May 25, 2008
Indicant Weekly Stock Market Report
Volume 05, Issue 04 ISSN 1526 6516 © The
Indicant Stock Market Report
This Week’s
Report
Bullish
Behavior Sustainable – Part 8
The Dow30
endured a major attribute shift, as pointed out in last Wednesday’s daily
stock market report. Click the following link.
http://www.indicant.net/Members/Updates/STI-Mkts/STI-10-Indices/STI08a-DJ.htm
You will
notice this tangential loss occurred with the “Greenspan Scare” in early
March 2007. Most of you recall, the Quick-term Indicant did not generate
ETF sell signals from the Greenspan scare. That bearish expression was
phony.
The sub-prime
lending crisis began to unfold in the summer of 2007. The Fed was
dutifully raising interest rates to counter inflationary pressures from
rising oil prices. That led to the sub-prime crisis, as variable mortgage
rates paralleled the Fed’s policy. As stated in prior reports, one has to
wonder how one is paid a significant salary by plotting interest rates
paralleling commodity prices.
You will
notice the Dow lost tangential protection against bearish ambition several
times since January 2007. Each time, there was minor follow-on bearish
behavior, followed by bullish spurts. Here is the tricky part.
When
tangential protection is lost, will the follow-on bearish behavior be
minor or will it be a devastating long-lasting bear market? Will the
bullish expressions be a mere spurt or a long-lasting bull market? Most of
the time, the bearish expressions are mere short-term bearish spurts.
Every now and then, though, they are the beginning of major and long
lasting bear markets. The trick is in identifying a spurt from the latter.
Fundamentally,
rising oil prices and declining consumer spending in the U.S. is certainly
a thorn to economic robustness. The bullish side of capital markets
requires economic robustness. That robustness is absent. Consumer spending
is heading south. Oil prices continue moving north and that is
inflationary. On the surface, the news is not good. However, keep in mind,
the market’s underlying directional intensity is not influenced by
contemporary events. It looks into the future; sometimes accurately
predicting it and sometimes missing the mark and thus the occasional
violent volatile responses.
Governmental
interference in the capital markets has worsened the inflationary spiral.
Food prices are rising. The capital markets have never respected
“intellectual and philosophical” interference. Capital markets reward only
products of appeal. That does not come from any source other than
hard-driving business minded people, who are not in government.
With the
negative economic forces underway, why then has the stock market’s bearish
behavior been relatively mild?
Technically,
volume has not been supportive of recent bearish behavior. The great bear
legs of 2001 and 2002 were preceded by a robust Indicant Volume Indicator.
Click the following link to view this.
http://www.indicant.net/Members/Updates/STI-Mkts/IVI.htm
You will
notice robust volume behavior paralleling the bearish cycle late last
year. That indeed suggested more bearishness. However, since then such
robustness has been absent. The bullish spurt, now expiring, was not
supported by robust volume. That is a non-bullish attribute.
Fundamentally,
the market senses profound wealth generation potential. Capitalism is in
favor around the world. Russia, China, and India are provided a huge
influx of capitalistic mind people. The long-term outlook for capital
markets is indeed bullish. Sometimes, such thinking, influences the
market’s directional intensity in spite of otherwise sour conditions.
Governmental interference in those countries is always a threat to the
potential of rapidly improving economies.
Sometimes the
cause of capitalism establishes a solid baseline that overpowers
governmental interference. Wealth begins to build from the efforts of the
capitalists. Bullish spurts evolve into long lasting bull legs when that
happens.
Unfortunately,
the laws of supply and demand prevail. Capitalists need resources. The
burgeoning population of capitalist are the reason for skyrocketing
commodity prices. It takes time for the productivity factor to kick in and
offset rising material costs. However, in the long-run, capitalists will
provide solutions for any shortage or any environmental problem.
Governments sometime get into the middle of these problems and worsen
them. It slows the solution process down and consequently prices rise.
The supply and
demand for stocks also influence bullish or bearish behavior. The bullish
spurt, now expiring, was not accompanied with a rising Indicant Volume
Indicator. This particular spurt was a little confusing first. It
originated with a tremendous volume surge on March 11, 2008. That
suggested it would have some sustainability. However, it was not followed
by increasing volume. The Fed and Government got more involved, which is
common during political election years. Those little checks being pumped
back into the economy is like putting a band aid on a brain tumor.
Incumbent politicians will do anything to retain power during election
years. If this developed during a post election year, the politicians
would have been more passive.
On Friday, two
more major indices lost their tangential support; the Dow65 and the
S&P100. The blue chips are leading the expiration of this bullish
spurt. That adds fuel that is a bit more bearish.
Click the
following link to view the other major indices tangential protection
against bearish expressions.
http://www.indicant.net/Members/Updates/STI-Mkts/STI-10-Indices/STI08.htm
Bullish
expiration appears imminent, but it has not yet occurred. It should happen
next week.
The S&P400-Mid-Cap Index is the strongest. It could delay the process
a little longer.
The long-term
investor will tolerate this bearish behavior. The short-term oriented
investor should behave in a manner consistent with bear market thinking.
The other
remaining indices, such as the S&P400, are maintaining their tangential
support and thus one reason for limited sell signals this weekend.
However, configurations are unfolding that suggest increasing bearish
influences. Do not be surprised with a new Quick-term bearish cycle.
