May 31, 2009 Indicant Weekly Stock Market Report

Volume 5, Issue 05 ISSN 1526 6516 © The Indicant Stock Market Report

This Week’s Report

The Wheels Will Wobble – General Motors Trabant Production Methods Now Started

Communist East Germany manufactured the “people’s car.” It was designed to be environmentally friendly, but the opposite occurred. It was repeatedly reported to be among the worse cars of all time by Time Magazine.

When the iron curtain fell, many East Germans drove the ones that would actually move to the West and then dumped them with the comment, “Ich bin Junk.”

http://www.time.com/time/specials/2007/article/0,28804,1658545_1658533_1658030,00.html

The great Shigeo Shingo, architect of the infamous Toyota Production System, described how political systems influence product quality. Of course, political systems are not the only influencing element. The production organization’s system has more direct influence, but difficult to achieve excellence without the competitive tensions that are not borne out of socialistic political systems.

In his world tour in the 1980’s, Shingo described automobile producers in Russia. He said they had the worse quality. He said, it was so bad, you could see the wheels wobbling as they left the factory floor and loaded onto the trucks. Government bureaucrats, who do not endure “competitive tension”, ran Russia’s automotive production. They, for the most part, gain their position and status from knowing someone. Such folks skills are limited to developing personal relationships for the sole purpose of advancing themselves, as opposed to producing products of value.

Shingo was amazed at how well the German automakers performed in the face of increasing socialism in their country. He indicated some unnecessary high cost for achieving their level of excellence, suggesting, very nicely, there is room for improvement.

It is well known the German language is friendly for scientific and engineering application. After all, they were developing rockets while most Americans were still traveling by horse and buggy and/or black Model T’s.

Germany produces a disproportionate number of creative scientists than the rest of the world. Nobel Prize winners in science offer proof. In spite of political systems than slow wealth building, some cultures have a propensity to offset such encumbrances with cultural superiority. The problem is that such cultures fall into stupid lines of masses of humanity with salutations to Adolph Hitler types. They may know how to design and produce outstanding physical objects, but sometimes have difficulty assessing the “big picture.”

Moving from East to West, Shingo visited Renault in France. He indicated they were a tad better than the Russians, but significantly worse than the Germans.

After visiting the U.S., he stated the U.S. political system is the best in the whole world. Keep in mind his presentation was in the late 1980’s, which coincided with rapidly expanding entrepreneurialism. Most of the talent in the U.S. tended to start their own companies, as opposed to joining the dilettante infested ranks of Fortune 500.

The U.S. automakers started losing big chunks of market share in the 1970’s to Japanese and German imports. So, if the U.S. has the best political system, how do U.S. automakers lose market share? Answer: Dilettante Managers.

When an organization couples dilettante management to politicians, products such as the Trabant manifest. Communist East Germany and Russia have already demonstrated this point. There is no argument against this point. The point is that quality of product deteriorates and with that the quality of life deteriorates with increased socialism. Politicians would argue this point, but if you asked them to measure the radius on a simple parking sprag, they could not do it. Even if you gave them calipers and a set of micrometers, they would not know what to do. So, if you hear them claiming argument against this assertion, disqualify their jabber, as they do not know what they are talking about.

General Motors and Chrysler will continue to lose market share. This dilemma will accelerate with each new loan. Loaning failures money is immoral. It will directly lead to a weakening of the U.S. culture and invite more corruption than what already exists.

Cars are important to contemporary societies. The use of motor vehicles spurs economic activity with great efficiency. One can cross Texas in a day in a motor powered vehicle, whereas it would take several days on horseback and several weeks walking. Speed and efficiency go hand in hand.

For example, McLeroy wrote in an Industry Week magazine article in the 1980’s that Toyota produced nine engines per day per employee on 300,000 square feet of manufacturing floor space. Ford produced only two engines per day per employee on 1,000,000 square feet. This was an “apples to apples” comparison. In essence, Toyota in 1985 was 450% more productive than Ford and used only one-third the capital. That is the difference between competent management and dilettante management.

Some blame the unions. There may be a small element of truth there, but to put it in proper perspective, one has to go back in history to FDR, who behaved like a militant union steward. All he wanted was the union votes, regardless of how destructive it was to wealth creation.

Gifford T. Brown ran the Ford Engine Plant in Cleveland, Ohio. Gifford was a student of Shingo. By the mid 1990’s Gifford had his plant running at a competitive productivity clip along the lines of the Toyota engine plants. Gifford was no dilettante, although surrounded by thousands of dilettantes at Ford. Ford was successful in the 1990’s and much of that success was directly attributable to the efforts of Gifford T. Brown. He embraced the Toyota Production System, while General Motors repelled it.

Not too many people know that about Ford. Ford’s CEO in the 1980’s, Donald Peterson, gets much credit for their success. He did contribute, as Taurus’ success can be directly related to Peterson’s influence. However, it was Gifford T. Brown’s efforts that led to Ford’s bottom line success in the 1990’s.

There is little doubt that Henry Ford was a great man. Many millionaires and the rise of the middle class manifested from this greatness. But not too many people know that is was Charles E. Sorenson that created the infamous Ford Production Line. People interested in history and who write history books seldom possess the skill sets to dig deep enough to find the true sources of the phenomena of wealth creation.

Gas powered cars are bad-mouthed by certain people. They argue that the internal combustion engine is one of the causative factors to global warming. The science of that argument must be incomplete, as scientists disagree on the hypothesis. Thus, listening to two scientist argue with different conclusions is a waste of time. That means the science is incomplete and thus just a mere theory, which has no more value than an opinion shared by Adolph Hitler or Al Gore. Until scientific conclusions are complete with the exacting proof of a gear and pinion powering a transmission, it is just noise and to be ignored.

But why ignore an argument that may be correct? Answer; it will be very expensive, if incorrect. Expense should dictate while theories should take a back seat. Reason: In the end, expense will win. It always has and always will. If expense takes the backseat to theory, poverty increases, hate grows, and chaos manifests.

Contemporary political leadership promotes alternative automobiles; lighter, more fuel efficiencies, etc. However, those political leaders should be ignored until they walk the talk. As long as they fly fancy planes and drive huge automobiles, they lack integrity from their position. Listening to those who lack integrity will lead the masses to their own peril. The integrity question is always easy to spot; if there is a gap between the talk and the action, one has no integrity.

Henry Ford was not a politician. The Ford Production System led to the obsolescence of the horse and buggy. No government employee or elected official has led to the development of a successful commercial product. All such successes derive from capitalists. A capitalist provided every thing you have that you enjoy. Abstractly speaking, all those soldiers who killed those who did not want you to have freedom and possession is another group of great people. One could argue there are only two groups of great people; capitalists and soldiers on the side of righteousness. That does not mean that other people are bad; just missing the element of greatness, unless of course, they are Babe Ruth or Henry Aaron.

FDR catered to the U.A.W. in the 1930’s for one and only one reason. They represented more votes than the executive staffs of Henry Ford, Alfred P Sloan, and Walter P. Chrysler. Politicians never decide on the basis of right or wrong; only the most votes. It is occurring again and with a bit too much gusto.

A democracy is okay when the constituents are strong and accurate in their thinking. When the constituents become stupid, weak, and lazy, the democracy will fail. That is because the strong and accurate over a period become too disgusted with the expansiveness of laziness and the resulting reduction in their quality of life. Since they are strong and not so stupid, they figure out a way to overthrow obstructive elements that confront their livelihoods. History continues to point this out, but control freaks are born every day, along with enough followers to promote the freaks.

The problem with this method is the length of time to correct itself. It can take generations. From time to time, the overthrow, will result in a charismatic leader, who may be evil, such as Adolph Hitler. So with each overthrow, delays to righteousness manifest. So far, righteousness has been a victor more often than not, but barely. Generations have lived in poverty since the beginning, as the process to righteousness is slow; just as the process to decay is slow. Detection of either the wrong or right direction is usually spotted by the masses long after the momentum of directional intensity is unstoppable on the immediate horizon.

General Motors and Chrysler should go out of business and immediately. They have been producing low product quality for years. It is going to get worse at an accelerating pace. Dilettante management is not being replaced by the normal process of capitalistic cleansing. That flies in the face of righteousness. Disallowing their failure prevents others with more competence from entering the industry.

The wheels will wobble.

In spite of all that, the Near-term Bull remains in tact. Bullish directional intensity remains underway.

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 one buy signal and no sell signals. There have been 540-sell signals since October 26, 2007 and 39-buy signals since October 31, 2008.

In addition to the buy signal, the Mid-term Indicant is signaling hold for only 21 of the 344-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 124.6%. That annualizes to 65.7%. The Mid-term Indicant has been signaling hold for these 21-stocks and funds for an average of 98.6-weeks.

Although there were no sell signals, the Mid-term Indicant is avoiding 322-stocks and funds of 344- tracked by the Indicant. The avoided stocks and funds are down an average of 27.5% since the Mid-term Indicant signaled sell an average of 51.6-weeks ago.

Due to this week’s lone buy signal, the Mid-term Indicant is no longer avoiding all 100-Mutual Funds. ETF#28-Fidelity American Gold crossed above bullish red and by default, a buy signal manifested. The remaining 99-Mid-term Indicant funds are down an average of 25.6% since their sell signals an average of 50.0-weeks ago. The Short-term Indicant’s 31-ETF’s trade more frequently and are updated in the daily stock market report.

One year ago, on May 30, 2008, the Mid-term Indicant was holding 213-stocks and funds out of the 345 tracked for an average of 126.7-weeks. They were up by an average of 148.1% (annualized at 60.8%). There were 131-avoided stocks and funds at that time. The avoided stocks and funds were down an average of 16.5% since their respective sell signals an average of 32.2-weeks earlier.

The Mid-term Indicant was signaling hold for 313-stocks and funds of the 345-tracked two years ago on Jun 1, 2007. They were up by an average of 126.4% (annualized at 64.8%) since their respective buy signals an average of 101.5-weeks earlier. The Mid-term Indicant was avoiding 29-stocks and funds at that time. They were down an average of 13.2% since their respective sell signals an average of 26.7-weeks earlier.

There were 232-stocks and funds with hold signals on Jun 2, 2006 since their buy signals an average of 105.3-weeks earlier. They were up by an average of 147.8% (annualized at 73.0%). There were 109-avoided stocks and funds at that time. They were down by an average of 4.3% from their respective sell signals an average of 14.1-weeks earlier.

On Jun 3, 2005, the Mid-term Indicant was signaling hold for 207-stocks and funds out of 320-tracked. They were up by an average of 98.8% (annualized at 57.4%) since their buy signals an average of 89.5-weeks earlier. The Mid-term Indicant was avoiding 112-stocks and funds at that time. They were down by an average of 26.0% since their sell signals an average of 57.8-weeks earlier.

Five years ago, on May 29, 2004, there were 229-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 79.7% (annualized at 73.7%) since their respective buy signals an average of 56.3-weeks earlier. There were 50-avoided stocks and funds then. They were down an average of 12.6% since their respective sell signals an average of 18.4-weeks earlier.

On May 30, 2003, there were 286-stocks and funds with hold signals from the listing of 296-tracked by the Mid-term Indicant at that time. They were up an average of 35.9%, annualizing at 108.1%, since the buy signals an average of 17.3-weeks earlier. There were nine avoided stocks and funds then. They were down by an average of 35.9% since their sell signals an average of 26.5-weeks earlier. There were 119-buy signals on Mar 22, 2003, which was the beginning of a nice Mid-term Bull Leg that lasted through that year. Most continued to hold through the meandering bear of 2004 and early 2005. Several did not receive sell signals until late 2007 and early 2008 since the March 2003 buy signals.

On May 31, 2002, there were 157-stocks and funds with hold signals. They were up 27.6%, annualizing at 50.4%. The 123-avoided stocks and funds were down an average of 21.4% since sell signals an average of 10.8-weeks earlier.

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

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

Link to this week’s buy and sell signals.

As repeatedly stated, do not hold more than 10% of your investment resources in a single stock and do not hold more than 20% of your investment resources into a single mutual fund. Also, never fall in love with a stock or fund. Only love the value of your portfolio. Never love its contents. Management stupidity can wreak havoc on any stock or fund at any time. Socio-economic interference can devastate your holdings from time to time. Right now, the pendulum is swinging to the left. That is not good for stock equity related investing.

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

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

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

Mutual Fund #28-Fidelity American Gold received a buy signal since it crossed above bullish red. This fund has historically disappointed when compared to its Vanguard cousin. However, its recent rise in price has been dramatic and thus the only mutual fund eclipsing bullish red. The Mid-term Indicant cannot avoid any fund that is above its bullish red curve. Fundamentally, gold should perform well in the coming months and years. This bullish outlook is based on its guardianship from inflation and/or uncertainty. Its price rises and falls based on human emotion and myth. Although not substantive, as water is more valuable than gold, one cannot argue with archetypical success. The future is uncertain and thus psychological problems persist within the investment community. With that, it should remain bullish.

