March 29, 2009 Indicant Weekly Stock Market Report

Volume 3, Issue 05 ISSN 1526 6516 © The Indicant Stock Market Report

This Week’s Report

Overusing the Word Bottom - Again

The July 20, 2008 Weekly Stock Market Report reflected the overuse of the word, bottom. In that report, it was pointed out that giddy media suggested the market bottomed after each bullish spurt from February through July 2008. One of the popular bottoming topics during those days was XLF. Most pundits proclaimed it could not go lower at that time. It did and by nearly 80% lower since its February peak.

It is difficult for those living in New York to fathom penny stock status for companies housed in stupendous structures. An unconscious influence in thinking is that those huge buildings have tremendous book value and thus the penny stock status is unwarranted for the big banks.

The problem is what goes on inside the buildings. When J.P. Morgan, himself, walked the halls of those bank buildings, the air was filled with greatness. J.P. may be considered guilty by some for shutting down Tesla’s free energy concept, but when one is a banker one does not find solace in anything that is free; even if energy. J.P. was only protecting the interest of his shareholders and himself; in that order too.

Each successive generation of managers in the banking industry (or any industry) is weaker than the ones before them. Successful enterprises do not invite the hard-working entrepreneur. Such enterprises invite those bent on taking the easier path; all one has to do is write a resume, learn the latest buzzwords, and beg for a job. So, inside those stupendous bank buildings, incompetence swelled.

That incompetence escalated as those dilettante bankers became more engaging with politicians. Any businessperson simply talking to a politician will mess their brain up. It takes a tremendous amount of effort to cleanse the taint from any dialog with politicians. Those big bankers, though, are pals with politicians and thus the cleansing does not happen. With that clear and accurate thinking is not possible for those soft-handed dilettante managers.

The only humane cleansing element is capitalism. It destroys incompetence and replaces the decadent organizations with new and better ones. The government, to the delight of the overpaid dilettante managers, has interceded. The government of the elite is disallowing the highly efficient process of capitalistic cleansing. As long as corporate managers mingle with political leaders, do not expect prolonged and dynamic bullishness. On the contrary, do not be surprised at an uprising that promotes inhumane methods of capital cleansing. Universal law holds that the cleansing will be accomplished one way or the other. It always has. Survival of humanity requires this cleansing.

The current bullish spurt has been impressive. Such spurts stimulate a giddy media; much like that in early 2008. The media has been giddy many times since October 2007. With that, each little bullish spurt invited discussions regarding market bottoms. Bear markets always contain bullish rallies. This one has now enjoyed three consecutive weeks of bullish convergence; that is all sectors moving north. It is unlikely that a fourth week will enjoy that phenomenon.

One problem confronting the market is the impending earnings reports. It has been stated that “less bad” may turn out to be good for the bull. Earnings will no doubt disappoint and many will be below expectations. A ten to twenty percent reduction on the top line (revenue) is not linear to the bottom line. Losses are generally much larger and by exponential amounts. That is mainly due to fixed costs, which includes excessive salaries of dilettante managers.

The Dow is hovering just below 8,000. It is over priced on two fundamental fronts. First, socio-economic meddling is prohibiting the highly efficient methods of capitalism. Companies go out of business all the time. Preventing their collapse is immoral to those underlings who are the ones who typically replace the bankrupt operations. Banks and insurance companies should not be immune to collapse. Those big institutions have in their ranks highly competent folks who understand the business. They would start up more robust organizations upon the failure of their current employer. They would be more efficient because they would not employ the overpaid dilettantes who are responsible for their collapse.

However, your political leadership is propping up and supporting the overpaid dilettante managers. The normal process of capitalism is not replacing their incompetence.  Political leaderships do not want these dilettante managers to fall prey to capitalism. The politicians would lose much of their political campaign funding sources. So, the politicians are in the process of taking money from your great grandchildren to pay off contemporary dilettantes so those dilettantes can contribute heavily to the campaign funds of contemporary politicians. We discussed all of that last week.

Secondly, the stock market is always overpriced at its prior cyclical peaks and always underpriced at its previous cyclical minimum. At current levels, the stock market has not yet achieved the latter. Corporate earnings will not lead the recessionary escape; especially in the larger cap sectors. Retail sales, for the most part, must occur first. Although there have been some recent reasons for optimism, the upticks in consumer spending have not been dramatic. The downticks have been much more dramatic. Downtick drama typically offers the occasional uptick phenomenon. It is a mere statistical quirk that, from time to time, invokes investor emotionalism of blinding optimism.

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

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

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

The Mid-term Indicant generated no buy signals and no sell signals. There have been 538-sell signals since October 26, 2007 and 38-buy signals since October 31, 2008.

Although there were no buy signals, the Mid-term Indicant is signaling hold for only 22 of the 344-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 106.1%. That annualizes to 58.6%. The Mid-term Indicant has been signaling hold for these 22-stocks and funds for an average of 94.2-weeks.

Although there were no sell signals, the Mid-term Indicant is avoiding 322-stocks and funds of the 344- tracked by the Indicant. The avoided stocks and funds are down an average of 35.5% since the Mid-term Indicant signaled sell an average of 42.7-weeks ago.

The Mid-term Indicant is avoiding 99-of the 100-Mutual Funds tracked, excluding the 31-ETF’s tracked daily. The funds are down an average of 36.3% since their sell signals an average of 41.4-weeks ago. The 31-ETF’s trade more frequently and are updated in the daily stock market report.

The Mid-term Indicant signaled, buy, for contrarian MF#22-USPIX Ultra Short on Feb 20, 2009.  It has been a typical post election year fund to hold, as it moves up while the market moves down. You can garnish the same benefit by buying QID with less expense.

One year ago, on Mar 28, 2008, the Mid-term Indicant was holding 202-stocks and funds out of the 345 tracked for an average of 120.9-weeks. They were up by an average of 128.8% (annualized at 55.4%). There were 140-avoided stocks and funds at that time. The avoided stocks and funds were down an average of 21.8% since their respective sell signals an average of 24.1-weeks earlier.

The Mid-term Indicant was signaling hold for 273-stocks and funds of the 345-tracked two years ago on Mar 30, 2007. They were up by an average of 121.9% (annualized at 61.3%) since their respective buy signals an average of 103.4-weeks earlier. The Mid-term Indicant was avoiding 70-stocks and funds at that time. They were down an average of 5.6% since their respective sell signals an average of 12.0-weeks earlier.

There were 282-stocks and funds with hold signals on Mar 31, 2006 since their buy signals an average of 98.6-weeks earlier. They were up by an average of 129.4% (annualized at 68.3%). There were 56-avoided stocks and funds at that time. They were down by an average of 9.0% from their respective sell signals an average of 24.3-weeks earlier.

On Mar 25, 2005, the Mid-term Indicant was signaling hold for 232-stocks and funds out of 320-tracked. They were up by an average of 85.8% (annualized at 59.3%) since their buy signals an average of 75.3-weeks earlier. The Mid-term Indicant was avoiding 84-stocks and funds at that time. They were down by an average of 28.6% since their sell signals an average of 52.3-weeks earlier.

Five years ago, on Mar 27, 2004, there were 249-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 71.0% (annualized at 75.8%) since their respective buy signals an average of 48.7-weeks earlier. There were only 43-avoided stocks and funds then. They were down an average of 24.7% since their respective sell signals an average of 39.3-weeks earlier.

On Mar 29, 2003, there were 241-stocks and funds with hold signals from the listing of 296-tracked by the Mid-term Indicant at that time. They were up an average of 18.3%, annualizing at 75.6%. There were 36-avoided stocks and funds then. They were down by an average of 29.7% since their sell signals an average of 27.5-weeks earlier. There were 119-buy signals on Mar 22, 2003, which was the beginning of a nice Mid-term Bull Leg that lasted through that year. Most continued to hold through the meandering bear of 2004 and early 2005. Several did not receive sell signals until late 2007 and early 2008 since those March 2003 buy signals.

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.

Link to this week’s buy and sell signals.

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. Socio-economic interference can devastate your holdings from time to time. Right now, the pendulum is swinging to the left. That is not good for stock equity related investing.

All updated information can be accessed from the following link. You will need your login ID and password.

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

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

Fundamentally, there is no reason to expect any bullish potential on a near-term, short-term, or mid-term basis. Earnings will continue to deteriorate and the normal capital “cleansing of the incompetent” is not being allowed by socialistic intervention. Wealth cannot be created when incompetent individuals are in the normal process of wealth creation; manufacturing, extraction, and agriculture. The natural ebb and flow of capitalism is not cleansing the inefficient and incompetent. Socialistic intervention will lead to higher costs, lower product quality, and a lower standard of living for all.

However, even with this “fundamental” gloom, there will be periods of technical rebounds. Those rebounds can lead to either bullish spurts or sustainable short-term rallies. Both spurts and rallies are configured the same in their first few days. After the first few days, the Near-term and Quick-term Indicant models differentiate spurts from rallies. Those of you who enjoy short-term trading will want to participate in rallies.

Technically, the Near-term Indicant qualified for a bull signal a few weeks ago, but the position of bearish indicators was not supportive. Therefore, the Near-term Indicant did not signal bull/buy, as would normally be the case. Such configurations are consistent with acute spurt behavior that quickly reverses. Once Force Vectors correct, obviations of directional intensity will be more apparent.

Click the following link that will take you to the Near-term, Quick-term, and Short-term Indicant models.

http://www.indicant.net/Members/Updates/STI-Mkts/STI-10-Indices/STI08.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 6.7% since its secular weekly low on October 9, 2002. The NASDAQ is up 38.7% and the S&P500 is up 5.0% since then. The small cap index, S&P600, is up 32.3% since October 9, 2002. All of the major indices were at new lows on the same week in 2002, which is a common attribute for bottoming. Interestingly, the NASDAQ100 is up 55.0% since October 9, 2002, which is more than the other indices. RIMM, Apple, and a few others who have strongly performed are the primary contributors. Now, the current economic environment is challenging them.

The Dow is down 45.1% since its last weekly closing peak on Oct 9, 2007. The NASDAQ is down 46.0% since its last peak on Oct 31, 2007. The S&P600-small cap index is down 49.3% since its last closing peak on Jul 19, 2007.

The NASDAQ is down 69.4% since its last weekly secular peak on March 9, 2000. The S&P500 is down 46.6% since its similar secular peak on March 23, 2000. The Dow is down by 33.7% since January 13, 2000 when it peaked from the 1990’s roaring bull. As stated the past several years in this report, do not be surprised at the NASDAQ equaling its March 9, 2000 high until after 2025.

As socialism increases, the NASDAQ may not hit its 2000 peak until after 2050. Even that depends on resurgence in entrepreneurialism and related capitalism. Politicians screwed up the economy and the majority apparently believes their proposed fixes. Yes, the masses, for the most part, are weak and stupid. It just depends on what critical mass believes the lies and what critical mass keeps moving forward with capitalism. There is always a chance that “Steven Jobs-like” creativity in product development and successful marketing may lead to economic benefits, in spite of governmental interference. There are hundreds of more potential creators in China, where U.S. politicians cannot squelch them. In about twenty years, a war between China and the U.S. would be China’s victory, as money funnels from government printing presses to insurance and bankers; those are abstract folks that have no idea how to build a weapon (or anything for that matter).

The good news is the politicians in Washington D.C. have reduced their power by weakening their already weak constituents. International competitiveness will continue reducing their power and influence. With that, capitalists around the world will continue providing products of appeal, while politicians continue exuding irrelevant commentary.

The Dow is down 11.4% so far this year. The NASDAQ is down 2.0% this year. Keep in mind the post election year is the most bearish and has lost money since 1832. So far, the stock market is conforming to this historical standard.

The NASDAQ year-to-date performance was bearish by 20.2% through this week in 2001. Keep in mind the NASDAQ finished 2001 down by 21.1%., which was congruent with standards of post-election-year-bearishness.

The NASDAQ was down by 6.3% through this weekend in 2002. Some of you recall the dynamic bear market in 2002, where the NASDAQ finished that year down by 31.5%. The bear cycle found bottom in October 2002, which is consistent with the mid-term year’s historical standards.

The NASDAQ YTD 2003 performance was up by 3.6%. It finished up in that solidly bullish year by 50.0%, which was consistent with historical pre-election year results. It was down on this weekend in 2004 by 2.2% and finished up by 8.6% for that year, which was congruent with election year bullishness although shy of magnitude standards.  It was down by 8.5% in 2005’s post election year, which maintained congruency to the historical standards of losses. Many of you recall that 2004 and 2005 were meandering bear markets. 2005 finished up by a mere 1.4%, which was an excellent year based on post election year historical standards. In 2006, it was up 5.0% on this weekend and finished that year with a 9.5%-gain, which again maintained congruency of historical bullishness for a mid-term election year. It was up by 0.9% at this time in 2007 with the Alan Greenspan scare but finished up that year by 9.8%, which was consistent with pre-election year bullishness. It was down 14.0% at this time last year. The NASDAQ finished down by 40.5% in 2008. That was contrarian performance to historical election year bullishness and the most bearish presidential election year since related records from 1832.

So far, this presidential post election year is performing consistently with historical standards. The capital markets understand socio-political influences are predominant in the first year of any new incoming administration and thus generally non-bullish. Politicians offer nothing pertinent to the quality of life, including health or wealth.

Keep your eye on the daily stock market report.

Stop Loss Management

The Mid-term Indicant recommends a trailing stop loss of 10% due to increasing bearish influences for your longer-term holdings. The Short-term and Mid-term Indicant continues signaling bear. Most of the longer-term holdings are with “avoid” signals, but a few are still holding. The risk of continued holding, even for the likes of Apple, is increasingly approaching the benefit to continued holding. If you feel you will need cash within the next two years, you should consider selling all stocks. (The Indicant is not signaling hold for any mutual funds, except those that short the market when bullish spurts are not threatening). The ETF are signaled on the Near-term, Quick-term, and Short-term Indicant and are updated daily. These shorter-term models participate in bullish spurts, while the Mid-term Indicant is more focused on fundamentals and longer-term technical data.

If your stock or fund is above the bearish yellow curve and below the green curve, set your stop loss equal to the greater of the yellow curve and the trailing stop loss. If your stock or fund is above the green curve, set your stop loss at no less the value of the green curve or 8% trailing, whichever is greater. If your stock or fund is above the red curve and you bought at the Mid-term Buy signal, you should use the 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.

Economic Conditions – Inflation, Currency, Interest Rates

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

Short-term interest rates have moved north in five of the past nine weeks. As stated the past few weeks, the issue confronting the Fed is the threat of deflation from a souring economic environment, followed by hyperinflation, as the supply of printed money is increasing well beyond productive capacities. That will eventually lead to demand exceeding supply by significant amounts and thus leading to hyperinflation. The demand will be generated from both socio-economic extremes; the very rich and the very poor. The middle class will be caught in the squeeze.

As stated last week, the problem with the devolving economy is that those buying goods and services are not producers. Although some of the very rich are highly productive, they are too few in numbers to offset the significantly higher number of the lazy poor-“give-me” generation. That will further depress the supply side, thereby adding socioeconomic problems in addition to the inflationary threats. The political structure is shortsighted on vote getting. Without strategic vision or for that matter, capability, political leaders endure their psychological problems and with that, wealth destruction by them continues.

There is no change from the past eleven weeks. Interest rates remain at record low levels. That normally fosters a bullish stock market. Unfortunately, souring economic conditions at an accelerating rate have reduced the normal bullish relationship of low interest rates as irrelevant. Although rates are low, the process of borrowing money is not a capitalistic relationship between borrower and seller and thus irrelevant to the capital markets. Government intervention is going to wreak havoc on the United States economy. Governments simply cannot perform due to their riskless and reckless decision-making.

As stated the past few weeks, the idea of capitalisms is to borrow or capitalize and expanding the supply of money through productive effort. That is not what is going on right now. Wealth creation will continue to slow and maybe even capsize.

The U.S. dollar continues to strengthen in its bullish cycle. It is a profoundly strong cycle with the exception of the Japanese Yen, where productive skills still exceed those of the U.S. in the management ranks. The dollar’s significance as an international currency is now under attack by the Chinese, who will eventually become the economic world power. The United States has been weakened severely by its tyranny by the majority and excessive focus on socio-economic programs that have absolutely nothing to do with cultural strength and economic wealth.

The U.S. economy is perceived to have the greatest chance of returning to robustness when compared to other countries. As stated the past nine weeks, the exception to this is China, who may or may not need U.S. consumption to bolster their economy. A weakening dollar against the Yuan may enjoy a longer-term labor relationship with the West. However, the stock market is focused only on the next six to nine months.

The commodities bearish cycle continues configuring at a bottom. It is already figured at prices supporting a low economic case. As long as they are bouncy near their cyclical minimums, the economic outlook should be considered as no worse than present. Although that is not positive, the magnitude of negatives has at least flattened for the time being.

Gold is an exception. It remains too risky to sell. Our hold positions are okay.  Its strength is a testament to the fear elements inherent in the economy. Economic conditions will be fostering the “hate element” of humanity. Keep your eye on the daily report as gold appears nearing a cyclical peak on a short-term basis, but fundamentally remains a solid hold.

As stated 24-weeks ago, once the euphoria of the socialistic methods are complete, rest assured the bear market will continue and with gusto. This is not technical. This is fundamental. You can see that prognosis continuing in spite of recent bullish expressions.

As stated 20-weeks ago, “probabilities remain high that any bullish cycle will be followed by a deep bear market in 2009. If taxes are raised on the highly productive and capital gains, do not be surprised at a 1,000 Dow by 2010.”

As stated 16-weeks ago, this bear has teeth, is hungry, and is nowhere near expiration. Cyclical spurts of a bullish configuration will occur from time to time, but the trend should remain bearish throughout this year and into 2010. Bullish spurts will occur from time to time. As we learned from the November 28, 2008 – January 21, 2009 bullish spurt, profit potential from them is limited and in some cases disappoint rather rapidly. The attempted spurt on Feb 6, 2009 faded quickly and expired on Feb 19, 2009. The short-term trader will trade on those spurts, while mid-to-long-term investor should remain on the sidelines.

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 162.2% from its April 13, 2001 buy signal until the Mid-term Indicant sell signal on October 3, 2008. It is down 36.7% since that sell signal. It has been bearish in nine of the last 13-weeks. It has been bullish the past three weeks, following three solid bearish weeks.

Fidelity Gold, Fund #28 is down 9.0% since the Midterm Indicant signaled sell on August 1, 2008. It was mildly bearish last week.

Vanguard Energy #18, VGENX, was up 144.9% from since the Mid-term Indicant buy signal April 5, 2003. It received a sell signal on October 3, 2008. It is down 23.3% since that sell signal. It was solidly bullish the past three weeks, following bearish behavior the past four weeks.

Fidelity Energy Services #40, FSESX, was up 107.2% since the Mid-term Indicant signaled buy on December 6, 2003. It received a sell signal on October 3, 2008. It is down 39.9% since that sell signal. It was also bullish the past three weeks.

State Street Research Global #9, SSGRX, was up 174.2% from its August 16, 2002 buy signal to the Mid-term Indicant sell on October 3, 2008. It is down 54.2% since that sell signal.

Fidelity Energy #39, FSENX, was up 81.2% since the Mid-term Indicant signaled buy on August 16, 2003 and the sell signal on October 3, 2008. It is down 24.9% since that sell signal.

Energy related funds were solidly bullish the past two weeks. They have endured significant bearishness in 19 of the last 33-weeks. The balance of supply and demand for oil appears to taking hold and with that, pricing stability.

As stated the past few weeks, the energy industry will not be bullish as long as politicians are trying to run it. The North American automotive industry will be weak for years to come as long as government is loaning money to dilettante managers. The quality of the products, regardless if fuel-efficient or not, will deteriorate. If you want to buy a car for your young daughter, do not buy American.

The Near-term Indicant signaled, sell, for ETF#03 – Energy and Natural Resources on Feb 17, 2009. It is up 1.7% since that sell signal. The Quick-term Indicant continues to signal avoid since September 2, 2008. It is down 38.9% since then. It was up 242.4% (annualized at 44.8%) since its previous buy signal on March 26, 2003 until the September 2008 sell signal.

The Near-term Indicant and Quick-term Indicant signaled buy for the GLD-ETF#11 on December 11, 2008. It is up 12.4% since that buy signal, annualizing at 42.3%. It gained 81.4% from its August 3, 2005 buy signal until the September 8, 2008 sell signal. Its annualized gain during that hold period amounted to 26.0%.

Gold was apparently overbought. It is simply enduring a near-term cyclical adjustment. Its long-term outlook appears solidly bullish. Keep your eye on its relative price position with respect to the Quick-term Indicant’s bearish yellow curve. As long as bearish yellow is inclining, long-term holding is with minimal risks.

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

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

The Mid-term Indicant signaled bear on February 20, 2009 for the ten major indices. They are up by an average of 4.7% since that bear signal.

Click this sentence to view a summary of their performance.

The Mid-term Indicant Dow Jones Industrial Average performance is at $25,504,680

That beats buy and hold performance of $1,183,049 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $120,730. That beats buy and hold’s $79,924 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $162,770. That beats buy and hold’s $53,578 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 2,055.8%, 51.1%, and 203.8%, 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 over 2,000% covering the past 100+ years. It will not be surprising to see the Mid-term Indicant outperform buy and hold by over 3,000% before the end of this decade, as the bear will gain momentum.

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 Feb 20, 2009. It is down 18.0% since then. It was hit hard by dynamic bullish behavior the past three weeks. It should rebound in the immediate future, but is somewhat threatened by a potential bullish rally in the next few weeks. The political structure right now is not friendly for wealth creating activities. This fund should perform very well for the balance of this year and the first half of next year. There will be bullish spurts from time to time that may trigger periodic sell signals for this contrarian fund, but right now, it appears headed for a triple digit gain since the buy signal in spite of recent stock market bullishness.

Click here for Mid-term Indicant Table of Mutual Funds

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 168.6% (annualized at 9.7%) since the Long-term Indicant signaled bull 908-weeks ago. Economic data is the primary influence on the Long-term Indicant. Recessions, deflation, inflation, and unreasonable interest rates have not been strong enough to signal bear since that bull signal. Even with today’s economy and stock market position, the 1991 investor is still up triple digit amounts, which remains above average performance when considering long-term planning. However, the Long-term Indicant is getting very close to signaling bear. A link to the Long-term Indicant is below:

Keep in mind this recession is not yet as bad as the 1979-82 recession. The Long-term Indicant is not influenced by short-term or mid-term cyclical behavior. It also takes into account longer-term performance within the model, both past and projected.

http://www.indicant.net/Members/Updates/LTI-Markets-DJIA/DJIA.htm

Short-term Indicant Stock Market Report - Summary

As stated on Friday, Feb 20, 2009, current configurations offered zero bullish support. As March 24, 2009-Tue, some of the Near-term attributes are shifting in favor of the bull, not enough to shift bias from bear to bull. As stated the past few days, the divergent gap between Force Vector and Vector Pressure can invite volatility. You saw that with recent bullish expressions, but lacking in the expected bearish expressions. Tuesday’s bearish expression and Wednesday’s profound intraday swings are fulfilling the requirements of volatility. There just needs to be a bit more bearishness for “settling purposes” so that directional intensity can proceed in either direction in a more civilized manner. Friday’s bearish behavior was helpful toward that end. Do not expect this coming Monday to be resoundingly bullish like last Monday.