However, there should be increased volatility as this bullish spurt was
healthy enough to have expected more longevity. In other words, its
expiration will not be without battle.
Historical
standards and normal seasonality suggest the following scenario. The
summertime doldrums will influence bearish behavior on the immediate
horizon, followed by the heart and soul of bullish seasonality during the
autumn months. Post election year bearishness in 2009 will follow.
Economic fundamentals suggest 2009 will be solidly bearish. The wild card
is the two billion new capitalists eager to join the 20%-rich group. Just
a few of them enjoying success will solve any problems. The other wild
card is bearish; that is, watch for interfering governmental policies “to
help.”
Keep your eye
on the daily stock market report. It will help you differentiate
sustainability versus spurts regardless of the directional intensity
underway.
Weekly
Buy/Sell Summary – Stocks and Funds – Mid-term Indicant
Click this sentence for a graphical summary of what follows. Simply
scroll down the page to see graphical and detail content of this section.
The Mid-term
Indicant generated no buy signals and two sell signals. There have been
90-buy signals since February 1, 2008. There have been 199-sell
signals since October 26, 2007.
Although
there were no buy signals, the Mid-term Indicant is signaling hold for 213 of the 345-stocks and
funds tracked by the Indicant. The stocks and funds with hold signals are
up an average of 143.5%. That annualizes to 59.4%. The Mid-term Indicant
has been signaling hold for these 213-stocks and funds for an average of
125.7-weeks.
Although
there were no sell signals, the Mid-term Indicant is avoiding 130-stocks and funds of the 345-
tracked by the Indicant. The avoided stocks and funds are down an average
of 18.5% since the Mid-term Indicant signaled sell an average of
31.5-weeks ago.
One year ago,
on May 25, 2007, the Mid-term Indicant was holding 313-stocks and funds
out of the 345 tracked for an average of 100.5-weeks. They were up by an
average of 122.3% (annualized at 63.3%). There were 31-avoided stocks and
funds at that time. Those avoided stocks and funds were down an average of
13.6% since their respective sell signals an average of 26.9-weeks
earlier.
The Mid-term
Indicant was signaling hold for 234-stocks and funds of the 345-tracked
two years ago on May 26, 2006. They were up by an average of 142.5%
(annualized at 70.6%) since their respective buy signals an average of
104.9-weeks earlier. The Mid-term Indicant was avoiding 100-stocks and
funds at that time. They were down an average of 5.6% since their
respective sell signals an average of 15.9-weeks earlier.
There were
208-stocks and funds with hold signals on May 27, 2005 since their buy
signals an average of 88.4-weeks earlier. They were up by an average of
98.6% (annualized at 58.0%). There were 112-avoided stocks and funds at
that time. They were down by an average of 25.8% from their respective
sell signals an average of 56.8-weeks earlier.
On May 22,
2004, the Mid-term Indicant was signaling hold for 219-stocks and funds
out of 296-tracked. They were up by an average of 74.7% (annualized at
67.5%) since their buy signals an average of 57.6-weeks earlier. The
Mid-term Indicant was avoiding 65-stocks and funds at that time. They were
down by an average of 10.9% since their sell signals an average of
12.3-weeks earlier.
Five years
ago, on May 24, 2003, there were 286-hold signals for stocks and funds out
of the 296 tracked by the Mid-term Indicant at that time. They were up an
average of 35.9% (annualized at 108.1%) since their respective buy signals
an average of 17.3-weeks earlier. There were nine avoided stocks and funds
then. They were down an average of 25.1% since their respective sell
signals an average of 26.5-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
Comments
about Mid-term Indicant Buy and Sell Signals This Weekend
Enron trading surfaced again
for a few days. As previously stated, this stock will be removed from the
Indicant tracking later this year. The Mid-term Indicant had to signal buy
last weekend and sell this weekend. If you do, make certain you understand
its potential liquidity and if your stop loss would be honored. Lately, it
has been manipulated, as opposed to real market pricing.
Buy signals
since February will most likely not generate favorable returns. However,
there are a few that will not succumb to bearish pressure. The sell signal
volume since last October will contribute significantly to avoided losses.
Do not be
surprised at significant selling increases in the next few months. Those
stocks and funds with triple digit gains and strong technical support will
most likely retain their hold positions. Most of the selling will be
limited to those with weaker technical positions.
The
Quick/Short-term Indicant Stock Market Report
The Indicant website maintains the last twelve months of daily reports on
an annual basis. These weekly reports are maintained on the website
for much longer periods. Beginning in March 2006, the daily stock market
report for the last trading day of each week is imbedded in this weekly
report. This allows web-based retention records of the daily report for
much longer than the last twelve months.
The Daily
Indicant Stock Market Report for the last trading day of the current week
is near the conclusion of this weekly stock market report. It is emailed
each weekend, separately, so you can read it, either as a separate
document, or in this document.
The
Indicant Stock Market Report’s Secular Market Blend
The Dow is up
71.3% since its secular low on October 9, 2002. The NASDAQ is up 119.4%
and the S&P500 is up 77.1% since then. The small cap index, S&P600, is up
124.3%. Even with the S&P600’s dynamic bearish behavior the last several
months, it still leads the major indices in bullish performance since the
birth of the secular bull on October 9, 2002. As stated the past several
months, the secular bull that originated on October 9, 2002 no longer
remains solid. A secular bear could indeed be unfolding.