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

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

As stated the past few weeks, the current Near-term Indicant’s Bull is no longer solid. Force Vectors penetrated bearish domains for the first time since early March 2009 during the week of

May 11, 2009. Since then the market has been meandering with a mild bearish bias. This is common ahead of shifts in directional intensity, which at this time can go either way. Although fundamentals are still lacking to support bullish sustainability, technical indicators remain in support of the Near-term Bull cycle now underway. There is more about that later in this report.

As stated several days ago, the current Near-term Bull is tiring. Vector Pressure is at or near a maximum value. Force Vector is not being as responsive to bullish expressions, as it was earlier in the cycle (early March). However, until you see Near-term sell signals and bear signals, the Near-term bull remains in tact.

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

http://www.indicant.net/Members/Updates/STI-Mkts/STI-10-Indices/STI08.htm

The Quick/Short-term Indicant Stock Market Report

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

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

The Indicant Stock Market Report’s Secular Market Blend

The Dow is up 16.7% since its secular weekly low on October 9, 2002. The NASDAQ is up 53.9% and the S&P500 is up 18.3% since then. The small cap index, S&P600, is up 55.1% since October 9, 2002. All of the major indices were at new lows on the same week in 2002, which is a common attribute for bottoming.

The Dow is down 40.0% since its last weekly closing peak on Oct 9, 2007. The NASDAQ is down 37.9% since its last peak on Oct 31, 2007. The S&P600-small cap index is down 40.5% since its last closing peak on Jul 19, 2007. Bull market expirations are not as obviating with simultaneous peaking, like bear markets are with simultaneous bottoming among the major indices.

Interestingly, most of the major indices last cyclical bottom occurred on March 9, 2009. That includes the four major Dow Indices, the NASDAQ and all of the major S&P Indices. The only exception is the NASDAQ100. It encountered its bottom on November 20, 2008. The resilience of the current Near-term Bull cycle suggests it may indeed have enough sustainability to permanently mark a major cyclical bottom. In other words, the next Near-term Bear cycle may not fall below the March 9, 2009 bottoming.

There is one major point here. If the Near-term Indicant is signaling avoid, all short-term traders should be avoiding, in spite of the potential optimism in the prior paragraph. The longer-term trader should continue patiently awaiting buying clearance from the Mid-term Indicant. Older and strategic longer-term traders are still way up from the 1991 bull signal by the Long-term Indicant.

The NASDAQ is down 64.9% since its last weekly secular peak on March 9, 2000. The S&P500 is down 39.8% since its similar secular peak on March 23, 2000. The Dow is down by 27.5% since January 13, 2000 when it peaked from the 1990’s roaring bull. As stated the past several years in this report, do not be surprised at the NASDAQ equaling its March 9, 2000 high until after 2025.

As socialism increases, the NASDAQ may not hit its 2000 peak until after 2050. Even that depends on resurgence in entrepreneurialism and related capitalism. Politicians screwed up the economy and the majority apparently believes their proposed fixes. They are now imposing more constraints on business expansion and thus the continuation of wealth destruction should not be surprising.

The good news is the politicians in Washington D.C. have reduced their power by weakening their already weak constituents. International competitiveness will continue reducing their power and influence. With that, capitalists around the world will continue providing products of appeal, while politicians continue exuding irrelevant commentary. Let’s just hope that products of appeal is not weaponry, alone.

The Dow is down 3.1% so far this year. The NASDAQ is up 12.5% so far this year. Keep in mind the post election year is the most bearish and has lost money since 1832. So far, the stock market is conforming to this historical standard, but the NASDAQ is currently arguing with that standard.

The NASDAQ year-to-date performance was bearish by 11.9% through this week in 2001. Keep in mind the NASDAQ finished 2001 down by 21.1%., which was congruent with standards of post-election-year-bearishness.

The NASDAQ was down by 16.7% through this weekend in 2002. Some of you recall the dynamic bear market in 2002, where the NASDAQ finished that year down by 31.5%. The bear cycle found bottom in October 2002, which is consistent with the mid-term year’s historical standards.

The NASDAQ YTD 2003 performance was up by 17.9%. It finished up in that solidly bullish year by 50.0%, which was consistent with historical pre-election year results. It was down on this weekend in 2004 by 0.8% and finished up by 8.6% for that year, which was congruent with election year bullishness, although shy of magnitude standards.  It was down by 4.6% in 2005’s post election year, which maintained congruency to the historical standards of losses. Many of you recall that 2004 and 2005 were meandering bear markets. 2005 finished up by a mere 1.4%, which was an excellent year based on post election year historical standards of bearishness. In 2006, it was up 0.2% on this weekend and finished that year with a 9.5%-gain, which again maintained congruency of historical bullishness for a mid-term election year. It was up by 6.5% at this time in 2007 and finished that year up by 9.8%, which was consistent with pre-election year bullishness. It was down 5.4% at this time last year. The NASDAQ finished down by 40.5% in 2008. That was contrarian performance to historical election year bullishness and the most bearish presidential election year since related records from 1832.

So far, this presidential post election year is performing consistently with historical standards. The capital markets understand socio-political influences are predominant in the first year of most incoming administrations and thus generally non-bullish. Politicians offer nothing pertinent to the quality of life, including health or wealth. They “talk about it” but just one RN offers more toward health and one good entrepreneur offers more toward wealth than the collection of all politicians, kings, queens, and dictators since the beginning of time. Those “control freaks” only talk and rob folks of their wealth and health.

Keep your eye on the daily stock market report.

Stop Loss Management

The Mid-term Indicant recommends a trailing stop loss of 8% due to the Near-term, Quick-term, and Short-term Indicant models continuing with bull/hold signals.

The Mid-term Indicant for major indices is supporting with a bull signal while this model is much more conservative in signaling buy for funds and stocks and thus the reason for continued avoidance for most of the stocks and funds.

Most of the longer-term holdings of stocks and funds continue with “avoid” signals, but a few are still holding. The risk of continued holding, even for the likes of Apple, remains relaxed.

If you feel you will need cash within the next two years, you should consider selling all stocks and funds. (The Mid-term Indicant is not signaling hold for any mutual funds, including those that short the market at this time). The ETF’s are signaled on the Near-term, Quick-term, and Short-term Indicant and are updated daily. These shorter-term models participate in bullish spurts and rallies, while the Mid-term Indicant is focused on fundamentals and longer-term technical data, which remains bearish.

If your stock or fund is above the bearish yellow curve and below the green curve, set your stop loss equal to the greater of the yellow curve and the trailing stop loss. If your stock or fund is above the green curve, set your stop loss at no less the value of the green curve or 8% trailing, whichever is greater. If your stock or fund is above the red curve and you bought at the Mid-term Buy signal, you should use the 10% trailing stop loss.

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

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

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

Economic Conditions – Inflation, Currency, Interest Rates

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

Short-term rates are bouncing at what appears to be a cyclical minimum. That is bullish for the stock market. Unfortunately, that is not the only variable influencing the stock market’s directional intensity.

Mortgage rates rose significantly last week, but most likely an aberration. Such a movement is asynchronous to underlying market forces.

You can see some early warning signs of impending inflation. Oil prices continue to rise. OPEC instituted supply reductions, as expected this past week. This time around, there is little likelihood of cheating members in the OPEC organization.

Demand for fuel will not subside with increasing socialism, but the rate of consumption will be muted with a decline in capitalistic opportunities. The socialistic elite will continue living in a life of comfort, while they regulate discomfort for the masses. It is amazing how history continues to repeat. It always concludes with the removal of the descendents of the social elite from power and sometimes not very kindly.

Research and development for alternative fuel sources will slow down during this socialistic phase of humanity. That will be inflationary. The capitalistic system will elevate the economy; nothing else will. If socialism existed to the extent of today in 1900, we would still be traveling by foot or horse and buggy. Maybe that is good; maybe bad, but it is a fact!

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

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

Some governments may figure it out and offer a business friendly climate. Capitalistic organizations will flourish in such countries and with that, U.S. politicians will lose power, which is the way it should always be and setup to be by the great Thomas Jefferson.

As stated the past several weeks, the idea of capitalism is to borrow or capitalize and expanding the supply of money (wealth) through productive effort. That is not what is going on right now. Wealth creation will continue to slow and maybe even capsize. With that, there will be a reduction of the quality of life, which typically leads to war. The Koreans are preparing, as they live in a life of misery and are incapable of resolving their misery internally. Therefore, there is an increasing propensity to spread that misery more broadly. This is one of those human nature things that tends to lead to a successful spreading of misery. From that, destruction expands exponentially.

However, as the world shrinks and asset ownership is not isolated geographically, world wars will diminish as an option to overcome displeasure. It will indeed be difficult for political leaders to order the bombing of assets in countries owned by their constituents. Doing so will threaten the livelihood of such any political leader. That is a good thing. It will be interesting to see what replaces world war. Displeasure by the masses is certainly not an ever-lasting option. In the end, though, those with the most talent at physical object creation are always the winners.

The problem with isolated spots around the world such as North Korea, Afghanistan, etc. is the omission of hard assets. There is no financial reason to prohibit their cultural annihilation. So, it will probably happen.

The U.S. dollar continues enduring resistance in strengthening its bullish cycle. The dollar’s significance as an international currency is now under attack by the Chinese, who will eventually become the economic world power if they accelerate their capitalistic causes. The United States has been weakened severely by its “tyranny by the majority system” and excessive focus on socio-economic programs that have absolutely nothing to do with cultural strength and economic wealth. The printing presses and “politburo style politics” in the U.S. will reduce the dollar to just another world currency.

The U.S. economy is perceived to have the greatest chance of returning to robustness when compared to other countries. As stated the past eighteen weeks, the exception to this is China, who may or may not need U.S. consumption to bolster their economy. A weakening dollar against the Yuan may enjoy a longer-term labor relationship with the West. However, the stock market is focused only on the next six to nine months. China’s government can undo this bullish outlook for China in seconds, so keep your eye on it (the government). Their political leaders are no different from ours; that is they have the same “control freak” psychological problems as those of the west.

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

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

As stated 33-weeks ago, once the euphoria of the socialistic methods are complete, rest assured the bear market will continue and with gusto. This is not technical. This is fundamental. You will see that prognosis continuing in spite of recent bullish expressions.

As stated 29-weeks ago, “probabilities remain high that any bullish cycle will be followed by a deep bear market in 2009. If taxes are raised on the highly productive and capital gains, do not be surprised at a 1,000 Dow by 2010.”

As stated 25-weeks ago, this bear has teeth, is hungry, and is nowhere near expiration. Cyclical spurts of a bullish configuration will occur from time to time, but the trend should remain bearish throughout this year and into 2010. Bullish spurts will occur from time to time. As we learned from the November 28, 2008 – January 21, 2009 bullish spurt, profit potential from them is limited and in some cases disappoint rather rapidly. The attempted spurt on Feb 6, 2009 faded quickly and expired on Feb 19, 2009. The short-term trader will trade on those spurts, which is occurring now, while mid-to-long-term investor should remain on the sidelines. Finally, the current spurt underway has potential for sustainability through April and as you saw, it did that. So far, it has performed well. The Near-term Indicant is remains the primary focal point. As expected a few weeks ago the Near-term Bull remains bullish, but tiring. Vector Pressure is starting to drift southward.

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 162.2% from its April 13, 2001 buy signal until the Mid-term Indicant sell signal on October 3, 2008. It is down 16.1% since that sell signal. It has been bearish in eleven of the last 21-weeks. It has been bullish in six of the last seven weeks.

Fidelity Gold, Fund #28 received a buy signal this past weekend. New charts are being developed, but its price eclipsed bullish red last week and thus the buy signal.

Vanguard Energy #18, VGENX, was up 144.9% from since the Mid-term Indicant buy signal April 5, 2003. It received a sell signal on October 3, 2008. It is down 4.5% since that sell signal. It has been bullish in nine of the last 11-weeks.

Fidelity Energy Services #40, FSESX, was up 107.2% since the Mid-term Indicant signaled buy on December 6, 2003. It received a sell signal on October 3, 2008. It is down 18.7% since that sell signal. It has been bullish in eleven of the last 12-weeks.

State Street Research Global #9, SSGRX, was up 174.2% from its August 16, 2002 buy signal to the Mid-term Indicant sell on October 3, 2008. It is down 36.3% since that sell signal and enjoyed bullishness the past few weeks.

Fidelity Energy #39, FSENX, was up 81.2% since the Mid-term Indicant signaled buy on August 16, 2003 and the sell signal on October 3, 2008. It is down 3.3% since that sell signal. It was solidly bullish last week.

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

The Near-term Indicant signaled buy for ETF#03 – Energy and Natural Resources on April 3, 2009. It is up 12.3% since then, annualizing at 79.1%. The Quick-term Indicant continues to signal hold from the May 4, 2009 buy signal. It is up 5.1% since then. It was up 242.4% (annualized at 44.8%) since its previous buy signal on March 26, 2003 until the September 2008 sell signal.

The Quick-term Indicant signaled buy for the GLD-ETF#11 on December 11, 2008. It is up 19.3% since that buy signal, annualizing at 41.1%. It gained 81.4% from its August 3, 2005 buy signal until the September 8, 2008 sell signal. Its annualized gain during that hold period amounted to 26.0%.  The Near-term Indicant signaled buy on April 24, 2009. It is up 7.2% since the Near-term buy signal, annualizing at 74.3%.