As stated the past few days, to complete the essence of volatility, do not be surprised at bearish expressions in the next few days. Technical requirements for a near-term bull cycle are now configured, but Force Vectors need to cool before signaling bull/buy. That anticipated cooling could invite bearishness. Regardless of all that, the bear will resume dominance once this bullish spurt completes it cycle.

Vector Pressure is rising, supporting bullish behavior, but the rise is too rapid. That should invite, at worse, bearish behavior due to profit taking. Some of that occurred recently, but each time the bull has responded with gusto. As stated yesterday, this pace cannot continue.

Previous comments regarding XLF and UGY are still pertinent. Please click this sentence to link to prior comments. Keep in mind XLF continues receiving a bear signal, but its Vector Pressure suggests bullish potential for it and its fast moving cousin, UGY. However its Force Vector remains a bit too hot for any aggressive buying.

Near-term, Quick-term, Short-term Indicant Stock Market Details

The Near-term Indicant did not signal any new bias shifts today. All eleven major indices are up by an average of 2.5% since the Near-term Indicant signaled bear an average of 5.7-weeks ago. Contrarian VIX is down 16.8% since the Near-term Indicant signaled bull on Friday, Feb 20, 2009. As stated last week, the VIX was poised for bullish expressions in the next few days. Although it occurred shortly thereafter, the VIX continued being victimized by stock market bullish expressions. VIX’s bull is now being threatened by the overall bullish stock market. It should move up in price on impending profit taking sessions but possibly lacking in the fear element. The VIX’s stability and inability of Force Vector to move bullishly is discerning. It will explode northward, but the immediacy of doing so is being challenged. Its Force Vector did not turn south on Friday and thus the Near-term Bull signal persists.

The Quick-term Indicant also did not signal new bias shifts today. All eleven major indices are down 36.7% since the QTI signaled bear an average of 33.8-weeks ago. Contrarian VIX is up 78.0% since the QTI bull signal 29.0-weeks ago.

On-going attribute watch for major indices:

-Near-term Directional Intensity Unanimity-Bearish bias remains. As of Feb 20, 2009, bearish unanimity was established with bear signals for all major indices and a bull signal for the VIX.

-QTI Red Bull Status—Quick-term bias favors bear. None of the major indices possess this feature. Red Bulls disallow stock market crashing. This assurance remains absent.

QTI Yellow Bear Status-Quick-term bias favors bear. All major indices are yellow bears. Quick-term yellow bears offer no resistance level to falling stock prices. Contrarian VIX is not a yellow bear.

-NTI Blue Bull Status-Near-term bias favors bull (Mar 24, 2009). It now has an established northerly slope.

-NTI-Bearish Green Curve-Near-term bearish bias remains for all major non-contrarian indices. It is flattening out and thus supporting the potential of bullish sustainability. Contrarian VIX remains non-bearishly positioned, although recently gored by the bull market. The VIX disappointed last week, but its configurations remain at worse, non-bearish.

-Force Vector Position- Most remain deep inside bullish domains and behaving abnormally. They are near two year highs and thus bearishly configured. The behavior is unusual with fluttering at the top and at very high levels. Although rare, it correlates highly for short-term bullish sustainability, but not yet.

-Force Vector Direction – Most are bullishly mature, suggesting recent bullishness is not sustainable. However, there is substance to this bullish threat in terms of sustainability. The robustness of this cycle is impressive and suggests the market is very near concluding the Near-term Bear cycle now underway, but not yet. Emotionally based bullish spurts are short-lived and this one should conform to that standard. Unfortunately, they are wavering at the top, which is unfriendly to the bear. If VIX Force Vector turns south in the next day or two, then the bull will become dominant and regrets for holding VIX will be real.

-Vector Pressure Position- Short-term bearish bias has concluded (Mar 24). Most are moving north toward bullish domains. The NASDAQ and NAS100 are now inside bullish domains, which is supportive of bullishness but also an indication of near-term bullish conclusion. Force Vector is the problem here. As long as they vacillate at very high levels, there will not be any significant bullish support.

-Vector Pressure Direction –Short-term bearish bias now disrupted. They are now (Mar 21) moving in support of the bull.

-Tangential Protection - None of the 11-major indices possess this attribute.

-Reverse Tangential Bearish Detection -  Construction will begin on the next Near-term Bullish cycle. It will identify a future lower trading range upon completion of its construction. It is 100% accurate in predicting this future phenomenon. In other words, after this bearish cycle completes, there will be another one or two before the year is out. Depending on breadth and bullish magnitude of the impending bullish cycle, do not be surprised at a 5,000 or lower Dow by August/September. This should lead to a 3,000 Dow just ahead of the mid-term election year in 2010.

Click the Short-term Indicant to see the combined table of the Near-term Indicant and Quick-term Indicant. The table has links to charts for each. There is one chart containing both the Near-term and Quick-term Indicant.

The tour is still being developed but most of you are now familiar with the Near-term bull/bear cycles as well as the tangential protections and reverse tangential bearish detectors. Those latter two will be explained as they evolve in the next two to three weeks.

The NYSE and NASDAQ Indicant Volume Indicators  continue moving robustly, but cooling slightly and thus not supporting recent bullish expressions. As stated the past several days, this attribute is solidly in support of bearish behavior in spite of recent bullishness. Monday’s volume was not impressive on dynamic bullish behavior and Tuesday’s volume was equally unimpressive on aggressive bearish behavior. Since then volume has been softening; most likely in anticipation of a profit-taking session or two. 

Short-term Report Card, Status, and Charts

The Near-term Indicant generated no buy signals and no sell signals.

The Near-term Indicant is signaling hold for three ETF’s. They are up by an average of 8.2%, annualizing at 47.8% since their buy signals an average of 8.9-weeks ago. The NTI is avoiding 28-ETF’s. They are up by an average of 4.2% since their sell signals an average of 5.5-weeks ago.

The Quick-term Indicant generated no buy signals and no sell signals.

The Quick-term Indicant is signaling hold for only three ETF’s. They are up 28.1% since their buy signals 18.2-weeks ago. 28-ETF’s are down 36.0% since their sell signals an average of 32.3-weeks ago.

The selling and avoidance of the 99-non-contrarian funds were triggered by the Mid-term Indicant. Click here to get a quick overview of the regular mutual funds as they stood a few months ago. As you can see, many of them are down by double digit percentage points since the Mid-term Indicant signaled sell in late 2007 and in early 2008. The Mid-term Indicant is updated each weekend with a link to the member’s section. Members can click this sentence to get a more recent update.

Click the below link to see today’s Near-term, Quick-term, and Short-term Indicant signals. Links on that page will take you to a single chart with all the model’s position on each ETF.

http://www.indicant.net/Members/Updates/STI-SQI-QTI-ETF-SumPage/0UD%20QTI-ETF0-Sum.htm

Current Strategy-Short-term Indicant –Mar 27, 2009-Fri-Force Vectors continue resisting in their support of bearish behavior. However, as expected today’s bearish behavior was encouraging, but it was not a systemic bear. Do not be surprised at volatility for the next several days. Force Vectors should obviate directional intensity once they fall and by a significant amount. Mar 26, 2009-Thu-Force Vector behavior is not what is expected or desired. Some are indeed moving south, but the bull’s ambition is too strong. They, however, must adjust south before the Near-term Indicant can signal bull. It is just a matter of a few more days. The Quick-term Indicant generated the first buy signal in several months today. It is discussed near the end of this report, dated March 26, 2009. Mar 25, 2009-Wed-Still awaiting Force Vector correction to the south. Today’s 57-point NASDAQ swing tried to accommodate. However, there was a slight accommodation to this Force Vector requirement. The market may not be bearish in the next few days, but it will be difficult for it to be bullish with current Force Vector configurations. Mar 24, 2009-Tue-Force Vector correction remains the focal point ahead of bias shift. Once it shifts down and prices fall below Near-term Bullish Blue curve, it is likely the Near-term Indicant will signal bull. Robust Force Vectors is a typical leading indicator of weeks to months of directional intensity. That would be bullish. However, Force Vectors need to correct to the south first. Mar 23, 2009-Mon-Vector Pressure is rising, which supports short-term bullishness. This rise has the bull panting. There needs to be a correction in Force Vector before the Near-term Indicant signals bull/buy. Bearish expectations remain due to excessive Force Vector position. Keep in mind, any bull signal would be near-term only as another bearish leg will follow due to the impending reverse bearish tangential construction. Mar 20, 2009-Fri-Expect more bearishness next week. As previously stated, Vector Pressure is positioning for bullish support. Simply waiting for Force Vectors to settle and establish normalcy. In other words, they should continue moving south. If they do not, there will be several “Near-term” buy signals. The Quick-term will not signal buy until the ETF’s cross above their bearish yellow curves. Keep in mind, any near-term buy signals are for participation in bullish spurt potential and not long-term “fundamental” holding. There are no fundamentals in play for such support. Corporate earnings will continue to erode. Fixed costs absorption will be their problem as long as unemployment remains high. The differential between four percent and eight percent is the source of profit contribution; especially in retail sales.

Near-term and Quick-term Summary

The Feb 20, 2009 bearish bias is under assault by the bull, but remains in tact. Vector Pressure is now rising, but doing so at an abnormally fast clip. If Force Vectors fall to, but not below Vector Pressure, configurations will shift in support of a bullish bias. The problem confronting the bull remains to be Force Vector’s excessive altitude.

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

The former Quick-term Indicant signaled sell for QID  on November 21, 2008. It was down 33.7% on Friday, Dec 26, 2008 since that sell signal. Although this ETF remains configured for a bullish cycle, by rule, the Quick-term Indicant had to signal sell yesterday. To add insult, it rebounded today, but by rule it cannot receive a Quick-term buy signal until the Near-term Indicant signals buy. And that cannot happen until Force Vectors cross above X and the price is above Blue. Although QID is bullishly configured, violating rules will not facilitate recovery on the loss last week. Its bullish potential from its depressed Vector Pressure remains high.

Other Contrarian Funds

ETF#03-Natural Resources   - This ETF is down 36.8% since the Quick-term Indicant signaled sell on September 2, 2008.

As previously stated, the Quick-term Indicant will not signal buy until Vector Pressure is positive and Yellow Bear expires.

The Near-term Indicant signaled sell for this ETF on Feb 17, 2009. It is up 1.7% since then. It no longer remains with Near-term Bullish configurations with the exception of Force Vectors that need to drop a bit more.

ETF#11-Gold and Precious Metals  is up 12.4% since the NTI and QTI signaled buy on December 11, 2008. It is annualized growth is at 42.3% since then.

Force Vector’s crossed above Vector Pressure on Friday, March 20, 2009. If you are holding, set stop losses at a dollar or two below the Near-term Green Curve, which is at $88.05. It is rising and thus should be changed daily. Although a fundamentally sound hold position could be argued, its Vector Pressure is trending south. Short-term traders should be aware that the underlying short-term trend is bearish. It is under assault by the gold bear on a near-term basis. It lost red bull protection again today. The fundamental issue is perceptions of deflation versus inflation. It will move south if deflationary threats are perceived as real. It will eventually move north when inflation kicks in and there is little doubt about that on a longer-term basis.

Gold remains fundamentally sound for long-term holding and a technical measure of authenticity in that assessment is in its bearish yellow curve. If it crosses below bearish yellow, you will not want to be holding. The Near-term Indicant will signal sell once Force Vector crosses below N (into bearish domains) and the price is below Green.

ETF#14-Long Government  received a buy signal on Feb 23, 2009 from the Near-term Indicant. It is flat since then. It’s Vector Pressure remains positioned to support bullish behavior and very much so. Recent stock market bullishness has hampered this ETF’s bullish ambition.

We’re continuing to hold unless it becomes a Yellow Bear, as the goal is to simply beat buy and hold. It is up 18.1% since the Quick-term Indicant signaled buy on June 24, 2008 and annualizing at 23.7%.

Major ETF Events Today

There were none.

Click Quick-term Indicant, Near-term, and Short-term for all 31-ETF’s.

Other links:

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

Near-term and Short-term Indicant for Major Indices

Divergence versus Convergence

Bullish convergence occurred the past three weeks, following three consecutive weeks of combined bearish divergence/convergence. The market has expressed a combined bearish convergence/divergence in ten of the past 14-weeks. This is a testament to the bear’s strength. Obviations of sustainable bullishness do not occur until there are four consecutive weeks of bullish convergence. It will take one more weeks like the past three to configure such obviations.

Again, depending on political landscape, this bear could last for decades. FDR-like economic meddling will continue to erode economic wealth. Those responsible are either 1) stupid, 2) do not care, or 3) have motives that typically lead to war.

Indicant Conclusion

There were again no Mid-term Indicant buy signals for non-contrarian Mutual Funds. All 99-of those funds are with avoid signals.

Those funds tracked by the Mid-term Indicant are down by an average of 36.3% since their sell signals an average of 41.4-weeks ago. Although the Quick-term and Short-term Indicant models are holding a few of the ETF’s, the Mid-term Indicant will not signal buy for most of the Mutual Funds until they remove themselves from bearish domains. Current configurations suggest it could be a year or longer for that to occur.

Interest rates appear to be stabilizing similar to oil prices. Once the economy stabilizes, expect interest rates and/or inflation to mount a significant increase. Neither of those events will excite the bull.

Although commodity prices have been stable the past several weeks, deflation remains as an immediate concern. If it manifests, a 2500 Dow by 2010/11 may be optimistic. If the purported inflationary depression hits, the prognosis of a 2500 Dow would be similarly optimistic.

In spite of gold prices softening the past few weeks, the sharp increase in Gold and other precious metals prior to that softening, suggests inflation and/or fear elements are predominant themes. Neither of those phenomena will offer the bull much incentive to manifest.

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

03/29/09

March 22, 2009 Indicant Weekly Stock Market Report

Volume 3, Issue 04 ISSN 1526 6516 © The Indicant Stock Market Report

The Good News – The System Just Might Work

Only closed loop systems work. Your biological system that keeps you alive is closed loop. All good business systems are closed loop. Most political systems are closed loop. No system works without being closed loop. When a system is no longer closed loop, it expires. For example, if a jugular vein is slashed with a sharp instrument, the system is no longer closed loop and the biological system soon expires. In a complex business organization with all employees dependent upon one another, those dependencies are interlocked into a closed loop system that identifies weaknesses very quickly. If the system is not closed loop, those weaknesses are not identified. That leads to organizational expiration.

Clicking this sentence will illustrate a closed loop system between dilettante corporate executives and politicians.

The closed loop system noted on the link is on the verge of possibly being open-looped. If so, the organization’s survival will be at stake. Although this system has been in play for decades, the examples cited are recent ones. No matter how much intellectual mumbo-jumbo you hear about what caused the current economic crisis, the link clearly shows very simply, on one single page, what caused this crisis, crisis in the past, and crisis in the future.

Some pundits are proclaiming capitalism as a failure. Empirical data proves those pundits are liars or stupid, or both. The problem with tyranny by the majority is the majority’s inability to understand empirically supported facts.

The current closed loop system works this way. Cronyism works very simply; “you scratch my back and I will scratch yours.” Although most organizational systems work okay with this sort of closed loop system, those that take from others who are not in the system, eventually fail. Those who are victims from such a system rise up and say, “no more.” This rising may be peaceful or it may invoke bloodshed. History suggests bloodshed occurs more often than peaceful uprisings.

The U.S. taxpayer is not upset with the trillion dollar debt; at least not yet. They will be in a few years when their taxes accelerate with the hidden tax of hyperinflation. When that happens political incumbents will blame it on their predecessors, which is what all new managers do in all large organizations. So around 2013 or so, do not be surprised at hyperinflation and do not be surprised at the depth of the bear market that will result from that.

The economic fiasco caused by politicians will continue pestering the U.S. economy for decades to come. Their mistakes and stupidity has permeated too deeply into the system for an immediate recovery. The noise from pundits will confuse most of the masses, who are incapable of connecting more than two dots in any series of activities. Most are capable of only a single “if-then” conclusion. The link showing the closed loop system only has six dots, but that is too many for most. As the great Shigeo Shingo once said, “when the count is more than five, then it becomes many.” He was referring to human normalcy.

Those reading this report are capable of connecting all the dots. The Indicant is proud that its membership consists of smart folks. Emails from you clearly indicate the intelligence of its members. Not one has conveyed thought with dangling participles or split infinitives. Serving intelligent people keeps the pressure up. Politicians do not serve the intelligent. They promote growing populace of stupid since there is no law preventing the stupid from voting. Keep in mind that most (not all) college professors are in the stupid category. They are like many corporate dilettante managers; that is they excelled in reading and regurgitating what they read. The problem is what they read; it could be wrong or it could be right and there is absolutely and unequivocally no in between. They then bias the wrongs and rights to whatever favors them and thus the stupidity unfolds.

Politicians have their hands out for campaign funds. Politicians use those funds to promote themselves as some sort of savior. To be a savior, one must “give” something to someone. Since politicians do not produce anything, they must “take” from someone else so they can “give.” The ones they “take” from do not even know it is happening. Producers are highly focused on their vocation; not political mumbo-jumbo. Those receiving the gifts (the takers) actually believe the politician is some sort of savior and vote for them. That, in essence, is “vote buying.”

However, there is one story that suggests some hope. In Norman Rockwell’s book, The Rickover Effect, Mr. Rockwell stated the political system works. In the 1950’s and 1960’s Captain Rickover was assigned the responsibility of powering submarines with nuclear propulsion. Each year, the U.S. Navy brass submitted candidates of naval captains to Congress for promotion to Admiral. Congress since the beginning rubber-stamped the recommendations and they promotions occurred. Each year for several years, the U.S. Navy brass excluded Captain Rickover in spite of the outstanding work he had accomplished. It was Admiral Rickover who brought down the Soviet empire and not one politician contributed in spite of what one hears on talk radio.

Mr. Rockwell and two other civilian employees met privately with several Congressmen, advising that the Navy brass was envious of Captain Rickover and his profound accomplishments. Once Rickover had a million dollars or so left over from his budgeted expenses. He returned the money to stunned Congressman, who told him that had never happened before. Rockwell and his two friends requested the Congressman reject the Navy’s candidacy list for Admiral, if Rickover’s name was not on it. Sure enough, as usual, the Navy brass submitted the list to Congress that did not include Captain Rickover. The Congressmen kept their word to Rockwell. They rejected the list with a note back to the Navy brass that Rickover needs to be included.

The Navy was embarrassed by this, but acquiesced and included Captain Rickover on the list. He then became Admiral Rickover long past his deserving the promotion. Until then, the Congress had never rejected the candidacy listing for new Admirals. This delighted Rockwell, who was loyal to Rickover. With that, Norman Rockwell said the system works.

You see something similar developing. Although it will not extinguish the current bear market, the attack on the current closed loop political system may provide hope for your grandchildren’s children. Your children and grandchildren have already been screwed. It only takes a few wrong turns to lead to disaster and many generations to recover it.

Here is what happened and why is happening. Political leaders took about one trillion dollars from you and two generations below you and several other fine folks and gave billions of it to AIG, Freddie Mac, and Fannie Mae. To pay back “political debt,” your political leadership included bonuses and/or limitless pay increases to the executives of those “dog” organizations. It was only a few million bucks out of the billions wasted on the idiots by the idiots for the idiots. Somehow, that closed loop system was exposed to the media and they actually published it. The media is typically protective of this, but this story was too juicy to let it go. The taxpayer got angry about the bonuses and limitless salary increases and the politicians are now in retreat.

There must be a few politicians around that were not a part of this particular closed loop system, but rest assured this closed loop political system will not be extinguished unless there is a massive populace uprising. However, on a short-term basis, politicians may learn to temper it better and not be so greedy themselves.

Current media reports suggest that this small group of non-participative politicians intend on reviewing what caused the bonuses to be paid to failing executives. Those executives should be on the street looking for a job just as hundreds of thousands of other folks are doing. But rather than pounding the pavement, they continue living their lavish and unearned livelihoods just like their “supportive” politicians and using your tax dollars to do so. The politicians and these dilettante executives travel in the same circles. They are indeed pals. And they are indeed corrupt. Do not be tricked by those few dilettantes who say they will not except their bonuses. Rest assured they are rolling in enough “corrupt” unearned money that their phony comments of not accepting bonuses is just more political mumbo-jumbo.

As Rockwell indicated, the system may work. The politicians in an effort to cover up their cozy closed loop system attempted to tax those bonuses up to 90% for those executives making over $250,000 per year. If they could get that rushed through Congress, the matter would die, leaving the closed loop system of “give” and “take” in tact. However, some politicians are not going along with it. With that, Rockwell may be right again. We’ll see.

The political leaders who wrote the law, signed the law, and authorized the payment of bonuses and/or unlimited salary increases are lying. Although they authored the document approving bonuses and/or limitless pay increases for those dilettante executives, they are now proclaiming shock at the amounts. Politicians lying should not be surprising. But that is the game played and the political mumbo-jumbo heard by the ignorant is believed by the ignorant and those ignorant vote. The problem with all this ignorance is that it may represent the majority. If so, the demise of this democracy is becoming more evident. No democracy to date has demonstrated on-going sustainability. The same is true for kingdoms, dictatorships, communism, or socialism. In essence, no political system lasts too long. However, capitalism has prevailed and can do so without any political system.

To prevent the demise of the current democracy underway, maybe a few more people will be able to connect the few dots that need to be connected. If just 4% do that, then we may luck out in the next mid-term election in November 2010, where most of the political incumbents are voted out of office. Better yet, two different political parties will represent the executive and legislative branches of government after that election. If that were to occur, rest assured the bull would be pleased and demonstrate that pleasure very well in spite of the problems confronting your grandchildren. The problem is that between now and then, the corruption of absolute power will drive the markets further to the south and by a significant amount. This bear is not done.

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

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

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

The Mid-term Indicant generated no buy signals and no sell signals. There have been 538-sell signals since October 26, 2007 and 38-buy signals since October 31, 2008.

Although there were no buy signals, the Mid-term Indicant is signaling hold for only 22 of the 344-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 103.9%. That annualizes to 57.9%. The Mid-term Indicant has been signaling hold for these 22-stocks and funds for an average of 93.4-weeks.

Although there were no sell signals, the Mid-term Indicant is avoiding 322-stocks and funds of the 344- tracked by the Indicant. The avoided stocks and funds are down an average of 38.3% since the Mid-term Indicant signaled sell an average of 41.7-weeks ago.

The Mid-term Indicant is avoiding 99-of the 100-Mutual Funds tracked, excluding the 31-ETF’s tracked daily. The funds are down an average of 39.4% since their sell signals an average of 40.4-weeks ago. The 31-ETF’s trade more frequently and are updated in the daily stock market report.

The Mid-term Indicant signaled, buy, for contrarian MF#22-USPIX Ultra Short on Feb 20, 2009.  It has been a typical post election year fund to hold, as it moves up while the market moves down. You can garnish the same benefit by buying QID with less expense.

One year ago, on Mar 21, 2008, the Mid-term Indicant was holding 158-stocks and funds out of the 345 tracked for an average of 159.2-weeks. They were up by an average of 175.3% (annualized at 57.3%). There were 139-avoided stocks and funds at that time. The avoided stocks and funds were down an average of 21.6% since their respective sell signals an average of 23.0-weeks earlier.

The Mid-term Indicant was signaling hold for 266-stocks and funds of the 345-tracked two years ago on Mar 23, 2007. They were up by an average of 126.8% (annualized at 63.2%) since their respective buy signals an average of 104.3-weeks earlier. The Mid-term Indicant was avoiding 68-stocks and funds at that time. They were down an average of 5.9% since their respective sell signals an average of 13.0-weeks earlier.

