March 30,
2008 Indicant Weekly Stock Market Report
Volume 03, Issue 05 ISSN 1526 6516 © The
Indicant Stock Market Report
This Week’s
Report
The Stock
Market Only Wants Four Simple Things Plus One
The four
simple things are 1) economic growth, low interest rates, low inflation,
and no deflation. So far, three of the four are in good shape. The plus
one popped up again; that is voodoo bookkeeping, lying, and/or stupidity.
It is unknown when voodoo bookkeeping originated, but it gained prominence
with Enron. Apparently, Bear Stearns read the Enron manual and unleashed
its misery. Other big banks are most likely in trouble, along the lines of
Bear Stearns. It will be interesting to see if they are forthcoming about
that ineptness versus voodoo bookkeeping. Keep in mind that many big banks
lost hundreds of millions on the Enron scandal. That was just one company.
The ma and pa real estate operations are many.
Free markets
impose complete and appropriate disdain for voodoo bookkeeping. Some may
prefer to see words, such as deception, dishonesty, or softer terms, other
than lying. It is lying. There is no gray in assigning debits and credits
and reporting numbers. Numbers were invented because of their clarity.
Debits are on the left hand side and credits are on the right hand side of
the ledger or T-account. A debited asset is equal to the credited cash or
debt incurred. Sure, there are funny accounts called goodwill, etc., but
they are clearly expressed on the balance sheet so that a viewer can
subtract their value if there is an “opinion” as opposed to simple
arithmetic that assigns that value. It only takes a few seconds to assign
a $750,000 value to a home, but when no one is willing to pay that prices,
the books are cooked. When the bookkeeper does not adjust it downward, to
say, $450,000, that bookkeeper is a simple liar and should be tossed into
jail-a real one. That is because the bookkeeper got his or her salary,
probably received a bonus because of the phone $300,000 profit, and the
shareholder lost money on the value of the stock when the truth was
learned. Some can rob a bank and some can rob shareholders. Either way, it
is stealing.
Voodoo
bookkeeping’s impact on the stock market remains unknown. Rest assured,
though, it will be strategically unfavorable. It appears that a lying
president, such as Bill Clinton, has imparted social acceptance of that
practice in contemporary U.S. society.
Analysts may
start peering more at bank balances, as opposed to income statements,
balance sheets, and cash flow statements released by corporate
bookkeepers. Accounting is one of the most structured professions, while
those of weak character and of the moral judgment of a reptile have
corrupted the standards of accounting. Now, politicians think they are
going “solve the problem.” They will not. They will only exacerbate the
problem. A significant amount of their political donations are derived
from voodoo bookkeeping type of organizations. In other words, they are
all pals.
Capitalistic
thinking solves all problems. Politicians on create problems. Bear Stearns
voodoo bookkeeping and the idiots who created the subprime mess opened up
Pandora’s Box for political intervention. Politicians love it when a huge
number of people have problems. That way they can tell those huge numbers
of poor souls what they want to hear and garnish all those votes. Of
course, those poor souls position in life will not change in the long run.
After all, they actually believe what the political voices say. And there
is nothing there. So, watch for more regulation. Watch for socialistic
minimization of risks. With that, there will be the offsetting
minimization of reward. Following that, the bull’s potential will be
dampened.
The magnitude
of the bull is influenced by those few who escaped the pitfalls of risk.
Without the risk, the reward is muted. The quality of life will take on
the dreaded “flat line.”
However, even
with that, the Short-term outlook for the stock market is bullish. There
are times when the stock market forgets about the big picture, which is
what the first few paragraphs of this section addressed. The market will
focus on three of the four simple things as being okay.
The damper on
the economy is the consumer. That $300,000 equity they thought they had is
not there. Many already spent that phony $300,000. Their inability to buy
is becoming more apparent each day. They have depressed retail sales. That
will depress production. That will lead to layoffs and further reduce
consumer spending. That is how depressions get started. After that,
deflation sets in. When that happens the stock market crashes to extremely
low levels. It will take some time, however, for that scenario to unfold.
Political influences will most likely accelerate that sadness in 2009.