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 April 3, 2009 for the ten major indices. The ten major indices are up 7.5% since then, annualizing at 391.5%. This “reluctant bull signal” was due to the strongly configuring near-term and quick-term bullish indicators. Do not be surprised at a bear signal once this short-term bullish cycle completes.

Click this sentence to view a summary of their performance.

The Mid-term Indicant Dow Jones Industrial Average performance is at $27,040,319.

That beats buy and hold performance of $1,293,219 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $131,712. That beats buy and hold’s $90,032 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $178,071. That beats buy and hold’s $61,523 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 1990.9%, 46.3%, and 189.4%, 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 Mid-term Indicant 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 approximately 2,000% covering the past 100+ years. It will not be surprising to see the Mid-term Indicant outperform buy and hold by over 3,000% before the end of this decade, as the bear will gain momentum.

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

Mid-term Indicant Positions - NASDAQ100 Stocks

Click here to see NASDAQ100 report card history.

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

Mid-term Indicant Positions - Dow Jones 30 Industrial Stocks

Click here to see Dow 30 report card history.

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

Mid-term Indicant Positions - Dow Jones 15 Utility Stocks

Click here to see Dow Utilities Report Card history.

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

Mid-term Indicant Positions - Indicant Selected Stocks  

Click here to see Indicant Select Stock Report Card history.

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

Mid-term Indicant Positions - Mutual Funds

Click here to see Mutual Fund Report Card history.

The Mid-term Indicant signaled sell for ProFunds Ultra Short on April 3, 2009. It is down 19.0% since then. It is too risky to hold with the Near-term and threatening Quick-term bull cycle. Although this is classically a post-election-year hold, current technical indicators are advising to avoid this fund until the Near-term bullish cycle expires.

Click here for Mid-term Indicant Table of Mutual Funds

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

Long Term Indicant Positions - Dow Jones Industrial Average

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

The Dow is up 193.7% (annualized at 11.0%) since the Long-term Indicant signaled bull 917-weeks ago. Economic data is the primary influence on the Long-term Indicant. Recessions, deflation, inflation, and unreasonable interest rates have not been strong enough to signal bear since that bull signal. Even with today’s economy and stock market position, the 1991 investor is still up triple digit amounts, which remains above average performance when considering long-term planning. However, the Long-term Indicant is getting very close to signaling bear. A link to the Long-term Indicant is below. You will notice long-term projections are bearish.

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

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

Short-term Indicant Stock Market Report - Summary

The Near-term Bull is tiring, but without a strong bearish threat. Increased volatility should not be surprising over the next few days/weeks. The rising Near-term Green curve offers non-bearish resistance. Since it is well above buy signal values, it is a good idea to set stop losses equal to or a point below green prices. Green will continue to rise so periodic adjustments should be applied to lock in your short-term profits.

Configurations haven been supporting meandering behavior the past few weeks. Declining Vector Pressure is discerning to the Near-term Bull. Force Vectors inability to eclipse Vector Pressure is shifting mildly in favor of bearish bias. The Near-term Blue curve will obviate any potential shifts from bullish to bearish directional bias. The bias continues to be bullish, though.

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

The Near-term Indicant signaled bull for the eleven major indices on Mar 31, 2009 and bear for Contrarian VIX on the same day. The 11-major indices are up by an average of 15.0% since that bull signal, annualizing at 92.3%. The VIX is down 34.1% since its bear signal 8.4-weeks ago.

The Quick-term Indicant is signaling bull for ten major indices. They are up by an average of 1.6% since their respective bull signals an average of 4.4-weeks ago. The DJU is the lone non-contrarian bear. Including contrarian VIX and non-contrarian DJU, those two indices are down by an average of 24.5% since the QTI signaled bear an average of 25.6-weeks ago.

By default the Quick-term Indicant has to signal bull when prices cross above bullish red curve. Buying at that point will win 82% of the time. However, during bear market rallies, such crossings incite a bearish response. That is the other 18% of the time. So far, the response from the bear has not been silent. It is a bit too early to tell if the Near-term Bull and Quick-term Bull are about to expire, but do not be surprised if they do in the next few days/weeks. Current configurations are symmetrical to normal bear market behavior.

On-going attribute watch for major indices:

-Near-term Directional Intensity Unanimity-All eleven major indices received a bull signal on March 31, 2009. They all bounced north of their respective Near-term Bullish Blue Curves in response to bearish aggression on Mar 27 and Mar 30. That was “near-term” bullish synergy with breadth, following the initial surge in early March.

QTI Red Bull Status-Quick-term bias, favoring the bear, continues being threatened with several recent new Quick-term Bull signals. Ten are Red Bulls. Dynamic bearish behavior cannot occur as long as there is at least one Quick-term Red Bull. Unanimity remains lacking as the Dow Utilities has not yet joined this threshold. Another problem confronting this “baby bull” is that most of the indices are now below bullish red. This is typical of bear market rallies, when bullish red curve acts as a ceiling to rising stock prices. However, as long as the Near-term Bull remains in tact, the Quick-term Indicant cannot signal bear. Bullish behavior the past two days has elevated several indices back above bullish red. Continue reading.

QTI Yellow Bear Status-Quick-term bias favors bear, but weakening, with the recent surge in Quick-term Bull signals. Quick-term yellow bears offer no resistance to falling stock prices, but such resistance is now manifesting. This bearish resistance is softening and threatening this baby bull along the same lines as classical bear market rally. Contrarian VIX fell prey to the bull on April 16, 2009 as it received a Quick-term Bear Signal. It is a passive bear, poised for a bullish recoil when the Near-term Bull expires. For those of you who delight in bearish stock market behavior, patience is the key at this point. Stalk related options. This Near-term Bull may have a few more days of life before its expiration. Although languishing, the Near-term Bull is demonstrating obstinate behavior toward bearish aggressions.

-NTI Blue Bull Direction-This indicator is moving north, favoring the Near-term Bull, but being confronted by the bear. Note May 20, 2009-Wed-It has been recently acting as a ceiling to bullish behavior, which is non-bullish. Note May 27, 2009-Tue-Aggressive bullish behavior did not eclipse the NTI bullish blue curve. Note May 28-Thu-Aggressive bullish behavior again did not eclipse bullish blue. This configuration remains non-bullish.

-NTI Green Bear Direction – Moving north; non-bearish offering protection against dynamic and sustainable bearish aggression. Note May 21, 2009-Thu-Watch the Dow Utilities, which nearing contact with NTI Bearish Green curve. Note May 22, 2009-Fri-Utilities was mildly bullish while the other major indices were mildly bearish. This suggests market synchronization with all indices before shifting out of its stagnating inflection point to another cycle of directional intensity. Note May 26, 2009-Tue-Dynamic bullish behavior was supported by a bounce off of the NTI green curve, which remains non-bearish. May 27, 2009-Wed-NTI Green curve is flattening out, suggesting increasing passivity by the bull.

-STI Force Vector Position- Note May 19, 2009-Tue-No longer in bullish domains and thus allowing bearish interest to manifest. Most are below Vector Pressure, which is encouragement to the bear. Note-May 26, 2009-Tue-Struggling to eclipse Vector Pressure. This is somewhat discerning to the Near-term Bull.

-STI Force Vector Direction – Note May 15, 2009-Fri -Bearishly mature, leaving open an opportunity for a bullish response. You saw that the past two Mondays, but struggling with follow-through. Note May 22, 2009-Fri-Although now moving bullishly, Vector Pressure may act as a ceiling. This will be obviating in the next two to three days. Note May 26, 2009-Tue-Bullishly mature. Note May 27, 2009-Wed-Force Vectors having difficulty eclipsing Vector Pressure; that is non-bullish. Note May 28, 2009-Thu-Aggressive bullish behavior last Tuesday and today have done nothing to offset this concern regarding expiration of the Near-term Bull.

-Vector Pressure Position- Short-term bearish bias concluded on Mar 24, 2009. None are in bearish domains, except contrarian VIX. As stated for the past several days, many are near a peak, though, suggesting this Near-term Bull is nearing respective peak prices in this near-term cycle. Keep in mind this “peaking” can last for several days. Note May 21, 2009-Thu-It appears the Near-term cycle is past peak prices in this cycle, which is non-bullish. Note-May 29, 2009-Fri-The bull has meandered since mid May, but has responded violently to each violent bearish expression. This Near-term Bull has some tenacity.

-Vector Pressure Direction –Note-May 26, 2009-Tue-Shifting south and thus non-bullish.

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

-Reverse Tangential Bearish Detection -  Although the current Near-term Bull has not yet expired, the following constructions are now pertinent.

>ETF#02-SPY will be at or below $82.35 at some future point.

>ETF#05-XLF will be at or below $9.50 at some future point.

>ETF#06-EWJ will be at or below $8.50 at some future point.

>ETF#07-DIA will be at or below $77.50 at some future point.

>ETF#08-EFA will be at or below $39.35 at some future point.

>ETF#09-XLK will be at or below $15.35 at some future point.

>ETF#15-IVV will be at or below $81.50 at some future point.

>ETF#16-IWO will be at or below $46.75 at some future point.

>ETF#18-MDY will be at or below $90.60 at some future point.

>ETF#19-XLB will be at or below $22.40 at some future point.

>ETF#22-IWF will be at or below $35.80 at some future point.

>ETF#23-IWD will be at or below $41.80 at some future point.

>ETF#24-IWN will be at or below $42.30 at some future point.

>ETF#25-DVY will be at or below $33.50 at some future point.

>ETF#26-IJR will be at or below $37.30 at some future point.

>ETF#29-XLY will be at or below $19.80 at some future point.

>ETF#30-XLI will be at or below $19.70 at some future point.

The above timing remains unknown. Sometimes it takes months and in one case years for reverse tangential bearish detection to manifest. A recent example occurred with ETF#31-QID. As you can see, reverse tangential originated in September 2008 and it was not until April 2009 that the bearish target manifested.

Although some would argue this is not an excellent forecast, which has merit, because the timing is not known. However, this has been back tested since 1970 with the major indices (not ETF’s). It has demonstrated 100% success. The problem is that manifestations of this forecast can elapse months/years and after triple digit gains, such as what you saw in the brief QID example. There is something to be said, though, that one can know excellent buying opportunities are not in the past. Also, it should be noted that 100% success in the past does not equate to 100% success in the future. On the other hand, the odds are pretty good!

Economic and corporate earnings fundamentals suggest it will not be long before this bearish manifestation will occur. However, forecasting is a waste of time. The Near-term Indicant will keep you informed of probabilities of bearish manifestations on the immediate horizon or years from now.

Overall configurations suggest this is indicating the bear will remain influential on stock market directional intensity in spite of the Near-term Bull cycle now underway. You should notice the Dow Transports and Dow Utilities are nearing a bear signal, but they are even demonstrating obstinate behavior toward bearish aggressions. Utilities bull cycle has been weak since the beginning.

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

The tour is still being developed, but most of you are now familiar with the Near-term bull/bear cycles as well as the tangential protections and reverse tangential bearish detectors. Those latter two will be explained as they evolve. The persistent Near-term Bull continues delaying construction.

The NYSE and NASDAQ Indicant Volume Indicators  are solidly lethargic; mostly due to approaching summer. This should enhance volatility as the market transforms from indecisiveness to the next cycle of directional intensity. Last Tuesday’s volume was seasonally adjusted as healthy. That coupled with dynamic bullish behavior suggests more delays before the next Near-term Bear cycle. Last Wednesday’s volume was equally seasonally healthy. That coupled with bearish aggression, Tuesday’s bullish aggression, and yesterday’s bullish aggression is a clear illustration of prior expectations in volatility. Overall, though, the stock market’s meandering bearish behavior is not supported by robust volume, which offers mild hope for bullish continuation on a near-term basis. The problem with summer volume is that it is always lethargic and that leads to increased volatility.

Short-term Report Card, Status, and Charts

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

Although there were no buy signals, the Near-term Indicant is signaling hold for 28-ETF’s. They are up by an average of 19.6%, annualizing at 120.8% since their buy signals an average of 8.5-weeks ago. Although there were no sell signals, the NTI is avoiding three ETF’s. They are down by an average of 9.9% since their sell signals an average of 9.9-weeks ago.

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

Although there were no buy signals, the Quick-term Indicant is signaling hold for 25-ETF’s. They are up an average of 8.1% since their buy signals an average of 5.8-weeks ago. Those with hold signals are annualizing at 71.8%. Six ETF’s are down by an average of 20.7% since their sell signals an average of 23.3-weeks ago.

The recent Quick-term Red Bulls significantly reduces the threat of dynamic bearish behavior. That attribute has not been enjoyed with the current breadth since early 2008. As long as there are Quick-term Red Bulls, one does not have to worry about bearish dominance.

You should notice that Vector Pressure continues drifting south, which is non bullish. Prices are vacillating below the Near-term Bullish Blue curve with a few exceptions, which is also non bullish. The Near-term Bull cycle is being challenged by the bear. However, until you see the bullish blue curves collapse, the Near-term Bull remains in tact. Near-term sell signals will occur when prices fall below green and Force Vectors fall into bearish domains. Green is above buy prices which guarantees profitability.