The Dow is
down 11.9% since its last closing peak on Oct 9, 2007. The NASDAQ is down
14.5% since its last peak on Oct 31, 2007. The S&P600 is down 14.0% since
its last closing peak value on Jul 19, 2007. The Small Caps Index was
bearish last week with a 2.3%-loss, while the blue chips were more bearish
with a 3.9%-loss. The NASDAQ100 was down solidly with a 3.3%-loss, wiping
out the previous week’s gain of 3.4%.
The NASDAQ is
down 51.6% since its last weekly secular peak on March 9, 2000. The S&P500
is down 9.9% since its similar secular peak on March 23, 2000. The Dow is
up by a mere 6.5% since January 13, 2000 when it peaked from the 1990’s
roaring bull. It has expressed no timidity in roaming above the new peak
area, while the S&P500 set a new record in early 2007 and then immediately
succumbed to bearish influence. The NASDAQ needs to climb 106.5% to
achieve a new record high. Do not be surprised if this occurs after the
year, 2025.
The Dow is
down 5.9% so far this year. The NASDAQ is down 7.8% this year. These
conditions are incongruent with historical standards. This year, 2008,
should be a bullish year, based on those standards. The stock market
occasionally delights in violating historical standards. This always
happen when such standards gain in popularity. The current bullish cycle
is lending support to historical standards, but it will be challenged,
during the dog days of summer. We saw the beginning of that last week.
The NASDAQ
year-to-date performance was bearish by 9.2% through this week in 2001.
Keep in mind the NASDAQ finished 2001 down by 21.1%. This year was
configuring with 2001 similarity, but the current bull cycle has disrupted
that similarity. Now, it appears a resumption of standards is occurring.
There will be additional bearish cycles in 2008. It appears a fresh one is
unfolding now.
The NASDAQ was
down by 13.0% through this weekend in 2002. Some of you recall the dynamic
bear market in 2002, where the NASDAQ finished that year down by 31.5%.
The NASDAQ YTD 2003 performance was up by 13.1%. It finished up in that
solidly bullish year by 50.0%. It was down on this weekend by 4.6% in
2004. It was also down by 5.5% in 2005. Many of you recall that 2004 and
2005 were meandering bear markets. In 2006, it was down by 2.6% and up by
6.7% at this time last year.
As previously
stated, so far this year, the DOW30 is down 5.9% and the NASDAQ down 7.8%.
This
paragraph, originating in the March 30, 2008 Weekly Stock Market Report,
will remain unchanged until it becomes irrelevant. Bearish behavior this
year contradicts historical standards whereby the presidential election
year is typically bullish. The political establishment and their
appointees are doing their part to support bullish behavior with interest
rate cuts and tax rebates. On the other hand, the stock market appears to
be short of buyers, who at one time refinanced their homes to buy stocks.
Their replacement buyers are expected to be foreign investors, where the
weak dollar is an added bonus for those who desire bullish market
behavior. However, rising commodity prices could dampen that potential
bullish effect.
May 2, 2008
comment regarding the previous paragraph. The Fed’s mild interest rate
adjustment to the south indeed strengthened the dollar. Keep in mind the
U.S. is a net importer. This increases the supply of dollars abroad. As
long as the U.S. is a net importer, there will be a continuing increase in
supply of dollars, which will continuously keep a “real economic” lid on
its value.
The bullish
bias shift on August 15, 2006 expired on January 4, 2008. The heart and
soul of bullish seasonality also expired on January 4, 2008. The Dow
increased 14.0% since the bullish bias shift on August 15, 2006. The
S&P500 was up 9.8% and the NASDAQ up by 18.4%.
A bearish bias
shift was identified by the Quick-term Indicant on January 4, 2008. It
lasted until March 11, 2008. The Dow was down 5.0% and the NASDAQ was down
9.9% during that time. On March 11, 2008, the Quick-term Indicant shifted
away from bearish bias. Although the Quick-term Indicant endured
fluttering since the March 11 bearish bias shift expiration, the NASDAQ is
up by 8.4% since then. This has been an above average bullish rally. Until
last week, there was no tangential support threatening.
Now there is a major threat to the current bullish cycle.
As previously
stated in the daily stock market reports, the Quick-term Indicant endured
two violations since March 11 and encountered fluttering behavior until
April 11. On April 29, 2008, the Quick-term Indicant conformed to its
standards of Red Bull recognition with positive Vector Pressure and
signaled bullish bias. Several buy signals for ETF’s were generated on
that day. Since then, the Dow is down 2.7% and the NASDAQ is up 0.8%. The
bullish cycle originating in early March is positioning its expiration.
That does not mean a deep bearish cycle is about to unfold, with
meandering behavior as a possible alternative.
As stated last
week, the presidential pre-election year of 2007 was below average
(+10.5%) with the Dow gaining 6.4%. This was the smallest gain since
Reagan’s 2.3% gain in 1987, when the market endured sharp sell off in
October of that year. These seasonal standards appear to be losing their
influence due to the phenomenon of commonality.
Where is the
market headed in 2008, the presidential election year, which is the second
most bullish year on the four-year presidential election cycle? If
historical standards prevail, which is bullish, the market is setting up
nicely for a tremendous profit this year. All that is needed is a bottom
to this bear, as 2008 should finish up on the year, based on historical
standards and falling interest rates.
The
fundamental requirements are limited inflation and economic stabilization.
