May 2007 Indicant Weekly Stock Market Reports

May 27, 2007 Indicant Weekly Stock Market Report

Volume 05, Issue 04 ISSN 1526 6516 © The Indicant Stock Market Report

Market Divergence

Contrarian securities were mixed last week with mild bullish and bearish expressions. General equities were also mildly bearish. Overall, the market conveyed mild bearish convergence with contrarian and general stocks moving in a bearish direction.

Fortunately, that bearishness was mild with the exception last Thursday’s bearish aggression. That bearishness was coupled with increased volume. Normally, that combination supports continuing bearish behavior on a Quick-term basis. However, the market rebounded on Friday with bullish behavior. The bearish expression last Thursday was a mere spurt.

Spurts are contrarian movements against the prevailing market bias. Spurts have no sustainability or magnitude. In other words, the underlying and prevailing market bias quickly adjusts to exert its influence over the mischievous behavior of those contrarian expressions (spurts).

That increased volume last Thursday raised an eyebrow. It suggests support for more bearish expressions on the immediate horizon. The underlying bullish bias may simply rest and allow bearish desires to influence the market. The underlying bullish bias will police these bearish assertions and more or less force meandering behavior. This is the worse-case scenario, given the current configurations. In other words, the market is configured to support the bullish bias, but the market’s emotion may allow for a temporary cycle of bearish influences. That suggests, at worse, a meanderer for a few weeks.

These bearish influences will attempt to convert the prevailing bullish bias to a dominant bearish bias. As long as the Quick-term Indicant attributes remain configured with their current bullish bias, it will tolerate bearish exertions on the assumption of spurt conclusions. In other words, each micro bearish expression will be countered with a bullish response. Those bullish responses may not be of equal value as the bearish spurts. These bullish responses do their job, though. They prevent outright bearish dominance. They allow your longer-term hold positions to be safely held without engaging in untimely nervous and high cost trading.

Keep your eye on the daily stock market report. Right now Vector Pressure and Red Bulls continue to dominate. As long as that domination continues, bearish expressions are mere spurts. They are a nuisance. It is generally better to tolerate them as opposed to avoiding them. After the bull is rested, it can re-exert its dominance quickly and dynamically. That is the reason for tolerance. Spurts are necessary for any free-market force. They constantly challenge what many would like to be guaranteed.

Weekly Buy/Sell Summary – Stocks and Funds

The Mid-term Indicant generated no buy signals and one sell signal.

In addition to the sell signal, the Mid-term Indicant is avoiding 31-stocks and funds of the 345 tracked by the Indicant. The avoided stocks and funds are down an average of 13.6% since the Mid-term Indicant signaled sell an average of 26.9-weeks ago.

There were 100-stocks and funds avoided at this time last year. Those avoided stocks and funds were down an average of 5.6% since their respective sell signals an average of 15.9-weeks earlier.

Two years ago, on May 27, 2005, the Mid-term Indicant was avoiding 112-stocks and funds that were down an average of 25.8% since their respective sell signals an average of 56.8-weeks earlier. Three years ago on May 29, 2004 there were only 50-avoided stocks and funds. They were down by an average of 12.6% from their respective sell signals an average of 18.4-weeks earlier. On May 24, 2003, the Mid-term Indicant was avoiding only 9-stocks and funds out of 296-tracked. They were down by an average of 25.1% since their sell signals an average of 26.4-weeks earlier.

Although there were no buy signals, the Mid-term Indicant is signaling hold for 313 of the 345-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 122.3%. That annualizes to 63.3%. The Mid-term Indicant has been signaling hold for these 313-stocks and funds for an average of 100.5-weeks.

One year ago, on May 26, 2006, the Mid-term Indicant was holding 234-stocks and funds out of the 345 tracked for an average of 104.9-weeks. Those 234-stocks and funds were up by an average of 142.5% (annualized at 70.6%). The Mid-term Indicant was signaling hold for 208-stocks and funds of the 320-tracked two years ago on May 27, 2005. They were up by an average of 98.6% (annualized at 58.0%) since their respective buy signals an average of 88.4-weeks earlier. There were 229-stocks and funds with hold signals on May 29, 2004 since their buy signals an average of 56.3-weeks earlier. They were up by an average of 79.7% (annualized at 73.7%). The Indicant was only tracking 296-stocks and funds in 2002-2003, and early 2004. On May 24, 2003, the Mid-term Indicant was signaling hold for 286-stocks and funds out of 296-tracked. They were up by an average of 35.9% (annualized at 108.1%) since their buy signals an average of 17.3-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.

http://www.indicant.net/Members/Updates/All%20Update%20Forms/Buy-Sell%20Summary%20This%20Week.htm

As repeatedly stated, do not hold more than 10% of your investment resources in a single stock and do not hold more than 20% of your investment resources into a single mutual fund. Also, never fall in love with a stock or fund. Only love the value of your portfolio. Never love its contents. Management stupidity can wreak havoc on any stock or fund at any time.

All updated information can be found from a single page at Indicant.Net. Click the below link to that page. You will need your login ID and password.

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

The Quick/Short-term Indicant Stock Market Report

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

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

The Indicant Stock Market Report’s Secular Market Blend

This section is a repeated each week with a few modifications, reflecting recent secular influences and performance data. Although appearing redundant at times, it is important to read this section to keep abreast of secular market shifts. Quantifications and qualifications are updated, weekly. Remember, secular shifts can last twenty-five or more years. Fortunately, secular market movements do not deter mid-term, short-term, and quick-term profit opportunities. However, they can wreak havoc to the long-term investors’ plans and those that buy and hold.

The current Mid-term Bull market and buying barrage started in late 2002. The mid-term election year of 2002 conformed perfectly to historical standards with deep bearish expressions and a cyclical bottom. That contrasts to the meandering bear market from late January through mid-August 2006 in the more recent mid-term election year.

Deep bearish seasonality was not influential in 2006, which usually occurs from late August through early October. Last August, the Quick-term Indicant obviated a bullish bias, contrary to the historical standards of deep bearish seasonality. Many buy signals occurred in late August - early September 2006, which was unusual.

The market synchronized with near perfection to normal seasonality in the mid-term election year of 2002. The rolling half of May-October 2002 was typically bearish. The 2002 seasonal bear leg was dynamic and configured perfectly to historical standards, although the depth of that bearish cycle was deeper than normal. That NASDAQ bear cycle approached the magnitude of the 1930-32 Dow bear cycle. The 2000-2002 NASDAQ bear leg lasted several weeks longer than the depression-laden 1930-32 Dow.

The mid-term election year of 2006 fundamentally supported historical standards for the first two thirds. Although mild bearishness exerted its historical influence in 2006, it was nowhere as deep as 2002’s bearishness. The meandering bear in the first two-thirds of 2006 supported the historical standard of bearishness to non-bullishness. That support was extremely mild.

As of mid-August 2006, hard economic fundamentals shifted in support of a bullish onslaught for the heart and soul of bullish seasonality and the normally bullish presidential pre-election year of 2007. Bullishness during the week of March 5, sandwiched between two bearish weeks (February 26 and March 12), provided some insight on bearish sustainability. The bullish bounce on the week of March 5 suggested the bearish aggressions are either going to be mild and not sustainable. In other words, that bearish behavior was a mere bearish spurt.

The heart and soul of bullish seasonality from mid-October 2005 through January 31, 2006 demonstrated bullish normalcy. The market was a meanderer from January 31, 2006 until mid-August 2006, when the Quick-term Indicant shifted from bearish to bullish bias.

The heart and soul of bullish seasonality, ending January 31, 2007, produced significant and expected gains since the August 15, 2006 bullish bias shift. The Dow, S&P500, and NASDAQ finished up by 12.4%, 11.9%, and 16.5% at the conclusion of that heart and soul of bullish seasonality.

How has market fared after the conclusion of the heart and soul of bullish seasonality? From January 31, 2002 through September 30, 2002, the Dow fell 23.5%. The NASDAQ was down 39.4%. The bull market of 2003 did not incur normal seasonality, as it conformed perfectly to the presidential pre-election year’s bullish phenomenon. From January 31, 2004 until September 30, 2004, the NASDAQ fell 8.2%, while the Dow was down 3.9%. From January 31, 2005 to June 30, 2005, the Dow was down 2.0% and the NASDAQ down 0.4%. From January 31, 2006 through August 1, 2006, the NASDAQ was flat while the Dow was up a respectable 6.1%.

From January 31, 2003 through September 30, 2003, the Dow was up 15.2%, while the NASDAQ was up 35.3%. The last presidential pre-election year was 2003. Presidential pre-election years are traditionally bullish. So far this year, the Dow is up 7.0% since January 31, 2007 and the NASDAQ is up 3.8%. Aggressive bearish expression thirteen weeks ago and again eleven weeks ago pushed the major indices into negative territory, which can happen after the heart and soul of bullish seasonality expires. That particular bearishness were mere spurts and lacked sustainability.

Historical standards suggest the market will go much higher this year. Political and economic fundamentals also support this prognosis.

As you can see, until mid-August 2006, most major market indices have been slightly bullish since late 2003 with pronounced meandering behavior. The only significant bullish expressions, not followed by bearish expressions, occurred in the heart and soul of bullish seasonality (Nov-Jan) in 2004, 2005, and 2006. Other than those “heart and soul” bullish cycles, the market was relatively flat from early 2004 through August 2006. However, this is a presidential pre-election year, where meandering to bearish behavior should not occur. The theme is bullish expectations even in the face of aggressive bearish expressions thirteen weeks ago and eleven weeks ago.

The Dow30 found bottom in the last presidential mid-term election year on October 9, 2002 at 7,286.27. The NASDAQ found bottom on the same day at 1114.11. Finding cyclical bottoms in mid-term election years is common. Fortunately, the bottom of 2006 was minimal and not sharp when compared to that of 2002. The Dow is up 85.4% from the 2002 mid-term presidential election year bottom. The NASDAQ is up 129.5% since October 9, 2002. The S&P600, small caps, is up even more by 152.5% since October 9, 2002.

The NASDAQ is down 49.3% from its historical weekending high of 5048.62 on March 9, 2000. The Dow is up by 15.2% from its previous weekending historical high of 11723 on January 13, 2000. It took over five-and-a-half years for the DJIA to establish a new high. The S&P500 is down 0.8% since its all time weekly closing high of March 23, 2000. So far, the new century, 2000 inclusive, has not been kind to long-term investors. The NASDAQ needs to climb 97.4% and S&P500 by 0.8% to establish new weekly closing highs.

Historical standards suggest the NASDAQ will not return to its historical high until 2025 or so. A 2000 buyer and holder will not be back to break-even until then. Including inflation, a thirty-year-old investor will be in his or her eighties before the NASDAQ profits from early 2000 investment dollars, which assumes minimal inflation. However, the late 2002 investor is up triple digit amounts. Timing is indeed important.

Economic or corporate earnings fundamentals did not support the stock market’s meteoric rise in the 1990’s in many sectors. Unprecedented demand for stocks skewed the supply-demand ratio and thus the powerful bull leg of the 1990’s enjoyed sustainability. The simple law of supply and demand propelled stock prices dynamically to the north in the 1990’s. The great bear leg of 2001 and 2002 depressed those prior sources of demand for at least one generation of investors. The market now has to wait for a new generation of investors to enjoy dynamic secular bullishness even though it has been bullish since late 2002.

The great bull leg of 2003 was a relatively short bull cycle that has not enjoyed dynamic follow-on bullish behavior due to this lack of demand. As you can see from the NYSE trading range, the northerly sloping cycle is not as strong as the trading ranges from late 2002 through most of 2003. However, bullish expressions occur during the heart and soul of bullish seasonality regardless of any technical or fundamental reason. The meandering segments of 2002, 2003, 2004, 2005, and 2006 were appropriately followed by historically significant bullishness in each of those years.

As earlier stated, the Indicant began its buying barrage in October – November 2002 just after the market bottomed from the severe 2000-2002 Bear Market. There were 239-buy signals between October 5, 2002 and November 9, 2002 out of the 296 stocks and funds tracked by the Mid-term Indicant at that time. Even badly managed companies received a buy signal, which is a common attribute of sustainable new bull markets. As many of you noticed, those companies eventually dipped back to the south after the euphoria of new bullishness.

Since August 18, 2006, the Mid-term Indicant generated 214-buy signals and only 76-sell signals. That is an unusually high number of buy signals when considering historical seasonal market influences. This is a testament to the strength of the underlying bull market. All Indicant models supported this recent buying surge just as they did in October 2002 and March 2003. Now that the heart and soul of bullish seasonality has expired, the resistance to generate sell signals has softened.

Some of you recall the Indicant Stock Market Report tracking the Short-term Indicant Bear for the NASDAQ in 2002. It was the longest in history. It even exceeded the Dow’s 1929-1932 Short-term Indicant Bear in breadth and approached it in magnitude. The good news is that the NASDAQ’s decline did not lead to a depression, which is a clear indication of how little influence tech stocks have on the economy.