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

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

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

Current Strategy-Short-term Indicant- May 29, 2009-Fri-Same as most of this week. May 28, 2009-Thu-Bullish aggression should not be surprising. See prior comments this week and last Friday. The bull and bear are waging battle to dominate over the other. The Near-term Indicant still supports the bull, but the bull is pretty tired right now. May 27, 2009-Wed-Bearish aggression should not have been surprising to you. See last Friday’s comments, which remain pestering to the Near-term Bull currently underway. May 26, 2009-Tue-In spite of bullish behavior, last Friday’s comments hold true. May 22, 2009-Fri-Near-term attributes are configuring non-bullishly. Although the Near-term Bull remains in tact, there is little likelihood of it delivering any more dynamic bullish moves. Low volume during the summer months can invite increased volatility and delay obviations of any renewed cycles of directional intensity.

Contrarian Funds

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

The Near-term and Quick-term Indicant signaled sell for QID  on March 26, 2009. It is down 24.3% since then. It is positioning inversely to QQQQ, but other QID attributes remain too passive to consider a buy signal at this time. A Near-term Indicant buy signal is getting close though. It is poised for strong bullish behavior upon the expiration of the current Near-term bull.

ETF#03-Natural Resources   - The Quick-term Indicant signaled buy on May 4, 2009. It is up by 5.1% since that buy signal, annualizing at 74.1%.

Force Vector jumped north on Apr 3 and the Near-term Indicant signaled buy. It is up 12.3% since the Near-term Indicant signaled buy on April 3, 2009, annualizing at 79.1%. Set your stop loss at green price minus 50-cents or so. Green should rise and you need to reset every now and then.

ETF#11-Gold and Precious Metals  is up 19.3% since the QTI signaled buy on December 11, 2008. Annualized growth is at 41.1%. The model’s intent is to beat buy and hold. Bearish yellow is a good price to set stop losses for a longer-term hold position.

The Near-term Indicant signaled buy on Apr 24, 2009. It is up 7.2% since then, annualizing at 74.3%. This is now solidifying in bullish position. Fundamentally, it is one of the few ETF’s that could continue to increase in price in the face of an overall bearish stock market.

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

ETF#14-Long Government  is down 3.0% since the Near-term Indicant signaled sell on Apr 7, 2009. Although it’s Vector Pressure remains positioned to support bullish behavior, and very much so, its Force Vector remains in bearish domains and its price remains below bullish blue. Its bullish blue curve remains in collapsed condition. That is bearish on a near-term basis.

This fund is down 8.3% since the Quick-term Indicant signaled sell on May 1, 2009, when it fell below bearish yellow.

Fundamentally, this fund may not be viewed as a safety net with trillions of paper money not backed by productive efforts or possessions of raw materials.

Major ETF Events Today

For the second consecutive day. strong bullish behavior was not accompanied with bullishly supporting Force Vectors. Vector Pressure continues drifting south, again suggesting peak prices for most ETF’s are behind us in this cycle.

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

Other links:

Short-term Indicant for DJIA and NASDAQ

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

Short-term Indicant Table for the NASDAQ Composite Index

Indicant Volume Indicator

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

Divergence versus Convergence

Bullish convergence occurred again last week. Eleven of the past twelve weeks have enjoyed combined bullish convergence/divergence. This remains solidly bullish, but also welcoming the bear to offset overloading bias. Fundamentals suggest the anticipated economic improvements may not manifest.

Obviations of sustainable bullishness do not occur until there are four consecutive weeks of bullish convergence. That occurred nine weeks ago. We now have a Near-term bullish cycle underway that has sustainability; as least through the month of April. It is not surprising this bull even persisted through the month of May. However, the second half of May has been encumbered with meandering behavior with a mild bearish bias. The key attribute to monitor is the Near-term Indicant’s bullish blue curve. As long as it does not collapse, the bull persists.

In spite of the newly forming bullish cycle, the bear market has not yet expired. Depending on political landscape, this bear could last for decades. FDR-like economic meddling will continue to erode economic wealth. Those responsible are either 1) stupid, 2) do not care, or 3) have motives that typically lead to war.

Indicant Conclusion

The Mid-term Indicant signaled buy for one fund, MF#28, Fidelity’s American Gold. This was a technical buy as it crossed above its bullish red curve.

The remaining 99-funds tracked by the Mid-term Indicant are down by an average of 25.6% since their sell signals an average of 50.0-weeks ago. Although the Quick-term and Short-term Indicant models are holding most of the ETF’s, the Mid-term Indicant will not signal buy for most of the Mutual Funds until they remove themselves from bearish domains. Current configurations suggest it could be a year or longer for that to occur. Although the Near-term Bull has been impressive, it has not shifted the funds to a buy position; other than MF#28.

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

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

In spite of gold prices softening the past few weeks, the sharp increase in Gold and other precious metals prior to that softening, suggests inflation and/or fear elements are predominant themes. Neither of those phenomena will offer the bull much incentive to manifest in the stock market, while these “psychological” investments should do well.

Keep up with the daily stock market report as the Quick-term attributes can shift quickly.

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

The daily updates are on the following link.

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

Hyperlinks

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

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

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

Happy Investing,

www.indicant.net

05/31/09

May 24, 2009 Indicant Weekly Stock Market Report

Volume 5, Issue 04 ISSN 1526 6516 © The Indicant Stock Market Report

This Week’s Report

Economic Overhead

At the risk of sounding offensive, economic overhead is comprised of people who do not work in the manufacturing, extraction, or agricultural industries. Look at your friends, neighbors, and family members. If they are not employed at a manufacturing plant, farm, or extracting minerals from the earth, they are economic overhead. In other words, they do not create wealth. Those who work in manufacturing, agricultural, and extraction support the livelihoods of economic overhead folks.

Most economists will not support this premise. They are members of the economic overhead group. It sounds negative and has a propensity to diminish their importance. Although many provide a good service, no wealth creation results from their services. However, competent economists add efficiencies to those who act on accurate information they provide. So, there are positives with some economists, but it is reiterated that they do not create wealth and thus are among the economic overhead group.

Economic overhead people are not bad. Yours truly is a member of economic overhead. The Indicant does not create wealth. It protects your wealth and adds to it at the expense of non-members, but without those in manufacturing, agriculture, and extraction, there would be no wealth to protect or shift.

Without manufacturing, agriculture, or extraction we would all exist without food, shelter, clothing, I-Pods, Blackberries, cars, houses, etc. We would merely live among the animals and be like them; either eating them or being eaten by them.

Manufacturers, agriculturists, and extractors learn some of their efficiencies from financial reports. The three prime cost elements in financial summaries are; material, labor, and overhead. The old timers refer to overhead as burden. Some organizations today have two separate accounts; burden and overhead.

Direct labor is the smallest unit of cost, typically under 10% of the total. Material and overhead represent the other 90% plus. Direct labor as a percentage of total material, labor, and overhead continues to decline with increasing automation. That contributes to rising productivity, which is the sole source of increases in the quality of life for all humankind.

Any person in a manufacturing organization that is not directly and physically engaged in the transformation of materials to products is in the overhead account. This includes managers, engineering, accountants, attorneys, secretaries, clerks, etc. Only those folks who physically touch the materials in the transformation to product are direct labor. The only moneymaking group of people in any manufacturing organization is direct labor. The overhead folks contribute by providing services to support the manufacturing operations. So, overhead services are a necessity to maintain organizational efficiency.

There are instances where certain overhead groups are not considered as a necessity. For example, Henry Ford fired the accounting staff once. Edsel Ford rehired them, but in Henry’s view, they were “excessive overhead.”

It is very easy to determine the efficiency, utilization, and productivity of direct labor, as well as the hard assets in manufacturing, extraction, and agriculture. There are time-tested scientific methods that very accurately determine productivity for direct labor and hard assets. Overhead measurements of productivity, on the other hand, are subjective. It is very difficult to assess how productive an accountant or engineer is on any given day. That contrasts with direct labor, where productivity can be known by the minute.

It is the omission of scientific development in measuring overhead productivity that facilitates cronyism, politicians, and dilettantes. Counter-productive organizational members are primarily determined through subjective means and, quite often, it boils down to personality conflicts, as opposed to scientific observation. Over the years, for example, General Motors has fallen prey to cronyism. The counter-productive employees continued to swell in numbers and achieved a pinnacle, much like leeches killing their host. Organizations can endure only a finite number of leech members. These leeches are referred to as dilettantes, imposters, phonies, etc. Direct labor employees can spot them more accurately and quickly than the average board member of large corporations.

Teachers are members of the overhead group. However, they add a valuable service to society. Without teachers, I doubt I could write this where at least 51% of the readers can understand it. There are two types of teachers; good and bad. There is no in between. As long as human kind continues expanding knowledge, then one can conclude at least 51% of the teachers are good. So, the teacher’s membership in the economic overhead group is not a bad thing.

Lawyers also can provide a valuable service from the overhead group. Their primary purpose is  ensure justice. People are either good or bad; honest or dishonest. There is no in between. There are many ways of resolving conflict, but the court systems facilitate a humanistic method of doing so. That is a common method of punishing the bad/dishonest and having them repay the good/honest. Mafia like members of society’s overhead group use alternate methods of dealing with conflict. Some regular folks use alternate methods as well.

It is difficult to claim that doctors and nurses are in the overhead group. But they would not be effective without extractors obtaining materials for manufacturers of medical product and agriculturists feeding them. In return, doctors and nurses help keep the wealth producers healthy so they continue creating wealth. In return, doctors and nurses garnish some wealth for themselves, even though they did not create any wealth.

The stock market is the best method of weeding incompetents from organizations. When incompetent management looses money, the stock market punishes and shareholders revolt. Directors, when honest, represent those revolting shareholders and fire the management. In some cases, directors are cronies to the management. When that happens, shareholders deserve their lost wealth. Cronyism is Fortune 500’s biggest problem and that is why their life cycle is increasingly shorter.

Most economic overhead folks follow the money. Dilettantes spend hours upon hours writing their resumes to get comfortable jobs with a Fortune 500 company and other large organizations. Most stretch their accomplishments on their resumes. They have no real ambition. They simply want to accumulate wealth where wealth is already being generated. It is much easier to do it that way, as opposed to starting a company from scratch and using one’s own wealth to finance it.  That is why small caps outperform larger caps companies. Regardless of what is on one’s resume at small caps, job performance is the only thing that counts. General Motors is cluttered with massive amounts of management stupidity from the resume writers of the economic overhead group. Overhead productivity is not known at those larger companies. It is doomed to fail.

The government is the lowest performing organization there is. Resume content is the sole source of gaining employment. Once employed at the government, job performance is a non-issue. There is not too much in the way of job pressure and tension. Thus, low performance is guaranteed. Tension and pressure are the primary prelude to performance. Without it, there is no positive performance and with that a continuing devolvement of the government’s effectiveness.

Even if there was positive governmental performance, it is pure economic overhead. Government creates no wealth. If the government inserts ten trillion dollars to the economy, no wealth was created. If such monies are directed to other pure economic overhead organizations, such as banks and insurance organizations, negative wealth will result. The money is taken from wealth creators and provided to non-wealth creators (economic overhead). That is inflationary, which is a wealth robber.

Actors, celebrities, radio talk show hosts, TV talk show hosts, etc. are also pure economic overhead. They are no different from politicians. Well, actors are a bit worse. They are from the land of fake and fiction and should always be ignored. Politicians run a close second and not too far behind are talk show folks, both TV and radio. That is because they do not create economic wealth. They are not members of the economic sector that manufactures, extracts, or produce agriculture.

The world is getting noisier. Most of the noise is nonsensical, irrelevant, and contributes nothing to wealth creation. With that, the populace listens to that noise. Most get confused.

To eliminate confusion, here is a simple idea.

The Dow Jones would zoom past 100,000 very quickly if the following four tax brackets were employed.

1. Direct labor in extraction, manufacturing, and agriculture would pay no income tax. They are the only direct wealth creators on the planet.

2. Overhead employees at organizations participating in extraction, manufacturing, and agriculture would pay 10% income tax. They contribute directly to increased productivity.

3. Organizations offering services to manufacturing, agriculture, and extraction would pay 20% income tax; teachers, doctors, nurses, and any lawyers not filing lawsuits against companies that manufacture, extract, or produce agricultural products.

4. Everyone else pays 33.3%.

There would be no deductions. The above would be off the top line. In other words, the income tax forms would be just two lines; 1) income receipts and 2) a percentage of those receipts for tax payment amounts.

With the above, manufacturing, extraction, and agricultural businesses would sprout very quickly. Wealth and increased competition would drive costs down and quality up, while creating new products of appeal at a rate faster than ever seen before. Even the poor would become rich.

Most economists and others in the economic overhead group would not support this. Those bent on socialistic causes would never be listened to. Being ignored would not be appealing to them. Most lawyers would not support, as many would become unemployed due to the simplicity of the tax code.

Of course, the above will not happen. It would quickly reduce too many people who are seemingly important, but not really, to nothingness. As wealth continues to erode, maybe enough will straighten out their pitiful thinking. The source of positive adjustment is often derived from extreme diversity.