There is a
silver lining for 2008, though. The “cheap U.S. dollar is offering some
bullish potential. This offers two scenarios, one of which is underway
right now. Those with a penchant for exporting products and services
should add to the payrolls. The balance of trade is approaching parity.
The U.S. may become the “poor country.” Just as the dilettantes export
jobs overseas, many foreign managers have imported plenty of jobs in the
U.S. and are positioned to reap financial benefit. Keep in mind, the U.S.
worker is among the most productive in the world.
The U.S. has
been headed in the wrong direction for over ten years. Organizations, such
as the United States of America, who head in the wrong direction, always
pay a price….
Dilettante
management moved labor operations overseas over the past several years.
There is nothing wrong with that since it helps the bottom line. But what
these dilettantes are doing is setting the framework for their
replacements. Rest assured, the next big wave of lost jobs in the U.S.
will be middle management first and then the upper crust will feel the ax.
Those ridiculous seven digit salaries are going to become obsolete in a
few years. That is fine. It will help the bottom line and get rid of those
who get fat “unearned pay checks.” A Chinaman with the same or even
sharper skills will be happy to garnish $50,000 or so. That has been
occurring in India for quite some time. The Russians are not resting
either. Those concerned about Wolverine football have no chance at those
who do not have Saturday afternoon distractions in the autumn.
Shareholders
will opt to pay a foreign manager wages to one who is more capable than
the U.S. manager. There is not one hireling who is worth more than
$250,000 per year in the United States. The only exceptions to this are
those who put their entire life savings into their organizations, as well
as their body and soul, such as the Bill Gates, Michael Dell types. Resume
writers’ who luck into those seven digit salaries days are numbered. Those
types lined the hallways of Enron and Bear Stearns. We have seen their
true capabilities, moral fiber, and unbelievable ineptness.
It is
difficult to assess who owns corporations with foreign investments ebbing
and flowing into and out of corporations. More foreigners should find
tremendous economic opportunity at buying stocks through U.S. stock
exchanges. That should depress the supply of stocks available to buy and
thus impart upward pricing pressure on stocks as long as the U.S. dollar
is weak.
The Dow is
down 7.9% so far this year. The last bearish election year was Bill
Clinton’s 1997 with a 6.2% drop in the Dow. Since World War II, there have
only been four bear markets in post election years. The worse was
Eisenhower’s 9.3% drop in 1957. The stock market is obviously sensitive to
the destructive behavior of politicians. It also knows that politicians
and their appointees bias policy in favor of fat pocket books and purses
on Election Day. That is why the post election year since 1832 loses
money. This is also one reason to expect bullish stock market behavior
before the end of this year. And that is also the reason to expect 2009 to
be bearish.
Keep in mind
if the bear regains momentum, the Quick-term and Short-term Indicant will
advise. 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
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 three sell signals. This brings the total buy
signals to 65 since February 1, 20008. The number of sell signals is at
185 since October 26, 2007.
Although there were no buy signals, the Mid-term Indicant is signaling hold for
202 of the 345-stocks and funds
tracked by the Indicant. The stocks and funds with hold signals are up an
average of 128.8%. That annualizes to 55.4%. The Mid-term Indicant has been
signaling hold for these 202-stocks and funds for an average of 120.9-weeks.
In addition to the sell signals,
the Mid-term Indicant is avoiding 140-stocks and funds of the 345- tracked
by the Indicant. The avoided stocks and funds are down an average of 21.8%
since the Mid-term Indicant signaled sell an average of 24.1-weeks ago.
One year ago, on Mar 30, 2007, the Mid-term Indicant was holding
273-stocks and funds out of the 345 tracked for an average of 103.4-weeks.
They were up by an average of 121.9% (annualized at 61.3%). There were
70-stocks and funds avoided at this time last year. Those avoided stocks
and funds were down an average of 5.6% since their respective sell signals
an average of 12.0-weeks earlier.
The Mid-term Indicant was signaling hold for 282-stocks and funds of
the 345-tracked two years ago on Mar 31, 2006. They were up by an average
of 129.4% (annualized at 68.3%) since their respective buy signals an
average of 98.6-weeks earlier. The Mid-term Indicant was avoiding
56-stocks and funds at that time. They were down an average of 9.0% since
their respective sell signals an average of 24.3-weeks earlier.