Fundamental influences will always be the primary force of directional
intensity. Three of the big four are okay for the time being; inflationary
threats have cooled but again threatening with a significant increase in
the CPI, as oil continues setting new highs. Interest rates remain low,
which is bullishly favorable. Deflation is not threatening. In addition to
a resurging CPI, another unfavorable condition for stock market
bullishness is the weak economy. The unknown is voodoo bookkeeping. The
market reacts to corporate earnings. If those earnings are perceived as
fiction, the market will move bearishly. Fictional financial
representations will enhance stock market bearishness. The capital market
system requires absolute honesty from the bookkeepers.
Keep your eye
on the daily stock market report.
Stop Loss
Management
The Mid-term
Indicant recommends a stop loss of 8% due to current bullish cycle.
Use a 10%
trailing stop loss or the yellow or green values you will find on the
tables for your longer-term hold positions. If your stock or fund is above
the bearish yellow curve and below the green curve, set your stop loss
equal to the greater of the yellow curve and the trailing stop loss. If
your stock or fund is above the green curve, set your stop loss at no less
the value of the green curve or 10% trailing, whichever is greater. If
your stock or fund is above the red curve and you bought at the Mid-term
Buy signal, you should use the 10% trailing stop loss.
If you are up
by triple digit amounts and enjoy your ownership of the stock or fund,
then use a 20% trailing stop loss or the slow moving blue curve price. If
you really enjoy holding the stock, keep a close eye on the management.
Dilettante managers have a way of worming into the business. Watch closely
for cronyism and lazy-hazy management dialog. Keep your eye on lavish
spending and excessive concerns about social issues. Those types are more
interested in burning your money for their pleasures, as opposed to making
you money. High performing companies remain focused on honoring the
investments made by their shareholders.
In a few
instances, you will see a hold signal for a stock or fund that is down
from its buy signal or below one of the above conditions for selling. If
you are more of a trader than an investor, feel free to buy stocks and
funds with those “bearish” attributes. They are configured for a possible
rebound, while at the same time, it is important to set the stop losses
mentioned in this report. Use the Quick-term Indicant as a guide in your
decision-making processes. If the stock price is falling in a Quick-term
Bear market, it is not advisable to buy.
Do not short
on stocks if they are up from an avoid signal. Stocks go up more often
than they go down. Stocks have a tendency to march to their own drumbeat
when rising. Some stocks rise and continue to rise in the most severe of
bear markets. Short selling opens up an opportunity for the snakes on Wall
Street to take everything you own. They can cause a stock to rise at their
whim and without any regard to fundamental reason. It usually does not
make sense to bet against the sweat and toil of hard-working people.
Stock and
Fund Update
Click the
following link to see sorted performance of stocks and funds with
hold/avoid signals. In the past, they were included in this email message
but now display them on the website. This is available to the public,
while the specific buy and sell transactions are limited to members only.
The below table is public information and not updated on a frequent basis.
http://www.indicant.net/Non-Members/Performance/Top-Bot.htm
Economic Conditions – Inflation, Currency, Interest Rates
Click the
above heading for a summary of hard economic indicators.
As stated the
past twenty-eight weeks, falling interest rates typically accompany stock
market bullish behavior. The primary exception to stock market bullishness
with declining interest rates is inflation or deflation.
As stated last
week, emotion offers only a burst of energy. Falling commodity prices four
weeks ago was emotionally-based, irrational market behavior. Commodity
prices bounced back to the north since then wiping out that emotional
elation. Unfortunately, major commodity indices continue hovering at near
peak values.
As stated the
past three weeks, interest rates are providing significant liquidity, but
when budgets are strapped for fuel, expect little economic stimulus.
The U.S.
Dollar continues in its embryonic cycle of strengthening. However, its
weakening trend has not been disrupted. A reversal in trend will damper
inflationary threats, but the extent remains unknown.
As stated the
past three weeks, 2009 is setting up to be a solid recession and bear
market. Historical standards support rising interest rates next year that
will encourage the bear. Increased political mumbo-jumbo of protectionism
enhances the probability of stock market calamity.
Fear
Metrics: Economics and Terrorism
Vanguard Gold and Precious Metals (VGPMX) - #19 is up 432.1% since the
April 13, 2001 buy signal. Its annualized growth since that buy signal is
59.9%. It moved to the north in 53 of the past 89-weeks. It has been
bullish in 24 of the last 40-weeks. This fund has been bullish in nine
weeks of the last 15-weeks. It was very bearish last week.
Fidelity Gold, Fund #28, is up 17.2% since its buy signal on September
7, 2007. It is annualized at 23.9% since that buy signal. This fund was
solidly bullish in nine of the past 15-weeks. It has been bullish the past
three weeks.
State Street Research Global #9, SSGRX, which is isolated in the
energy sector, is up 420.9% since the Mid-term Indicant signaled buy on
August 16, 2002. It is annualizing at 71.9%. This fund has been bullish in
six of the last 13-weeks. It was also bearish last week.
Vanguard Energy #18, VGENX, is up 293.4% (annualized at 56.3%) since
the Mid-term Indicant signaled buy on April 5, 2003.
Fidelity Energy Services #40, FSESX, is up 257.9% (annualized at
57.0%) since the Mid-term Indicant signaled buy on December 6, 2003.
Fidelity Energy #39, FSENX, is up 228.2% since the Mid-term Indicant
signaled buy on August 16, 2003. It is annualized at 47.1%.