There were 288-stocks and funds with hold signals on Mar 24, 2006 since their buy signals an average of 96.3-weeks earlier. They were up by an average of 115.4% (annualized at 62.3%). There were 57-avoided stocks and funds at that time. They were down by an average of 8.0% from their respective sell signals an average of 23.2-weeks earlier.

On Mar 18, 2005, the Mid-term Indicant was signaling hold for 235-stocks and funds out of 320-tracked. They were up by an average of 88.6% (annualized at 62.0%) since their buy signals an average of 74.4-weeks earlier. The Mid-term Indicant was avoiding 77-stocks and funds at that time. They were down by an average of 28.7% since their sell signals an average of 52.6-weeks earlier.

Five years ago, on Mar 20, 2004, there were 249-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 71.1% (annualized at 77.4%) since their respective buy signals an average of 47.8-weeks earlier. There were only 30-avoided stocks and funds then. They were down an average of 25.4% since their respective sell signals an average of 38.7-weeks earlier.

On Mar 22, 2003, there were 141-stocks and funds with hold signals from the listing of 296-tracked by the Mid-term Indicant at that time. They were up an average of 29.8%, annualizing at 74.8%. There were 36-avoided stocks and funds then. They were down by an average of 28.3% since their sell signals an average of 26.6-weeks earlier. There were 119-buy signals on Mar 22, 2003, which was the beginning of a nice Mid-term Bull Leg that lasted through that year. Most continued to hold through the meandering bear of 2004 and early 2005.

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.

Link to this week’s buy and sell signals.

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. Socio-economic interference can devastate your holdings from time to time. Right now, the pendulum is swinging to the left. That is not good for stock equity related investing.

All updated information can be accessed from the following link. You will need your login ID and password.

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

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

Fundamentally, there is no reason to expect any bullish potential on a near-term, short-term, or mid-term basis. Earnings will continue to deteriorate and the normal capital “cleansing of the incompetent” is not being allowed by socialistic intervention. Wealth cannot be created when incompetent individuals are in the normal process of wealth creation; manufacturing, extraction, and agriculture. The natural ebb and flow of capitalism is not cleansing the inefficient and incompetent. Socialistic intervention will lead to higher costs, lower product quality, and a lower standard of living for all.

However, even with this “fundamental” gloom, there will be periods of technical rebounds. Those rebounds can lead to either bullish spurts or sustainable short-term rallies. Both spurts and rallies are configured the same in their first few days. After the first few days, the Near-term and Quick-term Indicant models differentiate spurts from rallies. Those of you who enjoy short-term trading will want to participate in rallies.

Click the following link that will take you to the Near-term, Quick-term, and Short-term Indicant models.

http://www.indicant.net/Members/Updates/STI-Mkts/STI-10-Indices/STI08.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 down 0.1% since its secular weekly low on October 9, 2002. The NASDAQ is up 30.8% and the S&P500 is down 1.1% since then. The small cap index, S&P600, is up 23.1% since October 9, 2002. All of the major indices were at new lows on the same week in 2002, which is a common attribute for bottoming. Interestingly, the NASDAQ100 is up 47.0% since October 9, 2002, which is more than the other indices. RIMM, Apple, and a few others who have strongly performed are the primary contributors. Now, the current economic environment is challenging them.

The Dow is down 48.6% since its last weekly closing peak on Oct 9, 2007. The NASDAQ is down 49.0% since its last peak on Oct 31, 2007. The S&P600-small cap index is down 52.8% since its last closing peak on Jul 19, 2007.

The NASDAQ is down 71.1% since its last weekly secular peak on March 9, 2000. The S&P500 is down 49.7% since its similar secular peak on March 23, 2000. The Dow is down by 37.9% since January 13, 2000 when it peaked from the 1990’s roaring bull. As stated the past several years in this report, do not be surprised at the NASDAQ equaling its March 9, 2000 high until after 2025.

As socialism increases, the NASDAQ may not hit its 2000 peak until after 2050. Even that depends on resurgence in entrepreneurialism and related capitalism. Politicians screwed up the economy and the majority apparently believes their proposed fixes. Yes, the masses, for the most part, are weak and stupid. It just depends on what critical mass believes the lies and what critical mass keeps moving forward with capitalism. There is always a chance that “Steven Jobs-like” creativity in product development and successful marketing may lead to economic benefits, in spite of governmental interference. There are hundreds of more potential creators in China, where U.S. politicians cannot squelch them. In about twenty years, a war between China and the U.S. would be China’s victory, as money funnels from government printing presses to insurance and bankers; those are abstract folks that have no idea how to build a weapon (or anything for that matter).

The good news is the politicians in Washington D.C. have reduced their power by weakening their already weak constituents. International competitiveness will continue reducing their power and influence. With that, capitalists around the world will continue providing products of appeal, while politicians continue exuding irrelevant commentary.

The Dow is down 17.1% so far this year. The NASDAQ is down 7.6% this year. Keep in mind the post election year is the most bearish and has lost money since 1832. So far, the stock market is conforming to this historical standard.

The NASDAQ year-to-date performance was bearish by 24.8% through this week in 2001. Keep in mind the NASDAQ finished 2001 down by 21.1%., which was congruent with standards of post-election-year-bearishness.

The NASDAQ was down by 6.0% 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 bear cycle found bottom in October 2002, which is consistent with the mid-term year’s historical standards.

The NASDAQ YTD 2003 performance was up by 5.0%. It finished up in that solidly bullish year by 50.0%, which was consistent with historical pre-election year results. It was down on this weekend in 2004 by 3.1% and finished up by 8.6% for that year, which was congruent with election year bullishness although shy of magnitude standards.  It was down by 7.7% in 2005’s post election year, which maintained congruency to the historical standards of losses. Many of you recall that 2004 and 2005 were meandering bear markets. 2005 finished up by a mere 1.4%, which was an excellent year based on post election year historical standards. In 2006, it was up 4.9% on this weekend and finished that year with a 9.5%-gain, which again maintained congruency of historical bullishness for a mid-term election year. It was down by 0.3% at this time in 2007 with the Alan Greenspan scare but finished up that year by 9.8%, which was consistent with pre-election year bullishness. It was down 14.9% at this time last year. The NASDAQ finished down by 40.5% in 2008. That was contrarian performance to historical election year bullishness and the most bearish presidential election year since related records from 1832.

So far, this presidential post election year is performing consistently with historical standards. The capital markets understand socio-political influences are predominant in the first year of any new incoming administration and thus generally non-bullish. Politicians offer nothing pertinent to the quality of life, including health or wealth.

Keep your eye on the daily stock market report.

Stop Loss Management

The Mid-term Indicant recommends a trailing stop loss of 10% due to increasing bearish influences for your longer-term holdings. The Short-term and Mid-term Indicant continues signaling bear. Most of the longer-term holdings are with “avoid” signals, but a few are still holding. The risk of continued holding, even for the likes of Apple, is increasingly approaching the benefit to continued holding. If you feel you will need cash within the next two years, you should consider selling all stocks. (The Indicant is not signaling hold for any mutual funds, except those that short the market when bullish spurts are not threatening). The ETF are signaled on the Near-term, Quick-term, and Short-term Indicant and are updated daily. These shorter-term models participate in bullish spurts, while the Mid-term Indicant is more focused on fundamentals and longer-term technical data.

If your stock or fund is above the bearish yellow curve and below the green curve, set your stop loss equal to the greater of the yellow curve and the trailing stop loss. If your stock or fund is above the green curve, set your stop loss at no less the value of the green curve or 8% trailing, whichever is greater. If your stock or fund is above the red curve and you bought at the Mid-term Buy signal, you should use the 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.

Economic Conditions – Inflation, Currency, Interest Rates

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

Short-term interest rates have moved north in five of the past eight weeks. As stated the past few weeks, the issue confronting the Fed is the threat of deflation from a souring economic environment, followed by hyperinflation, as the supply of printed money is increasing well beyond productive capacities. That will eventually lead to demand exceeding supply by significant amounts and thus leading to hyperinflation. The demand will be generated from both socio-economic extremes; the very rich and the very poor. The middle class will be caught in the squeeze.

As stated last week, the problem with the devolving economy is that those buying goods and services are not producers. Although some of the very rich are highly productive, they are too few in numbers to offset the significantly higher number of the lazy poor-“give-me” generation. That will further depress the supply side, thereby adding socioeconomic problems in addition to the inflationary threats. The political structure is shortsighted on vote getting. Without strategic vision or for that matter, capability, political leaders endure their psychological problems and with that wealth destruction by them continues.

There is no change from the past ten weeks. Interest rates remain at record low levels. That normally fosters a bullish stock market. Unfortunately, souring economic conditions at an accelerating rate have reduced the normal bullish relationship of low interest rates as irrelevant. Although rates are low, the process of borrowing money is not a capitalistic relationship between borrower and seller and thus irrelevant to the capital markets. Government intervention is going to wreak havoc on the United States economy. Governments simply cannot perform due to their riskless and reckless decision-making.

As stated the past few weeks, the idea of capitalisms is to borrow or capitalize and expanding the supply of money through productive effort. That is not what is going on right now. Wealth creation will continue to slow and maybe even capsize.

The U.S. dollar continues to strengthen in its bullish cycle. It is a profoundly strong cycle with the exception of the Japanese Yen, where productive skills still exceed those of the U.S. in the management ranks. However, the yen has weakened the past few weeks as the Japanese have also reduced interest rates to very low levels. The yen strengthened last week with most of the other currencies against the dollar, but the cycle is U.S. dollar strengthening was not disrupted.

The U.S. economy is perceived to have the greatest chance of returning to robustness when compared to other countries. As stated the past eight weeks, the exception to this is China, who may or may not need U.S. consumption to bolster their economy. A weakening dollar against the Yuan may enjoy a longer-term labor relationship with the West. However, the stock market is focused only on the next six to nine months.

The commodities bearish cycle continues configuring at a bottom. It is already figured at prices supporting a low economic case. As long as they are bouncy near their cyclical minimums, the economic outlook should be considered as no worse than present. Although that is not positive, the magnitude of negatives have at least flattened for the time being.

Gold is an exception. It remains too risky to sell. Our hold positions are okay.  Its strength is a testament to the fear elements inherent in the economy. Economic conditions will be fostering the “hate element” of humanity. Keep your eye on the daily report as gold appears nearing a cyclical peak on a short-term basis, but fundamentally remains a solid hold.

As stated 23-weeks ago, once the euphoria of the socialistic methods are complete, rest assured the bear market will continue and with gusto. This is not technical. This is fundamental. You can see that prognosis continuing in spite of recent bullish expressions.

As stated 19-weeks ago, “probabilities remain high that any bullish cycle will be followed by a deep bear market in 2009. If taxes are raised on the highly productive and capital gains, do not be surprised at a 1,000 Dow by 2010.”

As stated 15-weeks ago, this bear has teeth, is hungry, and is nowhere near expiration. Cyclical spurts of a bullish configuration will occur from time to time, but the trend should remain bearish throughout the next year and into 2010. Bullish spurts will occur from time to time. As we learned from the November 28, 2008 – January 21, 2009 bullish spurt, profit potential from them is limited and in some cases disappoint rather rapidly. The attempted spurt on Feb 6, 2009 faded quickly and expired on Feb 19, 2009. The short-term trader will trade on those spurts, while mid-to-long-term investor should remain on the sidelines.

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 162.2% from its April 13, 2001 buy signal until the Mid-term Indicant sell signal on October 3, 2008. It is down 37.2% since that sell signal. It has been bearish in nine of the last 12-weeks. It has been bullish the past two weeks, following three solid bearish weeks.

Fidelity Gold, Fund #28 is down 8.3% since the Midterm Indicant signaled sell on August 1, 2008. It has been bullish the past two weeks after two weeks of solid bearish behavior.

Vanguard Energy #18, VGENX, was up 144.9% from since the Mid-term Indicant buy signal April 5, 2003. It received a sell signal on October 3, 2008. It is down 25.1% since that sell signal. It was solidly bullish the past two weeks, following bearish behavior the past four weeks.

Fidelity Energy Services #40, FSESX, was up 107.2% since the Mid-term Indicant signaled buy on December 6, 2003. It received a sell signal on October 3, 2008. It is down 42.3% since that sell signal. It was also bullish the past two weeks.

State Street Research Global #9, SSGRX, was up 174.2% from its August 16, 2002 buy signal to the Mid-term Indicant sell on October 3, 2008. It is down 55.5% since that sell signal.

Fidelity Energy #39, FSENX, was up 81.2% since the Mid-term Indicant signaled buy on August 16, 2003 and the sell signal on October 3, 2008. It is down 27.1% since that sell signal.

Energy related funds were solidly bullish last week. They have endured significant bearishness in 19 of the last 32-weeks. The balance of supply and demand for oil appears to taking hold and with that, pricing stability.

As stated the past few weeks, the energy industry will not be bullish as long as politicians are trying to run it. The North American automotive industry will be weak for years to come as long as government is loaning money to dilettante managers. The quality of the products, regardless if fuel-efficient or not, will deteriorate. If you want to buy a car for your young daughter, do not buy American.

The Near-term Indicant signaled, sell, for ETF#03 – Energy and Natural Resources on Feb 17, 2009. It is down 1.7% since that sell signal. The Quick-term Indicant continues to signal avoid since September 2, 2008. It is down 38.9% since then. It was up 242.4% (annualized at 44.8%) since its previous buy signal on March 26, 2003 until the September 2008 sell signal.

The Near-term Indicant and Quick-term Indicant signaled buy for the GLD-ETF#11 on December 11, 2008. It is up 16.0% since that buy signal, annualizing at 58.3%. It gained 81.4% from its August 3, 2005 buy signal until the September 8, 2008 sell signal. Its annualized gain during that hold period amounted to 26.0%.

Gold was apparently overbought. It is simply enduring a near-term cyclical adjustment. Its long-term outlook appears solidly bullish. Keep your eye on its relative price position with respect to the Quick-term Indicant’s bearish yellow curve. As long as bearish yellow is inclining, long-term holding is with minimal risks.

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

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

The Mid-term Indicant signaled bear on February 20, 2009 for the ten major indices. They are down by an average of 1.5% since that bear signal.

Click this sentence to view a summary of their performance.

The Mid-term Indicant Dow Jones Industrial Average performance is at $25,504,680

That beats buy and hold performance of $1,107,315 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $120,730. That beats buy and hold’s $75,281 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $162,770. That beats buy and hold’s $59,429 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 2,203.3%, 60.4%, and 222.1%, 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 over 2,000% covering the past 100+ years. It will not be surprising to see the Mid-term Indicant outperform buy and hold by over 3,000% before the end of this decade, as the bear will gain momentum.

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 Feb 20, 2009. It is down 7.1% since then. It was hit hard by dynamic bullish behavior the past two weeks. It should rebound in the immediate future, but is somewhat threatened by a potential bullish rally in the next few weeks. The political structure right now is not friendly for wealth creating activities. This fund should perform very well for the balance of this year and the first half of next year. There will be bullish spurts from time to time that may trigger periodic sell signals for this contrarian fund, but right now, it appears headed for a triple digit gain since the buy signal in spite of recent stock market bullishness.

Click here for Mid-term Indicant Table of Mutual Funds

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 151.4% (annualized at 8.7%) since the Long-term Indicant signaled bull 907-weeks ago. Economic data is the primary influence on the Long-term Indicant. Recessions, deflation, inflation, and unreasonable interest rates have not been strong enough to signal bear since that bull signal. Even with today’s economy and stock market position, the 1991 investor is still up triple digit amounts, which remains above average performance when considering long-term planning. However, the Long-term Indicant is getting very close to signaling bear. A link to the Long-term Indicant is below:

Keep in mind this recession is not yet as bad as the 1979-82 recession. The Long-term Indicant is not influenced by short-term or mid-term cyclical behavior. It also takes into account longer-term performance within the model, both past and projected.

http://www.indicant.net/Members/Updates/LTI-Markets-DJIA/DJIA.htm

Short-term Indicant Stock Market Report - Summary

As stated on Friday, Feb 20, 2009, current configurations offer zero bullish support. Recent bullishness was emotionalism only and thus unsustainable. The divergent gap between Force Vector and Vector Pressure can invite volatility. You saw that with recent bullish expressions. To complete the essence of volatility, do not be surprised at bearish expressions in the next few days. Last week, prices topped the Near-term Blue and Green curves, but has yet to shift their direction from bearish to bullish cycles.

Interestingly, most Vector Pressure is at or near bearish domains, suggesting the market is within a few weeks of concluding this near-term bearish cycle. That means a conclusion in time; not in depth. This near term bearish cycle could end in two weeks with the Dow below 6,000. This is not forecasting a Dow of 6,000; just letting you know the timing on directional intensity; not the magnitude. All we’re waiting for is Force Vector correction; they need to come down a bit more and that may not take more than a few days. If they start wavering in bullish domains, then Near-term Indicant buy signals will unfold.

Previous comments regarding XLF and UGY are still pertinent. Please click this sentence to link to prior comments. Keep in mind XLF continues receiving a bear signal, but its Vector Pressure suggests bullish potential for it and its fast moving cousin, UGY. However, as of today, its Force Vector is a bit too hot for any aggressive buying.

Near-term, Quick-term, Short-term Indicant Stock Market Details

The Near-term Indicant did not signal any new bias shifts today. All eleven major indices are down by an average of 3.6% since the Near-term Indicant signaled bear an average of 4.7-weeks ago. Contrarian VIX is down 6.4% since the Near-term Indicant signaled bull on Friday, Feb 20, 2009. As stated earlier this past week, the VIX was poised for bullish expressions in the next few days. As you saw, that is what occurred on Thursday and Friday. Similar behavior next week should not be surprising as the market remains overbought.

The Quick-term Indicant also did not signal new bias shifts today. All eleven major indices are down 40.4% since the QTI signaled bear an average of 32.8-weeks ago. Contrarian VIX is up 100.0% since the QTI bull signal 28.0-weeks ago.

On-going attribute watch for major indices:

-Near-term Directional Intensity Unanimity-Bearish bias remains. As of Feb 20, 2009, bearish unanimity was established with bear signals for all major indices and a bull signal for the VIX.

-QTI Red Bull Status—Quick-term bias favors bear. None of the major indices possess this feature. Red Bulls disallow stock market crashing. This assurance remains absent.

QTI Yellow Bear Status-Quick-term bias favors bear. All major indices are yellow bears. Quick-term yellow bears offer no resistance level to falling stock prices. Contrarian VIX is not a yellow bear.

-NTI Blue Bull Status-Near-term bias favors bear. Several indices are now above bullish blue curve and threatening the bear. Blue has separated from green, which would normally be bullish. The “expected” bearish response finally occurred today, but three days after the expectation.

-NTI-Bearish Green Curve-Near-term bearish bias remains solid for all major non-contrarian indices. Contrarian VIX remains non-bearishly positioned, although gored by the bull market the past few days. The VIX should show its pizzazz for a fast healer before the end of the week. Its performance yesterday was disappointing, but it can move more quickly than the other major indices. It was up over fourteen percent the last two days and that was paltry compared to its “volatile” potential. Do not be surprised at more VIX bullishness this coming week.

-Force Vector Position- Short-term bearish bias continues under mild threat. Most now reside in deep inside bullish domains. They are near two year highs and thus bearishly configured.

-Force Vector Direction – Most are now bullishly mature, suggesting recent bullishness is not sustainable. The robustness of this cycle is impressive and suggests the market is very near concluding the Near-term Bear cycle now underway, but not yet. Emotionally based bullish spurts are short-lived and this one should conform to that standard.

-Vector Pressure Position- Short-term bearish bias continues. Other than contrarian VIX, most are either in bearish domains or very close. This is configuring for bullish support, but Force Vectors have consumed too much energy from the bull. Once Force Vectors fall back to near Vector Pressure level, a sustainable bullish cycle will have a better chance of surviving.

-Vector Pressure Direction –Short-term bearish bias continues. Other than contrarian VIX, bearish direction is continuing, but threatened by the recent bullish robustness of Force Vector.

-Tangential Protection - None of the 11-major indices possess this attribute.

-Reverse Tangential Bearish Detection -  Construction will begin on the next Near-term Bullish cycle. It will identify a future lower trading range upon completion of its construction. It is 100% accurate in predicting this future phenomenon. In other words, after this bearish cycle completes, there will be another one after it completes. Depending on breadth and bullish magnitude of the impending bullish cycle, do not be surprised at a 5,000 or lower Dow by August/September. This should lead to a 3,000 Dow just ahead of the mid-term election year in 2010.

Click the Short-term Indicant to see the combined table of the Near-term Indicant and Quick-term Indicant. The table has links to charts for each. There is one chart containing both the Near-term and Quick-term Indicant.

The tour is still being developed but most of you are now familiar with the Near-term bull/bear cycles as well as the tangential protections and reverse tangential bearish detectors. Those latter two will be explained as they evolve in the next two to three weeks.

The NYSE and NASDAQ Indicant Volume Indicators  continue moving robustly, but cooling slightly and thus not supporting of recent bullish expressions. As stated the past several days, this attribute is solidly in support of bearish behavior in spite of recent bullish behavior.

Short-term Report Card, Status, and Charts

The Near-term Indicant generated no buy signals and no sell signals.

Although there were no buy signals, the Near-term Indicant is signaling hold for four ETF’s. They are up by an average of 2.9%, annualizing at 21.3% since their buy signals an average of 7.0-weeks ago. Although there were no sell signals, the NTI is avoiding 27-ETF’s. They are down by an average of 2.0% since their sell signals an average of 4.7-weeks ago.

The Quick-term Indicant did not generate any buy signals or sell signals.

The Quick-term Indicant is signaling hold for only three ETF’s. They are up 85.3% since their buy signals 27.2-weeks ago. 28-ETF’s are down 41.1% since their sell signals an average of 32.8-weeks ago.

The selling and avoidance of the 99-non-contrarian funds were triggered by the Mid-term Indicant. Click here to get a quick overview of the regular mutual funds as they stood a few months ago. As you can see, many of them are down by double digit percentage points since the Mid-term Indicant signaled sell in late 2007 and in early 2008. The Mid-term Indicant is updated each weekend with a link to the member’s section. Members can click this sentence to get a more recent update.

Click the below link to see today’s Near-term, Quick-term, and Short-term Indicant signals. Links on that page will take you to a single chart with all the model’s position on each ETF.

http://www.indicant.net/Members/Updates/STI-SQI-QTI-ETF-SumPage/0UD%20QTI-ETF0-Sum.htm

Current Strategy-Short-term Indicant –Mar 20, 2009-Fri-Expect more bearishness next week. As previously stated, Vector Pressure is positioning for bullish support. Simply waiting for Force Vectors to settle and establish normalcy. In other words, the should continue moving south. If they do not, there will be several “Near-term” buy signals. The Quick-term will not signal buy until the ETF’s cross above their bearish yellow curves. Keep in mind, any near-term buy signals are for participation in bullish spurt potential and not long-term “fundamental” holding. There are no fundamentals in play for such support. Corporate earnings will continue to erode. Fixed costs absorption will be their problem as long as unemployment remains high. The differential between four percent and eight percent is the source of profit contribution; especially in retail sales. Mar 19, 2008-Thu-Same as the past two days. Mar 18, 2009-Wed-Same as yesterday. Mar 17, 2009-Tue-Force Vectors are at extreme altitudes, which should invite immediate bearishness. Mar 16, 2009-Mon-The expected bearish response was somewhat mild today, but there is still more Force Vector room for additional bearishness. As stated last week, the NASDAQ and NASDAQ100 need to equalize their bearish participation to the other major indices. Since their Vector Pressure has not yet contacted bearish domains, expect more bearishness and do not be surprised at some dynamic bearishness before this Friday. Mar 13, 2009-Force Vectors are nearing max, which should invite a bearish response. Although Vector Pressure is suggesting the potential of a bullish spurt in a few weeks, now is not the time. Notice the indices consumed quite a bit of energy to climb above their respective Near-term curves. This configuration with incomplete Vector Pressure cycles and hot Force Vectors, coupled with declining Near-term curves, suggests the bear should resume dominance on a near-term basis. It is likely this response will be the last one before the next sustainable Near-term bullish cycle.