There are two important axioms to remember and are always repeated in this report. 1) Real economic wealth is created in only three ways - manufacturing, agriculture, and extraction. 2) The only positive influence politicians have on the economy is to undo their prior damage. That is also why the presidential pre-election year is historically the most bullish on the four-year cycle. If the strength of the current Mid-term Bull can be subjected only to meandering behavior, like 2004, 2005, and 2006, then it is possible for the current Mid-term Bull to be a record setting one in terms of duration. The prior threat to this historical standard has now diminished.

Political institutions reduce wealth. Politicians continually attempt to redistribute wealth, which flies in the face of the laws of nature. They promote “middle class” attainment. The larger the middle class, the more power politicians and their academic brethren have. The communists tried that, resulting 99% poverty, while the ruling 1% lived like kings. Socialism rewards an ability to intellectualize, while capitalism rewards the results of appealing effort.

The remainder of this section, Secular Market Blend, is repeated, in part, from the past several months, but it does not hurt to reread it each week. As time progresses and conditions change, there will be modifications to it to maintain a balanced frame of reference.

You will notice many of the mutual fund buy signals occurred in March 2003. Many of them endured sell signals for the first time since early 2003 during the mildly bearish meandering behavior in mid-2005. However, the bull’s resiliency minimized selling activity. The Mid-term Indicant is now signaling hold for nearly all mutual funds it tracks.

Many of you recall how the market did not synchronize with the heart and soul of bullish seasonality from November 2002 through February 2003. December 2002 was the most bearish since 1931, but not nearly as dynamic as the 1931 bearish expression. After the asynchronous behavior in the November 2002 rolling third of the year, the market turned bullish in March 2003 and again did not synchronize with normal seasonality. The Mid-term Indicant continued signaling bull/hold during bearish seasonality in 2003. The market continued moving north during that time, contrary to historical seasonal standards, but consistent with political cycle standards. As stated in most of 2004, bearish expressions on a Mid-term basis between May and October 2004 should not be surprising. That is exactly what occurred. The result was a meandering market with a slight bearish bias during most of 2004 and 2005 and the first two-thirds of 2006. This presidential pre-election year will be fundamentally tested in the face of war, terrorist threats, and rising oil prices.

The Quick-term Indicant’s bearish bias during most of 2006 was replaced with a bullish bias in mid-August 2006. Several buy signals ensued shortly after that bias shift. Bullish behavior occurred, as expected, since mid-August 2006. As stated since that bullish bias shift, the various Indicant models, economic fundamentals, and historical standards suggest significant bullishness in the coming months, but keep your eye on the Quick-term Indicant.

http://www.indicant.net/Members/Updates/History-Seasonal/HS0001.htm

Make certain you read the entire pages on the above link. You will see there are exceptions.

Stop Loss Management

The Mid-term Indicant recommends a stop loss of 8% on recent buys because of the Quick-term Indicant’s bullish bias and bullishly evolving economic fundamentals.

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

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

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

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

Stock and Fund Update

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

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

Economic Conditions – Inflation, Currency, Interest Rates

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

As stated last week, the 3-Month T-Bill continues moving to the southeast. This is shaping up to support the historical standards of presidential pre-election-year and election-year stock market bullishness. It is now at its bearish yellow curve.

Also, as stated last week, the Fed is “maintaining” prevailing rates. The problem is a tough one. Commodity prices continue to rise and the inflation battle is underway. Rising capitalism should invoke rising productivity. Will this productivity potential offset the inflationary threats of rising commodity prices? Capitalists convert commodities into products. That conversion is where productivity lies. The result of that conversion should be lower prices to the buyers of products even though the producer’s raw materials are higher.

Of course, productivity improvements are evolutionary, whereas commodity prices can be revolutionary. The sudden increase in the number of capitalists is revolutionary. The exponentially increased demand for commodities can out-pace the impending productivity increases and thus set off inflation. This is an issue confronting both the Fed and the stock market. The prevailing stock market perception is that productivity will be the economic savior.

Overall, economic conditions appear shifting in favor of a continuation of this strong bull market.

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 is up 348.9% since the April 13, 2001 buy signal. Its annualized growth since that buy signal is 56.6%. It moved to the north in 24 of the past 32-weeks. This fund moved mildly north last week after mild bearishness in the prior week.

Fidelity Gold, Fund #28, is up 33.1% since the Mid-term Indicant signaled buy on August 26, 2005. That annualizes to 18.7%. This fund has been bearish the past three weeks.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 315.4% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 65.1%.

Vanguard Energy #18, VGENX, is up 210.3% (annualized at 50.1%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 169.3% (annualized at 48.1%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 162.3% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 42.4%.

These energy related funds were mixed last week with a slight bullish bias after moving aggressively to the north in the previous three weeks.

Investors in these funds are supporting a 1970’s type of market with high inflation and high oil prices. Energy and gold always do well during such times. Fundamentals appear to be shifting in favor of selling the above funds (09/10/06). Do not sell until the Mid-term Indicant signals sell. They continue to rebound and from time to time endure fluttering. As long as capitalism remains in vogue around the globe and alternative sources of energy continue to lag exponentially increasing demand, a long-term perspective on holding strategy is appropriate.

The SQI (Consolidated Short-term and Quick-term Indicant) model signaled buy for the GLD-ETF#11 on August 3, 2005. It is up 49.2% since then. It is annualized at 26.9%. It has moved south the past three weeks.

The SQI signaled buy for ETF#03 – Energy and Natural Resources on March 26, 2003. It is up 215.4% (annualized at 51.0%). This fund moved mildly to the south last week after bullish aggression in the previous week.

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

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

All ten major indices are bulls. They are up by an average of 30.4% since the Mid-term Indicant signaled bull an average of 90-weeks ago. That annualizes to 16.4%, which is down significantly from the past three years. This is due to the bear signals for the S&P400 and S&P600 Indexes on July 21, 2006, which had been receiving a bull signal since October 25, 2002. Those two indices endured some fluttering after the expiration of the tremendous bull leg that lasted nearly four years. A new bull leg is underway and may proceed just as vigorously for these two indices as the bull leg from October 2002 through July 2006, where the S&P400 and S&P600 increased by 66.3% and 79.3%, respectively.

Dynamic bullish statistics were also eliminated due to the Dow Transports bear signal and a new bull signal on January 19, 2007. The Dow Transports enjoyed a 23.1% gain from its March 21, 2003 bull signal until its bear signal on March 19, 2004. It fluttered with a new bull signal one week later on March 26, 2004 and enjoyed an 80.0%-gain until a new bear signal on December 22, 2006.

The Dow Utilities increased by 104.4% from its October 25, 2002 bull signal to the March 21, 2006 bear signal. After some fluttering, it received a new bull signal on June 2, 2006. Interestingly, the Dow Utilities was the best performing index since the October 25, 2002 Mid-term Indicant bullish bias shift. Utility stocks have been consistent high performers since the bull market’s birth on October 25, 2002.

The Mid-term Indicant Dow Jones Industrial Average performance is now at $40,916,789

That beats buy and hold performance of $2,064,964 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $195,702. That beats buy and hold’s $148,470 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $213,962. That beats buy and hold’s $88,668 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 1,881.3%, 31.8%, and 141.3%, respectively, for these indices as of this past week.

The Indicant’s percentage advantage over buy and hold does not change during bull signals. The advantage changes only during bear signals. That is because the buy and hold model has to keep holding, while the MTI-RYS model avoids bear markets. The only purpose of the Mid-term Indicant model is to avoid the bear markets. That is why it beat buy and hold by nearly 2,000% over the past 100+ years.

Click here to go to the current Mid-term Indicant assessment of the ten major indices.

Click here for a tour of the Mid-term Indicant for major market indices.

Divergence versus Convergence

For the third week in a row, the market disguised immediate preferences for bullish support. Technology was again down slightly. Energy was mixed with a mild bullish bias. Gold and other commodities were down mildly along with general stocks and funds.

This configuration represents mild bearish convergence. The market is pausing and reassessing the economic outlook.

Mid-term Indicant Positions - NASDAQ100 Stocks

Click here to see NASDAQ100 report card history.

Click here for Mid-term Indicant Table of NASDAQ 100 Stocks.

Mid-term Indicant Positions - Dow Jones 30 Industrial Stocks

Click here to see Dow 30 report card history.

Click here for Mid-term Indicant - Table of Dow Jones Industrial Average Stocks.

Mid-term Indicant Positions - Dow Jones 15 Utility Stocks

Click here to see Dow Utilities Report Card history.

Click here for Mid-term Indicant - Dow Jones Utility Stocks Table.

Mid-term Indicant Positions - Indicant Selected Stocks

Click here to see Indicant Select Stock Report Card history.

Click here for Mid-term Indicant Table of Indicant Selected Stocks.

Mid-term Indicant Positions - Mutual Funds

Click here to see Mutual Fund Report Card history.

The Mid-term Indicant is now avoiding ProFunds Ultra Short. It is down 24.7% since the Mid-term Indicant signaled sell on September 15, 2006. Historical norms of market cyclicality suggest the next buying opportunity for this fund may not occur until 2009.

Click here for Mid-term Indicant Table of Mutual Funds.

Always remember never to keep more than 20% of your investment resources into a single mutual fund. Sector investing in mutual funds is an extremely good way to mix your investments.

Long Term Indicant Positions - Dow Jones Industrial Average

The blue-chip Long-term Indicant Bull signal was at 2895 for the DJIA in November 1991. Keep in mind the Long-term Indicant generated only five bull/bear cycles since 1920.

The Dow is up 366.6% (annualized at 23.5%) since the Long-term Indicant signaled bull 812-weeks ago. Economic data is the primary influence on the Long-term Indicant. Recessions, deflation, and inflation have not been strong enough to signal bear since that bull signal. A link to the Long-term Indicant is below:

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

Quick/Short-term Indicant Stock Market Report - Summary

Quick-term Red Bulls: Twenty-five of thirty; bullish support is being maintained.

Quick-term Yellow Bears: One; near-maximum non-bearish support.

Short-term/Quick-term Non-Bearishness: Countering “sustainable” deep bearish ambition.

Force Vectors: Supporting bullish bias, but vacillating, preventing obviating directional intention.

Vector Pressure: Supportive of bullish bias.

Long-term Hold Positions: Solidly safe.

Current Quick-term Bias: Non-bearish.

Overall Market Status: Bullish bias prevailing.

Profit Potential from Naked Options: Improving with increasing volatility.

Volume: Configurations remain in support of underlying bullish bias.

Comments from April 20, 2007

Both the NASDAQ and NYSE Indexes passed above their upper trading range limit. That means a new trading range is being established and is not an indication of immediate bias.

Force Vectors and Vector Pressure maintained bullish bias during the Greenspan/China bearishness that originated in late February and lasted for a few days in early March. Viewing the Indicant Volume Indicator charts (link is below) is a testament about how one should not engage trading behavior based on contemporary news. Only two ETF sell signals were generated from the late February-early March bearishness that was invoked by news and nothing substantive. The bullish bias that originated on August 15, 2006 prevails.

Special note May 24, 2007. You will notice fewer buy/sell signal arrows on the Quick-term Indicant charts. Research in the production database a few months ago contained a programming bug that caused those arrows to appear. They had no impact on buy or sell signals. The only error was the arrows. This has been corrected and made mistake-proof.

Special note May 24, 2007, regarding options trading. The minor period of bearish seasonality and the anticipated bearish aggressions in February and early March have now passed. You will notice increased call option buy signals for the remainder of this year, except for deep bearish seasonality which starts in late summer. If you have limited cash for options trading, you may want to hold it until the beginning of the heart and soul of bullish seasonality, which starts in early autumn. The heart and soul of bullish seasonality is where call options have significantly more profit potential. Even then, your selections should be stalked first.

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

The Short-term Indicant signaled bull on May 21, 2007 for both the Dow and NASDAQ at the conclusion of historical bearish standards. The market is now into bearish seasonality, but presidential pre-election year’s bullish traditions typically over power bearish seasonality. As stated yesterday, last Thursday’s aggressive bearish expressions should be interpreted as a bearish spurt without sustainability. Sure enough the market rebounded on Friday. However, do not be surprised at meandering behavior in the next few weeks and summer months. Please read on. Click here to see the Short-term Indicant’s history.

Thursday’s volume was relatively high on aggressive bearish expressions. If that combined configuration continued, there would be underlying support for bearish behavior. One data point does not represent a trend or a cycle. Friday’s volume was mild on mild bullish expressions, providing further evidence that last Thursday’s aggression by the bear was a mere spurt. Again, though, do not be surprised at meandering behavior in the next few weeks/months.

Both Indicant Volume Indicator’s continue expressing non-descriptive configurations with a tinge of lethargy. The bearish spurt can mature into more than just a mere spurt if bearish expressions coincide with robust volume. Lethargic configurations are seasonally consistent with this time of year. Configurations continue to support the underlying bullish bias.