These energy
related funds were bearish last week, following bullish behavior in the
previous two weeks.
Investors in
these funds are supporting a 1970’s type of market with high inflation and
high oil prices. As long as capitalism remains in vogue around the globe
and alternative sources of energy continue to lag exponentially increasing
demand, a long-term perspective on holding strategy is appropriate.
The SQI
(Consolidated Short-term and Quick-term Indicant) model signaled buy for
the
GLD-ETF#11 on August 3, 2005. It is up 109.6% since then. It is
annualized at 38.5%. This fund has been bullish in 28 of the past
39-weeks. It has been solidly bullish in nine of the last 14-weeks. It has
been bullish the past three weeks.
The SQI
signaled buy for
ETF#03 – Energy and Natural Resources on March 26, 2003. It is up
302.6% (annualized at 57.8%). This fund has been bearish in nine of the
past 19-weeks. It was bearish last week, following two weeks of dynamic
bullishness.
Mid-term
Indicant Positions – Ten U.S. Indices
There were no new bull signals and no
new bear signals.
The Mid-term
Indicant signaled bull on March 20, 2008. All ten major indices are up by
an average of 6.5% since then. They are annualizing at 37.0%. The most
bullish is the NASDAQ100 index. It is up 11.8%. The DOW30 is the weakest.
It is up just 1.0%. Do not be surprised if these major indices receive
bear signals in the next week or two.
The Mid-term Indicant Dow Jones Industrial Average performance is at
$37,471,443
That beats buy
and hold performance of $1,898,620 on a $10,000 investment in the Dow
stocks in 1900. The
MTI S&P500 is at $182,237. That beats buy and hold’s $134,776 on a
December 31, 1971 $10,000 investment. The
MTI-NASDAQ is at $226.880. That beats buy and hold’s $84,767 on an
October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy
and hold by 1,873.6%, 35.2%, and 167.7%, respectively, for these indices
as of this past week.
The Indicant’s
percentage advantage over buy and hold does not change during bull
signals. The advantage changes only during bear signals. That is because
the buy and hold model has to keep holding, while the MTI-RYS model avoids
bear markets. The only purpose of the Mid-term Indicant model is to avoid
the bear markets. That is why it beat buy and hold by nearly 2,000%
covering the past 100+ years.
Click here to go to the current Mid-term Indicant assessment of the ten
major indices.
Click here for a tour of the Mid-term Indicant for major market indices.
Mid-term
Indicant Positions - NASDAQ100 Stocks
Click here to see NASDAQ100 report card history.
Click here for
Mid-term Indicant Table of NASDAQ 100 Stocks.
Mid-term
Indicant Positions - Dow Jones 30 Industrial Stocks
Click here to see Dow 30 report card history.
Click here for
Mid-term Indicant - Table of Dow Jones Industrial Average Stocks.
Mid-term
Indicant Positions - Dow Jones 15 Utility Stocks
Click here to see Dow Utilities Report Card history.
Click here for
Mid-term Indicant - Dow Jones Utility Stocks Table.
Note from
April 5, 2008:
Enron will be removed from
Indicant tracking later this year. It was removed from the Dow Utility
Index several years ago. It is now a penny stock, but the Indicant kept
tracking it at the request of members. Its low cost nature is not friendly
to Mid-term Indicant assessment due to small price changes and
corresponding large percentage impact. The Mid-term Indicant is not
designed for penny stocks. Although recovery is always possible, this
stock has become too busy to track. This position will be re-accessed
based on member feedback as the year progresses.
Mid-term
Indicant Positions - Indicant Selected Stocks
Click here to see Indicant Select Stock Report Card history.
Click here for
Mid-term Indicant Table of Indicant Selected Stocks.
Mid-term
Indicant Positions - Mutual Funds
Click here to see Mutual Fund Report Card history.
The Mid-term
Indicant signaled buy for
ProFunds Ultra Short on January 18, 2008. It was down 32.3%
since the Mid-term Indicant signaled sell on September 15, 2006 until the
buy signal on January 18, 2008. Historical norms of market cyclicality
suggested the next buying opportunity for this fund should not occur until
2009.
The Mid-term
Indicant again signaled buy for this fund on April 12, 2008 and signaled
sell on May 2, 2008. Unfortunately, it was sold at a loss of approximately
11.9%. It may offer more opportunities later this year or early next year.
Click here for Mid-term Indicant Table of Mutual Funds
Always
remember never to keep more than 20% of your investment resources into a
single mutual fund. Sector investing in mutual funds is an extremely good
way to mix your investments.
Long Term
Indicant Positions - Dow Jones Industrial Average
The blue-chip
Long-term Indicant Bull signal was at 2895 for the DJIA in November 1991.
Keep in mind the Long-term Indicant generated only five bull/bear cycles
since 1920.
The Dow is up
331.1% (annualized at 19.9%) since the Long-term Indicant signaled bull
864-weeks ago. Economic data is the primary influence on the Long-term
Indicant. Recessions, deflation, inflation, and unreasonable interest
rates have not been strong enough to signal bear since that bull signal. 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: Seven of thirty;
offering bullish support; no longer solid with significant population
losses this week.
Quick-term
Yellow Bears/Threats: Five of
thirty. Non-bearish support, but dwindling.
Quick-term
Non-Bearishness: QTI
differential is bullish 3.0%. Weakening non-bearish support.