Near-term and Quick-term Summary

The Feb 20, 2009 bearish bias is under assault by the bull, but remains in tact. Vector Pressure is at or very near minimums. If Force Vectors fall to but not below Vector Pressure, configurations will shift in support of a bullish bias. The current problem confronting the bull is Force Vector’s excessive altitude.

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

The former Quick-term Indicant signaled sell for QID  on November 21, 2008. It was down 33.7% on Friday, Dec 26, 2008 since that sell signal. It continues to be down considerably since then. It is now rising and attained Red Bull Status on March 2, 2009. It is now configuring with a support for rapid bullishness. As stated last week, a bullish bounce for this contrarian ETF would not be surprising on the immediate horizon.

The Near-term Indicant signaled buy on Feb 19, 2009. It is down 7.8% since that buy signal. Its bullish potential from its depressed Vector Pressure is high right now. The expected volatility manifested last week and earlier this week. The volatility is a bit wilder than usual since this past week was triple witching week.  You will notice the Quick-term Indicant in the table adhered to the yellow bear rule and has not yet signaled sell.

Other Contrarian Funds

ETF#03-Natural Resources   - This ETF is down 38.9% since the Quick-term Indicant signaled sell on September 2, 2008.

As previously stated, the Quick-term Indicant will not signal buy until Vector Pressure is positive and Yellow Bear expires.

The Near-term Indicant signaled sell for this ETF on Feb 17, 2009. It is down 1.7% since then. It remains with near-term bearish configurations.

ETF#11-Gold and Precious Metals  is up 16.0% since the NTI and QTI signaled buy on December 11, 2008. It is annualized growth is at 58.3% since then.

Force Vector’s crossed above Vector Pressure on Friday, March 20, 2009. If you are holding, set stop losses at a dollar or two below the Near-term Green Curve, which is at $38.95. It is rising and thus should be changed daily. Although a fundamentally sound hold position could be argued, its Vector Pressure is trending south. Short-term traders should be aware that the underlying short-term trend is bearish. However, it is a red bull, which offers some degree of bullish protection. It is barely a red bull, though. The fundamental issue is perceptions of deflation versus inflation. It will move south if deflationary threats are perceived as real. It will eventually move north when inflation kicks in and there is little doubt about that on a longer-term basis.

Gold remains fundamentally sound for long-term holding and a technical measure of authenticity in that assessment is in its bearish yellow curve. If it crosses below bearish yellow, you will not want to be holding.

ETF#14-Long Government  received a buy signal on Feb 23, 2009 from the Near-term Indicant. It is down 0.6% since then. It’s Vector Pressure remains positioned to support bullish behavior and very much so.

We’re continuing to hold unless it becomes a Yellow Bear, as the goal is to simply beat buy and hold. It is up 17.4% since the Quick-term Indicant signaled buy on June 24, 2008.

Click Quick-term Indicant, Near-term, and Short-term for all 31-ETF’s.

Other links:

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

Near-term and Short-term Indicant for Major Indices

Divergence versus Convergence

Bullish convergence occurred the past two weeks, following three consecutive weeks of combined bearish divergence/convergence. The market has expressed a combined bearish convergence/divergence in ten of the past 13-weeks. This is a testament to the bear’s strength. Obviations of sustainable bullishness does not occur until there are four consecutive weeks of bullish convergence. It will take two more weeks like the past two to configure such obviations.

Again, depending on political landscape, this bear could last for decades. FDR-like economic meddling will continue to erode economic wealth. Those responsible are either 1) stupid, 2) do not care, or 3) have motives that typically lead to war.

Indicant Conclusion

There were again no Mid-term Indicant buy signals for non-contrarian Mutual Funds. All 99-of those funds are with avoid signals.

Those funds tracked by the Mid-term Indicant are down by an average of 39.8% since their sell signals an average of 40.4-weeks ago. Although the Quick-term and Short-term Indicant models are holding a few of the ETF’s, the Mid-term Indicant will not signal buy for most of the Mutual Funds until they remove themselves from bearish domains. Current configurations suggest it could be a year or longer for that to occur.

Interest rates appear to be stabilizing similar to oil prices. Once the economy stabilizes, expect interest rates and/or inflation to mount a significant increase. Neither of those events will excite the bull.

Although commodity prices have been stable the past several weeks, deflation remains as an immediate concern. If it manifests, a 2500 Dow by 2010/11 may be optimistic. If the purported inflationary depression hits, the prognosis of a 2500 Dow would be similarly optimistic.

In spite of gold prices softening the past few weeks, the sharp increase in Gold and other precious metals prior to that softening, suggests inflation and/or fear elements are predominant themes. Neither of those phenomena will offer the bull much incentive to manifest.

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

03/22/09

March 15, 2009 Indicant Weekly Stock Market Report

Volume 3, Issue 03 ISSN 1526 6516 © The Indicant Stock Market Report

This Week’s Report

A Government of the Elite for the Elite by the Elite

A producer of physical objects is, quite often, very wealthy; especially if the founder or an early generation manager of a manufacturing organization. You seldom hear from them. Many wear coveralls or are covered in grease. If you met one, you would never guess they are rich. Most are common sense thinkers and confined to the purity of physical object creation. They typically work 14-hour days or more. Their products are on their mind when their head hits the pillow late in the evening and that is the first thing on their mind when they wake up.

Most do not write books that the populace would read. They engage in technical details, which is an element that escapes most of the populace.  Most do not appear on television or make speeches. They are simply too busy. Those dilettante managers you see on TV are trying to talk their stock prices up, as opposed to staying at work and propping them up the old fashion way by creating values. Talk is the lowest form of abstract objects there is. That is what politicians do for the most part. When politicians put their low effort brain waves to paper, economic harm unfolds.

You know your neighbors and friends. You see politicians on television. Do they possess similar character and presentation attributes as your neighbors and friends? If not, then we do not have a government of the people, for the people, by the people. The system has devolved from the days when politicians had a day job and governed by their hearts on a part-time basis.

Alfred P. Sloan was a great manager. General Motors prospered for decades with his leadership, which was encumbered with his constant battling against FDR policies. As stated before in this weekly report, General Motors never lost money during the Great Depression and several economic recessions under Sloan’s leadership. Today’s dilettante management teams in Detroit cannot make a dime even in normal economic periods.

Some could argue that Sloan was not a great manager. There could be merit to that as most of his subordinates were the founders of the various divisions of General Motors. Founders are the real heroes of any economically prospering society. Heroes, such as Joe DiMaggio, are a by-product of the hard working efforts of founders; not the other way around. Without them, Joe DiMaggio would have never been allowed to demonstrate his athleticism.

The culprits to economic prosperity are all governments and politicians. At any rate, Sloan and his subordinates worked hard creating products of appeal and thus generating profound wealth and were successful in spite of FDR’s distracting and un-principled policies. Since Thomas Jefferson, the quality of politicians has gone downhill and certainly not of the people.

Contrasting the Sloan type of people to those in politics is easy to do. Politicians only create abstract objects. For example, when they outlawed liquor, the mafia’s distribution business enjoyed outstanding growth, plus some of those who quickly joined the elite circles, such as Joseph Kennedy. Joseph bred offspring of questionable character, who quickly joined in the political ranks because of their limitations in talent and the psychological problems inherent in those who wish to control vast amounts of humanity; not much different from Marx or Hitler. 

When Al Gore pushed through legislation to save the spotted owl in the Pacific Northwest, lumber production enjoyed profound growth in the Emerald Forest of South America. Some have related global warming to the destruction of the rain forest in South America. That is more dots to connect than most are capable. If some were willing to connect more dots, than simple one-dimensional if-then conclusions, one could very easily offer a poignant theory that Al Gore started global warming. Abstracts should require a simulator of consequences but done only by scientific thinking mechanisms and not “vote getting” mechanisms that influence tyranny by the majority.

As stated a few times in this report, physical objects are more difficult to produce than abstract objects. Physical objects fit inside of a designed “envelope” so to speak. In other words, they must fit into a specific amount of space. That can indeed be a very difficult undertaking. Abstract objects can create consequences but the prognosis of those consequences are seldom known at the time of their creation. In other words, if the abstract objects are wrong, no one knows. There is no conscious linkage from the original abstract object to the consequences from them. Building an automobile too wide or too heavy for public roads is immediately known and the linkage from design to conclusion is very conscious. The abstract world continues producing non-value add creations with absolutely no understanding of liability enhancement.

FDR policies were created over fifty years ago. They were wrong by evidence of a continuing and unrelenting government debt. Those policies impregnated the governmental institutions and they have been flourishing ever since then. You are witnessing first hand that FDR was wrong, but most do not link contemporary issues to egotistical maniac acts over sixty years ago.

Many still see the earth as flat. They think history started with their first memory. That is why the bad side of history tends to repeat. After birth and the corresponding escape from tabula rasa, people see things like cars, trains, planes, stoves, air conditioners, etc. at an early age. Since history starts with their first memory, they cannot relate to their surroundings void of any manufactured object; E.g., standing naked in a forest with snakes, gators, and other animals sniffing them as a meal. They did not participate in the creation of those wealth-building values and by default take them for granted. That lack of respect for what does exist is the sole source of generational floundering. The hippies riled against LBJ stupidity, but for the wrong reasons and using the wrong methods. Cooking ones brain with dope is not solid.

Many think the store shelves of food were always there since the beginning of time. They have no idea of the difficulties encountered by farmers and the likes of Alfred P. Sloan and thousands of others to get the car to run smoothly and comfortably after Henry Ford and some Germans figured out how to get it to move without using a horse. That was a lot more difficult than the writing of the Communist Manifesto or the United States Constitution.

However, the United States Constitution facilitated the evolvement of Henry Ford. There was no one like him in communist Russia with respect to demonstrated performance. The potential of some young Russians in 1900 were the same as Henry Fords. However, the Communist Manifesto system squelched their potential to evolve to the likings of Henry Ford. In essence the Communist Manifesto directly stated to those young Russian men, who were just as capable as Henry Ford, “you will be no more or no less than the lowest member of our society.” That is what socialism does; it does not elevate anyone; it lowers all.

In the meantime, while those young Russians with the same potential of Henry Ford, lived their lives in misery and poverty, while the leaders of the Communist Party enjoyed the good life. Two-hundred or so million folks labored in the fields and factories for very little and their sweat and toil provided for the two to three thousand communist party leaders and the gold medal-winning athletes.

Today, political leaders are not being laid off. The headcount in Congress is the same as it has been for two hundred years. Headcount should be directly proportionate to the number of millionaires. If there are none, then there should only be one Congressman and the President can have no staff. Just one Congressman and one president and by law, they cannot be from the same political party. Millionaires would start popping up all over the country with only two people in the executive and legislative branch of government. The rate of growth in the millionaire population would slow as the number of Congressman increased. Congressman are not getting cuts in pay. None are worth more than $15,000 per year and that is a stretch. Not one needs a staff because those that should be calling their offices are too busy creating economic wealth. Those, who are currently calling their offices, are pretty much, for the most part, idle folks. Their idle ways permeate government and eventually impregnate economic activity with idleness.

Congressional performance is pitiful. If the American people do not fire all of them in November 2010, they will continue to live like kings and exacerbate the problems on an accelerating basis since FDR started the process of wealth destruction. The president will eat expensive meals and the speaker of the house will be jet setting around the world at tax payer’s expense.

In an effort to mitigate congressional firing, they will do anything, like their communist counterparts did over a hundred years ago. They will want to modify the U.S. Constitution, introduce a flurry of abstract objects to confuse one abstract over another, etc. Unfortunately, they will probably be successful in blaming predecessor George W. Bush; two-dot thinking. All George W. was just one dot along a long line of many dots dating back to FDR. The people in power now were not alive in the 1930’s and their brains are void of the 1930’s stupidity and related psychological problems that manifested 12-years of economic hardship that eventually led to a world war. In essence, they are in a state of tabula rasa with respect to the evils of politicians and government. The burning question is are those in the tabula rasa state the majority now?

With the above, the stock market will remain a bear. The stock market prefers for millions to be millionaires of earned wealth. It disdains unearned status of lazy and foggy brained elites and their hazy creation of an endless stream of nonsensical abstract objects and thus the bear.

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

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

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

The Mid-term Indicant generated no buy signals and no sell signals. There have been 538-sell signals since October 26, 2007 and 38-buy signals since October 31, 2008.

Although there were no buy signals, the Mid-term Indicant is signaling hold for only 22 of the 344-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 102.8%. That annualizes to 57.7%. The Mid-term Indicant has been signaling hold for these 22-stocks and funds for an average of 92.6-weeks.

Although there were no sell signals, the Mid-term Indicant is avoiding 322-stocks and funds of the 344- tracked by the Indicant. The avoided stocks and funds are down an average of 38.6% since the Mid-term Indicant signaled sell an average of 40.7-weeks ago.

The Mid-term Indicant is avoiding 99-of the 100-Mutual Funds tracked, excluding the 31-ETF’s tracked daily. The funds are down an average of 40.8% since their sell signals an average of 39.4-weeks ago. The 31-ETF’s trade more frequently and are updated in the daily stock market report.

The Mid-term Indicant signaled, buy, for contrarian MF#22-USPIX Ultra Short on Feb 20, 2009.  It has been a typical post election year fund to hold, as it moves up while the market moves down. You can garnish the same benefit by buying QID.

One year ago, on Mar 14, 2008, the Mid-term Indicant was holding 155-stocks and funds out of the 345 tracked for an average of 159.8-weeks. They were up by an average of 182.8% (annualized at 59.5%). There were 186-avoided stocks and funds at that time. The avoided stocks and funds were down an average of 17.2% since their respective sell signals an average of 18.4-weeks earlier.

The Mid-term Indicant was signaling hold for 266-stocks and funds of the 345-tracked two years ago on Mar 16, 2007. They were up by an average of 118.9% (annualized at 59.9%) since their respective buy signals an average of 96.1-weeks earlier. The Mid-term Indicant was avoiding 53-stocks and funds at that time. They were down an average of 8.8% since their respective sell signals an average of 17.3-weeks earlier.

There were 290-stocks and funds with hold signals on Mar 17, 2006 since their buy signals an average of 96.1-weeks earlier. They were up by an average of 117.6% (annualized at 63.6%). There were 53-avoided stocks and funds at that time. They were down by an average of 8.8% from their respective sell signals an average of 23.2-weeks earlier.

On Mar 11, 2005, the Mid-term Indicant was signaling hold for 241-stocks and funds out of 320-tracked. They were up by an average of 86.2% (annualized at 61.9%) since their buy signals an average of 72.4-weeks earlier. The Mid-term Indicant was avoiding 68-stocks and funds at that time. They were down by an average of 28.9% since their sell signals an average of 52.4-weeks earlier.

Five years ago, on Mar 13, 2004, there were 263-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 68.4% (annualized at 77.2%) since their respective buy signals an average of 46.1-weeks earlier. There were only 15-avoided stocks and funds then. They were down an average of 27.4% since their respective sell signals an average of 39.2-weeks earlier.

On Mar 15, 2003, there were 124-stocks and funds with hold signals from the listing of 296-tracked by the Mid-term Indicant at that time. They were up an average of 25.3%, annualizing at 56.7%. There were 141-avoided stocks and funds then. They were down by an average of 11.0% since their sell signals an average of 8.3-weeks earlier.

Summary of Stocks and Funds with Buy and Sell Signals This past Week

To maintain appropriate security, you can see the Mid-term Indicant "buy/sell" signals for stocks and funds for this week by clicking the following link. It is in the member’s only section.

Link to this week’s buy and sell signals.

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. Socio-economic interference can devastate your holdings from time to time. Right now, the pendulum is swinging to the left. That is not good for stock equity related investing.

All updated information can be accessed from the following link. You will need your login ID and password.

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

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

Fundamentally, there is no reason to expect any bullish potential on a near-term, short-term, or mid-term basis. Earnings will continue to deteriorate and the normal capital “cleansing of the incompetent” is not being allowed by socialistic intervention. Wealth cannot be created when incompetent individuals are in the normal process of wealth creation; manufacturing, extraction, and agriculture.

However, even with this “fundamental” gloom, there will be periods of technical rebounds. Those rebounds can lead to either bullish spurts or sustainable short-term rallies. Both spurts and rallies are configured the same in their first few days. After the first few days, the Near-term and Quick-term Indicant models will differentiate spurt from rally. For those of you who enjoy short-term trading will want to participate in rallies.

Click the following link that will take you to the tangential protection charts.

http://www.indicant.net/Members/Updates/STI-Mkts/STI-10-Indices/STI08.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 down 0.9% since its secular weekly low on October 9, 2002. The NASDAQ is up 28.5% and the S&P500 is down 2.6% since then. The small cap index, S&P600, is up 21.3% since October 9, 2002. All of the major indices were at new lows on the same week in 2002, which is a common attribute for bottoming. Interestingly, the NASDAQ100 is up 44.7% since October 9, 2002, which is more than the other indices. RIMM, Apple, and a few others who have strongly performed are the primary contributors. Now, the current economic environment is challenging them.

The Dow is down 49.0% since its last weekly closing peak on Oct 9, 2007. The NASDAQ is down 49.9% since its last peak on Oct 31, 2007. The S&P600-small cap index is down 53.5% since its last closing peak on Jul 19, 2007.

The NASDAQ is down 71.6% since its last weekly secular peak on March 9, 2000. The S&P500 is down 50.5% since its similar secular peak on March 23, 2000. The Dow is down by 38.4% since January 13, 2000 when it peaked from the 1990’s roaring bull. As stated the past several years in this report, do not be surprised at the NASDAQ equaling its March 9, 2000 high until after 2025.

As socialism increases, the NASDAQ may not hit its 2000 peak until after 2050. Even that depends on resurgence in entrepreneurialism and related capitalism. Politicians screwed up the economy and the majority apparently believes their proposed fixes. Yes, the masses, for the most part, are weak and stupid. It just depends on what critical mass believes the lies and what critical mass keeps moving forward with capitalism. There is always a chance that “Steven Jobs-like” creativity in product development and successful marketing may lead to economic benefits, in spite of governmental interference. There are hundreds of more potential creators in China, where U.S. politicians cannot squelch them. In about twenty years, a war between China and the U.S. would be China’s victory, as money funnels from government printing presses to insurance and bankers; those are abstract folks and have no idea how to build a weapon (or anything for that matter).

The good news is the politicians in Washington D.C. have reduced their power by weakening their already weak constituents. International competitiveness will continue reducing their power and influence. With that, capitalists around the world will continue providing products of appeal, while politicians continue exuding irrelevant commentary.

The Dow is down 17.7% so far this year. The NASDAQ is down 9.2% this year. Keep in mind the post election year is the most bearish and has lost money since 1832. So far, the stock market is conforming to this historical standard.

The NASDAQ year-to-date performance was bearish by 18.4% through this week in 2001. Keep in mind the NASDAQ finished 2001 down by 21.1%., which was congruent with standards of post-election-year-bearishness.

The NASDAQ was down by 4.5% 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 bear cycle found bottom in October 2002, which is consistent with the mid-term year’s historical standards.

The NASDAQ YTD 2003 performance was up by 0.4%. It finished up in that solidly bullish year by 50.0%, which was consistent with historical pre-election year results. It was down on this weekend in 2004 by 0.9% and finished up by 8.6% for that year, which was congruent with election year bullishness although shy of magnitude standards.  It was down by 6.3% in 2005’s post election year, which maintained congruency to the historical standards of losses. Many of you recall that 2004 and 2005 were meandering bear markets. 2005 finished up by a mere 1.4%, which was an excellent year based on post election year historical standards. In 2006, it was up 2.8% on this weekend and finished that year with a 9.5%-gain, which again maintained congruency of historical bullishness for a mid-term election year. It was down by 2.7% at this time in 2007 with the Alan Greenspan scare but finished up that year by 9.8%, which was consistent with pre-election year bullishness. It was down 14.7% at this time last year. The NASDAQ finished down by 40.5% in 2008. That was contrarian performance to historical election year bullishness and the most bearish presidential election year since related records from 1832.

So far, this presidential post election year is performing consistently with historical standards. The capital markets understand socio-political influences are predominant in the first year of any new incoming administration.

Keep your eye on the daily stock market report.

Stop Loss Management

The Mid-term Indicant recommends a trailing stop loss of 10% due to increasing bearish influences for your longer-term holdings. The Short-term and Mid-term Indicant continues signaling bear. Most of the longer-term holdings are with “avoid” signals, but a few are still holding. The risk of continued holding, even for the likes of Apple, is increasingly approaching the benefit to continued holding. If you feel you will need cash within the next two years, you should consider selling all stocks. (The Indicant is not signaling hold for any mutual funds, except those that short the market when bullish spurts are not threatening). The ETF are signaled on the Near-term, Quick-term, and Short-term Indicant and are updated daily. These shorter-term models participate in bullish spurts, while the Mid-term Indicant is more focused on fundamentals and longer-term technical data.

If your stock or fund is above the bearish yellow curve and below the green curve, set your stop loss equal to the greater of the yellow curve and the trailing stop loss. If your stock or fund is above the green curve, set your stop loss at no less the value of the green curve or 8% trailing, whichever is greater. If your stock or fund is above the red curve and you bought at the Mid-term Buy signal, you should use the 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.

Economic Conditions – Inflation, Currency, Interest Rates

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

Short-term interest rates have moved north in four of the past seven weeks. They moved down the past two weeks. As stated the past few weeks, the issue confronting the Fed is the threat of deflation from a souring economic environment, followed by hyperinflation, as the supply of printed money is increasing well beyond productive capacities. That will eventually lead to demand exceeding supply by significant amounts and thus leading to hyperinflation.

The problem with the devolving economy is that those buying goods and services are not producers. That will further depress the supply side, thereby adding socioeconomic problems in addition to the inflationary threats. But the political structure is short-sighted on vote-getting only and without strategic vision or for that matter, capability. Political leaders endure psychological problems and with that wealth destruction by them continues.

There is no change from the past nine weeks. Interest rates remain at record low levels. That normally fosters a bullish stock market. Unfortunately, souring economic conditions at an accelerating rate have reduced the normal bullish relationship of low interest rates as irrelevant. Although rates are low, the process of borrowing money is not a capitalistic relationship between borrower and seller and thus irrelevant to the capital markets. Government intervention is going to wreak havoc on the United States economy. Governments simply cannot perform due to their riskless and reckless decision-making.

As stated the past few weeks, the idea of capitalisms is to borrow or capitalize and expanding the supply of money through productive effort. That is not what is going on right now. Wealth creation will continue to slow and maybe even capsize.

The U.S. dollar continues to strengthen in its bullish cycle. It is a profoundly strong cycle with the exception of the Japanese Yen, where productive skills still exceed those of the U.S. in the management ranks. However, the yen has weakened the past few weeks as the Japanese have also reduced interest rates to very low levels.

