.
There were 239-buy signals between October 5, 2002 and November 9, 2002
out of the 296 stocks and funds tracked by the Mid-term Indicant at that
time. Even badly managed companies received a buy signal, which is a
common attribute of sustainable new bull markets. As many of you noticed,
those companies eventually dipped back to the south after the euphoria of
new bullishness.
Since August
18, 2006, the Mid-term Indicant generated 169-buy signals and only 71-sell
signals up until this past week. That is an unusually high number of buy
signals when considering historical seasonal market influences. However,
all Indicant models supported this recent buying surge just as they did in
October 2002 and March 2003. Now that the heart and soul of bullish
seasonality has expired, the resistance to generate sell signals has
softened. Buying stimulants within the Mid-term Indicant are more
reserved, but not as much during post election years.
Some of you
recall the Indicant Stock Market Report tracking the
Short-term Indicant Bear for the NASDAQ in 2002. It was the longest in
history. It even exceeded the Dow’s 1929-1932 Short-term Indicant Bear in
breadth and approached it in magnitude. The good news is that the NASDAQ’s
decline did not lead to a depression, which is a clear indication of how
little influence tech stocks have on the economy.
There are two
important axioms to remember and are always repeated in this report. 1)
Real economic wealth is created in only three ways - manufacturing,
agriculture, and extraction. 2) The only positive influence politicians
have on the economy is to undo their prior damage. That is also why the
presidential pre-election year is historically the most bullish on the
four-year cycle. If the strength of the current Mid-term Bull can be
subjected only to meandering behavior, like 2004, 2005, and 2006, then it
is possible for the current Mid-term Bull to be a record setting one in
terms of duration. However, as earlier stated in this report, this
historical standard is being threatened.
Political
institutions reduce wealth. Politicians continually attempt to
redistribute wealth, which flies in the face of the laws of nature. They
promote “middle class” attainment. The larger the middle class, the more
power politicians and their academic brethren have. The communists tried
that, resulting 99% poverty, while the ruling 1% lived like kings. In
other words, socialism rewards an ability to intellectualize, while
capitalism rewards the results of appealing effort.
The remainder
of this section, Secular Market Blend, is repeated, in part, from the past
several months, but it does not hurt to reread it each week. As time
progresses and conditions change, there will be modifications to it to
maintain a balanced frame of reference.
You will
notice many of the
mutual fund buy signals occurred in March 2003. Many of them endured
sell signals for the first time since early 2003 during the mildly bearish
meandering behavior in mid-2005. However, recent bullish spurts and the
bull’s resiliency have minimized selling activity. The Mid-term Indicant
is now signaling hold for nearly all mutual funds it tracks with the
exception of contrarian funds.
Many of you
recall how the market did not synchronize with the heart and soul of
bullish seasonality from November 2002 through February 2003. December
2002 was the most bearish since 1931, but not nearly as dynamic as the
1931 bearish expression. After the asynchronous behavior in the November
2002 rolling third of the year, the market turned bullish in March 2003
and again did not synchronize with normal seasonality. The Mid-term
Indicant continued signaling bull/hold during bearish seasonality in 2003.
The market continued moving north during that time, contrary to historical
standards. As stated in most of 2004, bearish expressions on a Mid-term
basis between May and October 2004 should not be surprising. That is
exactly what occurred. The result was a meandering market with a slight
bearish bias during most of 2004 and 2005 and the first two-thirds of
2006. This presidential pre-election year will be fundamentally tested in
the face of war, terrorists threats, and rising oil prices.
The Quick-term
Indicant’s bearish bias during most of 2006 was replaced with a bullish
bias in mid-August 2006. Several buy signals ensued shortly after that
bias shift. Bullish behavior occurred, as expected, since mid-August 2006.
The various Indicant models, economic fundamentals, and historical
standards suggest significant bullishness in the coming months, but keep
your eye on the Quick-term Indicant.
http://www.indicant.net/Members/Updates/History-Seasonal/HS0001.htm
Make certain
you read the entire pages on the above link. You will see there are
exceptions.
Stop Loss
Management
The Mid-term
Indicant recommends a stop loss of 8% on recent buys because of the
Quick-term Indicant’s bullish bias and bullishly evolving economic
fundamentals.