Short-term
Non-Bearishness:
Breakout/breakdown differential is bullish by 3.6%. Solid, but weakening,
bullish support.
Force
Vectors: Somewhat of a bearish
cycle is underway, but without robustness at this point.
Vector
Pressure: Twenty-seven in
bullish domains. They are holding steady but one was lost last Thursday.
This bull leg will not expire as long as Force Vectors remain above Vector
Pressure.
STI
Tangential Support: Three major
indices lost their support lines this past week. The other major indices
still retain theirs. It is generally bearish when large caps lead bearish
attributes, but important to not overreact.
Immediate
Tactics: Buy signals for
non-contrarian ETF’s will be limited with the bearish threat now underway.
Current
Quick-term Bias: Bullish bias
on April 29, 2008 no longer remains solid. This bull is panting now, but
not yet dead.
Overall
Market Status: Red bull
population decline is discerning, but positive Vector Pressure remains,
although its recent dominance is being challenged. The red bull population
is declining, but Vector Pressure remains in solid support of the bull.
Profit
Potential from Naked Options:
Expect increased volatility with tangential support losses.
Volume:
Lethargic, but consistent, with
seasonal behavior.
Quick-term/Short-term Indicant Stock Market Report Details
To view the STI-Tangential Protection for ten major indices, click here.
The Dow30 breeched tangential protection against bearish aggression
last Wednesday, 2008-05-21. Since then, the bear has been encouraged to
express its ambition. On Friday, May 23, 2008, the Dow65-Composites, and
the S&P500 also breeched tangential protection against aggressive bearish
behavior. The remaining major indices remain configured with that
protection, but barely.
Force Vectors
are moving south, favoring bearish ambition. However, Vector Pressure
remains in bullish domains. This offers some resistance to absolute
bearish dominance.
As stated
most of last week, when major indices breech tangential protection, the
underlying Quick-term Bull cycle is near extinction. That does not mean a
bearish cycle is about to follow, but the symmetrical expression of the
current cycle is disrupted. We are not complete in computing percentages,
but early analysis suggests the market will endure fluttering behavior one
the breech occurs. Volatility tends to be greater at the start and end of
such cycles.
You should
take a look at the S&P400, which was the most bullish index on this cycle.
It still has some room before breeching. The magnitude of each indices
bearish cycle are not the same. However, their directional bullish or
bearish intensity are always in harmony with the smaller caps falling
faster and deeper than the blue chips during bearish cycles and conversely
during bull cycles.
In this case,
the mid-caps was the leader of the current bullish cycle, which is
obviously expiring. The small caps lagged. The blue chips are taking it on
the nose first, which indicates an increased probability of a major
bearish cycle in the not too distant future. Keep in mind, though, that
volatile expressions should not be surprising.
As stated the
past several days, the bull is tiring, but a Short-term Bull nonetheless.
VIX bounced north off breakdown, suggesting no major cyclical shifts. This
favors a resumption of a bearish stock market in the not too distant
future.
The
Short-term Indicant signaled bear on May 20, 2008 for the Dow Jones
Industrial Average and yesterday, May 21, 2008, for the NASDAQ. The
Short-term Indicant is influenced, in part, by historical seasonality.
Normal
bearish seasonality is underway. It has gained in popularity over the past
few years and as a result, its performance level in predictability has
dropped due to the phenomenon of commonality. Normal seasonality has
deteriorated significantly since 2003. This model will eventually be
replaced by the STI Tangential Protection model which will remain esoteric
to mitigate the influences of the phenomenon of commonality.
Please read
on. Click here to see the
Short-term Indicant’s history.
Both
Indicant Volume Indicator’s remain lethargic. Today’s big board
volume was relatively high on bearish aggression the past two days.
However, it is nowhere near the March 11, 2008 bullish support volume.
Overall, support is mixed at this point.
Keep in mind
lethargic volume cycles are seasonal to daylight savings time, allowing
the market to moved wildly in either direction without substantive cause.
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 26-ETF’s. They are up by an average of 59.7%
(annualized at 42.7%) since their respective buy signals an average of
71.9-weeks ago. Although there were no sell signals, the SQI is avoiding
five-ETF’s at this time. They are down by an average of 7.2% since their
sell signals an average of 13.5-weeks ago.
The SQI model is the one that most of you will prefer for your trading
decisions. It generates fewer signals than the other two models and
represents consistencies in the Quick-term and Short-term outlooks for the
specific ETF’s. It also beats buy and hold on a regular basis, although
there is only nine 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 26-ETF’s. They are up an average
of 78.5% (annualized 49.0%) since the STI signaled, buy, an average of
82.5-weeks ago. Although there were no sell signals, there are five ETF’s
with avoid signals. They are down by an average of 7.6% since their sell
signals an average of 13.5-weeks ago.
The
Short-term Indicant is more active in buying/selling than the Consolidated
model. The Quick-term Indicant, which follows, is even more active.
Quick-term Report Card, Status, and Charts
There were no
buy signals and no sell signals. Although there were no buy signals, the
Quick-term Indicant is signaling hold for 26-ETF’s. They are up by an
average of 14.2% (annualized at 37.1%) since the QTI signaled buy an
average of 19.7-weeks ago. Although there were no sell signals, the
Quick-term Indicant is avoiding five-ETF’s. They are down by an average of
5.8% since their sell signals an average of 8.2-weeks ago.