The U.S. economy is perceived to have the greatest chance of returning to robustness when compared to other countries. As stated the past seven weeks, the exception to this is China, who may or may not need U.S. consumption to bolster their economy. A weakening dollar against the Yuan may enjoy a longer-term labor relationship with the West. However, the stock market is focused only on the next six to nine months.

The commodities bearish cycle continues configuring at a bottom. It is already figured at prices supporting a low economic case. As long as they are bouncy near their cyclical minimums, the economic outlook should be considered as no worse than present. Although that is not positive, the magnitude of negatives have at least flattened for the time being.

Gold is an exception. It remains too risky to sell. Our hold positions are okay.  Its strength this is a testament to the fear elements inherent in the economy. Economic conditions will be fostering the “hate element” of humanity. Keep your eye on the daily report as gold appears nearing a cyclical peak on a short-term basis.

As stated 22-weeks ago, once the euphoria of the socialistic methods are complete, rest assured the bear market will continue and with gusto. This is not technical. This is fundamental. You can see that prognosis continuing in spite of recent bullish expressions.

As stated 18-weeks ago, “probabilities remain high that any bullish cycle will be followed by a deep bear market in 2009. If taxes are raised on the highly productive and capital gains, do not be surprised at a 1,000 Dow by 2010.”

As stated 14-weeks ago, this bear has teeth, is hungry, and is nowhere near expiration. Cyclical spurts of a bullish configuration will occur from time to time, but the trend should remain bearish throughout the next year and into 2010. Bullish spurts will occur from time to time. As we learned from the November 28, 2008 – January 21, 2009 bullish spurt, profit potential from them is limited and in some cases disappoint rather rapidly. The attempted spurt on Feb 6, 2009 faded quickly and expired on Feb 19, 2009. The short-term trader will trade on those spurts, while mid-to-long-term investor should remain on the sidelines.

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 162.2% from its April 13, 2001 buy signal until the Mid-term Indicant sell signal on October 3, 2008. It is down 43.1% since that sell signal. It has been bearish in nine of the last 12-weeks. It was bullish last week, following three solid bearish weeks.

Fidelity Gold, Fund #28 is down 17.5% since the Midterm Indicant signaled sell on August 1, 2008. It was mildly bullish last week after two weeks of solid bearish behavior.

Vanguard Energy #18, VGENX, was up 144.9% from since the Mid-term Indicant buy signal April 5, 2003. It received a sell signal on October 3, 2008. It is down 28.2% since that sell signal. It was solidly bullish last week, following bearish behavior the past four weeks.

Fidelity Energy Services #40, FSESX, was up 107.2% since the Mid-term Indicant signaled buy on December 6, 2003. It received a sell signal on October 3, 2008. It is down 45.6% since that sell signal. It was also bullish last week.

State Street Research Global #9, SSGRX, was up 174.2% from its August 16, 2002 buy signal to the Mid-term Indicant sell on October 3, 2008. It is down 59.8% since that sell signal.

Fidelity Energy #39, FSENX, was up 81.2% since the Mid-term Indicant signaled buy on August 16, 2003 and the sell signal on October 3, 2008. It is down 31.1% since that sell signal.

Energy related funds were solidly bullish last week. They have endured significant bearishness in 19 of the last 31-weeks. The balance of supply and demand for oil appears to taking hold and with that pricing stability.

As stated the past few weeks, the energy industry will not be bullish as long as politicians are trying to run it. The North American automotive industry will be weak for years to come as long as government is loaning money to dilettante managers. The quality of the products, regardless if fuel-efficient or not, will deteriorate. If you want to buy a car for your young daughter, do not buy American.

The Near-term Indicant signaled, sell, for ETF#03 – Energy and Natural Resources on Feb 17, 2009. It is down 5.1% since that sell signal. The Quick-term Indicant continues to signal avoid since September 2, 2008. It is down 41.0% since then. It was up 242.4% (annualized at 44.8%) since its previous buy signal on March 26, 2003 until the September 2008 sell signal.

The Near-term Indicant and Quick-term Indicant signaled buy for the GLD-ETF#11 on December 11, 2008. It is up 13.2% since that buy signal, annualizing at 51.7%. It gained 81.4% from its August 3, 2005 buy signal until the September 8, 2008 sell signal. Its annualized gain during that hold period amounted to 26.0%.

Gold was apparently overbought. It is simply enduring a near-term cyclical adjustment. Its long-term outlook appears solidly bullish.

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

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

The Mid-term Indicant signaled bear on February 20, 2009 for the ten major indices. They are down by an average of 3.9% since that bear signal.

Click this sentence to view a summary of their performance.

The Mid-term Indicant Dow Jones Industrial Average performance is at $25,504,680

That beats buy and hold performance of $1,099,038 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $120,730. That beats buy and hold’s $74,106 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $162,770. That beats buy and hold’s $49,636 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 2,220.6%, 62.9%, and 227.9%, 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 over 2,000% covering the past 100+ years. It will not be surprising to see the Mid-term Indicant outperform buy and hold by over 3,000% before the end of this decade, as the bear will gain momentum.

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 Feb 20, 2009. It is down 3.4% since then. It was hit hard by last week’s dynamic bullish behavior. The political structure right now is not friendly for wealth creating activities. This fund should perform very well for the balance of this year. There will be bullish spurts from time to time that may trigger periodic sell signals for this contrarian fund, but right now, it appears headed for a triple digit gain since the buy signal in spite of last week’s stock market bullishness.

Click here for Mid-term Indicant Table of Mutual Funds

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 149.6% (annualized at 8.6%) since the Long-term Indicant signaled bull 906-weeks ago. Economic data is the primary influence on the Long-term Indicant. Recessions, deflation, inflation, and unreasonable interest rates have not been strong enough to signal bear since that bull signal. Even with today’s economy and stock market position, the 1991 investor is still up triple digit amounts, which remains above average performance when considering long-term planning. However, the Long-term Indicant is getting very close to signaling bear. A link to the Long-term Indicant is below:

Keep in mind this recession is not yet as bad as the 1979-82 recession. The Long-term Indicant is not influenced by short-term or mid-term cyclical behavior. It also takes into account longer-term performance within the model, both past and projected.

http://www.indicant.net/Members/Updates/LTI-Markets-DJIA/DJIA.htm

Short-term Indicant Stock Market Report - Summary

As stated on Friday, Feb 20, 2009, current configurations offer zero bullish support. The divergent gap between Force Vector and Vector Pressure can invite volatility. You saw that with recent bullish expressions. Prices topped the Near-term Blue and Green curves, but has yet to shift their direction from bearish to bullish cycles.

Interestingly, most Vector Pressure is at or near bearish domains, suggesting the market is within a few weeks of concluding this near-term bearish cycle. We will know when this occurs when the indices shoot back above the two Near-term curves (blue and green) and Force Vectors settle above Vector Pressure for all of the major indices and key ETF’s.

Previous comments regarding XLF and UGY are still pertinent. Please click this sentence to link to prior comments. Keep in mind XLF continues receiving a bear signal, but its Vector Pressure suggests bullish potential for it and its fast moving cousin, UGY.

Near-term, Quick-term, Short-term Indicant Stock Market Details

The Near-term Indicant did not signal any new bias shifts today. All eleven major indices are down by an average of 5.8% since the Near-term Indicant signaled bear an average of 3.7-weeks ago. Contrarian VIX is down 14.1% since the Near-term Indicant signaled bull on Friday, Feb 20, 2009. Last week’s report erred suggesting March options expired this coming Friday. That expiration is a week from Friday. Most “in the money” calls should profit by then. A safer call would be the April expirations.

The Quick-term Indicant also did not signal new bias shifts today. All eleven major indices are down 41.8% since the QTI signaled bear an average of 31.8-weeks ago. Contrarian VIX is up 83.7% since the QTI bull signal 27.0-weeks ago.

On-going attribute watch for major indices:

-Near-term Directional Intensity Unanimity-Bias remains in favor of bear. As of Feb 20, 2009, bearish unanimity was established with bear signals for all major indices and a bull signal for the VIX.

-QTI Red Bull Status—Quick-term bias favors bear. None of the major indices possess this feature. Red Bulls disallow stock market crashing. This assurance remains absent.

QTI Yellow Bear Status-Quick-term bias favors bear. All major indices are yellow bears. Quick-term yellow bears offer no resistance level to falling stock prices. Contrarian VIX is not a yellow bear.

-NTI Blue Bull Status-Near-term bias favors bear. Several indices are now above bullish blue curve and threatening the bear.

-NTI-Bearish Green Curve-Near-term bearish bias remains solid for all major indices. The VIX remains non-bearishly positioned.

-Force Vector Position- Short-term bearish bias continues under mild threat. Most now reside in bullish domains. Their cycle is mature suggesting immediate non-bullish behavior and an increased probability of bearish behavior.

-Force Vector Direction – Most are now bullishly mature, suggesting recent bullishness is not sustainable.

-Vector Pressure Position- Short-term bearish bias continues. Other than contrarian VIX, most are either in bearish domains or very close. This is configuring for bullish support, but Force Vectors have consumed too much energy.

-Vector Pressure Direction –Short-term bearish bias continues. Other than contrarian VIX, bearish direction is continuing, but threatened somewhat. That threat should diminish next week with resumption of bearish expressions.

-Tangential Protection - None of the 11-major indices possess this attribute.

-Reverse Tangential Bearish Detection -  Construction will begin on the next Near-term Bullish cycle. It will identify a future lower trading range upon completion of its construction. It is 100% accurate in predicting this future phenomenon. In other words, after this bearish cycle completes there will be another one after it completes.

Click the Short-term Indicant to see the combined table of the Near-term Indicant and Quick-term Indicant. The table has links to charts for each. There is one chart containing both the Near-term and Quick-term Indicant.

The tour is still being developed but most of you are now familiar with the Near-term bull/bear cycles as well as the tangential protections and reverse tangential bearish detectors.

The NYSE and NASDAQ Indicant Volume Indicators  continue moving robustly. As stated the past several days, this attribute is solidly in support of bearish behavior in spite of this week’s bullish behavior.

Short-term Report Card, Status, and Charts

The Near-term Indicant generated no buy signals and no sell signals.

Although there were no buy signals, the Near-term Indicant is signaling hold for four ETF’s. They are up by an average of 2.6%, annualizing at 22.7% since their buy signals an average of 6.0-weeks ago. Although there were no sell signals, the NTI is avoiding 27-ETF’s. They are down an average of 3.7% since their sell signals an average of 3.7-weeks ago.

The Quick-term Indicant did not generate any buy signals or sell signals.

The Quick-term Indicant is signaling hold for only three ETF’s. They are up 87.6% since their buy signals 26.2-weeks ago. 28-ETF’s are down 42.1% since their sell signals an average of 31.8-weeks ago.

The selling and avoidance of the 99-non-contrarian funds were triggered by the Mid-term Indicant. Click here to get a quick overview of the regular mutual funds as they stood a few months ago. As you can see, many of them are down by double digit percentage points since the Mid-term Indicant signaled sell in late 2007 and in early 2008. The Mid-term Indicant is updated each weekend with a link to the member’s section. Members can click this sentence to get a more recent update.

Click the below link to see today’s Near-term, Quick-term, and Short-term Indicant signals. Links on that page will take you to a single chart with all the model’s position on each ETF.

http://www.indicant.net/Members/Updates/STI-SQI-QTI-ETF-SumPage/0UD%20QTI-ETF0-Sum.htm

Current Strategy-Short-term Indicant –Mar 13, 2009-Force Vectors are nearing max, which should invite a bearish response. Although Vector Pressure is suggesting the potential of a bullish spurt in a few weeks, now is not the time. Notice the indices consumed quite a bit of energy to climb above their respective Near-term curves. This configuration with incomplete Vector Pressure cycles and hot Force Vectors, coupled with declining Near-term curves, suggests the bear should resume dominance on a near-term basis. It is likely this response will be the last one before the next sustainable Near-term bullish cycle. Mar 12, 2009-Thu-Force Vectors have risen with the recent bullish spurt. Significant bullish energy was consumed with this behavior. The bear should react. Vector Pressure is nearing limiting support for bearish dominance, but too many still have room to continue bearishly. Therefore, bias your behavior consistent with that of a dominant bear. Mar 11, 2009-Wed-Several indices and ETF’s are configured with  some bullish bounce, but with spurt (unsustainable bullishness). A few are configured with a very near-term bearish reaction. Obviations of directional intensity still favor the bear, but threatened mildly by the bull. Mar 10, 2009-Tue-Force Vector resistance at low levels resulted in non-bearish support with today’s bullish aggression. Nothing substantive can be garnished from this until Force Vectors cross above Vector Pressure. Several Vector Pressures are now inside bearish domains, which is configuring for non-bearish support; but not necessarily bullish support. The NASDAQ100 was the only index that crossed above the Near-term curves of blue and green. Until the remaining indices do same, consider the Near-term Bear as remaining dominant. Configurations suggests the NASDAQ100 and NASDAQ’s Vector Pressure should fall into bearish domains before substantive bullish behavior can unfold. With that, put options may be a good play when (and if) Force Vectors cross above Vector Pressure. VIX remains solidly in support of the completion of this Near-term bearish cycle. Mar 9-2009-Mon-Contrary to last Friday, option expiration occurs on Mar 20 and not this Friday. It will be triple witching week and thus an invitation for enhanced volatility. ETF#20, EEM, is configured for increased bearish behavior. That suggests profit opportunities for March put options. Force Vectors climbed above declining Vector Pressure in the neutral zone. That leads to a bearish response more often than not. Other than Force Vector resisting greater bearish depth, there are no other attributes suggesting potential for sustainable bullish behavior. Mar 6, 2009-Fri-Volume is waning a bit, which suggests reducing interest in bearish support. Most Vector Pressure is near or inside bearish domains. That suggests limited bearishness in magnitude, but certainly not indicating the bear is about to expire. This Vector Pressure configuration can persist for several more weeks. The interesting short-term configuration is recent Force Vector behavior. It is resisting at a low point, which suggests an increasing potential of bullish spurt behavior. Do not be surprised at such expressions in the next few days. However, this coming week is options expiration week and recent behavior suggests market stabilization. The combination of anticipated stabilization and volatility suggests triple digit up and down days will net very little change in the market. Vector Pressure and QID Vector Pressure configurations, though, suggest the bear will continue domination.

Near-term and Quick-term Summary

The bearish bias originating on January 20, 2009 was replaced with a new bullish bias as of February 6, 2009. As of Friday, Feb 20, 2009, a new bearish bias unfolded. These near-term cycles are occurring with greater frequency than they have since early 2006, but similar to that of 2001-2002. However, recent bullish spurts have been flat, while those of 2001-2002 at least enjoyed some uplifting behavior. Even the bullish spurts during the early 1930’s enjoyed some bullish magnitude. The last bullish spurt was flat in this market. That suggests the bull has very little interest in participating in a market with socialistic causes and limited fundamentals of capitalistic oversight. The bearish bias originating on September 5, 2008 and expiring on November 4 was relatively long and extraordinarily forceful. Such cycles are often followed by similar cycles within months.

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

The former Quick-term Indicant signaled sell for QID  on November 21, 2008. It was down 33.7% on Friday, Dec 26, 2008 since that sell signal. It continues to be down considerably since then. It is now rising and attained Red Bull Status on March 2, 2009. It is configuring with a support in volatility. A bullish bounce for this contrarian ETF would not be surprising on the immediate horizon.

The Near-term Indicant signaled buy on Feb 19, 2009. It is down 3.8% since that buy signal. Its bullish potential from its depressed Vector Pressure is high right now. The expected volatility manifested the past few days. You will notice the Quick-term Indicant in the table adhered to the yellow bear rule and has not yet signaled sell.

Other Contrarian Funds

ETF#03-Natural Resources   - This ETF is down 41.0% since the Quick-term Indicant signaled sell on September 2, 2008.

As previously stated, the Quick-term Indicant will not signal buy until Vector Pressure is positive and Yellow Bear expires.

The Near-term Indicant signaled sell for this ETF on Feb 17, 2009. It is down 5.1% since then. It remains with near-term bearish configurations.

ETF#11-Gold and Precious Metals  is up 13.2% since the NTI and QTI signaled buy on December 11, 2008. It is annualized growth is at 51.7% since then. Although Vector Pressure is approaching a maximum and thus nearing a short-term price peak, configurations are too bullishly strong to consider holding a threat. Vector Pressure fell below bullish domains last Monday. That is insignificant at this point due to the divergence between Force Vector and Vector Pressure. It will be interesting to see what happens once Force Vector interacts with Vector Pressure. Such an interaction in the next few days should lead to a bullish jump before the next bearish cycle unfolds. At the very worse, it should help obviating directional intensity. Unfortunately, the bullish bounce off of green has been meek. It was not what it should have been. Also, Force Vector is now behaving lethargically. If it continues with this lethargic behavior then this near-term bull cycle is most likely nearing its conclusion. Even with all that, it remains a solid “fundamental” hold. The idiots printing paper currency cannot print gold. The “elite political class” would not know what a pick and shovel is all about, while the rest of us may have to use those devices to maintain our food supply.

The concern is the same as last week. Its declining Force Vector and relatively high Vector Pressure is somewhat threatening, but again, continue holding. After losing Red Bull status two weeks ago, it regained earlier this week. A bounce off bullish Red is not uncommon during strong bullish cycles. Force Vector shifted to the north last several days ago. You may want to consider setting a trailing stop loss at a point or two below the Green Curve price. As of Friday, Mar 13, it is $87.91. You can keep track of that in the table. It will continue to rise. You do not want to see this fund fall below green with declining Vector Pressure, if you are holding for technical reasons. Holding for fundamental reasons is okay and bearish yellow would be your point of concern for continued holding.

Some out of the money March call options remain attractive. However, do not expect more than a ten point gain between now and Mar 20. Unfortunately, this fund’s recent bullishness was too timid. It could still bounce sharply to the north, though, before next Friday, but configurations are not offering aggressive support for that.

ETF#14-Long Government  received a buy signal on Feb 23, 2009 from the Near-term Indicant. It is down 1.8% since then. It’s Vector Pressure remains positioned to support bullish behavior and very much so.

We’re continuing to hold unless it becomes a Yellow Bear, as the goal is to simply beat buy and hold. It is up 16.1% since the Quick-term Indicant signaled buy on June 24, 2008.

Click Quick-term Indicant, Near-term, and Short-term for all 31-ETF’s.

Other links:

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

Near-term and Short-term Indicant for Major Indices

Divergence versus Convergence

Bullish convergence occurred last week, following three consecutive weeks of combined bearish divergence/convergence. The market has expressed a combined bearish convergence/divergence in ten of the past 12-weeks. That is a testament to the strength of this bear and a prognosis of its continuation. Utilities will not offer any bullish potential for several weeks based on its near-term configurations. That will add bearish energy. Until then, the bear is providing the brunt of stock market energy.

Again, depending on political landscape, this bear could last for decades. FDR-like economic meddling will continue to erode economic wealth. Those responsible are either 1) stupid, 2) do not care, or 3) have motives that typically lead to war.

Indicant Conclusion

There were again no Mid-term Indicant buy signals for non-contrarian Mutual Funds. All 99-of those funds are with avoid signals.

Those funds tracked by the Mid-term Indicant are down by an average of 40.8% since their sell signals an average of 39.4-weeks ago. Although the Quick-term and Short-term Indicant models are holding a few of the ETF’s, the Mid-term Indicant will not signal buy for most of the Mutual Funds until they remove themselves from bearish domains. Current configurations suggest it could be a year or longer for that to occur.

Interest rates appear to be stabilizing similar to oil prices. Once the economy stabilizes, expect interest rates and/or inflation to mount a significant increase. Neither of those events will excite the bull.

Although commodity prices have been stable the past several weeks, deflation remains as an immediate concern. If it manifests, a 2500 Dow by 2010/11 may be optimistic. If the purported inflationary depression hits, the prognosis of a 2500 Dow would be similarly optimistic.

In spite of gold prices softening the past few weeks, the sharp increase in Gold and other precious metals prior to that softening, suggests inflation and/or fear elements are predominant themes.

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

03/15/09

March 8, 2009 Indicant Weekly Stock Market Report

Volume 3, Issue 02 ISSN 1526 6516 © The Indicant Stock Market Report

This Week’s Report

Demand Side Economics

Non-producers will be getting more money. There will plenty of it going around through the hands of the non-productive. Some of it may wiggle itself back through the hands of the productive. When that occurs, corporate earnings may improve as these non-producers start buying things. Of course, that will be short lived.

The productive, those with sustainable buying power, will be taxed more and thus depressing their disposable income for purchases. Those tax dollars will then circulate through the hands of the non-productive; that is to the government to lazy people.  In other words, it is possible for economic activity to improve. However, it will not be robust.

Those goods purchased by the non-productive will not be cars, appliances, and other durable high cost goods. It will be limited to low cost items, such as beer, cigarettes, a few cheap TV’s, nose rings, tattoos, body piercing devices, and other items cherished by Jerry Springer generation.

The process of making mistakes does not take much time. The process of recovering from mistakes requires much more time. Turning the wrong way on a ski slope only takes two seconds. The broken leg that follows takes months to heal. Buying a stock at its highest price only takes a couple of mouse clicks. Waiting for it to return to its highest price after falling to its low, can take a lifetime, if ever.

Mistake making is easy; most do it regularly. Mistake detecting is requires a bit more talent. Mistake prevention seems to be limited to very few. Many endure the consequences of mistakes and most understand the mistake they made. The phenomenon of making mistakes and correcting against the consequences of those mistakes contribute to basic improvements in the process of living. Organizations that do not engage in the corrective action elements eventually perish.

Politicians make mistakes. Just about everything they do is a mistake. They always do more harm than good. Their penalty of mistake making eventually leads to their removal from the office they hold, but few get fired on a real time basis with their mistake-making. The problem is that the mistakes made in the past are not corrected. They linger. This lingering effect leads to an accumulation of mistakes that cannot be overcome by the institution. In the private sector, that leads to bankruptcy and is swift. Governments persist for a longer period, as their bankruptcy is delayed. That delaying tends to depress all those living within that government. Once the depression falls to a level this is no longer sustainable, the government is overthrown. The elimination of governments is seldom as civil as a bankruptcy. Universal law does not contain elements of civility.

All institutions eventually fail; public and private.

Over-taxing the producers will be hard-felt for years to come. The Dow will not revisit 15,000 for several decades. The NASDAQ will not revisit its 2000 high until after 2050, if by then. Until several months ago, the Indicant consistently projected the NASDAQ would not return to its 2000 high until after 2025. That projection is now set at 2050 and that depends on a near complete reversal from the current economic policies by contemporary politicians before 2012.

Politicians will continue exacerbating the problems. As the non-producers breed more like them, the tyranny by the majority will continue to unfold. That will depress economic well being, as this “political” process does not “elevate” the under-performers. It brings down all societal participants to the lowest level performers. This is not an opinion, but a fact backed with complete empirical evidence. The problem is that “under-achievers” do not know this and since they do not read or think about much, they never will. The population of under-achievers is growing by the day in the United States. Many are too stupid to even vote, but politicians pay them and pack them into busses to go vote. That is a form of communism.

U.S. political leadership will continue blaming “their inheritance” of the current recession. That is common in all forms of dilettante management. In corporate America, one can blame their predecessor for about two years before that tactic begins losing its effect. It takes much longer in the public sector where mistakes are tolerated for much longer periods.