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

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

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

The Mid-term Indicant generated no buy signals and no sell signals. There have been 540-sell signals since October 26, 2007 and 38-buy signals since October 31, 2008.

Although there were no buy signals, the Mid-term Indicant is signaling hold for only 21 of the 344-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 117.0%. That annualizes to 62.1%. The Mid-term Indicant has been signaling hold for these 21-stocks and funds for an average of 98.0-weeks.

Although there were no sell signals, the Mid-term Indicant is avoiding 323-stocks and funds of 344- tracked by the Indicant. The avoided stocks and funds are down an average of 31.5% since the Mid-term Indicant signaled sell an average of 50.6-weeks ago.

The Mid-term Indicant is avoiding all 100-Mutual Funds tracked by the Indicant, excluding the 31-ETF tracked daily. The Mid-term Indicant funds are down an average of 27.9% since their sell signals an average of 48.9-weeks ago. The 31-ETF’s trade more frequently and are updated in the daily stock market report.

One year ago, on May 23, 2008, the Mid-term Indicant was holding 213-stocks and funds out of the 345 tracked for an average of 125.7-weeks. They were up by an average of 143.5% (annualized at 59.4%). There were 130-avoided stocks and funds at that time. The avoided stocks and funds were down an average of 18.5% since their respective sell signals an average of 31.5-weeks earlier.

The Mid-term Indicant was signaling hold for 313-stocks and funds of the 345-tracked two years ago on May 25, 2007. They were up by an average of 122.3% (annualized at 63.3%) since their respective buy signals an average of 100.5-weeks earlier. The Mid-term Indicant was avoiding 31-stocks and funds at that time. They were down an average of 13.6% since their respective sell signals an average of 26.9-weeks earlier.

There were 234-stocks and funds with hold signals on May 26, 2006 since their buy signals an average of 104.9-weeks earlier. They were up by an average of 142.5% (annualized at 70.6%). There were 100-avoided stocks and funds at that time. They were down by an average of 5.6% from their respective sell signals an average of 15.9-weeks earlier.

On May 27, 2005, the Mid-term Indicant was signaling hold for 208-stocks and funds out of 320-tracked. They were up by an average of 98.6% (annualized at 58.0%) since their buy signals an average of 88.4-weeks earlier. The Mid-term Indicant was avoiding 112-stocks and funds at that time. They were down by an average of 25.8% since their sell signals an average of 56.8-weeks earlier.

Five years ago, on May 22, 2004, there were 219-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 74.7% (annualized at 67.5%) since their respective buy signals an average of 57.6-weeks earlier. There were 65-avoided stocks and funds then. They were down an average of 10.9% since their respective sell signals an average of 12.3-weeks earlier.

On May 23, 2003, there were 275-stocks and funds with hold signals from the listing of 296-tracked by the Mid-term Indicant at that time. They were up an average of 36.3%, annualizing at 111.9%, since the buy signals an average of 16.8-weeks earlier. There were eight avoided stocks and funds then. They were down by an average of 26.0% since their sell signals an average of 26.4-weeks earlier. There were 119-buy signals on Mar 22, 2003, which was the beginning of a nice Mid-term Bull Leg that lasted through that year. Most continued to hold through the meandering bear of 2004 and early 2005. Several did not receive sell signals until late 2007 and early 2008 since the March 2003 buy signals.

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

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

Link to this week’s buy and sell signals.

As repeatedly stated, do not hold more than 10% of your investment resources in a single stock and do not hold more than 20% of your investment resources into a single mutual fund. Also, never fall in love with a stock or fund. Only love the value of your portfolio. Never love its contents. Management stupidity can wreak havoc on any stock or fund at any time. Socio-economic interference can devastate your holdings from time to time. Right now, the pendulum is swinging to the left. That is not good for stock equity related investing.

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

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

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

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

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

As stated the past few weeks, the current Near-term Indicant’s Bull is no longer solid. Force Vectors penetrated bearish domains for the first time since early March 2009 during the week of

May 11, 2009.

As stated several days ago, the current Near-term Bull is tiring. Vector Pressure is at or near a maximum value. Force Vector is not being as responsive to bullish expressions, as it was earlier in the cycle (early March). However, until you see Near-term sell signals and bear signals, the Near-term bull remains in tact.

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

http://www.indicant.net/Members/Updates/STI-Mkts/STI-10-Indices/STI08.htm

The Quick/Short-term Indicant Stock Market Report

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

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

The Indicant Stock Market Report’s Secular Market Blend

The Dow is up 13.6% since its secular weekly low on October 9, 2002. The NASDAQ is up 51.9% and the S&P500 is up 14.2% since then. The small cap index, S&P600, is up 48.3% since October 9, 2002. All of the major indices were at new lows on the same week in 2002, which is a common attribute for bottoming.

The Dow is down 41.6% since its last weekly closing peak on Oct 9, 2007. The NASDAQ is down 40.8% since its last peak on Oct 31, 2007. The S&P600-small cap index is down 43.1% since its last closing peak on Jul 19, 2007. Bull market expirations are not as obviating with simultaneous peaking, like bear markets are with simultaneous bottoming among the major indices.

The NASDAQ is down 66.5% since its last weekly secular peak on March 9, 2000. The S&P500 is down 41.9% since its similar secular peak on March 23, 2000. The Dow is down by 29.4% since January 13, 2000 when it peaked from the 1990’s roaring bull. As stated the past several years in this report, do not be surprised at the NASDAQ equaling its March 9, 2000 high until after 2025.

As socialism increases, the NASDAQ may not hit its 2000 peak until after 2050. Even that depends on resurgence in entrepreneurialism and related capitalism. Politicians screwed up the economy and the majority apparently believes their proposed fixes. They are now imposing more constraints on business expansion and thus the continuation of wealth destruction should not be surprising.

The good news is the politicians in Washington D.C. have reduced their power by weakening their already weak constituents. International competitiveness will continue reducing their power and influence. With that, capitalists around the world will continue providing products of appeal, while politicians continue exuding irrelevant commentary. Let’s just hope that products of appeal is not weaponry, alone.

The Dow is down 5.7% so far this year. The NASDAQ is up 7.3% so far this year. Keep in mind the post election year is the most bearish and has lost money since 1832. So far, the stock market is conforming to this historical standard, but the NASDAQ is currently arguing with that standard.

The NASDAQ year-to-date performance was bearish by 6.3% through this week in 2001. Keep in mind the NASDAQ finished 2001 down by 21.1%., which was congruent with standards of post-election-year-bearishness.

The NASDAQ was down by 14.2% through this weekend in 2002. Some of you recall the dynamic bear market in 2002, where the NASDAQ finished that year down by 31.5%. The bear cycle found bottom in October 2002, which is consistent with the mid-term year’s historical standards.

The NASDAQ YTD 2003 performance was up by 12.9%. It finished up in that solidly bullish year by 50.0%, which was consistent with historical pre-election year results. It was down on this weekend in 2004 by 4.6% and finished up by 8.6% for that year, which was congruent with election year bullishness although shy of magnitude standards.  It was down by 5.9% in 2005’s post election year, which maintained congruency to the historical standards of losses. Many of you recall that 2004 and 2005 were meandering bear markets. 2005 finished up by a mere 1.4%, which was an excellent year based on post election year historical standards. In 2006, it was down 1.5% on this weekend and finished that year with a 9.5%-gain, which again maintained congruency of historical bullishness for a mid-term election year. It was up by 7.2% at this time in 2007 and finished the year up by 9.8%, which was consistent with pre-election year bullishness. It was down 7.1% at this time last year. The NASDAQ finished down by 40.5% in 2008. That was contrarian performance to historical election year bullishness and the most bearish presidential election year since related records from 1832.

So far, this presidential post election year is performing consistently with historical standards. The capital markets understand socio-political influences are predominant in the first year of most incoming administrations and thus generally non-bullish. Politicians offer nothing pertinent to the quality of life, including health or wealth. They “talk about it” but just one RN offers more toward health and one good entrepreneur offers more toward wealth than the collection of all politicians, kings, queens, and dictators since the beginning of time. Those “control freaks” only talk and rob folks of their wealth and health.

Keep your eye on the daily stock market report.

Stop Loss Management

The Mid-term Indicant recommends a trailing stop loss of 8% due to the Near-term, Quick-term, and Short-term Indicant models continuing with bull/hold signals.

The Mid-term Indicant for major indices is supporting with a bull signal while this model is much more conservative in signaling buy for funds and stocks and thus the reason for continued avoidance for most of the stocks and funds.

Most of the longer-term holdings of stocks and funds continue with “avoid” signals, but a few are still holding. The risk of continued holding, even for the likes of Apple, remains relaxed.

If you feel you will need cash within the next two years, you should consider selling all stocks and funds. (The Mid-term Indicant is not signaling hold for any mutual funds, including those that short the market at this time). The ETF’s are signaled on the Near-term, Quick-term, and Short-term Indicant and are updated daily. These shorter-term models participate in bullish spurts and rallies, while the Mid-term Indicant is focused on fundamentals and longer-term technical data, which remains bearish.

If your stock or fund is above the bearish yellow curve and below the green curve, set your stop loss equal to the greater of the yellow curve and the trailing stop loss. If your stock or fund is above the green curve, set your stop loss at no less the value of the green curve or 8% trailing, whichever is greater. If your stock or fund is above the red curve and you bought at the Mid-term Buy signal, you should use the 10% trailing stop loss.

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

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

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

Economic Conditions – Inflation, Currency, Interest Rates

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

Short-term rates are bouncing at what appears to be a cyclical minimum. That is bullish for the stock market. Unfortunately, that is not the only variable influencing the stock market’s directional intensity.

You can see some early warning signs of impending inflation. Oil prices continue to rise. OPEC is expected to institute supply reductions. Demand for fuel will not subside with increasing socialism, but the rate of consumption will be muted with a decline in capitalistic opportunities. Research and development for alternative fuel sources will slow down during this socialistic phase of humanity. That will be inflationary. The capitalistic system will elevate the economy; nothing else will. If socialism existed to the extent of today in 1900, we would still be traveling by foot or horse and buggy.

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

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

As stated the past several weeks, the idea of capitalism is to borrow or capitalize and expanding the supply of money (wealth) through productive effort. That is not what is going on right now. Wealth creation will continue to slow and maybe even capsize. With that, there will be a reduction of the quality of life, which typically leads to war.

However, as the world shrinks and asset ownership is not isolated geographically, world wars will diminish as an option to overcome displeasure. It will indeed be difficult for political leaders to order the bombing of assets in countries owned by their constituents. Doing so will threaten the livelihood of such a political leader. That is a good thing. It will be interesting to see what replaces world war. Displeasure by the masses is certainly not an ever-lasting option. In the end, though, those with the most talent at physical object creation are always the winners.

The U.S. dollar continues enduring resistance in strengthening its bullish cycle. The dollar’s significance as an international currency is now under attack by the Chinese, who will eventually become the economic world power if they accelerate their capitalistic causes. The United States has been weakened severely by its “tyranny by the majority system” and excessive focus on socio-economic programs that have absolutely nothing to do with cultural strength and economic wealth. The printing presses and “politburo style politics” in the U.S. will reduce the dollar to just another world currency.

The U.S. economy is perceived to have the greatest chance of returning to robustness when compared to other countries. As stated the past seventeen weeks, the exception to this is China, who may or may not need U.S. consumption to bolster their economy. A weakening dollar against the Yuan may enjoy a longer-term labor relationship with the West. However, the stock market is focused only on the next six to nine months. China’s government can undo this bullish outlook for China in seconds, so keep your eye on it (the government). Their political leaders are no different from ours; that is they have the same “control freak” psychological problems as those of the west.

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

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

As stated 32-weeks ago, once the euphoria of the socialistic methods are complete, rest assured the bear market will continue and with gusto. This is not technical. This is fundamental. You will see that prognosis continuing in spite of recent bullish expressions.

As stated 28-weeks ago, “probabilities remain high that any bullish cycle will be followed by a deep bear market in 2009. If taxes are raised on the highly productive and capital gains, do not be surprised at a 1,000 Dow by 2010.”

As stated 24-weeks ago, this bear has teeth, is hungry, and is nowhere near expiration. Cyclical spurts of a bullish configuration will occur from time to time, but the trend should remain bearish throughout this year and into 2010. Bullish spurts will occur from time to time. As we learned from the November 28, 2008 – January 21, 2009 bullish spurt, profit potential from them is limited and in some cases disappoint rather rapidly. The attempted spurt on Feb 6, 2009 faded quickly and expired on Feb 19, 2009. The short-term trader will trade on those spurts, which is occurring now, while mid-to-long-term investor should remain on the sidelines. Finally, the current spurt underway has potential for sustainability through April and as you saw, it did that. So far, it has performed well. April has now concluded and the Near-term Indicant is now the primary focal point. As of this writing, it is still bullish, but tiring. Vector Pressure is starting to drift southward.

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 162.2% from its April 13, 2001 buy signal until the Mid-term Indicant sell signal on October 3, 2008. It is down 22.0% since that sell signal. It has been bearish in eleven of the last 20-weeks. It has been bullish in five of the last six weeks.