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

There were no buy signals and no sell signals. Although there were no buy signals, the SQI is signaling hold for 30-ETF’s. They are up 73.6% (annualized at 32.8%) since their respective buy signals an average of 115.3-weeks ago. The SQI is not avoiding any of the 30-ETF’s.

The SQI model is the one that most of you will prefer for your trading decisions. It generates fewer signals than the other two models and represents consistencies in the Quick-term and Short-term outlooks for the specific ETF’s. It also beats buy and hold on a regular basis, although there is only eight years of proof. The quality of that proof is high since this period includes a powerful bull and bear. The model sours a little during meandering markets with an excessive number of signals from time to time. Research toward perfecting continues.

Short-term Indicant Report Card, Status, and Charts

There were no buy signals and no sell signals. Although there were no buy signals, the Short-term Indicant is signaling hold for 30-ETF’s. They are up an average of 75.5% (annualized 34.6%) since the STI signaled, buy, an average of 112.3-weeks ago. The STI is not avoiding any of the 30-ETF’s.

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

Quick-term Report Card, Status, and Charts

There were no buy signals and no sell signals. Although there were no buy signals, the Quick-term Indicant is signaling hold for 29-ETF’s. They are up by an average of 21.5% (annualized at 23.0%) since the QTI signaled buy an average of 48.1-weeks ago. The Quick-term Indicant is avoiding one ETF. It is down 0.4% since last Tuesday’s sell signal.

Conflicts Between the Short-term and Quick-term Indicants

There is one conflict, whereby the Short-term Indicant and the Quick-term Indicant are in disagreement between hold and avoid status. The bias shift on August 15, 2006 remains in favor of the bull.

There are 89-hold signals out of a possible 90. There is one avoid signal. The bias remains in obvious support of the bull.

Quick-term Indicant Bull/Bear Health Report

One of the 30-ETF’s is below its bearish yellow curve. The average relative position of all thirty ETF’s is above bearish yellow by 10.0%. This is maintaining the market’s non-bearish posture. There is minimal support for sustainable bearish assertions.

Twenty-five ETF’s are above their respective bullish red curves. This supports the underlying bullish bias. All thirty ETF average positions are 2.1% above their bullish red curves. This attribute remains supportive of bullish bias. Although weakening somewhat, this remains in solid support of bullish bias.

Short-term Indicant Bull/Bear Health Report for ETF’s

The above heading is linked to the Short-term Indicant table. This paragraph is repeated daily as a reminder of accurately interpreting the charts. By clicking the charts on the table you can review potential contact with the breakdown lines (bearish) and potential contact with breakout lines (bullish). It is extremely bearish when several ETF’s are contacting their respective breakdown lines. The breakdown lines are the yellow lines (bearish). The breakout lines are the red ones (bullish). Close proximity to breakout implies an increased probability of an actual breakout occurring. It is certainly bullish and you will want to be in a hold position for those few days a year when the breakout occurs. Conversely, significant contact with yellow (breakdown) suggests “avoid” positions are best.

None of the ETF’s are contacting their breakout lines. As stated the past several months, the high concentration of breakout-contact since last August is solidly bullish. This repeated contact solidly supports the underlying bullish bias. Although there was no contact the last two trading days, contact in thirty-three of the last thirty-eight trading days is supportive of bullish bias.

The average distance from breakout contact is at a miniscule 2.1%. This remains in solid support of the bullish bias.

None of the ETF’s are contacting their respective breakdown lines. The average distance from the price and breakdown is 27.5%. This configuration provides tremendous non-bearish support, which has been the case since March 2003. There have been several bearish “spurts” since then with no sustainability or dynamic support. The probability of immediate contact remains low and thus a non-bearish bias is maintained on a short-term basis.

This attribute remains solidly non-bearish, regardless of recent bearish behavior.

ETF Force Vector Configurations

You can scan the Quick-term Indicant for Exchange Traded Funds table and click on the charts to observe Force Vector configurations. Scroll down each of the charts, where a quick link has been added to take you to the next series of Quick-term ETF charts. Use you back arrow on your browser to return to the previous page.

Thirteen of the thirty ETF Force Vectors continue toward bullish domains. Although down by several from Tuesday, this remains configured in support of bullish bias.

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

ETF Force Vectors/Vector Pressure Crossings/Option Signals

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

Click this sentence for Vector Pressure Option Signals. There were no call option buy signals today. Wednesday’s buy signal for a call option was cited as appealing. Thursday’s aggressive bearish behavior configured perfectly for such a signal. That allowed deep discounted buy offers to transact. The perfection was Friday’s bullish behavior. Unfortunately, Friday’s bullish expression was not dynamic, but should position profits albeit minor one. ETF#10, IBB, was up slightly last Friday.

Twenty-six ETF Vector Pressures are in bullish domains. Although down by two from early last week, this configuration continues to support the bullish bias shift from August 15, 2006.

As long as this attribute holds above fifteen within confines of other Quick-term attributes, bearish expressions are mere spurts, where there is no sustainability or depth potential.

Make certain you sell naked options when the Force Vectors shift direction or within two days of the purchase, whichever occurs first. If you are unfamiliar with this, take the options tour.

Remember options trading is risky. Never offer “market prices.” Always bid low in hopes of an intraday contrarian movement to the underlying assumption of directional behavior. Always place day-orders, only. That keeps the floor folks out of your pocketbook. Do not despair if your order does not take. There are plenty of opportunities throughout the course of the year. Remember, stalking is the key to success here. Although not necessary for stock market success, those of you who have a gambling instinct will enjoy this. For those of you with a longer-term perspective, it does not hurt to see what the short-term folks are thinking. The Indicant indicates both perspectives.

Quick-term and Short-term Indicant Summary

The shift from bearish bias to bullish bias started on Tuesday, August 15, 2006 after maintaining a bearish bias from early February 2006 until August 15. The Quick-term and Short-term Indicant models continue suggesting a bullish bias.

Do not write covered call options while Vector Pressure is positive (bullish), which is the current configuration.

The Quick-term Bull remains in tact.

ProFunds Ultra Short mutual fund moves inversely to the QQQQ by exponential amounts. The Consolidated Indicant model is no longer avoiding QQQQ, which no longer supports holding contrarian fund, ProFunds Ultra Short.

To familiarize yourself with viewing the market from an ETF perspective, click the following update links.

Quick-term ETF Options

Quick-term Indicant for ETF’s

Short-term Indicant for ETF’s

Consolidated Quick-term/Short-term Indicant for ETF’s

Click here to the report card, which is updated weekly, to link to related tours.

Links to the Short-term Indicant and Indicant Volume Indicator are below:

Short-term Indicant for DJIA and NASDAQ

Short-term Indicant Tables for the Dow Jones Industrial Average Index

Short-term Indicant Table for the NASDAQ Composite Index

Indicant Volume Indicator

Indicant Conclusion

The bull is panting from it exhaustive emotional swings in the past thirteen months. After fending off the phony bearish spurts several weeks ago, it rose dramatically. That slap to the bear has drained quite a bit of energy from the bull. However, the bull remains dominant. It is just tired right now.

Vector Pressure continues to support the bullish bias. It has been doing that since August 15, 2006.

Do not get lazy and set those stop losses for those stocks and funds that continue to enjoy hold signals.

The daily updates are on the following link.

http://www.indicant.net/Non-Members/Back%20Issues/QT.htm

Hyperlinks

To access all major markets, stocks, funds, economic data, charts, statuses, etc, click the following hyperlink:

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

In addition, once you are inside the website, click on "members update" or simply log in. It is on the top of every page in the web site so you can always find your way back.

Happy Investing,

www.indicant.net

05/27/07

May 20, 2007 Indicant Weekly Stock Market Report

Volume 05, Issue 03 ISSN 1526 6516 © The Indicant Stock Market Report

This Week’s Report

Bull Market Thrives

Using the Dow’s rich history, a 1900 investment only during the past four weeks of the past 108 years would result in a loss. The market was bullish during this historical standard of mild bearishness. Click the following links to view some of the charts.

http://www.indicant.net/Members/Updates/MTIRYS-Mkts-US/MTI-RYS-01-DJIA-Curr.htm

You will notice the small white segments on the Mid-term Indicant Charts for the major market indices. This small white segment on the charts represents that historical standard of mild bearishness. As you can see from the chart, the Dow’s bearish historical standard moved aggressively to the north.

The following link displays the S&P500 chart.

http://www.indicant.net/Members/Updates/MTIRYS-Mkts-US/MTI-RYS-02-SP500-Curr.htm

You will notice that it also moved aggressively to the north. Interestingly, the S&P 500 Index is within 0.3% of its all time record weekly closing high. This is an added testimonial to the stock market’s underlying bullish bias.

It should not be surprising the stock market ignored this bearish standard this year. There are several reasons to maintain a bullish posture in your thinking for the rest of this year and into next year.

The presidential pre-election year is the most bullish year along the presidential election cycle. A $10,000 investment only in presidential election years in 1832 grew to $283,810 by the end of 2003. That contrasts sharply with investments made in post election years only where that $10,000 shriveled to $8,758 as of the end of 2005.

If historical standards were perfect, all you would have to do is maintain your hold positions until the conclusion of 2008, which is the next presidential election year. A $10,000 investment only during presidential election years since 1832 grew to $95,473 as of the end of 2004.

Historical standards are nice to use from time to time when decisions are difficult. However, they do not always work. Since Herbert Hoover’s disastrous 1931 pre-election year stock market collapse of over 50%, the stock market has moved bullishly in each presidential election year since then with the exception of FDR’s small dip of 2.9% in 1939.

The Dow has enjoyed a 20%, plus, performance level since Ronald Reagan’s minor gain of 2.9% in 1987 during presidential pre-election years. Interestingly, that minor gain in 1987 included the largest stock market collapse since records became reliable.

The market does not care about historical standards. It only cares about adding economic values. It just so happens that the stock market contains that underlying bias that politicians know their political worth is related to the net worth of voters. If economic conditions are poor, politicians are blamed. If economic conditions are good, incumbents are re-elected. Politicians know that voters vote their pocket books. That is the one and only reason the democracy works more than not in a capitalistic environment. Without that, nothing would counter the evils of political thinking.

Ronald Reagan’s policies of tax cuts, combined with OPEC’s failure of declining oil prices, triggered a rise of entrepreneurialism in North America. That challenged socialism and acted as a deterrent to communism. This triggered a profound rise in capitalism, accelerating increases in productivity and lower product costs.

It is the sheer number of rising capitalists that has the stock market excited. China’s one billion potential capitalist excites the stock market. If the U.S. produced the likes of Henry Ford, Alfred P. Sloan, Bill Gates, Michael Dell, Earle P. Halliburton, etc. imagine a country with thousands like them.

This phenomenon occurred in Japan with the likes of Soichira Honda, Shigeo Shingo, Taiichi Ono, Akio Morita, etc. after World War II. They blasted North America manufacturing with better and cheaper products. The stock market does not care about nationalism and boundaries. It focuses on just one simple issue; making money. It is blind to any social cause or concern. Just make money.

Soichira Honda would now be 100-years old. He was a poor student in school. In a socialistic environment, he would have never been known, just as millions of Chinese folks were born, lived in a depressed state, and died. China has not produced any greatness like that of the Soichira Honda while under repressed regimes from communism to warlords. Honda’s legacy now employs hundreds of thousands of people and is the largest engine producer in the world at 14-million.

The stock market is sensing China, Russia, and other formerly depressed societies are about to unleash unprecedented high performance, low cost products and services. That means corporations are going to make more money. With that, shareholders who provide funds for dreams and imagination will get rich.

There will be some problems along with way. Rising capitalism gives rise to greater consumption of finite resources. The laws of supply and demand always induce pricing elasticity. That threatens inflation, which confuses the stock market. Reported profits become falsely inflated with rising prices and rising costs. The primary solution is raising productivity. Secondary solutions rest with replacement raw materials that dampen the demand for natural resources.

Even though commodity prices continue to rise and impose inflationary threats, the stock market is sensing declining costs and higher corporate profits delivered by the potentially rising numbers of capitalists, which is the sole source of rising quality of life. Politicians have absolutely nothing to do with that.

However, keep your eye on the daily stock market report, as only in one day, politicians can get jealous of the success of capitalist and exert their periodic painful influence on the economy. The Quick-term Indicant will spot that in time to preserve your worth.

Weekly Buy/Sell Summary – Stocks and Funds

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

Although there were no sell signals, the Mid-term Indicant is avoiding 31-stocks and funds of the 345 tracked by the Indicant. The avoided stocks and funds are down an average of 13.9% since the Mid-term Indicant signaled sell an average of 26.1-weeks ago.

There were 92-stocks and funds avoided at this time last year. The avoided stocks and funds one year ago were down an average of 6.8% since their respective sell signals an average of 16.1-weeks earlier.