The process of detection and removing ill guidance from the political process can take over 16-years. That was demonstrated by the majority’s unwillingness to remove FDR from office in the 1930’s. Those poor souls, for the most part, lived in poverty while believing FDR’s political rhetoric. FDR used new technology, called the radio, to brainwash the masses with his poverty-laden ideas. There was no fairness doctrine then. FDR controlled the media single handily. World War II minimized his embarrassment for his failed economic policies. He wanted and needed that war to save face. He needed that even if it resulted in the loss of millions of lives. That is the seriousness and sheer gravity of the psychological problems of those who engage in politics. It is an element that should be studied and remedied. Six-month term limits may be the solution. “Forcing” stupid people to vote should carry a minimum prison sentence of 25-years without parole. If someone does not have an interest in voting within their individual volition to do so, it is better to omit their opinion at the polls for it is a baseless one. Voter apathy will garnish greater quality in political candidates. Of course, top flight quality will never be garnished.

The current policies unfolding out of Washington D.C. are eerily similar to those of FDR. The policies may not be exact replications of FDR’s, but they are steeped in the same philosophy.  That is government and politicians can positively influence economic activity. They cannot. They never have. They never will. This is true for the United States and it has been true for any other country since the beginning of time. All politicians and other non-producers are good at is generating wars, which is their address to their psychological problems.

Dumb Americans have become the majority, which has been the underlying goal of politburo politics for quite some time. It is not a purposeful goal. It is a goal of default. That is, in socialistic and communistic societies, the only important folks are the political leaders and sport figures. So, the idea of politics is to bring down those with capitalistic success; not to be destructive, but to enhance “political” power and importance. As stated before, the problem with politicians is a psychological one. To overcome their envy and unconscious sensation of their inadequacies, politicians target the highly productive.

In spite of all this, there are enough people, who add economic wealth. For the most part, the highly productive do not even know their congressional representative’s name or what they are doing in Washington D.C. Being highly productive means one is tightly focused on their vocation and with that, all other things are irrelevant. With that, there will some bullish spurts from time to time. Some will enjoy long cycles.

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

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

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

The Mid-term Indicant generated no buy signals and no sell signals. There have been 538-sell signals since October 26, 2007 and 38-buy signals since October 31, 2008.

Although there were no buy signals, the Mid-term Indicant is signaling hold for only 23 of the 344-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 102.5%. That annualizes to 58.1%. The Mid-term Indicant has been signaling hold for these 23-stocks and funds for an average of 91.8-weeks.

Although there were no sell signals, the Mid-term Indicant is avoiding 321-stocks and funds of the 344- tracked by the Indicant. The avoided stocks and funds are down an average of 44.6% since the Mid-term Indicant signaled sell an average of 39.3-weeks ago.

The Mid-term Indicant is avoiding 99-of the 100-Mutual Funds tracked, excluding the 31-ETF’s tracked daily. The funds are down an average of 45.7% since their sell signals an average of 38.4-weeks ago. The 31-ETF’s trade more frequently and are updated in the daily stock market report.

The Mid-term Indicant signaled, buy, for contrarian MF#22-USPIX Ultra Short on Feb 20, 2009.  It has been a typical post election year fund to hold, as it moves up while the market moves down. You can garnish the same benefit by buying QID.

One year ago, on Mar 7, 2008, the Mid-term Indicant was holding 148-stocks and funds out of the 345 tracked for an average of 168.7-weeks. They were up by an average of 190.7% (annualized at 58.8%). There were 190-avoided stocks and funds at that time. The avoided stocks and funds were down an average of 16.1% since their respective sell signals an average of 17.2-weeks earlier.

The Mid-term Indicant was signaling hold for 300-stocks and funds of the 345-tracked two years ago on Mar 9, 2007. They were up by an average of 111.2% (annualized at 58.6%) since their respective buy signals an average of 98.6-weeks earlier. The Mid-term Indicant was avoiding 42-stocks and funds at that time. They were down an average of 9.9% since their respective sell signals an average of 17.0-weeks earlier.

There were 290-stocks and funds with hold signals on Mar 10, 2006 since their buy signals an average of 98.6-weeks earlier. They were up by an average of 111.0% (annualized at 61.0%). There were 54-avoided stocks and funds at that time. They were down by an average of 9.6% from their respective sell signals an average of 23.0-weeks earlier.

On Mar 4, 2005, the Mid-term Indicant was signaling hold for 249-stocks and funds out of 320-tracked. They were up by an average of 87.3% (annualized at 64.8%) since their buy signals an average of 70.1-weeks earlier. The Mid-term Indicant was avoiding 67-stocks and funds at that time. They were down by an average of 29.3% since their sell signals an average of 53.6-weeks earlier.

Five years ago, on Mar 6, 2004, there were 275-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 73.1% (annualized at 85.1%) since their respective buy signals an average of 44.7-weeks earlier. There were only 17-avoided stocks and funds then. They were down an average of 26.2% since their respective sell signals an average of 38.4-weeks earlier.

On Mar 8, 2003, there were 135-stocks and funds with hold signals from the listing of 296-tracked by the Mid-term Indicant at that time. They were up an average of 22.5%, annualizing at 55.6%. There were 131-avoided stocks and funds then. They were down by an average of 12.0% since their sell signals an average of 7.9-weeks earlier.

Summary of Stocks and Funds with Buy and Sell Signals This past Week

To maintain appropriate security, you can see the Mid-term Indicant "buy/sell" signals for stocks and funds for this week by clicking the following link. It is in the member’s only section.

Link to this week’s buy and sell signals.

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. Socio-economic interference can devastate your holdings from time to time. Right now, the pendulum is swinging to the left. That is not good for stock equity related investing.

All updated information can be accessed from the following link. You will need your login ID and password.

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

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

Fundamentally, there is no reason to expect any bullish potential on a near-term, short-term, or mid-term basis. Earnings will continue to deteriorate and the normal capital “cleansing of the incompetent” is not being allowed by socialistic intervention. Wealth cannot be created when incompetent individuals are in the normal process of wealth creation; manufacturing, extraction, and agriculture.

Click the following link that will take you to the tangential protection charts.

http://www.indicant.net/Members/Updates/STI-Mkts/STI-10-Indices/STI08.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 down 9.0% since its secular weekly low on October 9, 2002. The NASDAQ is up 16.1% and the S&P500 is down 12.0% since then. The small cap index, S&P600, is up 8.7% since October 9, 2002. All of the major indices were at new lows on the same week in 2002, which is a common attribute for bottoming. Interestingly, the NASDAQ100 is up 31.9% since October 9, 2002, which is more than the other indices. RIMM, Apple, and a few others who have strongly performed are the primary contributors. Now, the current economic environment is challenging them.

The Dow is down 53.2% since its last weekly closing peak on Oct 9, 2007. The NASDAQ is down 54.7% since its last peak on Oct 31, 2007. The S&P600-small cap index is down 58.3% since its last closing peak on Jul 19, 2007.

The NASDAQ is down 74.7% since its last weekly secular peak on March 9, 2000. The S&P500 is down 55.3% since its similar secular peak on March 23, 2000. The Dow is down by 43.5% since January 13, 2000 when it peaked from the 1990’s roaring bull. As stated the past several years in this report, do not be surprised at the NASDAQ equaling its March 9, 2000 high until after 2025.

As socialism increases, the NASDAQ may not hit its 2000 peak until after 2050. Even that depends on resurgence in entrepreneurialism and related capitalism. Politicians screwed up the economy and the majority apparently believes their proposed fixes. Yes, the masses, for the most part, are weak and stupid. It just depends on what critical mass believes the lies and what critical mass keeps moving forward with capitalism. There is always a chance that “Steven Jobs-like” creativity in product development and successful marketing may lead to economic benefits, in spite of governmental interference.

The good news is the politicians in Washington D.C. have reduced their power by weakening their already weak constituents. International competitiveness will continue reducing their power and influence. With that, capitalists around the world will continue providing products of appeal, while politicians continue exuding irrelevant commentary.

The Dow is down 24.5% so far this year. The NASDAQ is down 18.0% this year. Keep in mind the post election year is the most bearish and has lost money since 1832. So far, the stock market is conforming to this historical standard.

The NASDAQ year-to-date performance was bearish by 10.8% through this week in 2001. Keep in mind the NASDAQ finished 2001 down by 21.1%., which was congruent with standards of post-election-year-bearishness.

The NASDAQ was down by 3.1% 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 bear cycle found bottom in October 2002, which is consistent with the mid-term year’s historical standards.

The NASDAQ YTD 2003 performance was down by 2.4%. It finished up in that solidly bullish year by 50.0%, which was consistent with historical pre-election year results. It was up on this weekend in 2004 by 2.2% and finished up by 8.6% for that year, which was congruent with election year bullishness although shy of magnitude standards.  It was down by 4.8% in 2005’s post election year, which maintained congruency to the historical standards of losses. Many of you recall that 2004 and 2005 were meandering bear markets. 2005 finished up by a mere 1.4%, which was an excellent year based on post election year historical standards. In 2006, it was up 3.7% on this weekend and finished that year with a 9.5%-gain, which again maintained congruency of historical bullishness for a mid-term election year. It was down by 1.2% at this time in 2007 with the Alan Greenspan scare but finished up that year by 9.8%, which was consistent with pre-election year bullishness. It was down 16.3% at this time last year. The NASDAQ finished down by 40.5% in 2008. That was contrarian performance to historical election year bullishness and the most bearish presidential election year since related records from 1832.

So far, in this post election year, the Dow is down 24.5%. The S&P500 is down 24.3% and the NASDAQ is down 18.0%.

Keep your eye on the daily stock market report.

Stop Loss Management

The Mid-term Indicant recommends a trailing stop loss of 10% due to increasing bearish influences for your longer-term holdings. The Short-term and Mid-term Indicant continues signaling bear. Most of the longer-term holdings are with “avoid” signals, but a few are still holding. The risk of continued holding, even for the likes of Apple, is increasingly approaching the benefit to continued holding. If you feel you will need cash within the next two years, you should consider selling all stocks. (The Indicant is not signaling hold for any mutual funds, except those that short the market when bullish spurts are not threatening). The ETF are signaled on the Near-term, Quick-term, and Short-term Indicant and are updated daily. These shorter-term models participate in bullish spurts, while the Mid-term Indicant is more focused on fundamentals and longer-term technical data.

If your stock or fund is above the bearish yellow curve and below the green curve, set your stop loss equal to the greater of the yellow curve and the trailing stop loss. If your stock or fund is above the green curve, set your stop loss at no less the value of the green curve or 8% trailing, whichever is greater. If your stock or fund is above the red curve and you bought at the Mid-term Buy signal, you should use the 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.

Economic Conditions – Inflation, Currency, Interest Rates

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

Short-term interest rates have moved north in four of the past six weeks. They were down this past week. As stated the past few weeks, the issue confronting the Fed is the threat of deflation from a souring economic environment, followed by hyperinflation, as the supply of printed money is increasing well beyond productive capacities. That will eventually lead to demand exceeding supply by significant amounts and thus leading to hyperinflation.

The problem with the devolving economy is that those buying goods and services are not producers. That will further depress the supply side, thereby adding socioeconomic problems in addition to the inflationary threats.

There is no change from the past eight weeks. Interest rates remain at record low levels. That normally fosters a bullish stock market. Unfortunately, souring economic conditions at an accelerating rate have reduced the normal bullish relationship of low interest rates as irrelevant. Although rates are low, the process of borrowing money is not a capitalistic relationship between borrower and seller and thus irrelevant to the capital markets. Government intervention is going to wreak havoc on the United States economy. Governments simply cannot perform due to their riskless and reckless decision-making.

As stated the past few weeks, the idea of capitalisms is to borrow or capitalize and expanding the supply of money through productive effort. That is not what is going on right now.

The U.S. dollar continues to strengthen in its bullish cycle. It is a profoundly strong cycle indeed with the exception of the Japanese Yen, where productive skills still exceed those of the U.S.

The U.S. economy is perceived to have the greatest chance of returning to robustness when compared to other countries. As stated the past six weeks, the exception to this is China, who may or may not need U.S. consumption to bolster their economy. A weakening dollar against the Yuan may enjoy a longer-term labor relationship with the West. However, the stock market is focused only on the next six to nine months.

The commodities bearish cycle continues configuring at a bottom. It is already figured at prices supporting a low economic case. As long as they are bouncy near their cyclical minimums, the economic outlook should be considered as no worse than present. Although that is not positive, the magnitude of negatives have at least flattened for the time being.

Gold is an exception. Although it was bearish last week, it remains too risky to sell. Our hold positions are okay.  Its strength this is a testament to the fear elements inherent in the economy. Economic conditions will be fostering the “hate element” of humanity. Keep your eye on the daily report as gold appears nearing a cyclical peak on a short-term basis.

As stated 21-weeks ago, once the euphoria of the socialistic methods are complete, rest assured the bear market will continue and with gusto. This is not technical. This is fundamental. And you can see that prognosis continuing.

As stated 17-weeks ago, “probabilities remain high that any bullish cycle will be followed by a deep bear market in 2009. If taxes are raised on the highly productive and capital gains, do not be surprised at a 1,000 Dow by 2010.”

As stated 13-weeks ago, this bear has teeth, is hungry, and is nowhere near expiration. Cyclical spurts of a bullish configuration will occur from time to time, but the trend should remain bearish throughout the next year and into 2010. Bullish spurts will occur from time to time. As we learned from the November 28, 2008 – January 21, 2009 bullish spurt, profit potential from them is limited and in some cases disappoint rather rapidly. The attempted spurt on Feb 6, 2009 faded quickly and expired on Feb 19, 2009. The short-term trader will trade on those spurts, while mid-to-long-term investor should remain on the sidelines.

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 162.2% from its April 13, 2001 buy signal until the Mid-term Indicant sell signal on October 3, 2008. It is down 47.5% since that sell signal. It has been bearish in nine of the last eleven weeks. It has been solidly bearish the past three weeks.

Fidelity Gold, Fund #28 is down 18.6% since the Midterm Indicant signaled sell on August 1, 2008. It has been bearish the past two weeks.

Vanguard Energy #18, VGENX, was up 144.9% from since the Mid-term Indicant buy signal April 5, 2003. It received a sell signal on October 3, 2008. It is down 34.2% since that sell signal. It was solidly bearish the past four weeks.

Fidelity Energy Services #40, FSESX, was up 107.2% since the Mid-term Indicant signaled buy on December 6, 2003. It received a sell signal on October 3, 2008. It is down 50.2% since that sell signal. It was also bearish last week.

State Street Research Global #9, SSGRX, was up 174.2% from its August 16, 2002 buy signal to the Mid-term Indicant sell on October 3, 2008. It is down 62.1% since that sell signal.

Fidelity Energy #39, FSENX, was up 81.2% since the Mid-term Indicant signaled buy on August 16, 2003 and the sell signal on October 3, 2008. It is down 36.1% since that sell signal.

Energy related funds were flat to mildly bearish last week following solidly bearishness in the prior two weeks. They have endured significant bearishness in 19 of the last 30-weeks. The balance of supply and demand for oil appears to taking hold and with that pricing stability.

As stated the past few weeks, the energy industry will not be bullish as long as politicians are trying to run it. The North American automotive industry will be weak for years to come as long as government is loaning money to dilettante managers. The quality of the products, regardless if fuel-efficient or not, will deteriorate. If you want to buy a car for your young daughter, do not buy American.

The Near-term Indicant signaled, sell, for ETF#03 – Energy and Natural Resources on Feb 17, 2009. It is down 11.3% since that sell signal. The Quick-term Indicant continues to signal avoid since September 2, 2008. It is down 44.8% since then. It was up 242.4% (annualized at 44.8%) since its previous buy signal on March 26, 2003 until the September 2008 sell signal.

The Near-term Indicant and Quick-term Indicant signaled buy for the GLD-ETF#11 on December 11, 2008. It is up 14.4% since that buy signal, annualizing at 61.1%. It gained 81.4% from its August 3, 2005 buy signal until the September 8, 2008 sell signal. Its annualized gain during that hold period amounted to 26.0%.

Gold was apparently overbought. It is simply enduring a near-term cyclical adjustment. Its long-term outlook appears solidly bullish.

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

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

The Mid-term Indicant signaled bear on February 20, 2009 for the ten major indices. They are down by an average of 12.2% since that bear signal.

Click this sentence to view a summary of their performance.

The Mid-term Indicant Dow Jones Industrial Average performance is at $25,504,680

That beats buy and hold performance of $1,088,206 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $120,730. That beats buy and hold’s $66,939 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $162,770. That beats buy and hold’s $44,863 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 2,429.7%, 80.4%, and 262.8%, 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 over 2,000% covering the past 100+ years. It will not be surprising to see the Mid-term Indicant outperform buy and hold by over 3,000% before the end of this decade, as the bear will gain momentum.

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 Feb 20, 2009. It is up 18.6% since then and annualizing at 479.1%. The political structure right now is not friendly for wealth creating activities. This fund should perform very well for the balance of this year. There will be bullish spurts from time to time that may trigger periodic sell signals for this contrarian fund, but right now, it appears headed for a triple digit gain since the buy signal.

Click here for Mid-term Indicant Table of Mutual Funds

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 128.9% (annualized at 7.4%) since the Long-term Indicant signaled bull 905-weeks ago. Economic data is the primary influence on the Long-term Indicant. Recessions, deflation, inflation, and unreasonable interest rates have not been strong enough to signal bear since that bull signal. Even with today’s economy and stock market position, the 1991 investor is still up 128.9%, which remains above average performance when considering long-term planning. However, the Long-term Indicant is getting very close to signaling bear. A link to the Long-term Indicant is below:

Keep in mind this recession is not yet as bad as the 1979-82 recession. The Long-term Indicant is not influenced by short-term or mid-term cyclical behavior. It also takes into account longer-term performance within the model, both past and projected.

http://www.indicant.net/Members/Updates/LTI-Markets-DJIA/DJIA.htm

Short-term Indicant Stock Market Report - Summary

As stated on Friday, Feb 20, 2009, current configurations offer zero bullish support.

The major indices are below the Near-term bearish green curve. Until the indices and most of the ETF’s interact with that curve, obviations of directional intensity are minimal; other than the bearish one currently underway.

Interestingly, most Vector Pressure is at or near bearish domains, suggesting the market is within a few weeks of concluding this bearish cycle. We will know when this occurs when the indices shoot back above the two Near-term curves (blue and green).

Previous comments regarding XLF and UGY are still pertinent. Please click this sentence to link to prior comments. Keep in mind XLF continues receiving a bear signal, but its Vector Pressure suggests bullish potential for it and its fast moving cousin, UGY.

Near-term, Quick-term, Short-term Indicant Stock Market Details

On-going attribute watch for major indices:

-Near-term Directional Intensity Unanimity-Bias remains in favor of bear. As of Feb 20, 2009, bearish unanimity was established with bear signals for all major indices and a bull signal for the VIX.

-QTI Red Bull Status—Quick-term bias favors bear. None of the major indices possess this feature. Red Bulls disallow stock market crashing. This assurance remains absent.

QTI Yellow Bear Status-Quick-term bias favors bear. All major indices are yellow bears. Quick-term yellow bears offer no resistance level to falling stock prices. Contrarian VIX is not a yellow bear.

-NTI Blue Bull Status-Near-term bias favors bear. None possess this near-term bullish attribute.

-NTI-Bearish Green Curve-Near-term bearish bias remains solid for all major indices. The VIX remains non-bearishly positioned.

-Force Vector Position- Short-term bearish bias continues under mild threat. As stated last week, another crash cycle or two will be forthcoming. As stated on Friday, Feb 27, 2009 the VIX Force Vector is setting where a solid bounce in its price should occur. It was up 13.6% last Tuesday,  down 3.3% on Wednesday, up 5.5% on Thursday, and down 0.8% today. The VIX remains bullishly configured and solidly so.

-Force Vector Direction – Short-term bearish bias continues under mild threat. The potential for Force Vector bullish cycle was disrupted on Friday, Feb 27 deep inside bearish domains. This attribute correlates with bearish aggression. The last bullish cycle only lasted three days, which is shorter than average. However, Force Vectors are finding a resistance level inside bearish domains, which should reduce bearish aggression.

-Vector Pressure Position- Short-term bearish bias continues. Other than contrarian VIX, most are either in bearish domains or very close. Until Force Vectors cross above Vector Pressure, consider the bear as dominant.

-Vector Pressure Direction –Short-term bearish bias continues. Other than contrarian VIX, bearish direction is continuing.

-Tangential Protection - None of the 11-major indices possess this attribute.

-Reverse Tangential Bearish Detection -  Construction will begin on the next Near-term Bullish cycle. It will identify a future lower trading range upon completion of its construction. It is 100% accurate in predicting this future phenomenon. In other words, after this bearish cycle completes there will be another one after it completes.

The Near-term Indicant did not signal any new bias shifts today. All eleven major indices are down by an average of 14.0% since the Near-term Indicant signaled bear an average of 2.7-weeks ago. Contrarian VIX is up 0.1% since the Near-term Indicant signaled bull on Friday, Feb 20, 2009. VIX’s Vector Pressure is configured in solid short-term bullish support. As stated last week, its Force Vector engaged Vector Pressure, inviting increased probabilities of Near-term bullishness. You saw that most of this week, but not as dynamic as it normally is with significant stock market bearishness. It remains with a bullish configuration on a short-term basis (two to four weeks), while

The Near-term is questionable due to its lazy Force Vector. Do not be surprised at VIX stabilization through next Friday when the March options expire.

The Quick-term Indicant also did not signal new bias shifts today. All eleven major indices are down 46.8% since the QTI signaled bear an average of 30.8-weeks ago. Contrarian VIX is up 113.9% since the QTI bull signal 26.0-weeks ago.

Click the Short-term Indicant to see the combined table of the Near-term Indicant and Quick-term Indicant. The table has links to charts for each. There is one chart containing both the Near-term and Quick-term Indicant.

The tour is still being developed but most of you are now familiar with the Near-term bull/bear cycles as well as the tangential protections and reverse tangential bearish detectors.

The NYSE and NASDAQ Indicant Volume Indicators  continue moving robustly. As stated the past several days, this attribute is solidly in support of bearish behavior. Volume cooled the past few days, suggesting reduced exuberance favoring the bear. Rest assured, though, this bear will continue dominating, but maybe with less punch.

Short-term Report Card, Status, and Charts

The Near-term Indicant generated no buy signals and no sell signals.

Although there were no buy signals, the Near-term Indicant is signaling hold for four ETF’s. They are up by an average of 7.0%, annualizing at 73.7% since their buy signals an average of 5.0-weeks ago. Although there were no sell signals, the NTI is avoiding 27-ETF’s. They are down an average of 12.6% since their sell signals an average of 2.7-weeks ago.

The Quick-term Indicant did not generate any buy signals or sell signals.

The Quick-term Indicant is signaling hold for only three ETF’s. They are up 125.3% since their buy signals 25.2-weeks ago. 28-ETF’s are down 47.1% since their sell signals an average of 30.8-weeks ago.

The selling and avoidance of the 99-non-contrarian funds were triggered by the Mid-term Indicant. Click here to get a quick overview of the regular mutual funds as they stood a few months ago. As you can see, many of them are down by double digit percentage points since the Mid-term Indicant signaled sell in late 2007 and in early 2008. The Mid-term Indicant is updated each weekend with a link to the member’s section. Members can click this sentence to get a more recent update.

Click the below link to see today’s Near-term, Quick-term, and Short-term Indicant signals. Links on that page will take you to a single chart with all the model’s position on each ETF.

http://www.indicant.net/Members/Updates/STI-SQI-QTI-ETF-SumPage/0UD%20QTI-ETF0-Sum.htm

Current Strategy-Short-term Indicant –Mar 6, 2009-Fri-Volume is waning a bit, which suggests reducing interest in bearish support. Most Vector Pressure is near or inside bearish domains. That suggests limited bearishness in magnitude, but certainly not indicating the bear is about to expire. This Vector Pressure configuration can persist for several more weeks. The interesting short-term configuration is recent Force Vector behavior. It is resisting at a low point, which suggests an increasing potential of bullish spurt behavior. Do not be surprised at such expressions in the next few days. However, this coming week is options expiration week and recent behavior suggests market stabilization. The combination of anticipated stabilization and volatility suggests triple digit up and down days will net very little change in the market. Vector Pressure and QID Vector Pressure configurations, though, suggest the bear will continue domination. Mar 5, 2009-Thu-Configurations continue supporting the bear. At some point along this bearish cycle, the market will catapult above bearish green. That will most likely be a bullish spurt, depending on configurations at that time. When it does occur, this report will assess if it is a bullish spurt or a foundation for sustainable bullish behavior. If it is a mere spurt, that will provide you opportunities to participate in shorting what is appearing to be a historical bear market, approaching that of the 1929-1932 market. ETF”s, such as QID, could quadruple in value if that prognosis manifests. Mar 4, 2009-Wed-Same as yesterday and yes there was a bullish bounce today. Until the major indices get to the Near-term bearish green curve, consider any bullish expression as a spurt. Mar 3, 2009-Tue-Force Vectors are turning south somewhat uncharacteristically from deep bearish domains. This uncharacteristic behavior could invite near-term volatility. If there is a bullish bounce, it will be without substance as long as the major indices are below the Near-term Bearish Green curve. As stated last Friday, Vector Pressure continues supporting a bearish trend and it is always better to not fight the trend. Some March options spreads to out of money may be profitable with the increasing probability of near-term volatility. Mar 2, 2009-Mon-The message is the same as last Friday. Do not fight the trend. Even more unsettling to those desiring bullish behavior was the disfigurement of the rising Force Vectors deep inside bearish domains. The yellow bear is jaundiced and is having its way with the bull. Feb 27, 2009-Fri-Bullish spurt potential remains threatening. Its manifestation, though, would be countered with a bearish response. Vector Pressure identifies the short-term trend, which is bearish. Do not fight the trend.

Near-term and Quick-term Summary

The bearish bias originating on January 20, 2009 was replaced with a new bullish bias as of February 6, 2009. As of Friday, Feb 20, 2009, a new bearish bias unfolded. These near-term cycles are occurring with greater frequency than they have since early 2006, but similar to that of 2001-2002. However, recent bullish spurts have been flat, while those of 2001-2002 at least enjoyed some uplifting behavior. Even the bullish spurts during the early 1930’s enjoyed some bullish magnitude. The last bullish spurt was flat in this market. That suggests the bull has very little interest in participating in a market with socialistic causes and limited fundamentals of capitalistic oversight. The bearish bias originating on September 5, 2008 and expiring on November 4 was relatively long and extraordinarily forceful. Such cycles are often followed by similar cycles within months.

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

The former Quick-term Indicant signaled sell for QID  on November 21, 2008. It was down 33.7% on Friday, Dec 26, 2008 since that sell signal. It continues to be down considerably since then. It is now rising and attained Red Bull Status on March 2, 2009.

The Near-term Indicant signaled buy on Feb 19, 2009. It is up 17.3% since that buy signal. Its Force Vector cycle remains embryonically non-bullish, but it remains in bullish domains. Its bullish potential from its depressed Vector Pressure is high right now. Patience is required for the newly forming bearish Force Vector cycle to complete. It should only take a few days. It is configured, at worse, with significant non-bearishness. You will notice the Quick-term Indicant in the table adhered to the yellow bear rule and has not yet signaled sell.

Other Contrarian Funds

ETF#03-Natural Resources   - This ETF is down 44.8% since the Quick-term Indicant signaled sell on September 2, 2008.

As previously stated, the Quick-term Indicant will not signal buy until Vector Pressure is positive and Yellow Bear expires.

The Near-term Indicant signaled sell for this ETF on Feb 17, 2009. It is down 11.3% since then. Again, its Force Vector was also disfigured by the bull the past few days. That offers significant non-bullishness.

ETF#11-Gold and Precious Metals  is up 14.4% since the NTI and QTI signaled buy on December 11, 2008. It is annualized growth is at 61.1% since then. Although Vector Pressure is approaching a maximum and thus nearing a peak, configurations are too bullishly strong to consider holding a threat. Vector Pressure resides in bullish domains. Until it falls below bullish domains, it should be considered dynamically bullish based on “fear.” The fear is a function of economic blundering by politicians, which is the only possible result from their actions.

The concern is the same as last week. Its declining Force Vector and relatively high Vector Pressure is somewhat threatening, but again, continue holding. After losing Red Bull status last Wednesday, it regained last Thursday. A bounce off bullish Red is not uncommon on strong bullish cycles. Force Vector has shifted to the north last Thursday. You may want to consider setting a trailing stop loss at a point or two below the Green Curve price. As of Friday, Mar 6, it is $87.59. You can keep track of that in the table. It will continue to rise. You do not want to see this fund fall below green with declining Vector Pressure.

Some March call options will be attractive when the price falls below blue and the Force Vector starts to shift back to the north. The bearishly moving Force Vector cycle is also mature and the previously mentioned gap between Force Vector and Vector pressure should invite added volatility. As expected a solid bullish bounce occurred the past two days.

ETF#14-Long Government  received a buy signal on Feb 23, 2009 from the Near-term Indicant. It is down 0.3% since then. It’s Force Vector shifted north last Thursday and Vector Pressure is positioned to support bullish behavior.

We’re continuing to hold unless it becomes a Yellow Bear, as the goal is to simply beat buy and hold. It is up 17.8% since the Quick-term Indicant signaled buy on June 24, 2008.

Click Quick-term Indicant, Near-term, and Short-term for all 31-ETF’s.

Other links:

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

Near-term and Short-term Indicant for Major Indices

Divergence versus Convergence

Bearish convergence occurred last week, following two consecutive weeks of bearish divergence. The market has expressed a combined bearish convergence/divergence in ten of the past eleven weeks. That is a testament to the strength of this bear and a prognosis of its continuation. Utilities will not offer any bullish potential for several weeks based on its near-term configurations. That will add bearish energy.

Again, depending on political landscape, this bear could last for decades. FDR like economic meddling will continue to erode economic wealth. Those responsible are either 1) stupid, 2) do not care, or 3) have motives that typically lead to war.

Indicant Conclusion

There were again no Mid-term Indicant buy signals for non-contrarian Mutual Funds. All 99-of those funds are with avoid signals.

Those funds tracked by the Mid-term Indicant are down by an average of 45.7% since their sell signals an average of 38.4-weeks ago. Although the Quick-term and Short-term Indicant models are holding a few of the ETF’s, the Mid-term Indicant will not signal buy for most of the Mutual Funds until they remove themselves from bearish domains. Current configurations suggest it could be a year or longer for that to occur.

Interest rates appear to be stabilizing similar to oil prices. Once the economy stabilizes, expect interest rates and/or inflation to mount a significant increase. Neither of those events will excite the bull.

Although commodity prices have been stable the past several weeks, deflation remains as an immediate concern. If it manifests, a 2500 Dow by 2010/11 may be optimistic. If the purported inflationary depression hits, the prognosis of a 2500 Dow would be similarly optimistic.

In spite of gold prices softening three weeks ago, the sharp increase in Gold and other precious metals the past few weeks, suggests inflation and/or fear elements are predominant themes.

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

03/08/09

March 1, 2009 Indicant Weekly Stock Market Report

Volume 3, Issue 01 ISSN 1526 6516 © The Indicant Stock Market Report

This Week’s Report

More about Abstracts and Bear Markets

The late and great Industrial Engineer of Toyota Production Systems fame, Shigeo Shingo, said there are only two types of objects; abstract and physical. Abstract objects are overrated and always based in personal opinion. The most talented of all people work in the production of physical objects and the least talented work in the world of abstracts.

There is one abstract concept that threatens bullish potential. It is the idea of increasing government regulation. You see many pundits proclaiming a lack of regulation as to one of the primary causes of the stock market crash. Those people are in the untalented group. They form opinions based on their abstract thoughts and conclude their opinion is omnipotent.

The problem with abstracts is proof of deficiency and dysfunction is difficult. That contrasts significantly with observations of physical objects where deficiency and dysfunction are readily obvious. Any argument against an abstract is just another abstract (or differing opinion). The only appropriate analyses at this time is a study of empirical observations. Here are a few.

First, one has to take a look a highly regulated countries versus those of un-regulated economies. Observe the quality of life in those countries. Is it better or worse where regulations are more lax? If one looks at Africa or the Amazon tribes in 1900, there was no regulation. What was the quality of life in those countries without regulation? The soft-handed tea sipper of ten generations of inherited wealth at a country club in the U.K. would conclude jungle inhabitants do not enjoy a high quality of life. It was that group that were critical of capitalistic aggression and the pursuit of money in the Americas in the 1700’s. They already had their wealth from inheritance. Their abstract opinion was “why do others work so hard for wealth creation?” They did not have respect for hard working people. Their abstract held that respect should only be allocated to those in their society clubs, whose members lived an unearned life of luxury. Their life style of inherited wealth shifted their brain's function to some weird conclusions about the nature of people.

Anthropologists would convey abstract counter points to the tea sipper. Jungle tribes were a happy people; always smiling and completely independent. Yes, every now and then a Boa constrictor may enjoy one of the tribe members for lunch, but that tea sipper’s grandpa probably died of syphilis or some other disease that was foreign to 1900 jungle tribes.

That abstract argument can continue ad infinitum and neither side will convince the other, in spite of evidence to the contrary from either side. That is why the least talented folks tend to gravitate to the world of abstracts. Absolute perfection is not required in their world, which is contrary to the world of producing physical objects.

Let’s take a look another way to argue abstracts away from the jungle. How about the 1950’s Soviet Union versus that of the United States? Nearly all economic aspects of the Soviet Union were regulated. By the 1950’s long lines emerged for just about everything, ranging from vodka to bread in the Soviet Union. As stated in prior reports, the non-productive and lazy do not mind long lines.

The Japanese visiting the 1950’s U.S. were impressed with Supermarkets, where there were no long lines. They even borrowed supermarket concepts from the U.S. and implemented them into their manufacturing processes.

With that, one can conclude that a high degree of regulation induces deficiencies and dysfunction into any socio-economic system. The mortality rate is more evidence, where living in a highly regulated socio-economic structure not only minimizes the quality of life, it shortens it. That is an abstract concept and is a current argument between capitalistic and socialistic view points. Frankly, some cannot be regulated regardless of the desires of the control freaks who wish to. Those that go placidly and/or aimless through life probably do not care. Regardless, it is all abstract and thus irrelevant and nonsensical.

So, the soft-handed pundits, like the tea sipper, who are among the least talented among us, are again arguing for more governmental regulation. Since they are the least talented among us, one has to wonder why they are on the television and in the news as being some sort of expert. There is no conclusive evidence suggesting they are experts. On the contrary, since they are always involved in abstracts, suggests a significant degree of limited intelligence.

Human beings, just as with physical objects, create all abstract objects. The production of a physical object offers limitations on personal opinion. The physical object serves the purpose of its designed intention or it does not. An abstract object is not as easily assessed in terms of fulfilling a designed functionality and opinions in wavering three and a half pound brains approach infinity. Those opinions can never offer any physical evidence as to their accuracy.

Karl Marx produced an abstract object called communism. Adam Smith elaborated on an abstract object called capitalism. A blend between those two abstracts is called socialism. In the past 100-years of so, the pendulum swings from the left (communism) to the right (capitalism). Back and forth it swings. Each swing to the left reduces productivity and thus lowers the quality of life. Each swing to the right increases productivity and thus elevates the quality of life. Productivity increases is the sole source of improvements in the quality of life and not the medical profession, as many would have you believe.

Capitalism leaves behind a few, while communism brings everyone down to the lowest levels in capitalistic environments. Those in the upper middle class that supported increased socialism in the last election will endure the pain of their ignorance. They voted to gravitate themselves to levels endured by the street people, if this tyranny by the majority continues without abatement.

The current political leadership, much like any new Fortune 500 manager, blames problems on their predecessors. The current political leadership is directly implicated in some of the causative factors leading to a poor economic environment. They all took money from Freddie Mac and Fannie Mae, which are government run institutions. Those institutions practiced socialism by equalizing the unsuccessful with the successful. Attempts to equalize inequalities always disrupt norms. That disruption to norms expands, ranging from economic sourness to outright war; both civil and international.

Increasing governmental regulation swings the pendulum to the left. Regulation increases the number of regulators. Those regulators are human beings who have the same Maslow Hierarchy of Needs and the exact same desires for pleasure as those being regulated. Since both subgroups are from the same main group, human beings, there will be good and evil in both sub-groups. Therefore, by logical default, not too much is accomplished other than an acceleration for bad greed and corruption. The idea of regulation is for the regulators to ensure the regulated do not cheat. But when the regulator becomes the cheater, who regulates their demise? The answer can be seen in Mexico, Russia, China, and other socio-economic structures that attempted to equalize inequalities. It is impossible to achieve this, as the phenomenon of inequalities is a requirement for all that exists. Inequalities produce form and substance. If all existence was equalities, there would be only form and very dull.

Now, here is the essence of the stupidity of all this regulatory mumbo-jumbo. How does one know that the regulator is honest? After all, they are picked from the same genre as those being regulated.

Not knowing the answer to this is what gives rise to socio economic structures such as 1950’s Russia. Those in government were corrupt people as the elite comprised less than 1% of the population. Bernard Madoff was once an official at the NASDAQ, but was influential on SEC policy. But yet, Madoff violated SEC policy. In other words, existing regulators and their regulations did not prevent Madoff’s violation. Regulations are simply words on paper. People are people.

Madoff’s Ponzi scheme was much like the government run social security system where new money is used to pay off old money. One can suppose the government learned that directly from Charles Ponzi himself.

All man made laws are abstract objects. Increasing man-made laws typically gives rise to business for the mafia. When the government outlaws, say liquor, the mafia becomes its distributor. Socialistic methods can eliminate the mafia, but the leaders of socialism become like the mafia.

There are good people and evil people. So far, the obsolescence of evil people has remained elusive. From time to time, there are wars and for the most part, more evil have been eliminated than good for a world with only leeches and thieves would cause a rather quick expiration of the human race. The start of bear markets is a leading indicator to that potential. The gap between the two sub-groups of good and evil is not as wide as we would like.

People are not a perfect physical construction. After all, the airways are populated constantly by those who only live in the abstract world and thus a continuum of constant bantering by the least talented among us. None of them are engage in the production of physical objects and thus a testament to their limited intellectual abilities.

There are those that are deceitful and without character. So far, no system has been developed to identify those poor lost souls and prevent them from stealing money or bending “regulations” to the advantage of themselves, their friends and/or their third cousins.

Banks are now going to have government employees on their boards. Who can prove these government employees are more honest and with more character than say, the Enron board or the board members at Citi Corp they are replacing. They are just people very similar to those they are replacing. There is nothing special about them; just ordinary folks who got a job with the government, as opposed to some other employer. The same political establishment that took monies from Freddie Mac and Fannie Mae for their political campaigns is directing the insertion of Citi Corp board by government employees. Those same politicians directed the social equilibrium of the haves and have-nots. All that does is bring the haves closer to the have-nots and not the other way around.

Unfortunately, a pre-determination of good and evil is obviously non-existent. History sides with that abstract observation. However, it would be interesting to hear an abstract argument against such a predetermination of good and evil for about one or two seconds. The element of interest would be that one would allow an idiot to get their attention for that long. Capitalist spot and eliminate evil quicker and better than socialist. Socialists react bitterly to this ability by the capitalist. That is detectable when you hear their raised, shrilled, and interruptive voices claiming they know all that is important when they are only conveying abstracts from their twirling dendrites spilling to misused parts of their brains.

As long as you are hearing about more governmental regulations and government meddling in the capital markets, the more you should anticipate a 2500 Dow before you see 10,000 again. General Motors, Delphi, Visteon, Chrysler, etc. are bad companies, run by bad people. Does anyone believe a government run bank will be more efficient than one run by capitalists? One could interject that ability or lack thereof by the Freddie Mac and Fannie Mae organizations. They should all perish and they eventually will. The problem is that saving such organizations will bring the rest of you down with it.

Socialistic methods tend to equalize everyone. The point of equilibrium, unfortunately, is not on the high end of performance. It devolves to the lowest form of existence as evinced by those that tried it before. A promoter of socialism and enhanced governmental regulation will not be convinced of the greater efficiencies contained in capitalism no matter how many abstract contrarian points of evidence are presented. That is because it is abstract and the penetration point is a small spherical object of about three and a half pounds inside the skull of low talented brains that only deal with the abstract, where right and wrong are always based in some mystery.  The root of the problem is that those limited and weak brains cannot be penetrated with accurate thinking while leaving that organism alive. Therein lays the problem in the world of abstracts.

It is abstract thinking and its related lack of objective conclusion that spreads misery around the world. All abstract thoughts are merely an expression from some three and a half pound brain proclaiming absolute conclusions, but without any physical evidence or authenticity of those conclusions. That causes problems and when skewed to far to the left, bear markets unfold.

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

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

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

The Mid-term Indicant generated no buy signals and one sell signal. There have been 538-sell signals since October 26, 2007 and 38-buy signals since October 31, 2008.

Although there were no buy signals, the Mid-term Indicant is signaling hold for only 23 of the 344-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 103.1%. That annualizes to 57.1%. The Mid-term Indicant has been signaling hold for these 23-stocks and funds for an average of 93.8-weeks.

In addition to the sell signal, the Mid-term Indicant is avoiding 321-stocks and funds of the 344- tracked by the Indicant. The avoided stocks and funds are down an average of 40.1% since the Mid-term Indicant signaled sell an average of 38.5-weeks ago.

The Mid-term Indicant is avoiding 99-of the 100-Mutual Funds tracked, excluding the 31-ETF’s tracked daily. The funds are down an average of 39.8% since their sell signals an average of 36.4-weeks ago. The 31-ETF’s trade more frequently and are updated in the daily stock market report.

The Mid-term Indicant signaled, buy, for contrarian MF#22-USPIX Ultra Short on Feb 20, 2009.  It has been a typical post election year fund to hold, as it moves up while the market moves down. You can garnish the same benefit by buying QID.

One year ago, on Feb 29, 2008, the Mid-term Indicant was holding 145-stocks and funds out of the 345 tracked for an average of 170.0-weeks. They were up by an average of 198.8% (annualized at 60.8%). There were 195-avoided stocks and funds at that time. The avoided stocks and funds were down an average of 11.4% since their respective sell signals an average of 16.5-weeks earlier.

The Mid-term Indicant was signaling hold for 301-stocks and funds of the 345-tracked two years ago on Mar 2, 2007. They were up by an average of 108.8% (annualized at 57.7%) since their respective buy signals an average of 98.0-weeks earlier. The Mid-term Indicant was avoiding 30-stocks and funds at that time. They were down an average of 12.7% since their respective sell signals an average of 21.6-weeks earlier.

There were 285-stocks and funds with hold signals on Mar 3, 2006 since their buy signals an average of 93.6-weeks earlier. They were up by an average of 115.4% (annualized at 64.1%). There were 54-avoided stocks and funds at that time. They were down by an average of 9.4% from their respective sell signals an average of 22.0-weeks earlier.

On Feb 25, 2005, the Mid-term Indicant was signaling hold for 250-stocks and funds out of 320-tracked. They were up by an average of 89.7% (annualized at 66.9%) since their buy signals an average of 64.1-weeks earlier. The Mid-term Indicant was avoiding 61-stocks and funds at that time. They were down by an average of 29.9% since their sell signals an average of 69.8-weeks earlier.

Five years ago, on Feb 28, 2004, there were 275-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 70.0% (annualized at 83.5%) since their respective buy signals an average of 43.9-weeks earlier. There were only 15-avoided stocks and funds then. They were down an average of 28.7% since their respective sell signals an average of 43.6-weeks earlier.

On Mar 3, 2003, there were 155-stocks and funds with hold signals from the listing of 296-tracked by the Mid-term Indicant at that time. They were up an average of 21.1%, annualizing at 58.9%. There were 127-avoided stocks and funds then. They were down by an average of 10.6% since their sell signals an average of 7.2-weeks earlier.

Summary of Stocks and Funds with Buy and Sell Signals This past Week

To maintain appropriate security, you can see the Mid-term Indicant "buy/sell" signals for stocks and funds for this week by clicking the following link. It is in the member’s only section.

Link to this week’s buy and sell signals.

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. Socio-economic interference can devastate your holdings from time to time. Right now, the pendulum is swinging to the left. That is not good for stock equity related investing.

All updated information can be accessed from the following link. You will need your login ID and password.

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

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

Fundamentally, there is no reason to expect any bullish potential on a near-term, short-term, or mid-term basis. Earnings will continue to deteriorate and the normal capital “cleansing of the incompetent” is not being allowed by socialistic intervention. Wealth cannot be created when incompetent individuals are in the normal process of wealth creation; manufacturing, extraction, and agriculture.

Click the following link that will take you to the tangential protection charts.

http://www.indicant.net/Members/Updates/STI-Mkts/STI-10-Indices/STI08.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 down 3.1% since its secular weekly low on October 9, 2002. The NASDAQ is up 23.7% and the S&P500 is down 5.4% since then. The small cap index, S&P600, is up 20.6% since October 9, 2002. All of the major indices were at new lows on the same week, which is a common attribute for bottoming. Interestingly, the NASDAQ100 is up 38.2% since October 9, 2002, which is more than the other indices. RIMM, Apple, and a few others who have strongly performed are the primary contributors. Now, the current economic environment is challenging them.

The Dow is down 50.1% since its last weekly closing peak on Oct 9, 2007. The NASDAQ is down 51.8% since its last peak on Oct 31, 2007. The S&P600-small cap index is down 53.7% since its last closing peak on Jul 19, 2007.

The NASDAQ is down 72.7% since its last weekly secular peak on March 9, 2000. The S&P500 is down 51.9% since its similar secular peak on March 23, 2000. The Dow is down by 39.8% since January 13, 2000 when it peaked from the 1990’s roaring bull. As stated the past several years in this report, do not be surprised at the NASDAQ equaling its March 9, 2000 high until after 2025.

As socialism increases, the NASDAQ may not hit its 2000 peak until after 2050. Even that depends on resurgence in entrepreneurialism and related capitalism. Politicians screwed up the economy and the majority apparently believes their proposed fixes. Yes, the masses, for the most part, are weak and stupid. It just depends on what critical mass believes the lies and what critical mass keeps moving forward with progressive capitalism. There is always a chance that “Steven Jobs-like” creativity in product development and successful marketing may lead to economic benefits, in spite of governmental interference.

The Dow is down 19.5% so far this year. The NASDAQ is down 12.6% this year. Keep in mind the post election year is the most bearish and has lost money since 1832.

The NASDAQ year-to-date performance was bearish by 10.6% through this week in 2001. Keep in mind the NASDAQ finished 2001 down by 21.1%., which was congruent with standards of post-election-year-bearishness.

The NASDAQ was down by 10.2% through this weekend in 2002. Some of you recall the dynamic bear market in 2002, where the NASDAQ finished that year down by 31.5%. The bear cycle found bottom in October 2002, which is consistent with the mid-term year’s historical standards.

The NASDAQ YTD 2003 performance was down by 0.9%. It finished up in that solidly bullish year by 50.0%, which was consistent with historical pre-election year results. It was up on this weekend in 2004 by 1.3% and finished up by 8.6% for that year, which was congruent with election year bullishness although shy of magnitude standards.  It was down by 5.1% in 2005’s post election year, which maintained congruency to the historical standards of losses. Many of you recall that 2004 and 2005 were meandering bear markets. 2005 finished up by a mere 1.4%, which was an excellent year based on post election year historical standards. In 2006, it was up 4.6% on this weekend and finished that year with a 9.5%-gain, which again maintained congruency of historical bullishness for a mid-term election year. It was down by 0.3% at this time in 2007 with the Alan Greenspan scare but finished up that year by 9.8%, which was consistent with pre-election year bullishness. It was down 11.3% at this time last year. The NASDAQ finished down by 40.5% in 2008. That was contrarian performance to historical election year bullishness and the most bearish presidential election year since related records from 1832.

So far, in this post election year, the Dow is down 19.5%. The S&P500 is down 18.6% and the NASDAQ is down 12.6%.

Keep your eye on the daily stock market report.

Stop Loss Management

The Mid-term Indicant recommends a trailing stop loss of 10% due to increasing bearish influences for your longer-term holdings. The Short-term and Mid-term Indicant continues signaling bear. Most of the longer-term holdings are with “avoid” signals, but a few are still holding. The risk of continued holding, even for the likes of Apple, is increasingly approaching the benefit to continued holding. If you feel you will need cash within the next two years, you should consider selling all stocks. (The Indicant is not signaling hold for any mutual funds, except those that short the market when bullish spurts are not threatening). The ETF are signaled on the Near-term, Quick-term, and Short-term Indicant and are updated daily. These shorter-term models participate in bullish spurts, while the Mid-term Indicant is more focused on fundamentals and longer-term technical data.

If your stock or fund is above the bearish yellow curve and below the green curve, set your stop loss equal to the greater of the yellow curve and the trailing stop loss. If your stock or fund is above the green curve, set your stop loss at no less the value of the green curve or 8% trailing, whichever is greater. If your stock or fund is above the red curve and you bought at the Mid-term Buy signal, you should use the 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.

Economic Conditions – Inflation, Currency, Interest Rates

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

Short-term interest rates have moved north in four of the past five weeks. As stated the past few weeks, the issue confronting the Fed is the threat of deflation from a souring economic environment, followed by hyperinflation as the supply of printed money is increasing well beyond productive capacities. That will eventually lead to demand exceeding supply by significant amounts and thus leading to hyperinflation.

There is no change from the past seven weeks. Interest rates remain at record low levels. That normally fosters a bullish stock market. Unfortunately, souring economic conditions at an accelerating rate have reduced the normal bullish relationship of low interest rates as irrelevant. Although rates are low, the process of borrowing money is not a capitalistic relationship between borrower and seller and thus irrelevant to the capital markets. Government intervention is going to wreak havoc on the United States economy. Governments simply cannot perform due to their riskless and reckless decision-making.

As stated the past few weeks, the idea of capitalisms is to borrow or capitalize and expanding the supply of money through productive effort. That is not what is going on right now.

The U.S. dollar continues to strengthen in its bullish cycle. It is a profoundly strong cycle indeed with the exception of the Japanese Yen, where productive skills still exceed those of the U.S.

The U.S. economy is perceived to have the greatest chance of returning to robustness when compared to other countries. As stated the past six weeks, the exception to this is China, who may or may not need U.S. consumption to bolster their economy. A weakening dollar against the Yuan may enjoy a longer-term labor relationship with the West. However, the stock market is focused only on the next six to nine months.

The commodities bearish cycle is configuring at a bottom. It is already figured at prices supporting a low economic case. As long as they are bouncy near their cyclical minimums, the economic outlook should be considered as no worse than present. Although that is not positive, the magnitude of negatives have at least flattened for the time being.

Gold is an exception. Although it was bearish last week, it remains too risky to sell. Our hold positions are okay.  Its strength this is a testament to the fear elements inherent in the economy. Economic conditions will be fostering the “hate element” of humanity.

As stated 20-weeks ago, once the euphoria of the socialistic methods are complete, rest assured the bear market will continue and with gusto. This is not technical. This is fundamental. And you can see that prognosis continuing.

As stated 16-weeks ago, “probabilities remain high that any bullish cycle will be followed by a deep bear market in 2009. If taxes are raised on the highly productive and capital gains, do not be surprised at a 1,000 Dow by 2010.”

As stated 12-weeks ago, this bear has teeth, is hungry, and is nowhere near expiration. Cyclical spurts of a bullish configuration will occur from time to time, but the trend should remain bearish throughout the next year and into 2010. Bullish spurts will occur from time to time. As we learned from the November 28, 2008 – January 21, 2009 bullish spurt, profit potential from them is limited and in some cases disappoint rather rapidly. The attempted spurt on Feb 6, 2009 faded quickly and expired on Feb 19, 2009. The short-term trader will trade on those spurts, while mid-to-long-term investor should remain on the sidelines.

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 162.2% from its April 13, 2001 buy signal until the Mid-term Indicant sell signal on October 3, 2008. It is down 46.3% since that sell signal. It has been bearish in eight of the last ten weeks. It was solidly bearish the past two weeks due to being over-bought.

Fidelity Gold, Fund #28 is down 18.1% since the Midterm Indicant signaled sell on August 1, 2008. It was solidly bearish last week.

Vanguard Energy #18, VGENX, was up 144.9% from since the Mid-term Indicant buy signal April 5, 2003. It received a sell signal on October 3, 2008. It is down 31.0% since that sell signal. It was solidly bearish the past three weeks.

Fidelity Energy Services #40, FSESX, was up 107.2% since the Mid-term Indicant signaled buy on December 6, 2003. It received a sell signal on October 3, 2008. It is down 46.0% since that sell signal. It was mildly bullish last week.

State Street Research Global #9, SSGRX, was up 174.2% from its August 16, 2002 buy signal to the Mid-term Indicant sell on October 3, 2008. It is down 58.2% since that sell signal.

Fidelity Energy #39, FSENX, was up 81.2% since the Mid-term Indicant signaled buy on August 16, 2003 and the sell signal on October 3, 2008. It is down 31.6% since that sell signal. It was flat last week.

Energy related funds were flat to mildly bearish last week following solidly bearishness in the prior two weeks. They have endured significant bearishness in 19 of the last 30-weeks. The balance of supply and demand for oil appears to taking hold and with that pricing stability.

As stated the past few weeks, the energy industry will not be bullish as long as politicians are trying to run it. The North American automotive industry will be weak for years to come as long as government is loaning money to dilettante managers. The quality of the products, regardless if fuel-efficient or not, will deteriorate. If you want to buy a car for your young daughter, do not buy American.

The Near-term Indicant signaled, sell, for ETF#03 – Energy and Natural Resources on Feb 17, 2009. It is down 6.0% since that sell signal. The Quick-term Indicant continues to signal avoid since September 2, 2008. It is down 41.5% since then. It was up 242.4% (annualized at 44.8%) since its previous buy signal on March 26, 2003 until the September 2008 sell signal.

The Near-term Indicant and Quick-term Indicant signaled buy for the GLD-ETF#11 on December 11, 2008. It is up 14.9% since that buy signal, annualizing at 68.8%. It gained 81.4% from its August 3, 2005 buy signal until the September 8, 2008 sell signal. Its annualized gain during that hold period amounted to 26.0%.

Gold was apparently overbought. It is simply enduring a near-term cyclical adjustment. Its long-term outlook appears solidly bullish.

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

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

The Mid-term Indicant signaled bear on February 20, 2009 for the ten major indices. They are down by an average of 4.7% since that bear signal.

Click this sentence to view a summary of their performance.

The Mid-term Indicant Dow Jones Industrial Average performance is at $25,504,680

That beats buy and hold performance of $1,074,537 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $120,730. That beats buy and hold’s $72,004 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $162,770. That beats buy and hold’s $47,775 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 2,273.6%, 67.7%, and 240.7%, 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 over 2,000% covering the past 100+ years. It will not be surprising to see the Mid-term Indicant outperform buy and hold by over 3,000% before the end of this decade, as the bear will gain momentum.

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 Feb 20, 2009. It is up 8.8% since then and annualizing at 452.4%. The political structure right now is not friendly for wealth creating activities. This fund should perform very well for the balance of this year. There will be bullish spurts from time to time that may trigger periodic sell signals.

Click here for Mid-term Indicant Table of Mutual Funds

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 144.0% (annualized at 8.3%) since the Long-term Indicant signaled bull 904-weeks ago. Economic data is the primary influence on the Long-term Indicant. Recessions, deflation, inflation, and unreasonable interest rates have not been strong enough to signal bear since that bull signal. Even with today’s economy and stock market position, the 1991 investor is still up 144.0%, which remains above average performance when considering long-term planning. However, the Long-term Indicant is getting very close to signaling bear. A link to the Long-term Indicant is below:

Keep in mind this recession is not yet as bad as the 1979-82 recession. The Long-term Indicant is not influenced by short-term or mid-term cyclical behavior. It also takes into account longer-term performance within the model.

http://www.indicant.net/Members/Updates/LTI-Markets-DJIA/DJIA.htm

Short-term Indicant Stock Market Report - Summary

The Near-term Bull born on Friday, Feb 6, 2009 expired on Feb 19, 2009. Configurations are now in solid support of the bear. As stated on Friday, Feb 20, 2009 current configurations offer zero bullish support. Also as stated on Feb 20, maturing bearish Force Vector cycles supported bullish behavior and you saw that last Tuesday. However, as stated after that bullish expression, that bullish behavior has not and will unlikely shift from bearish bias on a near-term cyclical basis. You saw that with bearish behavior the past two days. Force Vector cycles typically last only four to six days and continues to offer some bullish potential, but not yet threatening to the underlying bearish cycle.

As stated on Friday, Feb 20, 2009 ETF#05, XLF-Chart,  is an exception to bearishly configuring Vector Pressure. It is configured with non-bearishness. It is possible for this ETF to stabilize with significant bearishness elsewhere. Watch for “political” adjustments to Sarbanes Oxley and Mark to Market. Technically, the Near-term Indicant is not quite ready to signal buy even though you will notice its Force Vector has shifted to the north from deep inside bearish domains. Again, the design is to merely beat buy and hold and not take gambles on Force Vector behavior alone.

It is humorous laws were made to minimize voodoo bookkeeping invented by Enron. Now, political mindlessness is engaged with the idea of adjusting asset values, regardless of what the asset’s real value is. Chairman Bernanke recently suggested government owned preferred shares can be converted to common shares at the banks. That will dilute shareholder value and thus drive the XLF and its faster moving cousin, UYG, much lower. UYG is approaching penny ETF status.

Also, as stated on Friday, Feb 20, 2009, regardless of the nonsensicality of all of this, XLF and its exponential cousin, UYG, could enjoy a swift and solid bullish stimulant from political pandering. Although a bit of a gamble, UYG or XLF are building a relatively high reward/risk ratio in spite of the void in basic principle and fundamental. They could move like gold; that is on pure emotion and with absolutely no economic reason. Keep your eye on the Near-term Indicant for ETF#05-XLF. UYG is configured the same. Keep in mind, though, as of this writing, XLF is under a Near-term avoid signal. It will formally receive a buy signal from the Near-term Indicant when (and if) its Force Vector crosses into bullish domains. It interacted today with Vector Pressure. There could be another bearish dip before the next bullish cycle because its Force Vector is very mature. It also could dip down another 50% from its current position. That is why it is a bit of a gamble. If you engage, set stop losses and do not worry about being stopped out. There will be plenty of other opportunities to ride this “penny ETF” to higher ground at some future point.

Near-term, Quick-term, Short-term Indicant Stock Market Details

On-going attribute watch for major indices:

-Directional Intensity Unanimity-Bias remains in favor of bear. As of Feb 20, 2009, bearish unanimity exists with bear signals for all major indices and a bull signal for the VIX.

-QTI Red Bull Status—Quick-term bias favors bear. None of the major indices possess this feature. Red Bulls disallow stock market crashing. This assurance is absent right now.

QTI Yellow Bear Status-Quick-term bias favors bear. All major indices are yellow bears. Quick-term yellow bears offer no resistance level to falling stock prices. Contrarian VIX is not a yellow bear.

-NTI Blue Bull Status-Near-term bias favors bear. None possess this near-term bullish attribute.

-NTI-Bearish Green Curve-Near-term bearish bias remains solid for all major indices. The VIX remains non-bearishly positioned.

-Force Vector Position- Short-term bearish bias continues under mild threat. They are deep inside bearish domains, which is non-bearish. That is why the market is not crashing when fundamentals suggest “crashing” would be appropriate. Another crash cycle or two will be forthcoming. The VIX Force Vector is setting where a solid bounce in its price should occur.

-Force Vector Direction – Short-term bearish bias continues under mild threat. A new bullish cycle is underway. These cycles only last four to six days on average. It is now three days old. Those desiring bullishness do not want to see those Force Vectors turn south from deep inside bearish domains.

-Vector Pressure Position- Short-term bearish bias continues. Other than contrarian VIX, most are in short-term neutrality. The DJ Composites and Dow Transports fell into bearish domains today, Friday, February 27, 2009.

-Vector Pressure Direction –Short-term bearish bias continues. Other than contrarian VIX, bearish direction is continuing.

-Tangential Protection - None of the 11-major indices possess this attribute.

-Reverse Tangential Bearish Detection -  Construction will begin on the next Near-term Bullish cycle. It will identify a future lower trading range upon completion of its construction. It is 100% accurate in predicting this future phenomenon.

The Near-term Indicant did not signal any new bias shifts today. All eleven major indices are down by an average of 6.0% since the Near-term Indicant signaled bear an average of 1.7-weeks ago. Contrarian VIX is down 6.0% since the Near-term Indicant signaled bull last Friday. The VIX should resume bullishness once the Force Vector completes its bearish cycle in the next day or two.  Its Vector Pressure is configured in solid short-term bullish support. Its Force Vector is now engaging Vector Pressure, inviting increased probabilities of Near-term bullishness.

The Quick-term Indicant also did not signal new bias shifts today. All eleven major indices are down 42.4% since the QTI signaled bear an average of 29.8-weeks ago. Contrarian VIX is up 101.1% since the QTI bull signal 25.0-weeks ago.

Click the Short-term Indicant to see the combined table of the Near-term Indicant and Quick-term Indicant. The table has links to charts for each. There is one chart containing both the Near-term and Quick-term Indicant.

The tour is still being developed but most of you are now familiar with the Near-term bull/bear cycles as well as the tangential protections and reverse tangential bearish detectors.

The NYSE and NASDAQ Indicant Volume Indicators  continue moving robustly. This attribute is solidly in support of bearish behavior. Friday’s volume accelerated bearish momentum.

Short-term Report Card, Status, and Charts

The Near-term Indicant generated no buy signals and no new sell signals.

Although there were no buy signals, the Near-term Indicant is signaling hold for five ETF’s. They are up by an average of 1.3%, annualizing at 18.8% since their buy signals an average of 3.7-weeks ago. Although there were no sell signals, the NTI is avoiding 26-ETF’s. They are down an average of 6.3% since their sell signals an average of 1.8-weeks ago.

The Quick-term Indicant did not generate any buy signals or sell signals.

The Quick-term Indicant is signaling hold for only three ETF’s. They are up 107.7% since their buy signals 24.2-weeks ago. 28-ETF’s are down 43.4% since their sell signals an average of 29.8-weeks ago.

The selling and avoidance of the 99-non-contrarian funds were triggered by the Mid-term Indicant. Click here to get a quick overview of the regular mutual funds as they stood a few months ago. As you can see, many of them were down by double digit percentage points since the Mid-term Indicant signaled sell in late 2007 and in early 2008. The Mid-term Indicant is updated each weekend with a link to the member’s section. Members can click this sentence to get a more recent update.

Click the below link to see today’s Near-term, Quick-term, and Short-term Indicant signals. Links on that page will take you to a single chart with all the model’s position on each ETF.

http://www.indicant.net/Members/Updates/STI-SQI-QTI-ETF-SumPage/0UD%20QTI-ETF0-Sum.htm

Current Strategy-Short-term Indicant –Feb 27, 2009-Fri-Bullish spurt potential remains threatening. Its manifestation, though, would be countered with a bearish response. Vector Pressure identifies the short-term trend, which is bearish. Do not fight the trend. Feb 26, 2009-Thu-Force Vectors continue moving bullishly but without stock market bullishness. This favors a repositioning that should not be too upsetting to the Near-term Bearish cycle now underway. However, there are a few days remaining for this bullish Force Vector cycle to complete. Feb 25, 2009-Wed-Force Vector position and direction are favoring non-bearishness at this time. Most of the other attributes are suggesting bearish dominance. There are conflicts in the configurations, but the bias continues in favor of the bear. Feb 24, 2009-Tue-It is a bit encouraging for Force Vector normalcy. The market responded with some bullish gusto on bearishly mature Force Vectors. However, do not be fooled by this. Force Vectors will move unfavorably to the avoid signals for a few days. The market should resume bearishness once this bullish cycle completes. It should last for only a few days; say four to six. The Near-term Indicant remains configured in favor of the bear. Feb 23, 2009-Mon-Force Vectors are bearishly mature. That typically induces non-bearishness to simple bullish responses. If Vector Pressure is allowed to dip into bearish domains, you can expect configurations of bearish magnitude similar to that of last September/October.  Feb 20, 2009-Fri-The capital markets are subjected to socialistic interferences similar to that of the 1930’s. That will be confusing to the capital markets. The printing presses are running wild and that will invoke inflation. It will take longer for the free market to find optimum balances between supply and demand. That coupled with current Near-term, Quick-term, and Short-term configurations suggests a continuing bearish bias that may take decades to correct. There will be bullish spurts and the Near-term Indicant will configure accordingly.

Near-term and Quick-term Summary

The bearish bias originating on January 20, 2009 was replaced with a new bullish bias as of February 6, 2009. As of Friday, Feb 20, 2009, a new bearish bias unfolded. These near-term cycles are occurring with greater frequency than they have since early 2006, but similar to that of 2001-2002. However, contemporary bullish spurts have been flat, while those of 2001-2002 at least enjoyed some uplifting behavior. Even the bullish spurts during the early 1930’s enjoyed some bullish magnitude. The last bullish spurt was flat in this market. That suggests the bull has very little interest in participating in a market with socialistic causes and limited fundamentals of capitalistic oversight. The bearish bias originating on September 5, 2008 and expiring on November 4 was relatively long and extraordinarily forceful. Such cycles are often followed by similar cycles within the months.

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

The former Quick-term Indicant signaled sell for QID  on November 21, 2008. It was down 33.7% on Friday, Dec 26, 2008 since that sell signal. It continues to be down considerably since then. It is now rising and nearing Red Bull Status.

The Near-term Indicant signaled buy on Feb 19, 2009. It is up 8.1% since that buy signal. Its Force Vector cycle is now embryonically non-bullish, but it remains in bullish domains. Its bullish potential from its depressed Vector Pressure is high right now. Patience is required for the newly forming bearish Force Vector cycle to complete. It should only take a few days. It is configured, at worse, with significant non-bearishness. You will notice the Quick-term Indicant in the table adhered to the yellow bear rule and has not yet signaled sell.

Other Contrarian Funds

ETF#03-Natural Resources   - This ETF is down 41.5% since the Quick-term Indicant signaled sell on September 2, 2008.

As previously stated, the Quick-term Indicant will not signal buy until Vector Pressure is positive and Yellow Bear expires.

The Near-term Indicant signaled sell for this ETF on Feb 17, 2009. It is down 6.0% since then. Again, its Force Vector needs to complete its newly forming bullish cycle, which should only take a few days. Once complete, bearish behavior should accelerate.

ETF#11-Gold and Precious Metals  is up 14.9% since the NTI and QTI signaled buy on December 11, 2008. It is annualized growth is at 68.6% since then. Although Vector Pressure is approaching a maximum and thus nearing a peak, configurations are too bullishly strong to consider holding a threat. Vector Pressure resides in bullish domains. Until it falls below bullish domains, it should be considered dynamically bullish based on “fear.” The fear is a function of economic blundering by politicians, which is the only possible result from their actions.

The concern is the same as last week. Its declining Force Vector and relatively high Vector Pressure is somewhat threatening, but again, continue holding.

Once it falls below bullish blue, more buying may be appropriate. It is now below bullish blue. Some March call options will be attractive when the price falls below blue and the Force Vector starts to shift back to the north. Although its Near-term Bullish cycle is mature, it should enjoy another bounce or two in the near future. Its Force Vector is nearing bearish domains and that should invigorate a nice bullish bounce before the March options expire.

ETF#14-Long Government  received a buy signal on Feb 23, 2009 from the Near-term Indicant. It is down 2.9% since then. It moved non-contrarian the past three days with minor bearishness in the face of overall market bearishness. This ETF is more often contrarian than not. Its Vector Pressure are configured favorable to upside potential on a near-term basis. Its Force Vector is misbehaving with a dip into bearish domains today. That is discerning to its hold signal, but we’re still holding on the near-term buy.

As reported on February 11, 2009-Wed-it moved south considerably yielding a nice profit on the naked options play. As of Feb 19, 2009, March call options are appealing, but the Force Vector risks of overall market bullishness suggests a conservative view of this right.

We’re continuing to hold unless it becomes a Yellow Bear, as the goal is to simply beat buy and hold. It is up 14.8% since the Quick-term Indicant signaled buy on June 24, 2008.

Click Quick-term Indicant, Near-term, and Short-term for all 31-ETF’s.

Other links:

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

Near-term, Quick-term, and Short-term Indicant for Major Indices

Divergence versus Convergence

Bearish divergence occurred for the second consecutive week. The market has expressed a combined bearish convergence/divergence in nine of the past ten weeks. That is a testament of this bear and a prognosis of its continuation. Utilities will not offer any bullish potential for several weeks based on its near-term configurations. That will add bearish energy.

Again, depending on political landscape, this bear could last for decades.

Indicant Conclusion

There were again no Mid-term Indicant buy signals for non-contrarian Mutual Funds. All 99-of those funds are with avoid signals.

Those funds tracked by the Mid-term Indicant are down by an average of 42.2% since their sell signals an average of 37.0-weeks ago. Although the Quick-term and Short-term Indicant models are holding a few of the ETF’s, the Mid-term Indicant will not signal buy for most of the Mutual Funds until they remove themselves from bearish domains. Current configurations suggest it could be a year or longer for that to occur.

Interest rates appear to be stabilizing similar to oil prices. Once the economy stabilizes expect interest rates and/or inflation to mount a significant increase. Neither of those events will excite the bull.

Although commodity prices have been stable the past several weeks, deflation remains as an immediate concern. If it manifests, a 2500 Dow by 2010/11 may be optimistic. If the purported inflationary depression hits, the prognosis of a 2500 Dow would be similarly optimistic.

In spite of gold prices softening a bit the past two weeks, the sharp increase in Gold and other precious metals the past few weeks, suggests inflation and/or fear elements are predominant themes.

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

03/01/09

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