Fidelity Gold, Fund #28 is up 3.1% since the Midterm Indicant signaled sell on August 1, 2008. It was solidly bullish last week.

Vanguard Energy #18, VGENX, was up 144.9% from since the Mid-term Indicant buy signal April 5, 2003. It received a sell signal on October 3, 2008. It is down 10.4% since that sell signal. It has been bullish in eight of the last ten weeks. It was solidly bullish last week.

Fidelity Energy Services #40, FSESX, was up 107.2% since the Mid-term Indicant signaled buy on December 6, 2003. It received a sell signal on October 3, 2008. It is down 25.9% since that sell signal. It has been bullish in ten of the last eleven weeks.

State Street Research Global #9, SSGRX, was up 174.2% from its August 16, 2002 buy signal to the Mid-term Indicant sell on October 3, 2008. It is down 41.6% since that sell signal and enjoyed bullishness the past few weeks.

Fidelity Energy #39, FSENX, was up 81.2% since the Mid-term Indicant signaled buy on August 16, 2003 and the sell signal on October 3, 2008. It is down 11.3% since that sell signal. It was solidly bullish last week.

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

The Near-term Indicant signaled buy for ETF#03 – Energy and Natural Resources on April 3, 2009. It is up 5.6% since then, annualizing at 41.3%. The Quick-term Indicant continues to signal hold from the May 4, 2009 buy signal. It is down 1.1% since then. It was up 242.4% (annualized at 44.8%) since its previous buy signal on March 26, 2003 until the September 2008 sell signal.

The Quick-term Indicant signaled buy for the GLD-ETF#11 on December 11, 2008. It is up 16.7% since that buy signal, annualizing at 37.2%. It gained 81.4% from its August 3, 2005 buy signal until the September 8, 2008 sell signal. Its annualized gain during that hold period amounted to 26.0%.  The Near-term Indicant signaled buy on April 24, 2009. It is up 4.9% since the Near-term buy signal, annualizing at 37.2%.

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

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

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

The Mid-term Indicant signaled bull on April 3, 2009 for the ten major indices. The ten major indices are up 8.9% since then, annualizing at 464.1%. This “reluctant bull signal” was due to the strongly configuring near-term and quick-term bullish indicators. Do not be surprised at a bear signal once this short-term bullish cycle completes.

Click this sentence to view a summary of their performance.

The Mid-term Indicant Dow Jones Industrial Average performance is at $26,330,904.

That beats buy and hold performance of $1,259,291 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $127,107. That beats buy and hold’s $86,884 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $169,809. That beats buy and hold’s $58,669 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 1990.9%, 46.3%, and 189.4%, 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 Mid-term Indicant 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 approximately 2,000% covering the past 100+ years. It will not be surprising to see the Mid-term Indicant outperform buy and hold by over 3,000% before the end of this decade, as the bear will gain momentum.

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

Mid-term Indicant Positions - NASDAQ100 Stocks

Click here to see NASDAQ100 report card history.

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

Mid-term Indicant Positions - Dow Jones 30 Industrial Stocks

Click here to see Dow 30 report card history.

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

Mid-term Indicant Positions - Dow Jones 15 Utility Stocks

Click here to see Dow Utilities Report Card history.

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

Mid-term Indicant Positions - Indicant Selected Stocks  

Click here to see Indicant Select Stock Report Card history.

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

Mid-term Indicant Positions - Mutual Funds

Click here to see Mutual Fund Report Card history.

The Mid-term Indicant signaled sell for ProFunds Ultra Short on April 3, 2009. It is down 9.5% since then. It is too risky to hold with the Near-term and threatening Quick-term bull cycle. Although this is classically a post-election-year hold, current technical indicators are advising to avoid this fund until the Near-term bullish cycle expires.

Click here for Mid-term Indicant Table of Mutual Funds

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

Long Term Indicant Positions - Dow Jones Industrial Average

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

The Dow is up 185.9% (annualized at 10.6%) since the Long-term Indicant signaled bull 916-weeks ago. Economic data is the primary influence on the Long-term Indicant. Recessions, deflation, inflation, and unreasonable interest rates have not been strong enough to signal bear since that bull signal. Even with today’s economy and stock market position, the 1991 investor is still up triple digit amounts, which remains above average performance when considering long-term planning. However, the Long-term Indicant is getting very close to signaling bear. A link to the Long-term Indicant is below. You will notice long-term projections are bearish.

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

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

Short-term Indicant Stock Market Report - Summary

The Near-term Bull is tiring, but without a strong bearish threat. Increased volatility should not be surprising over the next few days/weeks. The rising Near-term Green curve offers non-bearish resistance. Since it is well above buy signal values, it is a good idea to set stop losses equal to or a point below green prices. Green will continue to rise so periodic adjustments should be applied to lock in your short-term profits.

Configurations support meandering behavior while at the same time such behavior can invoke increasing volatility in stock prices. The Near-term Blue curve will obviate any potential shifts from bullish to bearish directional bias.

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

The Near-term Indicant signaled bull for the eleven major indices on Mar 31, 2009 and bear for Contrarian VIX on the same day. The 11-major indices are up by an average of 10.3% since that bull signal, annualizing at 72.1%. The VIX is down 25.9% since its bear signal 7.4-weeks ago.

The Quick-term Indicant is signaling bull for ten major indices. They are down by an average of 2.6% since their respective bull signals an average of 3.4-weeks ago. The DJU is the lone non-contrarian bear. Including contrarian VIX and the DJU, those two indices are down by an average of 20.7% since the QTI signaled bear an average of 24.6-weeks ago.

By default the Quick-term Indicant has to signal bull when prices cross above bullish red curve. Buying at that point will win 82% of the time. However, during bear market rallies, such crossings incite a bearish response. That is the other 18% of the time. So far, the response from the bear has not been silent. It is a bit too early to tell if the Near-term Bull and Quick-term Bull are about to expire, but do not be surprised if they do in the next few days/weeks. Current configurations are symmetrical to normal bear market behavior.

On-going attribute watch for major indices:

-Near-term Directional Intensity Unanimity-All eleven major indices received a bull signal on March 31, 2009. They all bounced north of their respective Near-term Bullish Blue Curves in response to bearish aggression on Mar 27 and Mar 30. That was “near-term” bullish synergy with breadth, following the initial surge in early March.

QTI Red Bull Status—Quick-term bias, favoring the bear, continues being threatened with several recent new Quick-term Bull signals. Ten are Red Bulls. Dynamic bearish behavior cannot occur as long as there is at least one Quick-term Red Bull. The problem confronting this “baby bull” is that most of the indices are now below bullish red. This is typical of bear market rallies, when bullish red curve acts as a ceiling to rising stock prices. However, as long as the Near-term Bull remains in tact, the Quick-term Indicant cannot signal bear. Continue reading.

QTI Yellow Bear Status-Quick-term bias favors bear, but weakening, with the recent surge in Quick-term Bull signals. Quick-term yellow bears offer no resistance level to falling stock prices, but such resistance is now manifesting. This bearish resistance is softening and threatening this baby bull along the same lines as classical bear market rally. Contrarian VIX fell prey to the bull on April 16, 2009 as it received a Quick-term Bear Signal. It is a passive bear, poised for a bullish recoil when the Near-term Bull expires. For those of you who delight in bearish stock market behavior, patience is the key at this point. Stalk related options. This Near-term Bull may have a few more days of life before its expiration.

-NTI Blue Bull Direction-This indicator is moving north, favoring the Near-term Bull, but being confronted by the bear. Note May 20, 2009-Wed-It has been recently acting as a ceiling to bullish behavior, which is non-bullish.

-NTI Green Bear Direction – Moving north; non-bearish offering protection against dynamic and sustainable bearish aggression. Note May 21, 2009-Thu-Watch the Dow Utilities, which nearing contact with NTI Bearish Green curve. Note May 22, 2009-Fri-Utilities was mildly bullish while the other major indices were mildly bearish. This suggests market synchronization with all indices before shifting out of its stagnating inflection point to another cycle of directional intensity.

-STI Force Vector Position- Note May 19, 2009-Tue-No longer in bullish domains and thus allowing bearish interest to manifest. Most are below Vector Pressure, which is encouragement to the bear.

-STI Force Vector Direction – Note May 15, 2009-Fri They are bearishly mature, leaving open an opportunity for a bullish response. You saw that last Monday, but struggling with follow-through. Note May 22, 2009-Fri-Although now moving bullishly, Vector Pressure may act as a ceiling. This will be obviating in the next two to three days.

-Vector Pressure Position- Short-term bearish bias concluded on Mar 24, 2009. None are in bearish domains, except contrarian VIX. As stated for the past several days, many are near a peak, though, suggesting this Near-term Bull is nearing respective peak prices in this near-term cycle. Keep in mind this “peaking” can last for several days. Note May 21, 2009-Thu-It appears the Near-term cycle is past peak prices in this cycle which is non-bullish.

-Vector Pressure Direction –Short-term bearish bias concluded on Mar 21, 2009. After moving in support of the bull, they are now being challenged by the bear. Due to their aggressively bullish position, increased volatility is likely. In other words, this Near-term Bull should not expire without a good fight.

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

-Reverse Tangential Bearish Detection -  Construction will begin upon the expiration of the current Near-term Bullish cycle now underway. It will identify a future lower trading range upon completion of its construction. It is 100% accurate in predicting this future phenomenon. In other words, after this bullish cycle completes, another bearish cycle will follow. Depending on breadth and bullish magnitude of the current near-term bullish cycle, do not be surprised at a 5,000 or lower Dow by August/September. This should lead to a 3,000 Dow just ahead of the mid-term election year in 2010. Of course, keep in mind, the Indicant does not officially forecast. Fundamentally, either inflation or deflation always favors the bear. Right now, the additive values of interest rates to the absolute value of inflation/deflation is okay (not supportive of the bear).

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

The tour is still being developed, but most of you are now familiar with the Near-term bull/bear cycles as well as the tangential protections and reverse tangential bearish detectors. Those latter two will be explained as they evolve. The persistent Near-term Bull continues delaying construction.

The NYSE and NASDAQ Indicant Volume Indicators  are solidly lethargic; mostly due to holiday and approaching summer. This should enhance volatility as the market transforms from indecisiveness to the next cycle of directional intensity.

Short-term Report Card, Status, and Charts

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

Although there were no buy signals, the Near-term Indicant is signaling hold for 28-ETF’s. They are up by an average of 14.6%, annualizing at 101.9% since their buy signals an average of 7.5-weeks ago. Although there were no sell signals, the NTI is avoiding three ETF’s. They are down by an average of 8.2% since their sell signals an average of 8.9-weeks ago.

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

Although there were no buy signals, the Quick-term Indicant is signaling hold for 25-ETF’s. They are up an average of 3.5% since their buy signals an average of 4.8-weeks ago. Those with hold signals are annualizing at 38.0%. Six ETF’s are down by an average of 21.3% since their sell signals an average of 22.3-weeks ago.

The recent Quick-term Red Bulls significantly reduces the threat of dynamic bearish behavior. That attribute has not been enjoyed with the current breadth since early 2008. As long as there are Quick-term Red Bulls, one does not have to worry about bearish dominance.

You should notice that Vector Pressure is starting to drift south, which is non bullish. Prices are vacillating below the Near-term Bullish Blue curve, which is also non bullish. The Near-term Bull cycle is being challenged by the bear. However, until you see the bullish blue curves collapse, the Near-term Bull remains in tact.

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

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

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

Current Strategy-Short-term Indicant- May 22, 2009-Fri-Near-term attributes are configuring non-bullishly. Although the Near-term Bull remains in tact, there is little likelihood of it delivering any more dynamic bullish moves. Low volume during the summer months can invite increased volatility and delay obviations of any renewed cycles of directional intensity. May 21, 2009-Thu-Force Vectors are again rising, but appear to be configuring with bullish defensiveness. That sort of behavior is not strongly bullish. They should rise for a few more days and if they retreat bearishly do not be surprised at this Near-term Bear expiring within a few days; maybe a week or two from now. Interaction with NTI Green curve and Vector Pressure direction will obviate directional intensity. May 20, 2009-Wed-Same as last Friday. May 19, 2009-Tue-Same as last Friday. May 18, 2009-Mon-Same as last Friday. Also, today’s strong bullish expression does not mute comments made last week. Prices are still below Near-term cyclical peak. However, bearishly mature Force Vectors are offering the bull more opportunity for expression, while peak pricing may still be behind us. This is due to peaking Vector Pressure. May 15, 2009-Fri-Vector Pressure is past a peak and even though the Near-term Bull remains in tact, it will either rest for the next several days or expire. Explosive and sustainable bullish potential is low right now, while configurations are not in support of any dynamic and sustainable bearish behavior in the next few days.

Contrarian Funds

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

The Near-term and Quick-term Indicant signaled sell for QID  on March 26, 2009. It is down 15.5% since then. It is positioning inversely to QQQQ, but other QID attributes remain too passive to consider a buy signal at this time.

Note May 6, 2009-QQQQ’s Force Vectors are weak and have not participated dynamically in the recent bullish behavior. It was a leader and now stalling. It will be interesting to see if its bullish position erodes following the current stagnant configuration.