Use a 10%
trailing stop loss or the yellow or green values you will find on the
tables for your longer-term hold positions. If your stock or fund is above
the bearish yellow curve and below the green curve, set your stop loss
equal to the greater of the yellow curve and the trailing stop loss. If
your stock or fund is above the green curve, set your stop loss at no less
the value of the green curve or 10% trailing, whichever is greater. If
your stock or fund is above the red curve and you bought at the Mid-term
Buy signal, you should use the 10% trailing stop loss.
If you are up
by triple digit amounts and enjoy your ownership of the stock or fund,
then use a 20% trailing stop loss or the slow moving blue curve price. If
you really enjoy holding the stock, keep a close eye on the management.
Dilettante managers have a way of worming into the business. Watch closely
for cronyism and lazy-hazy management dialog. Keep your eye on lavish
spending and excessive concerns about social issues. Those types are more
interested in burning your money for their pleasures, as opposed to making
you money. High performing companies remain focused on honoring the
investments made by their shareholders.
In a few
instances, you will see a hold signal for a stock or fund that is down
from its buy signal or below one of the above conditions for selling. If
you are more of a trader than an investor, feel free to buy stocks and
funds with those “bearish” attributes. They are configured for a possible
rebound, while at the same time, it is important to set the stop losses
mentioned in this report. Use the Quick-term Indicant as a guide in your
decision-making processes. If the stock price is falling in a Quick-term
Bear market, it is not advisable to buy.
Do not short
on stocks if they are up from an avoid signal. Stocks go up more often
than they go down. Stocks have a tendency to march to their own drumbeat
when rising. Some stocks rise and continue to rise in the most severe of
bear markets. Short selling opens up an opportunity for the snakes on Wall
Street to take everything you own. They can cause a stock to rise at their
whim and without any regard to fundamental reason. It usually does not
make sense to bet against the sweat and toil of hard-working people.
Stock and
Fund Update
Click the
following link to see sorted performance of stocks and funds with
hold/avoid signals. In the past, they were included in this email message
but now display them on the website. This is available to the public,
while the specific buy and sell transactions are limited to members only.
The below table is public information and not updated on a frequent basis.
http://www.indicant.net/Non-Members/Performance/Top-Bot.htm
Economic Conditions – Inflation, Currency, Interest Rates
Click the
above heading for a summary of hard economic indicators.
As stated last
week, interest rates continue to meander, but with a slight southerly
bias. That southerly bias supports the underlying bullish bias. The Fed
apparently needs to threat of recession or significant cooling to justify
greater aggressions in reducing rates.
Commodity
prices remain mixed, although some are cycling favorably to the stock
market. Some continue hovering near their record highs. This, along with a
healthy economy, depresses the opportunity for aggressive interest rate
reductions.
As stated the
past three weeks, the U.S. Dollar remains mixed with other currencies, but
the bias is a slight strengthening trend. This strengthening is due, in
part, to the meandering interest rates. Expect the dollar to weaken if
interest rates decline.
Fear
Metrics: Economics and Terrorism
Vanguard Gold and Precious Metals (VGPMX) - #19 is up 305.9% since the
April 13, 2001 buy signal. Its annualized growth since that buy signal is
50.7%. It moved to the north in 17 of the past 23-weeks. This fund moved
north for three consecutive weeks.
Fidelity Gold, Fund #28, is up 43.7% since the Mid-term Indicant
signaled buy on August 26, 2005. That annualizes to 27.4%. This fund moved
mildly north the past two weeks after two weeks of moving aggressively to
the south.
State Street Research Global #9, SSGRX, which is isolated in the
energy sector, is up 262.3% since the Mid-term Indicant signaled buy on
August 16, 2002. It is annualizing at 56.2%.
Vanguard Energy #18, VGENX, is up 175.5% (annualized at 43.6%) since
the Mid-term Indicant signaled buy on April 5, 2003.
Fidelity Energy Services #40, FSESX, is up 139.3% (annualized at
41.7%) since the Mid-term Indicant signaled buy on December 6, 2003.
Fidelity Energy #39, FSENX, is up 134.7% since the Mid-term Indicant
signaled buy on August 16, 2003. It is annualized at 36.9%.
These energy
related funds moved aggressively to the north last week.
Investors in
these funds are supporting a 1970’s type of market with high inflation and
high oil prices. Energy and gold always do well during such times.
Fundamentals appear to be shifting in favor of selling the above funds
(09/10/06). Do not sell until the Mid-term Indicant signals sell. They
continue to rebound and are enduring fluttering. As long as capitalism
remains in vogue around the globe and alternative sources of energy
continue to lag exponentially increasing demand, a long-term perspective
on holding strategy is appropriate at this time.