Current
Strategy - The current bull leg
is maturing relative to recent similar legs. Upon expiration of this
Quick-term bull cycle, the Quick-term Indicant will most likely signal
sell for ETF’s when their red bull status is lost. That is not the normal
process, but since the QTI was late with the buy signals, it has to be
earlier with the sell signals to make up for that error. Although this
could encourage more fluttering, bearish risk are high enough to justify
this approach. The original intent from the March 11, 2008 buy signals was
to enjoy an approximate 8.0% gain with earlier than normal series of buy
signals. In hindsight that original designed intention was perfect.
Unfortunately, it was abandoned in early April, due in part, to the
Bear Stearns voodoo bookkeeping.
Recent buy
and sell signals have been stimulated to re-synchronize the normal model,
which originally identified the current bullish cycle as a bullish spurt,
but with wavering assessments of its sustainability. The current
Quick-term Bullish cycle originated in mid-March or about six weeks ahead
of bearish seasonality. Seasonal indices are one of several dimensions
with vacillating weighting factors. For example, in the great bull leg of
2003, bearish seasonality was ignored, while they accurately identified
the meandering bear markets of 2004, 2005, and early 2006. Based on normal
seasonality, the current bull leg was to have expired in late April or
early May leaving room for a six-week bullish spurt.
Recent
analyses suggest seasonal trading patterns have become too popular. When
one hears it on CNBC and other talk shows to the masses and or when one
reads about it in the Wall Street Journal and other popular publications,
rest assured the critical mass of the phenomenon of commonality has been
breeched. When that happens such models become dysfunctional. Other than
the heart and soul of bullish seasonality, which would require a larger
critical mass before dysfunction, normal seasonal dimensional factors are
being reduced and augmented by tangential support dimensions. The
tangential support dimensions will be esoteric for a long time; one would
have to gain access to computer files and have a thorough understanding of
Karmarkar algorithms, in addition to differential equations. That limits
the numbers of potential thieves to just a few and most of those types are
extremely honest.
Fundamentals
support a resumption of a bearish cycle before the heart and soul of
bullish seasonality later this year. This will occur when most
non-contrarian Red Bulls expire ahead of the next bear cycle. ETF#21 is
non-contrarian, but its bullish strength may forbid it from receiving a
sell signal. Tangential support will have to expire before this modified
strategy is implemented.
As of May
21, 2008, the Dow30’s tangential support expired. Several other major
indices expired on Friday, May 23, 2008. However, the other major indices
remain in tact, but they will eventually expire. When they expire, coupled
with a significant decrease in the number of non-contrarian non-Red-Bull
ETF’s, that will substantiate the next bearish cycle.
Conflicts
Between the Short-term and Quick-term Indicants
There are
only two conflicts, whereby the Short-term Indicant and the Quick-term
Indicant are in disagreement between hold and avoid status. The combined
Short/Quick Indicant models identify 78-hold signals and only 12-avoid
signals, providing a bullish bias. The bullish bias shift on August 15,
2006 expired on January 4, 2008, but a potential bullish bias shift was
born on March 11, 2008, which has now expired. After some jittery
behavior, a new bullish bias shift was born in mid-April 2008, but the
measurement of performance will commence on April 29, 2008 when several
ETF buy signals were generated.
The comment
about being 97% confident the market will be lower than early April’s
values at some future point; most likely in 2009, will be reinserted in
this daily stock market report as soon as the current bullish bias
expires. In the meantime, it is time to enjoy this bull leg until
expiration, which is nearing.
Quick-term Indicant Bull/Bear Health Report
Five of the
30-ETF’s are below their respective bearish yellow curves. That is
non-bearish, but the increase in yellow bears the past few days is
discerning. The average relative position of all thirty ETF’s is above
bearish yellow by 4.5%. This is the thirty-eighth consecutive trading day
with non-bearish support.
Seven ETF’s
are above their bullish red curves. All thirty ETF average positions are
below bullish red by 1.5%. This is no longer a bullish attribute. The Red
Bull population is down considerably since last Tuesday.
Six of the
seven Red Bulls are non-contrarian, which is remains bullish. It only
takes one non-contrarian red bull to stifle dynamic bearish aggression.
The QTI
differential is bullish by 3.0%. This is the twenty-sixth consecutive
trading day of bullish support.
Click the
heading link in this section to view the charts. As earlier stated, there
was no violent bullish response to Vector Pressure crossing into bullish
domains from yellow bear status. That supported Quick-term bullishness.
Short-term Indicant Bull/Bear Health Report for ETF’s
The above
heading is linked to the Short-term Indicant table. This paragraph is
repeated daily as a reminder of accurately interpreting the charts. By
clicking the charts on the table you can review potential contact with the
breakdown lines (bearish) and potential contact with breakout lines
(bullish). It is extremely bearish when several ETF’s are contacting their
respective breakdown lines. The breakdown lines are the yellow lines
(bearish). The breakout lines are the red ones (bullish). Close proximity
to breakout implies an increased probability of an actual breakout
occurring. It is certainly bullish and you will want to be in a hold
position for those few days a year when the breakout occurs. Conversely,
significant contact with yellow (breakdown) suggests “avoid” positions are
best.
None of the
thirty ETF’s are contacting their breakout lines, which is no longer
providing bullish support. After seven consecutive days of breakout
contact, bearish aggression last Thursday and Friday took its toll on this
former bullish attribute.