Note-May 11, 2009-On above average bearishness, you noticed QQQQ was mildly bullish, contrasting its recent bearishness on bullish days. This money rotation and related synchronization suggests the underlying bias remains in tact; that is bullish.

Note-May 13, 2009-QQQQ’s Force Vector is bearishly mature. It is configured with bullish bounce  potential, while at the same time its Force Vector is threatening to cross into bearish domains. It will be interesting to see if it succumbs and falls into bearish domains. (Note May 18, 2009-Mon-QQQQ did not succumb).

Note-May 14, 2009-QQQQ enjoyed the anticipated bullish bounce, while QID crossed above bearish yellow. QID did not receive a buy signal since the Near-term Indicant continues signaling the avoidance of QID. Note-May 18, 2009-QID Force Vector is bullishly mature, which suggests more bearishness for it (bullish for QQQQ). Both are configuring for significant reversals within a few weeks.

ETF#03-Natural Resources   - The Quick-term Indicant signaled buy on May 4, 2009. It is down by 1.1% since that buy signal.

Force Vector jumped north on Apr 3 and the Near-term Indicant signaled buy. It is up 5.6% since the Near-term Indicant signaled buy on April 3, 2009, annualizing at 41.3%. In spite of recent bearishness, the Near-term Bull cycle remains in tact; blue and green continue to rise. Set your stop loss at green price minus 50-cents or so. Green should rise and you need to reset every now and then.

ETF#11-Gold and Precious Metals  is up 16.7% since the QTI signaled buy on December 11, 2008. It is annualized growth is at 37.2%. The model’s intent is to beat buy and hold. Bearish yellow is a good price to set stop losses for a longer-term hold position.

The Near-term Indicant signaled buy on Apr 24, 2009. It is up 4.9% since then, annualizing at 63.5%. This is now solidifying in bullish position. Fundamentally, it is one of the few ETF’s that could continue to increase in price in the face of an overall bearish stock market.

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

ETF#14-Long Government  is down 9.0% since the Near-term Indicant signaled sell on Apr 7, 2009. Although it’s Vector Pressure remains positioned to support bullish behavior, and very much so, its Force Vector remains in bearish domains and its price remains below bullish blue. Its bullish blue curve remains in collapsed condition. That is bearish on a near-term basis.

This fund is down 3.7% since the Quick-term Indicant signaled sell on May 1, 2009, when it fell below bearish yellow.

Fundamentally, this fund may not be viewed as a safety net with trillions of paper money not backed by productive efforts or possessions of raw materials.

Major ETF Events Today

None so as stated on May 21, 2009-Thu-Declining Vector Pressure is a source of concern for those desiring a continuation of bullish behavior.

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

Other links:

Short-term Indicant for DJIA and NASDAQ

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

Short-term Indicant Table for the NASDAQ Composite Index

Indicant Volume Indicator

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

Divergence versus Convergence

Bullish convergence occurred last week. Ten of the past eleven weeks have enjoyed combined bullish convergence/divergence. This remains solidly bullish, but also welcoming the bear to offset overloading bias. Fundamentals suggest the anticipated economic improvements may not manifest.

Obviations of sustainable bullishness do not occur until there are four consecutive weeks of bullish convergence. That occurred eight weeks ago. We now have a Near-term bullish cycle underway that has sustainability; as least through the month of April. Now that April is over, the key attribute to monitor is the Near-term Indicant’s bullish blue curve. As long as it does not collapse, the bull persists.

In spite of the newly forming bullish cycle, the bear market has not yet expired. Depending on political landscape, this bear could last for decades. FDR-like economic meddling will continue to erode economic wealth. Those responsible are either 1) stupid, 2) do not care, or 3) have motives that typically lead to war.

Indicant Conclusion

There were again no Mid-term Indicant buy signals for non-contrarian Mutual Funds. All 99-of those funds are with avoid signals. Additionally, the Mid-term Indicant is avoiding contrarian ProShares Fund, mentioned earlier in this report, due to the Short-term Bull currently underway. All 100-mutual funds remain with avoid signals.

Those funds tracked by the Mid-term Indicant are down by an average of 27.9% since their sell signals an average of 46.9-weeks ago. Although the Quick-term and Short-term Indicant models are holding most of the ETF’s, the Mid-term Indicant will not signal buy for most of the Mutual Funds until they remove themselves from bearish domains. Current configurations suggest it could be a year or longer for that to occur. Although the Near-term Bull has been impressive, it has not shifted the funds to a buy position.

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

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

In spite of gold prices softening the past few weeks, the sharp increase in Gold and other precious metals prior to that softening, suggests inflation and/or fear elements are predominant themes. Neither of those phenomena will offer the bull much incentive to manifest in the stock market, while these “psychological” investments should do well.

Keep up with the daily stock market report as the Quick-term attributes can shift quickly.

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

The daily updates are on the following link.

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

Hyperlinks

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

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

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

Happy Investing,

www.indicant.net

05/24/09

May 17, 2009 Indicant Weekly Stock Market Report

Volume 5, Issue 03 ISSN 1526 6516 © The Indicant Stock Market Report

This Week’s Report

Capital Cleansing and Hard Assets

By 1985, one could buy oil field equipment for pennies to its book value. This oil field equipment was all that was left over from failed businesses. They were hard assets that remained long after the several organizations that managed those assets vanished.

Oil prices peaked in 1981 at around $36/bbl. U.S. Rotary Rig Count peaked at the same time with just under 5,000-running rigs. By 1985, U.S. Rig Count was less than 500, which represented a drop in industry activity of over 90%. Not too many organizations survived. However, all of the hard assets survived even if the parts were cannibalized from their original structures.

Petroleum industry organizations that could not survive vanished. Millions of people lost their jobs. The unemployment rate in Houston, Texas approached depression levels in the early 1980’s. There was no government bailout or help for those in the petroleum industry.

Just ahead of the petroleum industry’s demise, Chrysler was resurrected from bankruptcy with a loan from the Federal Government. Shortly after this resurrection, the economy improved enough to accommodate job retention for the demonstrated incompetence at Chrysler. For the next twenty-eight years, Chrysler continued churning out low quality products.

Chrysler was innovative in new product design under the leadership of then CEO Lee Iacocca. But, Chrysler repeatedly demonstrated an inability to place very high on any of the quality or consumer satisfaction surveys. They built pretty products, but for the most part, their quality consistently ranked near the bottom.

Chrysler’s inability to produce quality products, however, was not the reason for their demise at that time. Americans had grown accustomed to shoddy products as documented by low effort Ralph Nader types.

The reasons Chyrsler on the verge of bankruptcy in 1979 were two fold; economic recession and product/market mix was wrong. Their product offering were primarily gas-guzzlers and they did not sell in the face of then record-setting gas prices.

So, the government saved Chrysler in spite of its inability to manage its breakeven volume points and produce products that would sell with shifting market demands.

Now 30-years later, the same thing is occurring again; recession, shoddy quality, and product mix issues. Only this time, the victims of “protectionism” expanded to include General Motors.

Each time a society “protects the stupid and weak” the next cycle of unfavorability invites more victims. Chrysler should have not been allowed to survive in 1979. It takes some time and most are not capable of putting the big picture together. Every time an organization or any failed group of people are allowed to continue with their purpose, the underlying problem only becomes more pervasive.

Capitalism moves through cycles. As the economy expands, capacity expands. This expanded capacity eventually catches up to demand from the hot economy. Capacity expansion is not equal to the normalcy of incremental economic growth. A new plant is constructed, say with a million square feet of floor space. Once it reaches full production, the market is suddenly flooded with more product.

Capacity expansion eventually exceeds market demand. Prices begin to fall, profit margins become compressed, and work force reductions soon follow. Recessions are aligned to this natural ebb and flow of expansion and contraction of capacity. That is a very natural phenomenon of capitalism and has proven to be the most effective and efficient form of existence for humankind. Expanding governments has repeatedly demonstrated to be the most ineffective and inefficient when considering the quality of life for humankind.

The shrinking economy shows little mercy to those organizations that have trouble keeping their doors open. Those are the ones that should go out of business. Allowing failures to fail facilitates the process of continuous improvement in product, quality, and costs. That has been demonstrated and should be allowed to persist as they have for hundreds of years. Disallowing the incompetent to fail will lower the quality of life for all.

If Chrysler had been allowed to move into bankruptcy in 1979/80, the hard assets owned by Chrysler would have been purchased by those who had a better idea; that is improve the quality, broaden product offerings, and lower cost. When the government bailed them out, they facilitated a continuation of stupidity and sloppiness.

During Willie C. Durant’s and Alfred P. Sloan’s reign at General Motors, each recession brought on more bankruptcies of automobile manufacturers. In some instances, GM would buy the hard assets and very selectively retain some of the employees at those bankrupt companies. The industry thrived through several economic recessions and the Great Depression. That was capitalism and it worked.

Now, the government is again at it. Once this recession ends, rest assured the next one will be worse than this one. Universal law cannot be violated. That universal law is never protect incompetence. That weakens the entire species.

In early 1982, common forecasts included $85 oil prices by 1985 with over 8,500 U.S. Rotary Rigs running. That forecast was wrong. By 1985, oil was at less than $15 and there were less than 500 rigs running. There was no government help.

When oil prices rose rapidly in the U.S. in 2005 through 2007, the petroleum industry rose to the occasion by quickly developing new resources even the face of stupid governmental regulations. Without the petroleum industry’s relative high level of competence, oil prices would have surpassed $300/bbl. The increased supply in North America and non-OPEC places on the planet helped contribute to the fallback to $40/bbl from $140/bbl. The government had nothing to do with it. Capitalists did that in spite of OPEC’s price fixing system.

If the government had bailed out the incompetence that was running rampant in the petroleum industry in the late 1970’s, their ability to rise to the occasion in 2005 through 2008 would have been muted. That is because the methods, procedures, and organizational mantra’s of stupidity would have persisted if bailed out. What you want, as a citizen of the United States, is for the incompetent to either be demoted or fired. That is what accelerates the quality of your life. If the incompetent are retained, you will pay higher prices for shoddy product.

Americans were use to shoddy automotive products in the 1970’s and 1980’s. When the young yuppies bought the cheaper and gas friendlier cars from Japan, they could not help but notice the cars went from point A to point B without detouring to the repair shop most of the time. That was quite the contrast to cars made in North America. Hard assets were employed in Japan by competent management at that time and they knew how to use them much more competently than their American counterparts did.

Competence is hard to develop. Incompetence is not. Protecting incompetence only expands the population of the incompetent. Most choose the path of least resistance. They do not deserve protection. Everyone will share the burden imposed by the incompetent. That always leads to reductions in the quality of life.

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

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

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

The Mid-term Indicant generated no buy signals and no sell signals. There have been 540-sell signals since October 26, 2007 and 38-buy signals since October 31, 2008.

Although there were no buy signals, the Mid-term Indicant is signaling hold for only 21 of the 344-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 112.5%. That annualizes to 60.0%. The Mid-term Indicant has been signaling hold for these 21-stocks and funds for an average of 97.4-weeks.

Although there were no sell signals, the Mid-term Indicant is avoiding 323-stocks and funds of 344- tracked by the Indicant. The avoided stocks and funds are down an average of 32.2% since the Mid-term Indicant signaled sell an average of 49.6-weeks ago.

The Mid-term Indicant is avoiding all 100-Mutual Funds tracked by the Indicant, excluding the 31-ETF tracked daily. The Mid-term Indicant funds are down an average of 29.3% since their sell signals an average of 47.9-weeks ago. The 31-ETF’s trade more frequently and are updated in the daily stock market report.

One year ago, on May 16, 2008, the Mid-term Indicant was holding 210-stocks and funds out of the 345 tracked for an average of 126.0-weeks. They were up by an average of 151.7% (annualized at 62.6%). There were 130-avoided stocks and funds at that time. The avoided stocks and funds were down an average of 14.9% since their respective sell signals an average of 30.5-weeks earlier.

The Mid-term Indicant was signaling hold for 296-stocks and funds of the 345-tracked two years ago on May 18, 2007. They were up by an average of 123.6% (annualized at 64.6%) since their respective buy signals an average of 99.5-weeks earlier. The Mid-term Indicant was avoiding 31-stocks and funds at that time. They were down an average of 13.9% since their respective sell signals an average of 26.1-weeks earlier.

There were 272-stocks and funds with hold signals on May 19, 2006 since their buy signals an average of 98.8-weeks earlier. They were up by an average of 126.7% (annualized at 66.7%). There were 92-avoided stocks and funds at that time. They were down by an average of 6.8% from their respective sell signals an average of 16.1-weeks earlier.

On May 20, 2005, the Mid-term Indicant was signaling hold for 201-stocks and funds out of 320-tracked. They were up by an average of 99.4% (annualized at 57.0%) since their buy signals an average of 90.6-weeks earlier. The Mid-term Indicant was avoiding 112-stocks and funds at that time. They were down by an average of 26.6% since their sell signals an average of 55.8-weeks earlier.