There were 230-stocks and funds with hold signals on April 1, 2005
since their buy signals an average of 76.5-weeks earlier. They were up by
an average of 87.2% (annualized at 59.3%). There were 87-avoided stocks
and funds at that time. They were down by an average of 29.1% from their
respective sell signals an average of 52.3-weeks earlier.
On Mar 27, 2004, the Mid-term Indicant was signaling hold for
249-stocks and funds out of 296-tracked. They were up by an average of
71.0% (annualized at 75.8%) since their buy signals an average of
48.7-weeks earlier. The Mid-term Indicant was avoiding only 43-stocks and
funds. They were down by an average of 24.7% since their sell signals an
average of 39.3-weeks earlier.
Five years ago, on Mar 2, 2003, there were 241-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 29.7% (annualized at 75.6%) since their
respective buy signals an average of 27.5-weeks earlier. There were
36-avoided stocks and funds then. They were down an average of 29.7% since
their respective sell signals an average of 26.6-weeks earlier. There was
one buy signal and 18-sell signals on this weekend five years ago.
Summary of Stocks and Funds with Buy and Sell Signals This past Week
To maintain appropriate security, you can see the Mid-term Indicant
"buy/sell" signals for stocks and funds for this week by clicking the
following link. It is in the member’s only section.
http://www.indicant.net/Members/Updates/All%20Update%20Forms/Buy-Sell%20Summary%20This%20Week.htm
As repeatedly stated, do not hold more than 10% of your investment
resources in a single stock and do not hold more than 20% of your
investment resources into a single mutual fund. Also, never fall in love
with a stock or fund. Only love the value of your portfolio. Never love
its contents. Management stupidity can wreak havoc on any stock or fund at
any time.
All updated information can be found from a single page at
Indicant.Net. Click the below link to that page. You will need your login
ID and password.
http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20Summary.htm
The
Quick/Short-term Indicant Stock Market Report
The Indicant website maintains the last twelve months of daily reports on
an annual basis. These weekly reports are maintained on the website
for much longer periods. Beginning in March 2006, the daily stock market
report for the last trading day of each week is imbedded in this weekly
report. This allows web-based retention records of the daily report for
much longer than the last twelve months.
The Daily
Indicant Stock Market Report for the last trading day of the current week
is near the conclusion of this weekly stock market report. It is emailed
each weekend, separately, so you can read it, either as a separate
document, or in this document.
The
Indicant Stock Market Report’s Secular Market Blend
The Dow is up
67.7% since its secular low on October 9, 2002. The NASDAQ is up 103.0%
and the S&P500 is up 69.3% since then. The small cap index, S&P600, is up
112.0%. 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.
The Dow is
down 13.8% since its last weekly closing peak in 2007. The NASDAQ is down
20.9% since its last cyclical peak in 2007. The S&P600 is down 18.7% since
its last closing weekly peak value in 2007. The Small Caps Index was
mildly bearish last week with a 0.1% decline, while the blue chips were
slightly more bearish with a 1.2% loss.
The NASDAQ is
down 55.2% since its last weekly secular peak on March 9, 2000. The S&P500
is down 13.9% 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, until recently. The NASDAQ needs to climb 123.3% to achieve a new
record high. Do not be surprised if this occurs after the year, 2025.
The Dow is
down 7.9% so far this year. The NASDAQ is down 14.7% this year.
The NASDAQ
year-to-date performance was bearish by 24.9% through this week in 2001.
Keep in mind the NASDAQ finished 2001 down by 21.1%. So far, this year
looks similar to that of 2001. There will be some more bearish cycles in
2008 and one of the reasons for expectations of a solid bullish cycle
ahead of those impending bearish cycles. The NASDAQ was down by 5.4%
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 2.6%. It finished up in that solidly bullish
year by 50.0%. It was down on this weekend in 2004 by 2.2% and down 8.4%
in 2005. Many of you recall that 2004 and 2005 were meandering bear
markets. In 2006, it was up by 4.5% and up by 0.1% at this time last year.
As previously stated, so far this year, the DOW30 is down 7.9% and the
NASDAQ down 14.7%. The NASDAQ and Dow are down at this time of year more
than any other year this century with the exception of 2001.
Bearish
behavior this year contradicts historical standards whereby the
presidential election is typically bullish. The political establishment
and their appointees are doing their part to support bullish behavior with
interest rate cuts and tax rebates, but the stock market is 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. So, many are losing their homes and having to
incur the wrath of the bear at the same time. Even with that being said,
the Quick-term and Short-term Indicant are configured for a bullish spurt
on the immediate horizon. As earlier stated, and repeated from last week,
those configurations are in a precarious position and could evaporate at
any time.
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%. The NASDAQ was down 9.9%
since the expiration of that bullish bias shift on March 11, 2008. The Dow
was down 5.0%. The ensuing bearish bias expired on March 11, 2008. The Dow
is up 0.5% since the March 11, 2008 bullish bias shift. The NASDAQ is up
0.2% since then.
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.
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 required avoidances are
inflation and economic stabilization.
Three of the
big four are okay for the time being; inflationary threats have cooled,
interest rates are low, and deflation is not yet threatening. The only
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 and the stock market do not
mix at all.
Keep your eye
on the daily stock market report.
Stop Loss
Management
The Mid-term
Indicant recommends a stop loss of 10% due to
bearish tendencies. Although the market is positioning for a bullish
rebound, it has yet to demonstrate that directional intensity.
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 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.
Although
demand is softening and recent data suggest inflationary threats are
resigning, it is remains a primary threat. If the CPI continues to rise,
falling interest rates will not stimulate bullish behavior. This paragraph
will remain until commodity prices demonstrate a cyclical decline on a
Mid-term Indicant basis.
Commodity
prices rebounded this past week, after falling precipitously last week. It
is too early to tell if last week’s behavior was an aberration or the
beginning of a southerly trend. The bounce north did not set new highs.
Interest rates
rebounded somewhat last week, but remain at historically low levels.
The U.S.
Dollar again weakened this past week. Continuing weakness should stimulate
some increased demand for U.S. based stock by foreign investors. Also,
U.S. exporters should enjoy increased demand for their products.
As stated last
week, 2009 is setting up to be a solid recession.
Fear
Metrics: Economics and Terrorism
Vanguard Gold and Precious Metals (VGPMX) -
#19 is up 373.6% since the April 13, 2001 buy signal. Its
annualized growth since that buy signal is 52.9%. It moved to the north in
49 of the past 81-weeks. It has been bullish in 20 of the last 32-weeks.
This fund has been bullish in five weeks of the last seven weeks. It was
solidly bullish last week, following solid bearishness in the previous
week.
Fidelity Gold, Fund #28, is up
15.8% since its buy signal on September 7, 2007. It is annualized at 27.9%
since that buy signal. This fund was solidly bullish in four of the past
six weeks. It was bullish last week.
State Street Research Global #9, SSGRX,
which is isolated in the energy sector, is up 307.0% since the Mid-term
Indicant signaled buy on August 16, 2002. It is annualizing at 53.9%. This
fund was bullish last week, following solid bearishness in the previous
three weeks.
Vanguard Energy #18, VGENX, is
up 219.6% (annualized at 43.5%) since the Mid-term Indicant signaled buy
on April 5, 2003.
Fidelity Energy Services #40,
FSESX, is up 203.2% (annualized at 46.5%) since the Mid-term Indicant
signaled buy on December 6, 2003.
Fidelity Energy #39, FSENX, is
up 180.4% since the Mid-term Indicant signaled buy on August 16, 2003. It
is annualized at 38.5%.
These energy
related funds were extremely bullish last week after being equally bearish
in the previous week.
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 111.1% since then. It is annualized at 41.3%. This fund has been
bullish in twenty-three of the past thirty-one weeks. It has been solidly
bullish in four of the last six weeks. It was bullish last week, following
significant bearishness in the previous week.
The SQI
signaled buy for
ETF#03 – Energy and Natural Resources
on March 26, 2003. It is up 242.3% (annualized at 47.7%). This fund has
been bearish in six of the past twelve weeks. It was bullish last week.
Mid-term
Indicant Positions – Ten U.S. Indices
There were ten new bull signals
and no new bear
signals.
The Mid-term
Indicant signaled bull for all ten major indices it tracks on March 20,
2008.
The Mid-term Indicant Dow Jones Industrial
Average performance is at $36,681,066
That beats buy
and hold performance of $1,858,573 on a $10,000 investment in the Dow
stocks in 1900. The
MTI S&P500 is at $174,196. That
beats buy and hold’s $128,829 on a December 31, 1971 $10,000 investment.
The
MTI-NASDAQ is at $209,851. That
beats buy and hold’s $78,404 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.
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 signaled sell for this fund on March 20, 2008
after it garnished 8% gain since its buy signal last January. It is down
2.3% since the March 20 sell signal.
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 322.0% (annualized at 19.6%) since the
Long-term Indicant signaled bull 856-weeks ago. Economic data is the primary influence on the Long-term Indicant.
Recessions, deflation, and inflation have not been strong enough to signal
bear since that bull signal. A link to the Long-term Indicant is below:
http://www.indicant.net/Members/Updates/LTI-Markets-DJIA/DJIA.htm
Quick/Short-term Indicant Stock Market Report - Summary
Quick-term
Red Bulls: Two of thirty; neither are non-contrarian,
losing mild bullish support. This should annoy the bull enough for it to
exert some influence early next week.
Quick-term
Yellow Bears/Threats: Twenty-one of thirty with continuing, but
diminishing bearish support.
Quick-term
Non-Bearishness:
QTI differential is bearish 8.5%. Bearish support continues to relax.
Short-term
Non-Bearishness: Breakout/breakdown differential is bearish 6.5%.
Bearish support continues to diminish.
Force
Vectors: The recent bullish cycle is mature, but many
nestled deep inside bullish domains. Although not a strong offensive
position for the bull, it has afforded a strong defensive position against
bearish aggression. As stated the past three days, do not be surprised at
bearish behavior on a near-term basis, which should be mild, based on
current configurations. Unfortunately, this was an accurate prognosis.
Configurations are setting up for some bullish behavior. Please read on.
Vector
Pressure: Eight in
bullish domains, which is non-bullish, but increases by three since last
Wednesday is supporting bullish behavior. The key indicator for bullish
dominance on a Quick-term basis is for Vector Pressure to cross into
bullish domains more thoroughly than the recent increase. If Force Vectors
turn sharply to the south, the expected bullish response will be delayed
for several days.
Immediate
Tactics: Buy
aggressively with the mind set that 2009 will most likely be extremely
bearish. Although the current cycle may indeed be a bullish spurt, it
could last for several months. If not, the Indicant’s daily stock market
report will advise.
Current
Quick-term Bias:
Many ETF’s contacted bearish yellow (or in near contact) last Tuesday. As
stated the past three days, such interactions typically incite bull/bear
battles. Be prepared for some volatility in the next few days. Many of the
major indices’ Vector Pressure is nearing bullish domains. Such proximity
also induces bull/bear battles. So, do not be surprised at increased
volatility, but with a slight edge to the bull in the next few days.
Overall
Market Status*:
8/15/06-bullish-bias expired on 01/04/08; Bearish bias expired March 11,
2008.
Profit
Potential from Naked Options: Volatility is high, enhancing option
opportunities.
Volume:
Preparing for
lethargy, which supports mild bullishness. This means the Dow could enjoy
a 200 point gain followed by a 180 point loss. In other words, lethargy
does not necessarily mean market stability. There point here is there is
little interest in directional intensity in either direction. Bearish
behavior the past three days was not supported by volume.
Quick-term/Short-term Indicant Stock Market Report Details
Click this sentence to view the VIX chart. As you can see, it remains
in position for cyclical behavior supporting a Quick-term Bull cycle.
Even with
today’s mild bearish expression, the S&P600 Force Vector continued to
rise. It eclipsed bearish domains three days ago. As originated in the
March 24, 2008 daily stock market report, it was stated to not be
surprised at bearish pressure in the next few days. As stated the past
three days, the Force Vector eclipsing of bearish domains is predecessor
to bearish expressions of varying magnitude and do not be surprised at
bearish pressure in the next few days.
Click this sentence to view the S&P600 chart.
As stated
last Wednesday, you can see from the chart,
there is a considerable gap between the S&P600 and its bullish red curve.
This gap, unfortunately, leaves considerable room for bearish expressions
without disrupting the Quick-term Bull now in progress. As of last
Wednesday a drop of 2.5% would interact with the bullish red curve. This
index fell to bullish red this past Friday. The last three interactions
with bullish red resulted in a short bullish spurt. This interaction is
expected to provide more bullish sustainability, based on current
configurations.
This
paragraph from the March 26, 2008 daily stock market report will remain
unchanged until configurations obsolete its message. Strong bullish
behavior from its current level would cause overheating and thus embellish
bearish ambition on a Quick-term basis. Profit-taking by short-term
traders would incite more fear and thus cause the market to drop deeply.
So, it may sound weird, but those of you desiring bullish behavior should
prefer some mild bearishness over the next few days. This will allow the
bull to solidify its position for a solid bull cycle for the next several
weeks. Most of the recent ETF buy signals remain in winning position,
albeit small. So keep your eye on the Daily Stock Market Report. If this
“bullish prognosis” is premature, rest assured, sell signals will be
unleashed. If the bullish cycle is not imminent, there should be at least
one solid bullish cycle this year with declining interest rates and at
historically low levels. If this increased liquidity does not inspire
economic improvements, the recession will border the next worse term; that
is depression.
The expected
bullish bounce did not occur on Friday. There should be one early next
week. Configurations surrounding such a bounce will add insight as to the
substance of the Quick-term Bull cycle prognosis and its potential
sustainability. This is a tough uphill battle, but the market has a knack
for doing that when fundamentals suggest a downward slope would be more
appropriate. Remember, the market does not react to today’s events. It can
become optimistic about the future when the common person is depressed
about economic outlook. The stock market does not care about personal
feelings. It desires a few simple things; economic robustness, low
interest rates, low inflation, and no deflation. So far, three are in
pretty good shape.
The
Short-term Indicant signaled bull on Tuesday, March 18, 2008. The Dow
is down 1.4% and NASDAQ is down 0.3%, respectively, since that bull
signal.
Please read
on. Click here to see the
Short-term Indicant’s history.
Both
Indicant Volume Indicators are now falling into a lethargic pattern
continuing the cause of little dynamic behavior in either direction. Light
volume last Thursday and Friday did not support bearish expressions on
those two days. This attribute favors bullish responses.
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 25-ETF’s. They are up by an average of 47.1% (annualized at 34.7%) since their respective buy signals
an average of 69.9-weeks ago. Although there were no sell signals, the
SQI is avoiding six-ETF’s at this time.
They are down by an average of 7.5% since
their sell signals an average of 10.2-weeks
ago.
The SQI model is the one that most of you will prefer for your trading
decisions. It generates fewer signals than the other two models and
represents consistencies in the Quick-term and Short-term outlooks for the
specific ETF’s. It also beats buy and hold on a regular basis, although
there is only eight years of proof. The quality of that proof is high
since this period includes a powerful bull and bear. The model sours a
little during meandering markets with an excessive number of signals from
time to time. Research toward perfecting continues.
Short-term Indicant Report Card, Status, and Charts
There were no buy signals and no sell signals.
Although there were no buy signals, the Short-term Indicant is
signaling hold for 27-ETF’s. They are up an
average of 60.4% (annualized 41.6%) since the STI signaled, buy, an
average of 74.7-weeks ago. Although there were no sell signals, there are
four ETF’s with avoid signals. They are down by an average of 9.9% since
their sell signals an average of 11.5-weeks ago.
The
Short-term Indicant is more active in buying/selling than the Consolidated
model. The Quick-term Indicant, which follows, is even more active.
Quick-term Report Card, Status, and Charts
There were no buy signals and no sell signals.
Although there were no buy signals, the Quick-term Indicant is
signaling hold for 26-ETF’s. They are up by
an average of 10.4% (annualized at 33.1%) since the QTI signaled buy an
average of 16.1-weeks ago. Although there were no sell signals, the
Quick-term Indicant is avoiding five-ETF’s. They are down by an average of
8.9% since their sell signals an average of 11.6-weeks ago.
Conflicts
Between the Short-term and Quick-term Indicants
There is one conflict, whereby the
Short-term Indicant and the Quick-term Indicant are in disagreement
between hold and avoid status. The combined Short/Quick Indicant models
identify 80-hold signals and only ten-avoid signals, providing a bullish edge. 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. That bias shift remains in effect, but
in precarious position.
Quick-term Indicant Bull/Bear Health Report
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
1.5%. After configuring with bullish support last Wednesday for the
first time since early January, the bear took offense with bearish
responses the past two days. This is setting up well for a counter attack
by the bull.
Only two of the ETF’s are above their bullish red curves. All thirty ETF average positions
are 7.1% below their bullish red curves.
Unfortunately, the two red bulls are non-contrarian, which no longer
supports bullish bias.
The QTI
differential is minus 8.5%, which supports the
bear, but diminishing in that 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
non-bullish.
The average
distance from breakout contact is 16.8%. Double digit variances from breakout contact for
fifty-seven consecutive trading-days is not supportive of the bull.
None of the thirty ETF’s are contacting
their breakdown lines, which is
non-bearish.
The average
distance between the price and breakdown is 10.3%.
This configuration is providing non-bearish support, which has been the
case since March 2003, but barely hanging on to that support. This is
falling precariously close to single digit support. The last time that
occurred was in August 2002, near the depth of the great bear leg from
late 2000 through October 2002.
The
breakout/breakdown differential is bearish 6.5%. This is a bearish attribute, shifting away
from bearish support.
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-six Force Vectors are in
bullish domains. That is up by sixteen in the last
six trading days, which is offering bullish energy. You will notice many
appear to have pinnacled. Their impending southerly movement will add
insight to directional intensity.
Most of the non-contrarian ETF’s approached their respective bearish
yellow curves, which was expected. Timidity is always a problem in
catapulting the bearish yellow curve after solid bearish onslaughts. If
they start moving southerly again with some crossing above bearish yellow,
the bear may regain solid control.
Unfortunately, the two non-contrarian ETF’s with red bull status
evaporated with Friday’s bearish expression. If that does not incite an
immediate bullish response, the bear may resume dominance, but
configurations suggests such a response would be muted and short-lived.
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. There have been three call option buy signals and no put option
buy signals the past three days. This offers mild bullish support.
Bearish behavior the last Thursday and Friday setup well for deeply
discounted buy offers for recent call option buy signals. Do not be
surprised at bullish support in the next day or two. However, for profits
to manifest, a bullish response is required on Monday as the two day hold
period will expire.
Only eight of the thirty ETF
Vector Pressures are in bullish domains, which continues configuring in
support of the bear. However, that is an increase
by three since last Tuesday. As stated last Wednesday, this
attribute had been holding steady and should increase in the next few
days. Continuing increases with this attribute will enhance bullish
strength. Many are on the verge of passing into bullish domains which
would be a blow to the bear.
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.
Continue avoid writing covered options due to volatility.
ProFunds Ultra Short mutual fund moves inversely to the QQQQ by
exponential amounts. The Consolidated Indicant model is
holding QQQQ. You will notice the Mid-term Indicant is signaling sell for
ProFunds Ultra Short this past weekend based entirely on the recent buy
signal of QQQQ by the Quick-term and Short-term Indicant.
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 1.4-weeks ago. It is no longer
configured as a red bull. It is down by 2.4% since all three models
signaled sell. You will notice that its Force Vector is deep inside
bearish domains.
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
Divergence
versus Convergence
The markets
have now enjoyed three consecutive weeks of bullish divergence. Energy and
commodities were again bullish, while the stock market was mixed.
Indicant
Conclusion
On the
surface, it appears the stock market is primed for a bullish cycle with
plummeting interest rates. Commodity prices were not supportive last week,
as they rebounded from the prior week’s bearish behavior. However, a
reduction in consumer demand has dampened inflationary threats for the
time being. On the other-hand, this could be interpreted as a projection
to economic recession/depression. In other words, the threat of deflation
may loom. Such a bearish scenario has greater opportunities in 2009 with
anticipated political meddling.
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, the mid-term election year.
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
03/30/08
March 23,
2008 Indicant Weekly Stock Market Report
Volume 03, Issue 04 ISSN 1526 6516 © The
Indicant Stock Market Report
This Week’s
Report
Aberrations
and Trends
On Thursday,
March 20, 2008, several economic configurations shifted in support of a
bullish stock market. Commodity prices fell. Interest rates fell. The
stock market was up. The only remaining unknown variables for bullish
influence are corporate earnings and economic well-being. This evaluation
is superficial in the sense that one day’s performance is not a trend or
even a cyclical movement. However, the underlying fundamentals offer
increasing potential for bullish behavior.
Declining
interest rates, coupled with minimal inflationary threats, is typically a
no-brainer when prognosticating a bullish stock market. Those attributes
manifested last Thursday. The stock market reacted bullishly, which is a
standard expectation based on any fundamental analysis. A continuation of
these dynamics should foster bullish market behavior.
Although this
is a superficial overview, it is not without substance. Fundamentals are
always the eventual force of stock market direction. This should be enough
to incite a solid bullish cycle. In other words, the stock market should
enjoy bullish behavior for several weeks. Even if such a bullish cycle
were a mere spurt, it should be sufficient for a double-digit gain (ten
percent or more).
As more data
is accumulated over the next few days/weeks, such as corporate earnings
and economic health, the market will react accordingly. Those desiring
bearish behavior will want to argue on behalf of economic
recession/depression and related deflation.
Some folks
have been critical of the Federal Reserve raising interest rates in 2006
and 2007. Many blame the Fed’s behavior as the culprit leading to the
sub-primed lending crisis. There is little doubt their raising interest
rates was influential to the sub-prime crisis. However, in defense of the
Fed, inflation could not be ignored. Energy and other commodities were
rising at breath-taking rates and thus fostering a valid threat of
inflation. The Fed’s job is to minimize inflation to healthy levels of
around four percent or less. Keep in mind, the Fed during periods of
perceived equilibrium will opt to fend off inflation, when its threat is
present. That was an issue when oil prices topped $75/barrel.
Many folks are
blaming the Fed but with a blind eye to the inflationary threats. Those
folks are economic descendants of those who set policy supporting
double-digit inflation and double-digit interest rates in the 1970’s. They
are not genius. They are two dimensional, hindsight analysts looking for
hype to promote their own well-being. It is easy to be critical “after the
fact.”
On the other
hand, how much are Fed employees and political appointees paid? Anyone
with an eighth grade education can plot commodity prices and then plot
paralleling interest rates. These Fed folks have degrees in economics and
we all know their record. Most cannot advise of a recession before the
recession. Most of the time they confirm economic hardship a couple of
years after it ends.
The Federal
Reserve’s understanding of human nature and mortgage contracts by the
gullible and for the gullible are unknown. It is apparent, though, the
Fed’s behavior was reactionary to inflationary threats and then to
economic gloom. It took stock market calamity to prompt the recent policy
adjustments now unfolding. Reactionary folks’ salaries should be held to a
minimum since anyone with an 8th grade education can do that.
The top salary in the Fed should not be more than six digits based on the
supply of folks who can do the job versus the demand of the handful of
folks “on the job.”
Human nature
holds that folks will buy the mansion based on emotion and the “perception
of affordable monthly payments.” The blinding emotion is predecessor to
the incapability of considering the maximum monthly payments with rising
interest rates contributed to the problem. Those who work for a salary and
bonuses cannot elevate their income to vacillating mortgage payments. The
folks in the mortgage industry who made those deals are not very bright.
This is especially obvious when they could not do what an eight grader can
do; plot oil prices and interest rates. So, as those idiots were lining up
mortgage deals for the gullible and emotionally blind people signing them,
chaos unfolded.
Energy is a
requirement of contemporary society. No bureaucrat, intellectual, or
politician will solve the problem of finite supply against rising demand.
They will jibber-jabber about it, but will not solve the problem. They
want you to think they know the solution, but every enjoyable possession
you have was not provided by a bureaucrat, intellectual, or politician. If
enough people think politicians, intellectuals, or bureaucrats are the
savior, the stature of these pontificators increases and the net worth of
those listening to them decreases.
It will be
interesting to see the stock market’s interpretation of economic health,
inflation/deflation