Two years ago, on May 20, 2005, the Mid-term Indicant was avoiding 112-stocks and funds that were down an average of 26.6% since their respective sell signals an average of 55.8-weeks earlier. Three years ago on May 22, 2004 there were only 65-avoided stocks and funds. They were down by an average of 10.9% from their respective sell signals an average of 12.3-weeks earlier. On May 17, 2003, the Mid-term Indicant was avoiding 8-stocks and funds out of 296-tracked. They were down by an average of 26.0% since their sell signals an average of 26.4-weeks earlier.

Although there were no buy signals, the Mid-term Indicant is signaling hold for 314 of the 345-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 123.6%. That annualizes to 64.6%. The Mid-term Indicant has been signaling hold for these 314-stocks and funds for an average of 99.5-weeks.

One year ago, on May 19, 2006, the Mid-term Indicant was holding 244-stocks and funds out of the 345 tracked at that time for an average of 98.8-weeks. Those 244-stocks and funds were up by an average of 126.7% (annualized at 66.7%). The Mid-term Indicant was signaling hold for 201-stocks and funds of the 320-tracked two years ago on May 20, 2005. They were up by an average of 99.4% (annualized at 57.0%) since their respective buy signals an average of 90.6-weeks earlier. There were 219-stocks and funds with hold signals on May 22, 2004 since their buy signals an average of 57.6-weeks earlier. They were up by an average of 74.7% (annualized at 67.5%). The Indicant was only tracking 296-stocks and funds in 2002-2003, and early 2004. On May 17, 2003, the Mid-term Indicant was signaling hold for 266-stocks and funds out of 296-tracked. They were up by an average of 36.3% (annualized at 111.9%) since their buy signals an average of 16.8-weeks earlier.

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

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

http://www.indicant.net/Members/Updates/All%20Update%20Forms/Buy-Sell%20Summary%20This%20Week.htm

All updated information can be found from a single page at Indicant.Net. Click the below link to that page. You will need your login ID and password.

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

The Quick/Short-term Indicant Stock Market Report

The Indicant Stock Market Report’s Secular Market Blend

The current Mid-term Bull market and buying barrage started in late 2002. The mid-term election year of 2002 conformed perfectly to historical standards with deep bearish expressions. That contrasts to the meandering bear market from late January through mid-August 2006 in the more recent mid-term election year.

The market synchronized with near perfection to normal seasonality in the mid-term election year of 2002. The rolling half of May-October 2002 was typically bearish. The 2002 seasonal bear leg was dynamic and configured perfectly to historical standards, although the depth of that bearish cycle was deeper than normal. That NASDAQ bear cycle approached the magnitude of the 1930-32 Dow bear cycle. Also, the 2000-2002 NASDAQ bear leg lasted several weeks longer.

The heart and soul of bullish seasonality, ending on January 31, 2007, produced significant and expected gains since the August 15, 2006 bullish bias shift. The Dow, S&P500, and NASDAQ finished up by 12.4%, 11.9%, and 16.5% at the conclusion of that heart and soul of bullish seasonality.

From January 31, 2003 through September 30, 2003, the Dow was up 15.2%, while the NASDAQ was up 35.3%. The last presidential pre-election year was 2003. Presidential pre-election years are traditionally bullish. So far this year, the Dow is up 7.4% since January 31, 2007 and the NASDAQ is up 3.8%. Aggressive bearish expression twelve weeks ago and again ten weeks ago pushed the major indices into negative territory, which can happen after the heart and soul of bullish seasonality expires. That particular bearishness was a mere spurt and lacked sustainability.

Historical standards suggest the market will go much higher this year. Political and economic fundamentals also support this prognosis.

The Dow30 found bottom in the last presidential mid-term election year on October 9, 2002 at 7,286.27. The NASDAQ found bottom on the same day at 1114.11. Finding cyclical bottoms in mid-term election years is common. Fortunately, the bottom of 2006 was minimal and not sharp when compared to that of 2002. The Dow is up 86.1% from the 2002 mid-term presidential election year bottom. The NASDAQ is up 129.6% since October 9, 2002. The S&P600, small caps, is up even more by 150.8% since October 9, 2002.

The NASDAQ is down 49.3% from its historical weekending high of 5048.62 on March 9, 2000. The Dow is up by 15.6% from its previous weekending historical high of 11723 on January 13, 2000. It took over five-and-a-half years for the DJIA to establish a new high. The S&P500 is down 0.3% since its all time weekly closing high of March 23, 2000. So far, the new century, 2000 inclusive, has not been kind to long-term investors. The NASDAQ needs to climb 97.3% and S&P500 by 0.3% to establish new weekly closing highs.

Since August 18, 2006, the Mid-term Indicant generated 214-buy signals and only 75-sell signals. That is an unusually high number of buy signals when considering historical seasonal market influences. This is a testament to the strength of the underlying bull market. All Indicant models supported this recent buying surge just as they did in October 2002 and March 2003. Now that the heart and soul of bullish seasonality has expired, the resistance to generate sell signals has softened. Buying stimulants within the Mid-term Indicant are more reserved, but not as much during post election years.

http://www.indicant.net/Members/Updates/History-Seasonal/HS0001.htm

Make certain you read the entire pages on the above link. You will see there are exceptions.

Stop Loss Management

The Mid-term Indicant recommends a stop loss of 8% on recent buys because of the Quick-term Indicant’s bullish bias and bullishly evolving economic fundamentals.

Stock and Fund Update

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

Economic Conditions – Inflation, Currency, Interest Rates

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

The 3-Month T-Bill continues moving to the southeast. This is shaping up to support the historical standards of presidential pre-election-year and election-year stock market bullishness. It is now at its bearish yellow curve.

The Fed is “maintaining” prevailing rates. The problem is a tough one. Commodity prices continue to rise and the inflation battle is underway. Rising capitalism should invoke rising productivity. Will this productivity potential offset the inflationary threats of rising commodity prices. The capitalists convert commodities into products. That conversion is where productivity lies. The end result of that conversion should be lower prices to the buyers of products even though the producer’s raw materials are higher.

Overall, economic conditions appear shifting in favor of a continuation of this strong bull market.

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 is up 348.9% since the April 13, 2001 buy signal. Its annualized growth since that buy signal is 56.4%. It moved to the north in 23 of the past 31-weeks. This fund moved mildly south last week after aggressive bullishness in the prior two weeks.

Fidelity Gold, Fund #28, is up 35.8% since the Mid-term Indicant signaled buy on August 26, 2005. That annualizes to 20.5%. This fund has been bearish the past two weeks.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 312.0% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 64.7%.

Vanguard Energy #18, VGENX, is up 210.6% (annualized at 50.4%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 162.0% (annualized at 42.5%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 162.0% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 42.5%.

These energy related funds moved aggressively to the north the past three weeks.

The SQI (Consolidated Short-term and Quick-term Indicant) model signaled buy for the GLD-ETF#11 on August 3, 2005. It is up 50.4% since then. It is annualized at 27.8%. It has moved south the past two weeks.

The SQI signaled buy for ETF#03 – Energy and Natural Resources on March 26, 2003. It is up 215.6% (annualized at 51.3%). This fund moved aggressively to the north last week.

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

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

All ten major indices are bulls. They are up by an average of 31.4% since the Mid-term Indicant signaled bull an average of 90-weeks ago. That annualizes to 17.1%, which is down significantly from the past three years. This is due to the bear signals for the S&P400 and S&P600 Indexes on July 21, 2006, which had been receiving a bull signal since October 25, 2002. Those two indices endured some fluttering after the expiration of the tremendous bull leg that lasted nearly four years. A new bull leg is underway and may proceed just as vigorously for these two indices as the bull leg from October 2002 through July 2006, where the S&P400 and S&P600 increased by 66.3% and 79.3%, respectively.

The Mid-term Indicant Dow Jones Industrial Average performance is now at $41,065,979

That beats buy and hold performance of $2,072,457 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $196,608. That beats buy and hold’s $149,158 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $214,068. That beats buy and hold’s $88,712 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 1,881.3%, 31.8%, and 141.3%, respectively, for these indices as of this past week.

Click here to go to the current Mid-term Indicant assessment of the ten major indices.

Click here for a tour of the Mid-term Indicant for major market indices.

Divergence versus Convergence

For the second week in a row, the market disguised immediate preferences for bullish support. Technology was down slightly. Gold and other commodities were also down. That would support bearish convergence, but energy and large caps were bullish last week. Overall, the stock market displayed bullish divergence last week. There was nothing descriptive last week. Some sectors endured mixed behavior. Large cap and energy sector bullishness suggests the stock market’s economic prognosis is okay.

Mid-term Indicant Positions - NASDAQ100 Stocks

Click here to see NASDAQ100 report card history.

Click here for Mid-term Indicant Table of NASDAQ 100 Stocks.

Mid-term Indicant Positions - Dow Jones 30 Industrial Stocks

Click here to see Dow 30 report card history.

Click here for Mid-term Indicant - Table of Dow Jones Industrial Average Stocks.

Mid-term Indicant Positions - Dow Jones 15 Utility Stocks

Click here to see Dow Utilities Report Card history.

Click here for Mid-term Indicant - Dow Jones Utility Stocks Table.

Mid-term Indicant Positions - Indicant Selected Stocks

Click here to see Indicant Select Stock Report Card history.

Click here for Mid-term Indicant Table of Indicant Selected Stocks.

Mid-term Indicant Positions - Mutual Funds

Click here to see Mutual Fund Report Card history.

The Mid-term Indicant is now avoiding ProFunds Ultra Short. It is down 25.7% since the Mid-term Indicant signaled sell on September 15, 2006. Historical norms of market cyclicality suggest the next buying opportunity for this fund may not occur until 2009.

Click here for Mid-term Indicant Table of Mutual Funds.

Always remember never to keep more than 20% of your investment resources into a single mutual fund. Sector investing in mutual funds is an extremely good way to mix your investments.

Long Term Indicant Positions - Dow Jones Industrial Average

The blue-chip Long-term Indicant Bull signal was at 2895 for the DJIA in November 1991. Keep in mind the Long-term Indicant generated only five bull/bear cycles since 1920.

The Dow is up 368.3% (annualized at 23.6%) since the Long-term Indicant signaled bull 811-weeks ago. Economic data is the primary influence on the Long-term Indicant. Recessions, deflation, and inflation have not been strong enough to signal bear since that bull signal. A link to the Long-term Indicant is below:

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

Quick/Short-term Indicant Stock Market Report - Summary

Quick-term Red Bulls: Twenty-four of thirty; bullish support is being maintained.

Quick-term Yellow Bears: None; maximum non-bearish support.

Short-term/Quick-term Non-Bearishness: Countering “sustainable” deep bearish ambition.

Force Vectors: Supporting bullish bias, but vacillating, preventing obviating directional intention.

Vector Pressure: Supportive of bullish bias.

Long-term Hold Positions: Solidly safe.

Current Quick-term Bias: Non-bearish.

Overall Market Status: Bullish bias prevailing.

Profit Potential from Naked Options: Improving with increasing volatility.

Volume: Robustness is waning, but configurations remain in support of underlying bullish bias.

Comments from April 20, 2007

Both the NASDAQ and NYSE Indexes passed above their upper trading range limit. That means a new trading range is being established and is not an indication of immediate bias.

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

The Short-term Indicant signaled bear on March 13, 2007 for both the Dow and NASDAQ. Click here to see the Short-term Indicant’s history. The market rebounded with solid bullish expressions after that bear signal. The Short-term Indicant has yet to signal back to bull. The decreasing probability of bearish inclinations toward the lower trading range limit suggests any pull back would be irrelevant with respect to your longer-term hold positions. Although a new trading range is being configured, the lower limit of the older trading range can still be a target for bearish ambitions. Fortunately, that lower portion of the previous trading range is moving northeast on the charts and thus contact could produce a bullish result.

This time of year, for no more than four weeks, endures a mini-historical bearish cycle. The historical standard has now completed. This historical standard prevented the Short-term Indicant from signaling bull. The bullish strength of the individual ETF’s is not influenced by this freeze in the Short-term Indicant’s position.

Both Indicant Volume Indicator’s are configuring with an interest in resuming robustness but not yet obviating the market’s immediate intention. Configurations at this time continue to support the underlying bullish bias.

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

There were no buy signals and no sell signals. Although there were no buy signals, the SQI is signaling hold for 30-ETF’s. They are up 74.2% (annualized at 33.4%) since their respective buy signals an average of 114.3-weeks ago. The SQI is not avoiding any of the 30-ETF’s.

Short-term Indicant Report Card, Status, and Charts

There were no buy signals and no sell signals. Although there were no buy signals, the Short-term Indicant is signaling hold for 30-ETF’s. They are up an average of 76.1% (annualized 35.2%) since the STI signaled, buy, an average of 111.3-weeks ago. The STI is not avoiding any of the 30-ETF’s.

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

Quick-term Report Card, Status, and Charts

There were no buy signals and no sell signals. Although there were no buy signals, the Quick-term Indicant is signaling hold for 30-ETF’s. They are up by an average of 21.2% (annualized at 23.9%) since the QTI signaled buy an average of 45.6-weeks ago. The Quick-term Indicant is not avoiding any of the 30-ETF’s at this time.

Conflicts Between the Short-term and Quick-term Indicants

There are no conflicts, whereby the Short-term Indicant and the Quick-term Indicant are in disagreement between hold and avoid status. The bias shift on August 15, 2006 remains in favor of the bull.

There are 90-hold signals out of a possible 90. There no avoid signals.

Quick-term Indicant Bull/Bear Health Report

None of the 30-ETF’s are below their bearish yellow curves. The average position of all thirty ETF’s is above bearish yellow by 10.9%. This is maintaining the market’s non-bearish posture. There is minimal support for sustainable bearish assertions.

Twenty-four ETF’s are above their respective bullish red curves. This supports the underlying bullish bias. All thirty ETF average positions are 2.8% above their bullish red curves. This attribute remains supportive of bullish bias.

Short-term Indicant Bull/Bear Health Report for ETF’s

Twelve of the ETF’s are contacting their breakout lines. As stated the past several months, the high concentration of breakout-contact since last August is solidly bullish. This repeated contact solidly supports the underlying bullish bias. Contact in thirty of the last thirty-three trading days remains supportive of bullish bias.

The average distance from breakout contact is at a miniscule 1.6%. This remains in solid support of the bullish bias, although a soft spot in the bull is being endured now.

None of the ETF’s are contacting their respective breakdown lines. The average distance from the price and breakdown is 28.0%. This configuration provides tremendous non-bearish support, which has been the case since March 2003. There have been several bearish “spurts” since then with no sustainability or dynamic support. The probability of immediate contact remains low and thus a non-bearish bias is maintained on a short-term basis.

This attribute remains solidly non-bearish, regardless of recent bearish behavior.

ETF Force Vector Configurations

Thirteen of the thirty ETF Force Vectors continue toward bullish domains. This is configured in support of bullish bias.

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

ETF Force Vectors/Vector Pressure Crossings/Option Signals

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

Click this sentence for Vector Pressure Option Signals. There were no option signals.

Twenty-six ETF Vector Pressures are in bullish domains. Although down by two from last Monday, this configuration continues to support the bullish bias shift from August 15, 2006.

As long as this attribute holds above fifteen within confines of other Quick-term attributes, bearish expressions are mere spurts, where there is no sustainability or depth.

Make certain you sell naked options when the Force Vectors shift direction or within two days of the purchase, whichever occurs first. If you are unfamiliar with this, take the options tour.

Quick-term and Short-term Indicant Summary

Do not write covered call options while Vector Pressure is positive (bullish), which is the current configuration.

The Quick-term Bull remains in tact.

To familiarize yourself with viewing the market from an ETF perspective, click the following update links.

Quick-term ETF Options

Quick-term Indicant for ETF’s

Short-term Indicant for ETF’s

Consolidated Quick-term/Short-term Indicant for ETF’s

Click here to the report card, which is updated weekly, to link to related tours.

Links to the Short-term Indicant and Indicant Volume Indicator are below:

Short-term Indicant for DJIA and NASDAQ

Short-term Indicant Tables for the Dow Jones Industrial Average Index

Short-term Indicant Table for the NASDAQ Composite Index

Indicant Volume Indicator

Indicant Conclusion

As stated last week, stock market divergence reflects mixed index behavior and no consistent sector patterns. That suggests summertime doldrums are around the corner. Do not be surprised at meandering behavior and bearish spurts, followed by bullish responses. Volatility should diminish.

Vector Pressure continues to support the bullish bias. It has been doing that since August 15, 2006.

Do not get lazy and set those stop losses for those stocks and funds that continue to enjoy hold signals.

The daily updates are on the following link.

http://www.indicant.net/Non-Members/Back%20Issues/QT.htm

Hyperlinks

To access all major markets, stocks, funds, economic data, charts, statuses, etc, click the following hyperlink:

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

In addition, once you are inside the website, click on "members update" or simply log in. It is on the top of every page in the web site so you can always find your way back.

Happy Investing,

www.indicant.net

05/20/07

May 13, 2007 Indicant Weekly Stock Market Report

Volume 05, Issue 02 ISSN 1526 6516 © The Indicant Stock Market Report

This Week’s Report

Market Divergence

After five weeks of combined bullish convergence and bullish divergence, last week endured market divergence. This is the ultimate expression of market indecisiveness. The market is having difficulty grasping its divine purpose, which is anticipating economic robustness.

The configuration of market divergence is when major indices move in opposite directions. Opposite movements within economic sectors also detect this phenomenon. For example, the ever-so powerful small caps, S&P600, expressed mild bearish behavior last week.

Click the following link to view the small cap index.

http://www.indicant.net/Members/Updates/MTIRYS-Mkts-US/MTI-RYS-10-S&P600-Curr.htm

You will notice the chart’s white segmented line. That represents a historical standard of a mini-bearish cycle that typically occurs this time of year. Of course, during strong bull markets that historical standard of bearishness does not occur, fulfilling the stock market’s delight in deviating from any desired predictability. You will notice the small caps tilted slightly to the south last week.

The broader NASDAQ index also tilted slightly to the south last week. Click the following link to view its chart.

http://www.indicant.net/Members/Updates/MTIRYS-Mkts-US/MTI-RYS-03-NASDAQ%20Curr.htm

If there were only two market indexes, consisting of small caps and the NASDAQ index, we would refer to this southerly configuration as bearish convergence. However, there are many market indices. By clicking the Dow Jones 30 index, you will notice it did not move in a bearish direction.

http://www.indicant.net/Members/Updates/MTIRYS-Mkts-US/MTI-RYS-01-DJIA-Curr.htm

The Dow Jones Industrial Average was up 61.6 points last week. The NASDAQ was down 9.93 points. The S&P600 was down 1.12 points. The other major indices tracked by the Indicant were also mixed, with some moving north and some moving south. That is market divergence. It is neither bullish nor bearish. Just simple market divergence.

Market divergence is exacerbated when there are conflicting movements within sectors. For example, Mutual Fund #19, Vanguard Gold and Precious Metals moved bullishly (north) last week, while Mutual Fund #28, Fidelity Gold moved south (bearishly). Click the following two links to view their charts.

http://www.indicant.net/Members/Updates/MTI-Mutual%20Funds/MF04.htm#19

http://www.indicant.net/Members/Updates/MTI-Mutual%20Funds/MF05.htm#28

The stock market is a little confused right now after five consecutive weeks of absolute bullish commitment of combined bullish convergence and bullish divergence.

The market seldom biases, directionally, on corporate pro forma publications. It knows the fiction contained in those releases by the corporate dilettantes. The market is more interested in the profit potential from economic robustness in the face of corporate incompetence, especially in the large caps. In other words, high demand volume during economic robustness hides elements of corporate incompetence. High volume for the most part generates profit. This is not true in individual cases, but this is generally true for the S&P500 type of companies.

The market’s confusion last week was shrouded in conflicting economic conditions. It is somewhat disappointed in the Fed maintaining status quo on interest rates. It delights in the mild shift to the south on the 3-Month Treasury Bill. Combined disappointment and delight result in market divergence. Click the following link to view the 3-Month Treasury bill chart.

http://www.indicant.net/Members/Updates/Economic/E07.htm

Its shift to the south is not sharp, but configuring for future rate reductions. That mild shift is enough to stimulate stock market uncertainty, which is market divergence.

Clicking the following link reveals the charts on Gold and Oil.

http://www.indicant.net/Members/Updates/Economic/E03.htm

As you can see, oil is enduring a cyclical shift to the south even though it has rebounded the past several weeks. Last week it moved south, which should be favorable to the stock market. Gold, on the other hand, has not shifted cyclical to the south. Gold is typically influenced by inflationary expectations and fear. It is the fear element that has been a major contributor to its movement to the north the past several years, while inflationary concerns have also contributed to its bullish behavior. Historically, gold and stock market behavior seldom move in the same direction. However, both have moved bullishly the past several years.

Scrolling down on the above link reveals how the CRB Bridge Futures is also enduring a southerly cycle, which should be bullish for the stock market. However, you will notice the Reuter’s commodity index still setting at near peak levels.

A similar configuration is occurring between other commodity indexes. Click the following link where you will find one commodity index in a cyclically bearish direction and the other in the opposite direction. The stock market is taking a look at this and adds to its confusion.

http://www.indicant.net/Members/Updates/Economic/E04.htm

These charts reveal what would normally favor a bearish to meandering market. However, the market has moved bullish since the expiration of the heart and soul of bullish seasonality. The new variable is the rising influence of capitalism around the world. The six billion inhabitants want to be free. Most are repelling political leadership and the influence of royalty and dictators. Most are recognizing that individual happiness and expression are more important than being humbled by another human being, such as dictators, social and communist governments, kings, and biblical interpretations.

The radical religious Muslims are fighting this rapid change in world paradigm. They prefer status quo. This rapid shift in world paradigm and the ensuing conflicts has influenced the rise in gold prices more so than rising oil prices. It is unique that this radicalism and oil are closely connected.

The stock market’s bullishness in the face of rising commodities and fear of terrorism is a testament to its belief that wealth will be delivered by exponentially increasing productivity and competitiveness from the unprecedented increases in capitalists that populate this planet. The only problem with this is that capitalists consume commodities and energy to transform their recently found freedom of expression in products and services. This elevates prices of commodities and is a constant inflationary threat.

From time to time, the market will wonder if the rising productivity will offset the rising prices on commodities. The Federal Reserve Board is still developing the formula for all of this and until they finish it, do not expect anything different from their constant attempt balance economic robustness and inflation.

Keep your eye on the daily stock market report, as it does not really care about all of this. It is only concerned with sustainable direction in either a bullish or bearish direction. The Indicant knows that is your primary concern.

Weekly Buy/Sell Summary – Stocks and Funds

The Mid-term Indicant generated two buy signals and no sell signals.

Although there were no sell signals, the Mid-term Indicant is avoiding 31-stocks and funds of the 345 tracked by the Indicant. The avoided stocks and funds are down an average of 13.7% since the Mid-term Indicant signaled sell an average of 25.3-weeks ago.

There were 71-stocks and funds avoided at this time last year. The avoided stocks and funds one year ago were down an average of 7.9% since their respective sell signals an average of 18.5-weeks earlier.

Two years ago, on May 13, 2005, the Mid-term Indicant was avoiding 117-stocks and funds that were down an average of 28.0% since their respective sell signals an average of 54.7-weeks earlier. Three years ago on May 15, 2004 there were only 73-avoided stocks and funds. They were down by an average of 10.0% from their respective sell signals an average of 11.3-weeks earlier. On May 10, 2003, the Mid-term Indicant was avoiding 17-stocks and funds out of 296-tracked. They were down by an average of 31.9% since their sell signals an average of 30.7-weeks earlier.

In addition to the buy signals, the Mid-term Indicant is signaling hold for 312 of the 345-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 121.6%. That annualizes to 64.0%. The Mid-term Indicant has been signaling hold for these 312-stocks and funds for an average of 98.8-weeks.

One year ago, on May 12, 2006, the Mid-term Indicant was holding 253-stocks and funds out of the 345 tracked at that time for an average of 96.0-weeks. Those 253-stocks and funds were up by an average of 131.2% (annualized at 71.0%). The Mid-term Indicant was signaling hold for 201-stocks and funds of the 320-tracked two years ago on May 13, 2005. They were up by an average of 93.9% (annualized at 54.5%) since their respective buy signals an average of 89.6-weeks earlier. There were 218-stocks and funds with hold signals on May 15, 2004 since their buy signals an average of 57.2-weeks earlier. They were up by an average of 75.4% (annualized at 68.5%). The Indicant was only tracking 296-stocks and funds in 2002-2003, and early 2004. On May 10, 2003, the Mid-term Indicant was signaling hold for 266-stocks and funds out of 296-tracked. They were up by an average of 32.0% (annualized at 101.5%) since their buy signals an average of 16.4-weeks earlier.

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

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

http://www.indicant.net/Members/Updates/All%20Update%20Forms/Buy-Sell%20Summary%20This%20Week.htm

All updated information can be found from a single page at Indicant.Net. Click the below link to that page. You will need your login ID and password.

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

The Quick/Short-term Indicant Stock Market Report

The 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 current Mid-term Bull market and buying barrage started in late 2002. The mid-term election year of 2002 conformed perfectly to historical standards with deep bearish expressions. That contrasts to the meandering bear market from late January through mid-August 2006 in the more recent mid-term election year.

The market synchronized with near perfection to normal seasonality in the mid-term election year of 2002. The rolling half of May-October 2002 was typically bearish. The 2002 seasonal bear leg was dynamic and configured perfectly to historical standards, although the depth of that bearish cycle was deeper than normal. That NASDAQ bear cycle approached the magnitude of the 1930-32 Dow bear cycle but the 2000-2002 NASDAQ bear leg lasted several weeks longer.

From January 31, 2003 through September 30, 2003, the Dow was up 15.2%, while the NASDAQ was up 35.3%. The last presidential pre-election year was 2003. Presidential pre-election years are traditionally bullish. So far this year, the Dow is up 5.6% since January 31, 2007 and the NASDAQ is up 4.0%. Aggressive bearish expression eleven weeks ago and again nine weeks ago pushed the major indices into negative territory, which can happen after the heart and soul of bullish seasonality expires. That particular bearishness was a mere spurt and lacked sustainability.

Historical standards suggest the market will go much higher this year. Political and economic fundamentals also support this prognosis.

As you can see, until mid-August 2006, most major market indices have been slightly bullish since late 2003 with pronounced meandering behavior. The only significant bullish expressions, not followed by bearish expressions, occurred in the heart and soul of bullish seasonality (Nov-Jan) in 2004, 2005, and 2006. Other than those “heart and soul” bullish cycles, the market was relatively flat from early 2004 through August 2006. However, this is a presidential pre-election year, where meandering to bearish behavior should not occur. The theme is bullish expectations even in the face of bearish behavior eleven weeks ago and again nine weeks ago.

The Dow30 found bottom in the last presidential mid-term election year on October 9, 2002 at 7,286.27. The NASDAQ found bottom on the same day at 1114.11. Finding cyclical bottoms in mid-term election years is common. Fortunately, the bottom of 2006 was minimal and not sharp when compared to that of 2002. The Dow is up 82.9% from the 2002 mid-term presidential election year bottom. The NASDAQ is up 130.0% since October 9, 2002. The S&P600, small caps, is up even more by 152.2% since October 9, 2002.

The NASDAQ is down 49.2% from its historical weekending high of 5048.62 on March 9, 2000. The Dow is up by 13.7% from its previous weekending historical high of 11723 on January 13, 2000. It took over five-and-a-half years for the DJIA to establish a new high. The S&P500 is down 1.4% since its all time weekly closing high of March 23, 2000. So far, the new century, 2000 inclusive, has not been kind to long-term investors. The NASDAQ needs to climb 97.0% and S&P500 by 1.4% to establish new weekly closing highs.

http://www.indicant.net/Members/Updates/History-Seasonal/HS0001.htm

Make certain you read the entire pages on the above link. You will see there are exceptions.

Stop Loss Management

The Mid-term Indicant recommends a stop loss of 8% on recent buys because of the Quick-term Indicant’s bullish bias and bullishly evolving economic fundamentals.

Stock and Fund Update

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

Economic Conditions – Inflation, Currency, Interest Rates

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

Five weeks ago, the 6-month CD fell below bullish red. It again held there last week. As stated the past three weeks, several other benchmark interest rates continue to hover near their cyclical peaks. That is because commodity prices are not falling in addition to other pestering inflationary threats with a burgeoning economy.

Equally important is the 3-Month T-Bill falling below its bullish red curve four weeks ago. It is very near falling below its bearish yellow curve. If it does, the probability of rapid interest rate declines is high. That bodes well for stock market bullishness. As stated two weeks in the weekly stock market report, this is also indicative of the bullish potential that remains latent in the stock market. If it starts a major shift to the southeast on the charts, the stock market should move significantly to the northeast.

As stated the past five weeks, it is unfortunate that commodity prices are uncooperative to the desired decline in interest rates. Healthy economies stimulate demand. If the supply sources do not keep up with that demand, prices rise. These rising prices threaten with inflationary concerns. This is the reason for interest rate reduction hesitancy; even though two of the Indicant’s tracked rates have fallen below their bullish red curves in the past four weeks.

Oil prices have rebounded, but the cyclical direction remains bearish (bullish for stock market). You will notice on the same web page four commodities. Two are cyclical moving south (bearish) and favorable to stock market bullishness. They are oil and CRB Bridge Futures. The other two are cyclical directed to the north and thus bullish (bearish for stock market).

The Federal Reserve Board sees this same data. This is what is freezing the board members. They see elemental disinflation. And they see potential inflation. The Fed looks at hundreds of variables. If they evaluated only four (Oil, CRB, Gold, Reuters), they would derived the exact same conclusion. That is do nothing, until a clearly biased directional commitment to inflation, disinflation, or deflation was obvious. The Fed, for the most part, establishes policy on what is perceived as obvious.

However, as stated last week, the stock market is sensing a bullish combination of falling interest rates due to economic cooling. This cooling effect will contribute to rising productivity and thus lowering costs and related inflationary threats. That, combined with cooling economic activity, should result in commodity price reductions. All this fosters stock market bullishness. The stock market does not react to the Federal Reserve Board, for the most part. It dictates to the Federal Reserve Board. Right now, the stock market senses economic cooling with minimal corporate profit impact, but with maximal supply/demand relaxation. In other words, the stock market senses rising productivity along with reducing demand for commodities and thus a continuation of disinflation cycles, which should lead to falling interest rates, which provides dynamic bullish support.

As stated the past nine weeks, the U.S. Dollar remains mixed with other currencies. However, a weakening U.S. Dollar bias the past five weeks also acts against anticipated interest rate reductions. Considering the U.S. Dollar’s strength (or weakness) is becoming less important as the international economies are linked more closely. The Canadian dollar strengthened quite considerably the past few weeks, in spite of bearish oil prices.

Overall, economic conditions appear shifting in favor of a continuation of this strong bull market.

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 is up 354.9% since the April 13, 2001 buy signal. Its annualized growth since that buy signal is 57.6%. It moved to the north in 23 of the past 30-weeks. This fund bounced sharply to the north the past two weeks, after dipping deeply to the south three weeks ago.

Fidelity Gold, Fund #28, is up 38.2% since the Mid-term Indicant signaled buy on August 26, 2005. That annualizes to 22.1%. This fund was down last week on its continuing display of deficiency relative to the comparable Vanguard Fund.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 302.9% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 63.1%.

Vanguard Energy #18, VGENX, is up 199.7% (annualized at 48.0%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 160.2% (annualized at 46.1%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 153.6% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 40.5%.

These energy related funds moved mildly to the north last week after bullish aggressions in the previous two weeks.

The SQI (Consolidated Short-term and Quick-term Indicant) model signaled buy for the GLD-ETF#11 on August 3, 2005. It is up 52.7% since then. It is annualized at 29.3%. It fell sharply last week and even triggered a Put Option buy signal.

The SQI signaled buy for ETF#03 – Energy and Natural Resources on March 26, 2003. It is up 203.3% (annualized at 48.6%).

Both of these contrarian ETF’s moved solidly to the north last week after moving mildly south in the previous week.

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

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

All ten major indices are bulls. They are up by an average of 30.4% since the Mid-term Indicant signaled bull an average of 90-weeks ago. That annualizes to 16.7%, which is down significantly from the past three years. This is due to the bear signals for the S&P400 and S&P600 Indexes on July 21, 2006, which had been receiving a bull signal since October 25, 2002. Those two indices endured some fluttering after the expiration of the tremendous bull leg that lasted nearly four years. A new bull leg is underway and may proceed just as vigorously for these two indices as the bull leg from October 2002 through July 2006, where the S&P400 and S&P600 increased by 66.3% and 79.3%, respectively.

The Mid-term Indicant Dow Jones Industrial Average performance is now at $40,368,314

That beats buy and hold performance of $2,027,418 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $194,426. That beats buy and hold’s $147,502 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $214,383. That beats buy and hold’s $88,843 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 1,881.3%, 31.8%, and 141.3%, respectively, for these indices as of this past week.

Click here to go to the current Mid-term Indicant assessment of the ten major indices.

Click here for a tour of the Mid-term Indicant for major market indices.

Divergence versus Convergence

There was nothing descriptive last week. Some sectors endured mixed behavior. Some major indices were up, while others were down. However, the combined bullish convergence and bullish divergence in the previous five weeks are solidly in support of the underlying bullish bias. Some indicators are configuring in support of a bearish spurt.

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.

Click here for Mid-term Indicant Table of Mutual Funds.

Always remember never to keep more than 20% of your investment resources into a single mutual fund. Sector investing in mutual funds is an extremely good way to mix your investments.

Long Term Indicant Positions - Dow Jones Industrial Average

The blue-chip Long-term Indicant Bull signal was at 2895 for the DJIA in November 1991. Keep in mind the Long-term Indicant generated only five bull/bear cycles since 1920.

The Dow is up 360.4% (annualized at 23.1%) since the Long-term Indicant signaled bull 810-weeks ago. Economic data is the primary influence on the Long-term Indicant. Recessions, deflation, and inflation have not been strong enough to signal bear since that bull signal. A link to the Long-term Indicant is below:

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

Quick/Short-term Indicant Stock Market Report - Summary

Quick-term Red Bulls: Twenty-five of thirty; bullish support is being maintained.

Quick-term Yellow Bears: None; maximum non-bearish support.

Short-term/Quick-term Non-Bearishness: Countering “sustainable” deep bearish ambition.

Force Vectors: Supporting bullish bias, but vacillating, preventing obviating directional intention.

Vector Pressure: Supportive of bullish bias.

Long-term Hold Positions: Solidly safe.

Current Quick-term Bias: Non-bearish.

Overall Market Status: Bullish bias prevailing.

Profit Potential from Naked Options: Improving with increasing volatility.

Volume: Robustness is waning, but configurations remain in support of underlying bullish bias.

Comments from April 20, 2007

Both the NASDAQ and NYSE Indexes passed above their upper trading range limit. That means a new trading range is being established and is not an indication of immediate bias.

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

This time of year, for no more than four weeks, endures a mini-historical bearish cycle. It only has approximately one more week. This historical standard is preventing the Short-term Indicant from signaling bull. The bullish strength of the individual ETF’s is not influenced by this freeze in the Short-term Indicant’s position.

Last Thursday’s aggressive bearish behavior supported this seasonal standard, although not very timely. Friday’s bullish response is a testament to the underlying bullish strength.

Both Indicant Volume Indicator’s appear to be softening from their recent robustness. Configurations at this time continue to support the underlying bullish bias.

Last Thursday’s aggressive bearish expression was accompanied with moderate volume. As stated in last Thursday’s daily stock market report, it seems only the nervous short-term traders got excited to selling action on light retail sales and some disappointing profit performance.

Last Friday’s bullish response was on even lighter volume. That single data point is not necessarily bullish. However, a single data point is not a trend or even a cycle. But it is worth noting the bullish response was not accompanied with market consensus.

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

There were no buy signals and no sell signals. Although there were no buy signals, the SQI is signaling hold for 30-ETF’s. They are up 72.9% (annualized at 33.1%) since their respective buy signals an average of 113.3-weeks ago. The SQI is not avoiding any of the 30-ETF’s.

Short-term Indicant Report Card, Status, and Charts

There were no buy signals and no sell signals. Although there were no buy signals, the Short-term Indicant is signaling hold for 30-ETF’s. They are up an average of 74.9% (annualized 34.9%) since the STI signaled, buy, an average of 110.3-weeks ago. The STI is not avoiding any of the 30-ETF’s.

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

Quick-term Report Card, Status, and Charts

There were no buy signals and no sell signals. Although there were no buy signals, the Quick-term Indicant is signaling hold for 30-ETF’s. They are up by an average of 20.8% (annualized at 24.0%) since the QTI signaled buy an average of 44.6-weeks ago. The Quick-term Indicant is not avoiding any of the 30-ETF’s at this time.

Conflicts Between the Short-term and Quick-term Indicants

There are no conflicts, whereby the Short-term Indicant and the Quick-term Indicant are in disagreement between hold and avoid status. The bias shift on August 15, 2006 remains in favor of the bull.

There are 90-hold signals out of a possible 90. There no avoid signals. As stated in last Thursday’s daily stock market report, the bullish bias remains strong in spite of today’s aggression by the bear.

Quick-term Indicant Bull/Bear Health Report

None of the 30-ETF’s are below their bearish yellow curves. The average position of all thirty ETF’s is above bearish yellow by 11.0%. This is maintaining the market’s non-bearish posture. This non-bearish configuration persists. There is minimal support for sustainable bearish assertions.

Twenty-five ETF’s are above their respective bullish red curves. This supports the underlying bullish bias. All thirty ETF average positions are 3.9% above their bullish red curves. This attribute remains supportive of bullish bias.

Short-term Indicant Bull/Bear Health Report for ETF’s

Four of the ETF’s are contacting their breakout lines. As stated the past several months, the high concentration of breakout-contact since last August is solidly bullish. This repeated contact solidly supports the underlying bullish bias. Contact in twenty-five of the last twenty-eight trading days remains supportive of bullish bias.

The average distance from breakout contact is at a miniscule 1.5%. This remains in solid support of the bullish bias.

None of the ETF’s are contacting their respective breakdown lines. The average distance from the price and breakdown is 27.6%. This configuration provides tremendous non-bearish support, which has been the case since March 2003. There have been several bearish “spurts” since then with no sustainability or dynamic support. The probability of immediate contact remains low and thus a non-bearish bias is maintained on a short-term basis.

This attribute remains solidly non-bearish, regardless of recent bearish behavior.

ETF Force Vector Configurations

Fifteen of the thirty ETF Force Vectors continue toward bullish domains. This configuration continues supporting bullish bias. It should be noted that this is down from last Thursday’s. Friday’s bullish response to last Thursday’s bearish aggressions did not elevate Force Vectors. This configuration quite often results in bearish confidence. Do not be surprised at bearish spurts in the next few days.

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

ETF Force Vectors/Vector Pressure Crossings/Option Signals

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

Click this sentence for Vector Pressure Option Signals. There was one put option buy signal after Friday’s close. It is for contrarian ETF #11, GLD. This fund is barely off its bullish red curve, but its Force Vector and Vector Pressure are not supportive of bullish behavior. A passive approach to bidding for this put option is appropriate. Thursday’s put option signal (ETF#10-IBB) was most likely executed of Friday’s bullish aggression, as its “stalked-value” plummeted, allowing your low bids to be executed. It does not have real strong bearish attributes as it is priced near its bullish red curve. However, its Force Vectors and Vector Pressure are configured in support of bearish ambition. These two option signals are not as potentially profitable as a yellow bear would be with similar configurations.

Twenty-eight ETF Vector Pressures are in bullish domains. This configuration continues to support the bullish bias shift from August 15, 2006.

As long as this attribute holds above fifteen, bearish expressions are mere spurts, where there is no sustainability or depth.

Make certain you sell naked options when the Force Vectors shift direction or within two days of the purchase, whichever occurs first. If you are unfamiliar with this, take the options tour.

Quick-term and Short-term Indicant Summary

Do not write covered call options while Vector Pressure is positive (bullish), which is the current configuration.

The Quick-term Bull remains in tact.

To familiarize yourself with viewing the market from an ETF perspective, click the following update links.

Quick-term ETF Options

Quick-term Indicant for ETF’s

Short-term Indicant for ETF’s

Consolidated Quick-term/Short-term Indicant for ETF’s

Click here to the report card, which is updated weekly, to link to related tours.

Links to the Short-term Indicant and Indicant Volume Indicator are below:

Short-term Indicant for DJIA and NASDAQ

Short-term Indicant Tables for the Dow Jones Industrial Average Index

Short-term Indicant Table for the NASDAQ Composite Index

Indicant Volume Indicator

Indicant Conclusion

Market divergence last week, which reflects mixed index behavior and no consistent sector patterns, suggests summertime doldrums are around the corner. Do not be surprised at meandering behavior and bearish spurts, followed by bullish responses. Volatility should diminish.

Vector Pressure continues to support the bullish bias. It has been doing that since August 15, 2006.

Do not get lazy and set those stop losses for those stocks and funds that continue to enjoy hold signals.

The daily updates are on the following link.

http://www.indicant.net/Non-Members/Back%20Issues/QT.htm

Hyperlinks

To access all major markets, stocks, funds, economic data, charts, statuses, etc, click the following hyperlink:

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

In addition, once you are inside the website, click on "members update" or simply log in. It is on the top of every page in the web site so you can always find your way back.

Happy Investing,

www.indicant.net

05/13/07

May 06, 2007 Indicant Weekly Stock Market Report

Dear Indicant Members:

This Week’s Report

Bullish Convergence

The markets again enjoyed bullish convergence last week. This follows two weeks of bullish divergence. Bullish convergence occurred for two weeks prior to the two weeks of bullish divergence. That is five consecutive weeks of combined bullish convergence and divergence. This configuration offers tremendous support for bullish sustainability.

Bullish convergence is when contrarian sectors move bullishly with general equities. Bullish divergence occurs when contrarian sectors express bearish behavior while general equities are bullish. Contemporary economic fundamentals suggest contrarian sectors are related to commodities, such as oil, precious metals, and other extractions that can relate to inflationary pressures.

Four consecutive weeks of bullish convergence is highly correlated to sustainable bull markets. Bearish behavior, following the phenomenon of bullish convergence, is mere bearish spurts.

Although the market has not enjoyed four consecutive weeks of bullish convergence, the past five weeks of combined bullish convergence and bullish divergence are significant. Bearish expressions on the immediate horizon should be viewed as mere bearish spurts. Bearish spurts are extreme short cycles of bearish behavior followed by offsetting bullish responses, plus some.

Bullish convergence is a common theme ahead of favorable economic conditions of expansive prosperity. Bullish divergence is more common when there is a sector gap in terms of economic favoritism. For example, the Y2K economy of the 1990’s, favored the technology sector. Plentiful energy supplies during the 1990’s induced meandering bearishness on the energy sector. A 1990’s Apple investor made a lot more money than a 1990’s Halliburton investor did. That is bullish divergence. Bullish convergence minimizes the need for identifying bullish sectors. That is because all sectors are bullish. That was not the case in the 1990’s.

Recent bullish convergence and bullish divergence are in full support of the presidential pre-election year phenomenon. More logically, though, it appears interest rates have peaked. Recent stock market behavior suggests that interest rates have indeed peaked and will be moving south. A weakening economy will slow inflationary threats somewhat. That bodes well for bullish optimism.

It is important to recognize that bearish convergence and bearish divergence work the same way, but in reverse order. For example, general equities nosedived in the 1970’s, while the energy sector and inflation sensitive securities skyrocketed. That was a classic case of bearish divergence. Bearish convergence/divergence is important to monitor. It can quickly differentiate a bearish spurt from bearish sustainability.

Keep your eye on the Quick-term Indicant as it will identify the underlying market bias on a daily basis and differentiate bearish sustainability from bearish spurts.

Weekly Buy/Sell Summary – Stocks and Funds

The Mid-term Indicant generated four buy signals and no sell signals.

Although there were no sell signals, the Mid-term Indicant is avoiding 33-stocks and funds of the 345 tracked by the Indicant. The avoided stocks and funds are down an average of 12.0% since the Mid-term Indicant signaled sell an average of 23.2-weeks ago.

There were 67-stocks and funds avoided at this time last year. The avoided stocks and funds one year ago were down an average of 5.8% since their respective sell signals an average of 18.6-weeks earlier.

Two years ago, on May 6, 2005, the Mid-term Indicant was avoiding 117-stocks and funds that were down an average of 27.8% since their respective sell signals an average of 53.7-weeks earlier. Three years ago on May 8, 2004 there were only 57-avoided stocks and funds. They were down by an average of 12.8% from their respective sell signals an average of 15.8-weeks earlier. On May 3, 2003, the Mid-term Indicant was avoiding 27-stocks and funds out of 296-tracked. They were down by an average of 26.4% since their sell signals an average of 29.6-weeks earlier.

In addition to the buy signals, the Mid-term Indicant is signaling hold for 308 of the 345-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 122.4%. That annualizes to 64.6%. The Mid-term Indicant has been signaling hold for these 308-stocks and funds for an average of 98.5-weeks.

One year ago, on May 5, 2006, the Mid-term Indicant was holding 270-stocks and funds out of the 345 tracked at that time for an average of 99.7-weeks. Those 270-stocks and funds were up by an average of 144.8% (annualized at 75.5%). The Mid-term Indicant was signaling hold for 201-stocks and funds of the 320-tracked two years ago on May 6, 2005. They were up by an average of 98.0% (annualized at 57.5%) since their respective buy signals an average of 88.7-weeks earlier. There were 219-stocks and funds with hold signals on May 8, 2004 since their buy signals an average of 56.5-weeks earlier. They were up by an average of 76.9% (annualized at 70.8%). The Indicant was only tracking 296-stocks and funds in 2002-2003, and early 2004. On May 3, 2003, the Mid-term Indicant was signaling hold for 255-stocks and funds out of 296-tracked. They were up by an average of 31.4% (annualized at 102.2%) since their buy signals an average of 16.0-weeks earlier.

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

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

http://www.indicant.net/Members/Updates/All%20Update%20Forms/Buy-Sell%20Summary%20This%20Week.htm

All updated information can be found from a single page at Indicant.Net. Click the below link to that page. You will need your login ID and password.

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

The Quick/Short-term Indicant Stock Market Report

The 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 current Mid-term Bull market and buying barrage started in late 2002. The mid-term election year of 2002 conformed perfectly to historical standards with deep bearish expressions. That contrasts to the meandering bear market from late January through mid-August 2006 in the more recent mid-term election year.

The market synchronized with near perfection to normal seasonality in the mid-term election year of 2002. The rolling half of May-October 2002 was typically bearish. The 2002 seasonal bear leg was dynamic and configured perfectly to historical standards, although the depth of that bearish cycle was deeper than normal. That NASDAQ bear cycle approached the magnitude of the 1930-32 Dow bear cycle but the 2000-2002 NASDAQ bear leg lasted several weeks longer.

How has market fared after the conclusion of the heart and soul of bullish seasonality? From January 31, 2002 through September 30, 2002, the Dow fell 23.5%. The NASDAQ was down 39.4%. The bull market of 2003 did not incur normal seasonality. From January 31, 2004 until September 30, 2004, the NASDAQ fell 8.2%, while the Dow was down 3.9%. From January 31, 2005 to June 30, 2005, the Dow was down 2.0% and the NASDAQ down 0.4%. From January 31, 2006 through August 1, 2006, the NASDAQ was flat while the Dow was up a respectable 6.1%.

From January 31, 2003 through September 30, 2003, the Dow was up 15.2%, while the NASDAQ was up 35.3%. The last presidential pre-election year was 2003. Presidential pre-election years are traditionally bullish. So far this year, the Dow is up 5.1% since January 31, 2007 and the NASDAQ is up 4.4%. Aggressive bearish expression ten weeks ago and again eight weeks ago pushed the major indices into negative territory, which can happen after the heart and soul of bullish seasonality expires. That particular bearishness was a mere spurt and lacked sustainability.

Historical standards suggest the market will go much higher this year. Political and economic fundamentals also support this prognosis.

As you can see, until mid-August 2006, most major market indices have been slightly bullish since late 2003 with pronounced meandering behavior. The only significant bullish expressions, not followed by bearish expressions, occurred in the heart and soul of bullish seasonality (Nov-Jan) in 2004, 2005, and 2006. Other than those “heart and soul” bullish cycles, the market was relatively flat from early 2004 through August 2006. However, this is a presidential pre-election year, where meandering to bearish behavior should not occur. The theme is bullish expectations even in the face of bearish behavior ten weeks ago and again eight weeks ago.

The Dow30 found bottom in the last presidential mid-term election year on October 9, 2002 at 7,286.27. The NASDAQ found bottom on the same day at 1114.11. Finding cyclical bottoms in mid-term election years is common. Fortunately, the bottom of 2006 was minimal and not sharp when compared to that of 2002. The Dow is up 82.0% from the 2002 mid-term presidential election year bottom. The NASDAQ is up 130.9% since October 9, 2002. The S&P600, small caps, is up even more by 152.9% since October 9, 2002.

The NASDAQ is down 49.1% from its historical weekending high of 5048.62 on March 9, 2000. The Dow is up by 13.2% from its previous weekending historical high of 11723 on January 13, 2000. It took over five-and-a-half years for the DJIA to establish a new high. The S&P500 is down 1.4% since its all time weekly closing high of March 23, 2000. So far, the new century, 2000 inclusive, has not been kind to long-term investors. The NASDAQ needs to climb 96.3% and S&P500 by 1.5% to establish new weekly closing highs.

Since August 18, 2006, the Mid-term Indicant generated 212-buy signals and only 75-sell signals. That is an unusually high number of buy signals when considering historical seasonal market influences. This is a testament to the strength of the underlying bull market. All Indicant models supported this recent buying surge just as they did in October 2002 and March 2003. Now that the heart and soul of bullish seasonality has expired, the resistance to generate sell signals has softened. Buying stimulants within the Mid-term Indicant are more reserved, but not as much during post election years.

You will notice many of the mutual fund buy signals occurred in March 2003. Many of them endured sell signals for the first time since early 2003 during the mildly bearish meandering behavior in mid-2005. However, the bull’s resiliency has minimized selling activity. The Mid-term Indicant is now signaling hold for nearly all mutual funds it tracks with the exception of contrarian funds.

http://www.indicant.net/Members/Updates/History-Seasonal/HS0001.htm

Make certain you read the entire pages on the above link. You will see there are exceptions.

Stop Loss Management

The Mid-term Indicant recommends a stop loss of 8% on recent buys because of the Quick-term Indicant’s bullish bias and bullishly evolving economic fundamentals.

Stock and Fund Update

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

Economic Conditions – Inflation, Currency, Interest Rates

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

Four weeks ago, the 6-month CD fell below bullish red. It again held there last week. As stated the past two weeks, several other benchmark interest rates continue to hover near their cyclical peaks. That is because commodity prices are not falling in addition to other pestering inflationary threats with a burgeoning economy.

Equally important is the 3-Month T-Bill falling below its bullish red curve three weeks ago. It is very near falling below its bearish yellow curve. If it does, the probability of rapid interest rate declines is high. That bodes well for stock market bullishness. As stated last week, this is also indicative of the bullish potential that remains latent in the stock market. If it starts a major shift to the southeast on the charts, the stock market should move significantly to the northeast on the charts.

As stated the past four weeks, it is unfortunate that commodity prices are uncooperative to the desired decline in interest rates. Healthy economies stimulate demand. If the supply sources do not keep up with that demand, prices rise. These rising prices threaten with inflationary concerns. This is the reason for interest rate reduction hesitancy; even though two of the Indicant’s tracked rates have fallen below their bullish red curves in the past three weeks.

As stated last week, commodity prices remain elevated. However, oil prices moved to the south a little, but that appears to be normal variation and not even a cyclical shift appears underway; much less a favorable trend. That stifles economic stimulus tactics by the Federal Reserve Board. The only consistent countermeasure to rising commodity prices is productivity growth, which keeps costs down. However, if productivity growth slows with rising commodity prices, the producer price index and consumer price index will rise. That will prevent interest rate reductions and impose a stifling effect on the stock market’s bullish bias.

However, the stock market is sensing a bullish combination of falling interest rates due to economic cooling. This cooling effect will contribute to rising productivity and thus lowering costs and related inflationary threats. That, combined with cooling economic activity, should result in commodity price reductions. All this fosters stock market bullishness.

As stated the past eight weeks, the U.S. Dollar remains mixed with other currencies. However, a weakening U.S. Dollar bias the past four weeks also acts against anticipated interest rate reductions. Considering the U.S. Dollar’s strength (or weakness) is becoming less important as the international economies are becoming more closely linked. The Canadian dollar strengthened quite considerably last week.

Overall, economic conditions appear shifting in favor of a continuation of this strong bull market.

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 is up 347.1% since the April 13, 2001 buy signal. Its annualized growth since that buy signal is 56.5%. It moved to the north in 22 of the past 29-weeks. This fund bounced sharply to the north last week after dipping deeply south in the previous week.

Fidelity Gold, Fund #28, is up 40.0% since the Mid-term Indicant signaled buy on August 26, 2005. That annualizes to 23.4%. This fund was up slightly last week after falling deeply to the south in the previous three weeks.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 298.7% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 62.4%.

Vanguard Energy #18, VGENX, is up 199.3% (annualized at 48.1%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 157.7% (annualized at 45.6%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 152.6% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 40.5%.

These energy related funds moved solidly to the north the past two weeks after falling to the south in the prior week.

The SQI (Consolidated Short-term and Quick-term Indicant) model signaled buy for the GLD-ETF#11 on August 3, 2005. It is up 56.7% since then. It is annualized at 31.9%.

The SQI signaled buy for ETF#03 – Energy and Natural Resources on March 26, 2003. It is up 200.7% (annualized at 48.2%).

Both of these contrarian ETF’s moved solidly to the north last week after moving mildly south in the previous week.

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

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

All ten major indices are bulls. They are up by an average of 30.4% since the Mid-term Indicant signaled bull an average of 90-weeks ago. That annualizes to 16.9%, which is down significantly from the past three years. This is due to the bear signals for the S&P400 and S&P600 Indexes on July 21, 2006, which had been receiving a bull signal since October 25, 2002. Those two indices endured some fluttering after the expiration of the tremendous bull leg that lasted nearly four years. A new bull leg is underway and may proceed just as vigorously for these two indices as the bull leg from October 2002 through July 2006, where the S&P400 and S&P600 increased by 66.3% and 79.3%, respectively.

The Mid-term Indicant Dow Jones Industrial Average performance is now at $40,181,713

That beats buy and hold performance of $2,028,047 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $194,397. That beats buy and hold’s $147,480 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $215,214. That beats buy and hold’s $89,187 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 1,881.3%, 31.8%, and 141.3%, respectively, for these indices as of this past week.

Click here to go to the current Mid-term Indicant assessment of the ten major indices.

Click here for a tour of the Mid-term Indicant for major market indices.

Divergence versus Convergence

Inflation sensitive securities were bullish last week. The energy sector was also bullish along with general stock equities. That is bullish convergence, which supports bullish sustainability. The small increase in unemployment will apply pressure for the Fed to relax rates. Rising commodity prices imposes the antithesis of that. This bullish convergent pattern suggests the market is predicting interest rate relaxation and a softening inflationary threat due to economic cooling.

Three of the past five weeks have enjoyed bullish convergence. The only disruption to that configuration was two weeks of bullish divergence. Overall, this suggests the market is preparing for dynamic bullishness.

Mid-term Indicant Positions - NASDAQ100 Stocks

Click here to see NASDAQ100 report card history.

Click here for Mid-term Indicant Table of NASDAQ 100 Stocks.

Mid-term Indicant Positions - Dow Jones 30 Industrial Stocks

Click here to see Dow 30 report card history.

Click here for Mid-term Indicant - Table of Dow Jones Industrial Average Stocks.

Mid-term Indicant Positions - Dow Jones 15 Utility Stocks

Click here to see Dow Utilities Report Card history.

Click here for Mid-term Indicant - Dow Jones Utility Stocks Table.

Mid-term Indicant Positions - Indicant Selected Stocks

Click here to see Indicant Select Stock Report Card history.

Click here for Mid-term Indicant Table of Indicant Selected Stocks.

Mid-term Indicant Positions - Mutual Funds

Click here to see Mutual Fund Report Card history.

The Mid-term Indicant is now avoiding ProFunds Ultra Short. It is down 25.6% since the Mid-term Indicant signaled sell on September 15, 2006. Historical norms of market cyclicality suggest the next buying opportunity for this fund may not occur until 2009.

Click here for Mid-term Indicant Table of Mutual Funds.

Always remember never to keep more than 20% of your investment resources into a single mutual fund. Sector investing in mutual funds is an extremely good way to mix your investments.

Long Term Indicant Positions - Dow Jones Industrial Average

The blue-chip Long-term Indicant Bull signal was at 2895 for the DJIA in November 1991. Keep in mind the Long-term Indicant generated only five bull/bear cycles since 1920.

The Dow is up 358.2% (annualized at 23.0%) since the Long-term Indicant signaled bull 809-weeks ago. Economic data is the primary influence on the Long-term Indicant. Recessions, deflation, and inflation have not been strong enough to signal bear since that bull signal. A link to the Long-term Indicant is below:

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

Quick/Short-term Indicant Stock Market Report - Summary

Quick-term Red Bulls: Twenty-six of thirty; bullish support is being maintained.

Quick-term Yellow Bears: None; maximum non-bearish support.

Short-term/Quick-term Non-Bearishness: Countering “sustainable” deep bearish ambition.

Force Vectors: Supporting bullish bias, but also suggesting a bearish spurt is underway..

Vector Pressure: Supportive of bullish bias.

Long-term Hold Positions: Solidly safe.

Current Quick-term Bias: Non-bearish.

Overall Market Status: Short-term Indicant bear signal on March 13, 2007 for NYSE and NASDAQ. Seasonal bearish standards are preventing it from signaling bull.

Profit Potential from Naked Options: Improving with increasing volatility.

Volume: Increasing robustness will obviate the market’s desired sustainable direction.

Comments from April 20, 2007

Both the NASDAQ and NYSE Indexes passed above their upper trading range limit. That means a new trading range is being established and is not an indication of immediate bias.

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

This time of year, for no more than four weeks, endures a mini-historical bearish cycle. It only has approximately two more weeks. This historical standard is preventing the Short-term Indicant from signaling bull. The bullish strength of the individual ETF’s is not influenced by this freeze in the Short-term Indicant’s position.

Both Indicant Volume Indicator’s are again enjoying a robust cycle. Although this new cycle is not concurrent to dynamic market bullishness, it supports to the underlying bullish bias.

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

There were no buy signals and no sell signals. Although there were no buy signals, the SQI is signaling hold for 30-ETF’s. They are up 72.6% (annualized at 34.8%) since their respective buy signals an average of 112.3-weeks ago. The SQI is not avoiding any of the 30-ETF’s.

Short-term Indicant Report Card, Status, and Charts

There were no buy signals and no sell signals. Although there were no buy signals, the Short-term Indicant is signaling hold for 30-ETF’s. They are up an average of 74.5% (annualized 35.1%) since the STI signaled, buy, an average of 109.3-weeks ago. The STI is not avoiding any of the 30-ETF’s.

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

Quick-term Report Card, Status, and Charts

There were no buy signals and no sell signals. Although there were no buy signals, the Quick-term Indicant is signaling hold for 29-ETF’s. They are up by an average of 21.6% (annualized at 24.6%) since the QTI signaled buy an average of 45.1-weeks ago. The Quick-term Indicant is avoiding one ETF. It is up 1.3% since its sell signal 3.4-weeks ago.

Conflicts Between the Short-term and Quick-term Indicants

There is one conflict, whereby the Short-term Indicant and the Quick-term Indicant are in disagreement between hold and avoid status. The bias shift on August 15, 2006 remains in favor of the bull.

There are 89-hold signals out of a possible 90. There is one avoid signal. The bullish bias remains strong.

Quick-term Indicant Bull/Bear Health Report

None of the 30-ETF’s are below their bearish yellow curves. The average position of all thirty ETF’s is above bearish yellow by 11.5%. This is maintaining the market’s non-bearish posture. This non-bearish configuration persists. There is minimal support for sustainable bearish assertions.

Twenty-seven ETF’s are above their respective bullish red curves. This supports the underlying bullish bias. Threats to bullish bias have been significantly diminished. All thirty ETF average positions are 3.4% above their bullish red curves. This attribute is supportive of bullish bias.

Short-term Indicant Bull/Bear Health Report for ETF’s

Fifteen of the ETF’s are contacting their breakout lines. As stated the past several months, the high concentration of breakout-contact the past several months is solidly bullish. This repeated contact solidly supports the underlying bullish bias. Contact in twenty-one of the last twenty-three trading days remains supportive of bullish bias.

The average distance from breakout contact is at a miniscule 1.1%. This remains in solid support of the bullish bias.

This attribute remains solidly non-bearish, regardless of recent bearish behavior.

ETF Force Vector Configurations

Six of the thirty ETF Force Vectors continue toward bullish domains. Although down the past few days, it continues supporting bullish bias.

The recent downward cycle is sloping more passively than its predecessor upward cycle. Also, there is no consistency in physical description. This configuration is non-bearish.

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

ETF Force Vectors/Vector Pressure Crossings/Option Signals

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

Click this sentence for Vector Pressure Option Signals. There were no option buy signals today.

Twenty-six ETF Vector Pressures are in bullish domains. This configuration continues to support the bullish bias shift from August 15, 2006. Although down by two since last Wednesday, this configuration remains in healthy support of the bullish bias.

Make certain you sell naked options when the Force Vectors shift direction or within two days of the purchase, whichever occurs first. If you are unfamiliar with this, take the options tour.

Quick-term and Short-term Indicant Summary

Do not write covered call options while Vector Pressure is positive (bullish), which is the current configuration.

The Quick-term Bull remains in tact.

To familiarize yourself with viewing the market from an ETF perspective, click the following update links.

Quick-term ETF Options

Quick-term Indicant for ETF’s

Short-term Indicant for ETF’s

Consolidated Quick-term/Short-term Indicant for ETF’s

Click here to the report card, which is updated weekly, to link to related tours.

Links to the Short-term Indicant and Indicant Volume Indicator are below:

Short-term Indicant for DJIA and NASDAQ

Short-term Indicant Tables for the Dow Jones Industrial Average Index

Short-term Indicant Table for the NASDAQ Composite Index

Indicant Volume Indicator

Indicant Conclusion

Bullish convergence in three of the past five weeks, coupled with two weeks of bullish divergence, is configuring in full support of bullish sustainability. This is consistent with historical standards.

Vector Pressure continues to support the bullish bias. It has been doing that since August 15, 2006.

Do not get lazy and set those stop losses for those stocks and funds that continue to enjoy hold signals.

The daily updates are on the following link.

http://www.indicant.net/Non-Members/Back%20Issues/QT.htm

Hyperlinks

To access all major markets, stocks, funds, economic data, charts, statuses, etc, click the following hyperlink:

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

In addition, once you are inside the website, click on "members update" or simply log in. It is on the top of every page in the web site so you can always find your way back.

Happy Investing,

www.indicant.net

05/06/07