The SQI
(Consolidated Short-term and Quick-term Indicant) model signaled buy for
the
GLD-ETF#11 on August 3, 2005. It is up 49.7% since then. It is
annualized at 29.9%.
The SQI
signaled buy for
ETF#03 – Energy and Natural Resources on March 26, 2003. It is up
180.1% (annualized at 44.5%).
Both of these
contrarian ETF’s moved aggressively to the north last week.
Mid-term
Indicant Positions – Ten U.S. Indices
There were no new bull signals and no
new bear signals. Last week’s bullishness removed the
bear signal threat.
All ten major
indices are bulls. They are up by an average of 24.2% since the Mid-term
Indicant signaled bull an average of 87-weeks ago. That annualizes to
14.4%, which is down significantly from the past three years. This is due
to the bear signals for the S&P400 and S&P600 Indexes on July 21, 2006,
which had been receiving a bull signal since October 25, 2002. Those two
indices endured some fluttering after the expiration of the tremendous
bull leg that lasted nearly four years. A new bull leg is underway and may
proceed just as vigorously for these two indices as the bull leg from
October 2002 through July 2006, where the S&P400 and S&P600 increased by
66.3% and 79.3%, respectively.
Dynamic
bullish statistics were also eliminated due to the Dow Transports bear
signal and a new bull signal on January 19, 2007. The Dow Transports
enjoyed a 23.1% gain from its March 21, 2003 bull signal until its bear
signal on March 19, 2004. It fluttered with a new bull signal one week
later on March 26, 2004 and enjoyed an 80.0%-gain until a new bear signal
on December 22, 2006.
Also, the Dow
Utilities increased by 104.4% from its October 25, 2002 bull signal to the
March 21, 2006 bear signal. After some fluttering, it received a new bull
signal on June 2, 2006. Interestingly, the Dow Utilities was the best
performing index since the October 25, 2002 Mid-term Indicant bullish bias
shift.
The Mid-term Indicant Dow Jones Industrial Average performance is now
at $37,807,971
That beats buy
and hold performance of $ $1,908,830 on a $10,000 investment in the Dow
stocks in 1900. The
MTI S&P500 is at $ $185,422. That beats buy and hold’s $140,671
on a December
31, 1971 $10,000 investment. The
MTI-NASDAQ is at $205,511.
That beats buy
and hold’s $85,166 on an October 18, 1985 $10,000 investment. The Mid-term
Indicant model beats buy and hold by 1,880.7%, 31.8%, and 141.3%,
respectively, for these indices as of this past week.
The Indicant’s
percentage advantage over buy and hold does not change during bull
signals. The advantage changes only during bear signals. That is because
the buy and hold model has to keep holding, while the MTI-RYS model avoids
bear markets. The only purpose of the Mid-term Indicant model is to avoid
the bear markets. That is why it beat buy and hold by nearly 2,000% over
the past 100+ years.
Click here to go to the current Mid-term Indicant assessment of the ten
major indices.
Click here for a tour of the Mid-term Indicant for major market indices.
Divergence
versus Convergence
Bullish
convergence occurred last week with bullish expressions in all sectors
including contrarian sectors. The stock market does not foresee economic
recession.
Mid-term
Indicant Positions - NASDAQ100 Stocks
Click here to see NASDAQ100 report card history.
Click here for
Mid-term Indicant Table of NASDAQ 100 Stocks.
Mid-term
Indicant Positions - Dow Jones 30 Industrial Stocks
Click here to see Dow 30 report card history.
Click here for
Mid-term Indicant - Table of Dow Jones Industrial Average Stocks.
Mid-term
Indicant Positions - Dow Jones 15 Utility Stocks
Click here to see Dow Utilities Report Card history.
Click here for
Mid-term Indicant - Dow Jones Utility Stocks Table.
Mid-term
Indicant Positions - Indicant Selected Stocks
Click here to see Indicant Select Stock Report Card history.
Click here for
Mid-term Indicant Table of Indicant Selected Stocks.
Mid-term
Indicant Positions - Mutual Funds
Click here to see Mutual Fund Report Card history.
The Mid-term
Indicant is now avoiding
ProFunds Ultra Short. It is down 17.9% since the Mid-term
Indicant signaled sell on September 15, 2006. Historical norms of market
cyclicality suggest the next buying opportunity for this fund may not
occur until 2009.