The average
distance from breakout contact is 12.7%. Double digit variances from
breakout contact for 97-consecutive trading-days has been non-bullish.
After nearing a single digit expression earlier this past week, which is
solidly bullish, the bear was obviously offended by this near excursion
with near-complete bullish dominance.
None of the
thirty ETF’s are contacting their breakdown lines, which is non-bearish.
The average
distance between the price and breakdown is 16.2%. This configuration is
providing non-bearish support, which has been the case since March 2003.
The
breakout/breakdown differential is bullish by 3.6%, which is supportive of
the bull, but as you notice this bullish support has been dwindling.
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.
Only five
Force Vectors are in bullish domains. They had been relatively stable in
bullish domains for several weeks but without conventional configurations.
The question regarding sustainability has now subsided but after several
weeks of sustainable bullishness, its beautiful symmetry is being
challenged by the bear. This Quick-term bull leg was obviously
sustainable, which was the interpretation on March 11, 2008, but
regrettably, without adequate conviction. Bearish yellow is now
inflecting, which suggests a tiring bull, but a bull nonetheless. Adding
to the woes of the bull is the Dow30’s expiring bullish tangential support
last Wednesday and other large cap expirations on Friday.
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 and one call option buy signal after Friday’s close
Although it
has not occurred much in the past few months, the market’s directional
behavior was perfect for last Tuesday’s call option buy signal with
Wednesday’s aggressive bearish behavior and a bullish bounce last
Thursday. It was disappointing the bull’s bounce was not strong, but that
should not be surprising for a “tiring bull.”
Twenty-seven
of the thirty ETF Vector Pressures
are in bullish domains, which for the thirty-sixth consecutive trading day
is offering bullish support. Be cautious, as this is a decrease by one
from yesterday. The population remains bullishly healthy, but not escaping
some wounds from yesterday’s aggression by the bear.
Make certain
you sell naked options when the Force Vectors shift direction or within
two days of the purchase, whichever occurs first. If you are unfamiliar
with this, take the
options tour.
Remember
options trading is risky. Never offer “market prices.” Always bid low in
hopes of an intraday contrarian movement to the underlying assumption of
directional behavior. Always place day-orders, only. That keeps the floor
folks out of your pocketbook. Do not despair if your order does not take.
There are plenty of opportunities throughout the course of the year.
Remember, stalking is the key to success here. Although not necessary for
stock market success, those of you who have a gambling instinct will enjoy
this. For those of you with a longer-term perspective, it does not hurt to
see what the short-term folks are thinking. The Indicant indicates both
perspectives.
Quick-term
and Short-term Indicant Summary
The bullish
bias shift that began on August 15, 2006 expired on January 4, 2008.
However, a new bullish bias was born on March 11, 2008. It is not a
thoroughbred, though. It is tainted with Enron-like misguidance from Bear
Stearns. The March 11 bullish bias shift expired on April 11, 2008. It was
expected to be just another short bullish spurt. The Quick-term Indicant
is incapable of ignoring red bulls even though the trend is south.
Consequently, a new bullish bias shift was started on April 29, 2008. It
is now being threatened by expiring tangential support.
Continue
avoid writing covered options due to expected volatility as the bull and
bear are nearing battle stages. Although red bull population has waned the
past two days, they usually do not collapse all at once. It is a battle.
ProFunds Ultra Short mutual fund moves inversely to the QQQQ by
exponential amounts. The Mid-term Indicant is avoiding this fund for the
time being. The next growth opportunity will most likely be in 2009.
The
Quick-term and Short-term Indicant tracks ETF#31, QID, which is the ETF
cousin to ProFunds Ultra Short. This ETF is relatively new and has not yet
developed enough data to formally track its outlook. It is excluded from
overall ETF statistics because it is purely contrarian. It is designed to
move bullishly during bear markets and bearishly during bull markets. This
exclusion is required for convergent/divergent monitoring.
The Indicant
signaled sell for
QID on April 29, 2008. It is down by 3.0% since that sell signal. You
can see its Force Vector is moving north, but from deep inside bearish
domains. Vector Pressure remains within bearish domains and with yellow
bear configurations. It will take a lot of Force Vector energy to shift
this back into a bullish configuration, but the attempt to do so could
invigorate the bear. So far, though, this is simply a solid yellow bear
with increasing interest to shift out of bearish influences. The interest
will not be linear.
Other
Contrarian Funds
ETF#03-Natural Resources - is up 52.5% (annualized at 32.8%) since
the Quick-term Indicant signaled buy on Oct 25, 2006. It is a solid red
bull although a little too hot right now. Its Force Vector shifted south
encouraging a cooling off period.
ETF#11-Gold and Precious Metals is up 109.6% since the Quick-term
Indicant signaled buy on August 3, 2005. It is annualizing at 38.5%. Its
Force Vector has moved north, reducing the chances of it falling to
yellow. However, this fund could fall to bearish yellow before the end of
this year, which could be an excellent buy point for those who are getting
in late. Unfortunately for those not already in hold position, it has
expressed significant bullish behavior most of this past week. Rest
assured if the CPI continues to rise, this fund will be holding and
leading the way.
ETF#14-Long Government is up 0.1% since the May 5, 2008 sell signal.
Its Force Vector and Vector Pressure remain inside bearish domains, but
attempting to make a move to the north. The configuration is weak, but it
could be a good buy for the more conservative investor in the event the
market turns bearish.
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:
