May 27, 2007
Indicant Weekly Stock Market Report
Volume 05, Issue 04 ISSN 1526 6516 © The
Indicant Stock Market Report
This Week’s
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.