Click here for
Mid-term Indicant Table of Mutual Funds.
Always
remember never to keep more than 20% of your investment resources into a
single mutual fund. Sector investing in mutual funds is an extremely good
way to mix your investments.
Long Term
Indicant Positions - Dow Jones Industrial Average
The blue-chip
Long-term Indicant Bull signal was at 2895 for the DJIA in November 1991.
Keep in mind the Long-term Indicant generated only five bull/bear cycles
since 1920.
The Dow is up
331.2% (annualized at 21.4%) since the Long-term Indicant signaled bull
803-weeks ago. Economic data is the primary influence on the Long-term
Indicant. The recession, deflation, and inflation have not been strong
enough to signal bear. A link to the Long-term Indicant is below:
http://www.indicant.net/Members/Updates/LTI-Markets-DJIA/DJIA.htm
Quick/Short-term Indicant Stock Market Report - Summary
Quick-term
Red Bulls: Twenty of thirty;
bullish support has resumed.
Quick-term
Yellow Bears: None and
therefore non-bearish.
Short-term/Quick-term Non-Bearishness:
Countering “sustainable” deep bearish ambition.
Force
Vectors: Supportive of bullish
bias.
Vector
Pressure: Resistance to bearish
dominance has been weakened, but resuming strength.
Long-term
Hold Positions: Solidly safe.
Current
Quick-term Bias: Non-bearish.
Overall
Market Status: Short-term
Indicant bear signal on March 13, 2007 for NYSE and NASDAQ. The Short-term
Indicant is waiting for Force Vectors to retreat before re-signaling bull
Profit
Potential from Naked Options:
Improving with increasing volatility.
Volume:
Configurations remain in
support of bullish bias.
Special
Comments Continued from Monday, March 23, 2007
Current Force
Vector configurations suggest bearish behavior two weeks ago was a mere
bearish spurt in the face of a powerful bull. Force Vector usually meets
resistance when crossing from bearish domains to bullish domains. There
was some resistance, but it was exceedingly minor. They have continued to
skyrocket to the north and thus support a continuation of the underlying
bullish bias.
Quick-term/Short-term Indicant Stock Market Report Details
The
Short-term Indicant signaled bear on March 13, 2007 for both the Dow
and NASDAQ. Click here to see the
Short-term Indicant’s history. The market rebounded with solid bullish
expressions after this bear signal. The Short-term Indicant has yet to
signal back to bull. It is still detecting a high probability the market
will track toward the lower limit of the trading range. You will notice
the NYSE has nearly climbed back to its upper limit on the trading range.
It is busts through that upper limit, even greater aggressions by the bull
would be enjoyed.
The NYSE
volume was modest on today’s mixed market, contrasting previous day’s high
volume on bullish aggressions, The NASDAQ volume was again modest. The
NASDAQ
Indicant Volume Indicator is solidly into a lethargic pattern, while
the NYSE remains robust. A lethargic configuration is favorable to the
underlying bullish bias if, in fact, the market turns south toward the
lower limit of the trading range.
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 30-ETF’s. They are up 64.5% (annualized at
31.2%) since their respective buy signals an average of 106.3-weeks ago.
The SQI is not avoiding any of the 30-ETF’s.
The SQI model is the one that most of you will prefer for your trading
decisions. It generates fewer signals than the other two models and
represents consistencies in the Quick-term and Short-term outlooks for the
specific ETF’s. It also beats buy and hold on a regular basis, although
there is only eight years of proof. The quality of that proof is high
since this period includes a powerful bull and bear. The model sours a
little during meandering markets with an excessive number of signals from
time to time. Research toward perfecting continues.
Short-term Indicant Report Card, Status, and Charts
There were no
buy signals and no sell signals. Although there were no buy signals, the
Short-term Indicant is signaling hold for 30-ETF’s. They are up an average
of 66.3% (annualized 33.0%) since the STI signaled, buy, an average of
103.3-weeks ago. The STI is not avoiding any of the 30-ETF’s.
Keep in mind,
the Short-term Indicant is much more active in buying/selling than the
Consolidated model. The Quick-term Indicant, which follows, is even more
active.
Quick-term Report Card, Status, and Charts
There were no
buy signals and no sell signals. Although there were no buy signals, the
Quick-term Indicant is signaling hold for 29-ETF’s. They are up by an
average of 16.6% (annualized at 21.7%) since the QTI signaled buy an
average of 39.4-weeks ago. The Quick-term Indicant is avoiding one ETF. It
is up 2.8% since its sell signal four days ago.
Conflicts
Between the Short-term and Quick-term Indicants
There is one
conflict, where the Short-term Indicant and the Quick-term Indicant are in
disagreement between hold and avoid status. The bias shift on August 15,
2006 remains in favor of the bull even though bearish behavior would not
be surprising over the next few weeks. Current configurations suggests
that this bearish behavior will be without deep magnitude. Recent
bullishness has more than offset impending bearishness.
There are 89
hold signals out of a possible 90. There is one avoid signal. This ratio
supports sustainable bullish behavior.
Quick-term Indicant Bull/Bear Health Report
None of the
30-ETF’s are below their bearish yellow curve. The average position of all
thirty ETF’s is above bearish yellow by 8.7%. This is maintaining the
market’s non-bearish posture. This non-bearish configuration persists.
There is minimal support of any significant bearish assertions.
Twenty ETF’s
are above their respective bullish red curves. This supports the
underlying bullish bias. This is again a very healthy Quick-term bull.
All thirty
ETF average positions are 0.8% above their bullish red curves. This
attribute is now positive/bullish and in full bull 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.
One of the
ETF’s is contacting its breakout line. As stated the past several months,
the high concentration of breakout-contact the past several months is
solidly bullish. Although bearish behavior for a two-week period disrupted
this bullish attribute, contact in two of the past three days with one ETF
is certainly non-bearish overall. It is bullish for the ETF#12, Utilities,
which is the one ETF making contact in two of the past three trading days.
The average
distance from breakout contact is at 2.8%. This is approaching bullish
exuberance again, but do not be surprised at a pull-back.
None of the
ETF’s are contacting their respective breakdown lines. The average
distance from the price and breakdown is 22.4%. This configuration
provides tremendous non-bearish support, which has been the case since
March 2003. There have been several bearish “spurts” since then, but
always remained just a mere spurt. The probability of immediate contact
remains low and thus a non-bearish bias is maintained on a short-term
basis.
This
attribute remains solidly non-bearish, regardless of recent bearish
behavior.
ETF Force
Vector Configurations
You can scan
the
Quick-term Indicant for Exchange Traded Funds table and click on the
charts to observe Force Vector configurations. Scroll down each of the
charts, where a quick link has been added to take you to the next series
of Quick-term ETF charts. Use you back arrow on your browser to return to
the previous page.
Twenty-nine of the thirty ETF Force Vectors continue toward bullish
domains. That is a significant increase the past four trading days and
remains in full bullish support. This Force Vector behavior is a testament
to the strength of the underlying bullish 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 signals today for the third consecutive days,
Twelve
ETF Vector Pressures are in bullish
domains, which is down considerably since last August, but up from four on
March 16. This configuration continues to support the bullish bias shift
from August 15, 2006. This bull’s resiliency the past four days have
minimized immediate probability of bearish dominance.
Make certain
you sell naked options when the Force Vectors shift direction or within
two days of the purchase, whichever occurs first. If you are unfamiliar
with this, take the
options tour.
Remember
options trading is risky. Never offer “market prices.” Always bid low in
hopes of an intraday contrarian movement to the underlying assumption of
directional behavior. Always place day-orders, only. That keeps the floor
folks out of your pocketbook. Do not despair if your order does not take.
There are plenty of opportunities throughout the course of the year.
Remember, stalking is the key to success here. Although not necessary for
stock market success, those of you who have a gambling instinct will enjoy
this. For those of you with a longer-term perspective, it does not hurt to
see what the short-term folks are thinking. The Indicant indicates both
perspectives.
Quick-term
and Short-term Indicant Summary
The shift
from bearish bias to bullish bias started on Tuesday, August 15, 2006
after maintaining a bearish bias since early February 2006. The Quick-term
and Short-term Indicant models continue suggesting a bullish bias. This
bias weakened two weeks ago, but has regained its bullish strength.
Force Vectors
have moved into bullish domains. Do not write covered call options, as the
current configuration does not support meandering or bearish behavior.
The
Quick-term Bull remains in tact.
ProFunds Ultra Short mutual fund moves inversely to the QQQQ by
exponential amounts. The Consolidated Indicant model is no longer avoiding
QQQQ, which no longer supports holding contrarian fund, ProFunds Ultra
Short.
To
familiarize yourself with viewing the market from an ETF perspective,
click the following update links.
Quick-term ETF Options
Quick-term Indicant for ETF’s
Short-term Indicant for ETF’s
Consolidated Quick-term/Short-term Indicant for ETF’s
Click here to the report card, which is updated weekly, to link to related
tours.
Links to the
Short-term Indicant and Indicant Volume Indicator are below:
Short-term Indicant for DJIA and NASDAQ
Short-term Indicant Tables for the Dow Jones Industrial Average Index
Short-term Indicant Table for the NASDAQ Composite Index
Indicant Volume Indicator
Indicant
Conclusion
Force Vector
behavior prevented last week’s assumption that bearish behavior was on the
immediate horizon. On the contrary, configurations shifted in support of
bullish behavior early last week.
The Quick-term
and Short-term Indicant continue to express bullish bias, even though the
Short-term Indicant signaled bear. The bullish bias persists.
Do not get
lazy and set those stop losses for those stocks and funds that continue to
enjoy hold signals.
The daily
updates are on the following link.
http://www.indicant.net/Non-Members/Back%20Issues/QT.htm
Hyperlinks
To access all
major markets, stocks, funds, economic data, charts, statuses, etc, click
the following hyperlink:
http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20Summary.htm
In addition,
once you are inside the website, click on "members update" or simply log
in. It is on the top of every page in the web site so you can always find
your way back.
Happy
Investing,
www.indicant.net
03/25/07
March 18,
2007 Indicant Weekly Stock Market Report
Volume 03, Issue 03 ISSN 1526 6516 © The
Indicant Stock Market Report
This Week’s
Report
Is Bearish
Behavior Sustainable?
The answer is
“not likely,” as opposed to a firm yes or no. Here is why bearish behavior
is most likely not sustainable.
This is a
presidential pre-election year. It is the most bullish on the four-year
cycle. No political incumbent is re-elected during economic recessions
regardless of political party. This includes congressional
representatives. So, during presidential pre-election years, politicians
will do all they can to support prosperity, including jaw-boning interest
rate reductions.
The stock
market typically anticipates economic behavior six to nine months ahead of
economic activity. That is why the stock market is traditionally bullish
in the pre-election year. It is as if it knows politicians will support
economic prosperity leading into the election and thus the bullishness.
Historical
standards would be a wonderful predictor to use if they were always
accurate. Unfortunately, the market takes delight in aborting any
tradition when given the opportunity. For example, the Dow collapsed 52.7%
in the presidential pre-election year of 1929. The Fed or politicians
could not stop that collapse. Too many years of stupid politics preceded
that particular stock market collapse. It takes many years to overcome
many years of cumulative stupidity, which was the case leading into the
Great Depression.
There is a
potential problem with this particular historical standard. Several weeks
ago, there were widely published reports regarding the historical
bullishness of the presidential pre-election year. If a critical mass of
investors and potential investors act on this widely published report,
rest assured the phenomena of commonality will exert itself and impose
bearishness. The majority of stock market traders cannot be successful in
the stock market. Sure enough one week after this widely published report
the stock market endured significant bearish aggressions.
Residential
properties and associate financing are soft right now. Much of the stock
market’s bullishness since 2003 and a healthy economy has been triggered
by people re-financing their homes for cash. That cash circulated through
the economy and in one way or the other, stimulated bullish behavior. This
phenomenon is chalked up in favor of the bear. This is a relatively new
phenomenon, but the related law of supply and demand for stocks is not
new.
Fundamentally,
economic conditions are still favorable. An economic slow-down will be
bullish in the sense the Fed would be forced to lower interest rates.
Inflationary threats, of course, will offset such a scenario.
Force Vectors,
as expected, shifted back to the south Friday. The market closed on a
bearish note Friday, which was also expected. However, Friday’s decline
was not as sharp as last Wednesday’s option buyers would have liked. The
depth of bearish cycles is difficult to predict, while it was obvious
there would be a bearish expression last Friday.
Unfortunately,
the Quick-term Indicant suggests more bearish behavior will occur on the
immediate horizon. The Quick-term Indicant is recommending covered call
options to protect the value of securities that desire continued holding.
The key
attribute on this impending Force Vector cycle is its bottom point. If it
is below its last minimum, expect sustainable bearishness. If the cycle
finishes above its prior minimum, bearishness will be mild. If the cycle
following the current one is robustly north, bullish dominance will
resume. Seasonal forces will most likely disallow bullish aggression, but
at this time of year, a meandering bull will be just fine.
Keep your eye