Five years ago, on May 17, 2004, there were 218-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 75.4% (annualized at 68.5%) since their respective buy signals an average of 57.2-weeks earlier. There were 73-avoided stocks and funds then. They were down an average of 10.0% since their respective sell signals an average of 11.3-weeks earlier.

On May 17, 2003, there were 275-stocks and funds with hold signals from the listing of 296-tracked by the Mid-term Indicant at that time. They were up an average of 36.3%, annualizing at 111.9%, since the buy signals an average of 16.8-weeks earlier. There were eight avoided stocks and funds then. They were down by an average of 26.0% since their sell signals an average of 26.4-weeks earlier. There were 119-buy signals on Mar 22, 2003, which was the beginning of a nice Mid-term Bull Leg that lasted through that year. Most continued to hold through the meandering bear of 2004 and early 2005. Several did not receive sell signals until late 2007 and early 2008 since the March 2003 buy signals.

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

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

Link to this week’s buy and sell signals.

As repeatedly stated, do not hold more than 10% of your investment resources in a single stock and do not hold more than 20% of your investment resources into a single mutual fund. Also, never fall in love with a stock or fund. Only love the value of your portfolio. Never love its contents. Management stupidity can wreak havoc on any stock or fund at any time. Socio-economic interference can devastate your holdings from time to time. Right now, the pendulum is swinging to the left. That is not good for stock equity related investing.

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

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

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

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

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

The current Near-term Indicant’s Bull is no longer solid. Force Vectors are beginning to penetrate bearish domains. However, their cycles are mature and a bullish bounce in the next few days would not be surprising.

As stated several days ago, the current Near-term Bull is tiring. Vector Pressure is at or near a maximum value. Force Vector is not being as responsive to bullish rallies, as it was earlier in the cycle (early March). However, until you see Near-term sell signals, the Near-term bull will remain in tact.

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

http://www.indicant.net/Members/Updates/STI-Mkts/STI-10-Indices/STI08.htm

The Quick/Short-term Indicant Stock Market Report

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

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

The Indicant Stock Market Report’s Secular Market Blend

The Dow is up 13.5% since its secular weekly low on October 9, 2002. The NASDAQ is up 50.8% and the S&P500 is up 13.7% since then. The small cap index, S&P600, is up 48.1% since October 9, 2002. All of the major indices were at new lows on the same week in 2002, which is a common attribute for bottoming. Interestingly, the NASDAQ100 is up 67.8% since October 9, 2002, which is more than the other major indices. RIMM, Apple, and a few others who have strongly performed are the primary contributors. Now, the current economic environment is challenging them. They did not participate in last week’s bullishness. That is a source of concern at this time.

The Dow is down 41.6% since its last weekly closing peak on Oct 9, 2007. The NASDAQ is down 41.2% since its last peak on Oct 31, 2007. The S&P600-small cap index is down 43.2% since its last closing peak on Jul 19, 2007.

The NASDAQ is down 66.7% since its last weekly secular peak on March 9, 2000. The S&P500 is down 42.2% since its similar secular peak on March 23, 2000. The Dow is down by 29.5% since January 13, 2000 when it peaked from the 1990’s roaring bull. As stated the past several years in this report, do not be surprised at the NASDAQ equaling its March 9, 2000 high until after 2025.

As socialism increases, the NASDAQ may not hit its 2000 peak until after 2050. Even that depends on resurgence in entrepreneurialism and related capitalism. Politicians screwed up the economy and the majority apparently believes their proposed fixes.

The good news is the politicians in Washington D.C. have reduced their power by weakening their already weak constituents. International competitiveness will continue reducing their power and influence. With that, capitalists around the world will continue providing products of appeal, while politicians continue exuding irrelevant commentary. Let’s just hope that products of appeal is not weaponry, alone.

The Dow is down 5.8% so far this year. The NASDAQ is up 6.5% so far this year. Keep in mind the post election year is the most bearish and has lost money since 1832. So far, the stock market is conforming to this historical standard, but the NASDAQ is currently arguing with that standard.

The NASDAQ year-to-date performance was bearish by 15.6% through this week in 2001. Keep in mind the NASDAQ finished 2001 down by 21.1%., which was congruent with standards of post-election-year-bearishness.

The NASDAQ was down by 11.5% through this weekend in 2002. Some of you recall the dynamic bear market in 2002, where the NASDAQ finished that year down by 31.5%. The bear cycle found bottom in October 2002, which is consistent with the mid-term year’s historical standards.

The NASDAQ YTD 2003 performance was up by 16.2%. It finished up in that solidly bullish year by 50.0%, which was consistent with historical pre-election year results. It was down on this weekend in 2004 by 4.9% and finished up by 8.6% for that year, which was congruent with election year bullishness although shy of magnitude standards.  It was down by 9.1% in 2005’s post election year, which maintained congruency to the historical standards of losses. Many of you recall that 2004 and 2005 were meandering bear markets. 2005 finished up by a mere 1.4%, which was an excellent year based on post election year historical standards. In 2006, it was up 1.5% on this weekend and finished that year with a 9.5%-gain, which again maintained congruency of historical bullishness for a mid-term election year. It was down by 4.6% at this time in 2007 with the Alan Greenspan scare but finished up that year by 9.8%, which was consistent with pre-election year bullishness. It was down 4.5% at this time last year. The NASDAQ finished down by 40.5% in 2008. That was contrarian performance to historical election year bullishness and the most bearish presidential election year since related records from 1832.

So far, this presidential post election year is performing consistently with historical standards. The capital markets understand socio-political influences are predominant in the first year of most incoming administrations and thus generally non-bullish. Politicians offer nothing pertinent to the quality of life, including health or wealth. They “talk about it” but just one RN offers more toward health and one good entrepreneur offers more toward wealth than the collection of all politicians, kings, queens, and dictators since the beginning of time. Those “control freaks” only talk and rob folks of their wealth and health.

Keep your eye on the daily stock market report.

Stop Loss Management

The Mid-term Indicant recommends a trailing stop loss of 8% due to the Near-term Indicant continuing with bull/hold signals. The Mid-term Indicant for major indices is supporting with a bull signal while it is much more conservative in signaling buy for funds and stocks and thus the reason for continued avoidance for most of the stocks and funds.

Most of the longer-term holdings of stocks and funds continue with “avoid” signals, but a few are still holding. The risk of continued holding, even for the likes of Apple, remains relaxed.

If you feel you will need cash within the next two years, you should consider selling all stocks and funds. (The Indicant is not signaling hold for any mutual funds, including those that short the market at this time). The ETF’s are signaled on the Near-term, Quick-term, and Short-term Indicant and are updated daily. These shorter-term models participate in bullish spurts, while the Mid-term Indicant is focused on fundamentals and longer-term technical data, which remains bearish.

If your stock or fund is above the bearish yellow curve and below the green curve, set your stop loss equal to the greater of the yellow curve and the trailing stop loss. If your stock or fund is above the green curve, set your stop loss at no less the value of the green curve or 8% trailing, whichever is greater. If your stock or fund is above the red curve and you bought at the Mid-term Buy signal, you should use the 10% trailing stop loss.

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

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

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

Economic Conditions – Inflation, Currency, Interest Rates

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

Short-term rates are bouncing at what appears to be a cyclical minimum. That is bullish for the stock market. Unfortunately, that is not the only variable influencing the stock market’s directional intensity.

You can see some early warning signs of impending inflation. Oil prices continue to rise. OPEC is expected to institute supply reductions. Demand for fuel will not subside with increasing socialism, but the rate of consumption will be muted with a decline in capitalistic opportunities. Research and development for alternative fuel sources will slow down during this socialistic phase of humanity. That will be inflationary. The capitalistic system will elevate the economy; nothing else will. If socialism existed to the extent of today in 1900, we would still be traveling by foot or horse and buggy.

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

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

As stated the past several weeks, the idea of capitalism is to borrow or capitalize and expanding the supply of money (wealth) through productive effort. That is not what is going on right now. Wealth creation will continue to slow and maybe even capsize. With that, there will be a reduction of the quality of life, which typically leads to war.

However, as the world shrinks and asset ownership is not isolated geographically, world wars will diminish as an option to overcome displeasure. It will be interesting to see what replaces it. Displeasure by the masses is certainly not an ever-lasting option. In the end, though, those with the most talent at physical object creation are always the winners.

The U.S. dollar continues enduring resistance in strengthening its bullish cycle. The dollar’s significance as an international currency is now under attack by the Chinese, who will eventually become the economic world power if they accelerate their capitalistic causes. The United States has been weakened severely by its “tyranny by the majority system” and excessive focus on socio-economic programs that have absolutely nothing to do with cultural strength and economic wealth. The printing presses and “politburo style politics” in the U.S. will reduce the dollar to just another world currency.

The U.S. economy is perceived to have the greatest chance of returning to robustness when compared to other countries. As stated the past sixteen weeks, the exception to this is China, who may or may not need U.S. consumption to bolster their economy. A weakening dollar against the Yuan may enjoy a longer-term labor relationship with the West. However, the stock market is focused only on the next six to nine months. China’s government can undo this bullish outlook for China in seconds, so keep your eye on it (the government). Their political leaders are no different from ours; that is they have the same “control freak” psychological problems as those of the west.

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

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

As stated 31-weeks ago, once the euphoria of the socialistic methods are complete, rest assured the bear market will continue and with gusto. This is not technical. This is fundamental. You will see that prognosis continuing in spite of recent bullish expressions.

As stated 27-weeks ago, “probabilities remain high that any bullish cycle will be followed by a deep bear market in 2009. If taxes are raised on the highly productive and capital gains, do not be surprised at a 1,000 Dow by 2010.”

As stated 23-weeks ago, this bear has teeth, is hungry, and is nowhere near expiration. Cyclical spurts of a bullish configuration will occur from time to time, but the trend should remain bearish throughout this year and into 2010. Bullish spurts will occur from time to time. As we learned from the November 28, 2008 – January 21, 2009 bullish spurt, profit potential from them is limited and in some cases disappoint rather rapidly. The attempted spurt on Feb 6, 2009 faded quickly and expired on Feb 19, 2009. The short-term trader will trade on those spurts, which is occurring now, while mid-to-long-term investor should remain on the sidelines. Finally, the current spurt underway has potential for sustainability through April and as you saw, it did that. So far, it has performed well. April has now concluded and the Near-term Indicant is now the primary focal point. As of this writing, it is still bullish.

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 162.2% from its April 13, 2001 buy signal until the Mid-term Indicant sell signal on October 3, 2008. It is down 28.6% since that sell signal. It has been bearish in eleven of the last 19-weeks. It was bearish last week, following four consecutive weeks of bullish behavior.

Fidelity Gold, Fund #28 is down 7.4% since the Midterm Indicant signaled sell on August 1, 2008. It was mildly bearish last week.

Vanguard Energy #18, VGENX, was up 144.9% from since the Mid-term Indicant buy signal April 5, 2003. It received a sell signal on October 3, 2008. It is down 14.1% since that sell signal. It has been bullish in seven of the last nine weeks. It was solidly bearish last week.

Fidelity Energy Services #40, FSESX, was up 107.2% since the Mid-term Indicant signaled buy on December 6, 2003. It received a sell signal on October 3, 2008. It is down 28.4% since that sell signal. It was bearish last week, following nine consecutive weeks of bullishness.

State Street Research Global #9, SSGRX, was up 174.2% from its August 16, 2002 buy signal to the Mid-term Indicant sell on October 3, 2008. It is down 44.9% since that sell signal and enjoyed bullishness the past few weeks, but was also bearish last week.

Fidelity Energy #39, FSENX, was up 81.2% since the Mid-term Indicant signaled buy on August 16, 2003 and the sell signal on October 3, 2008. It is down 14.7% since that sell signal. It was solidly bearish last week.

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

The Near-term Indicant signaled buy for ETF#03 – Energy and Natural Resources on April 3, 2009. It is up 4.3% since then, annualizing at 36.9%. The Quick-term Indicant continues to signal hold from the May 4, 2009 buy signal. It is down 2.3% since then. It was up 242.4% (annualized at 44.8%) since its previous buy signal on March 26, 2003 until the September 2008 sell signal.

The Quick-term Indicant signaled buy for the GLD-ETF#11 on December 11, 2008. It is up 13.5% since that buy signal, annualizing at 31.4%. It gained 81.4% from its August 3, 2005 buy signal until the September 8, 2008 sell signal. Its annualized gain during that hold period amounted to 26.0%.  The Near-term Indicant signaled buy on April 24, 2009. This is a technical buy with not real strong attributes. Vector Pressure is drifting south. It is up 2.0% since the Near-term buy signal, annualizing at 35.0%.

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

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

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

The Mid-term Indicant signaled bull on April 3, 2009 for the ten major indices. The ten major indices are up 8.9% since then, annualizing at 464.1%. This “reluctant bull signal” was due to the strongly configuring near-term and quick-term bullish indicators. Do not be surprised at a bear signal once this short-term bullish cycle completes.

Click this sentence to view a summary of their performance.

The Mid-term Indicant Dow Jones Industrial Average performance is at $27,276,738.

That beats buy and hold performance of $1,304,526 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $133,158. That beats buy and hold’s $91,021 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $174,525. That beats buy and hold’s $60,298 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 1990.9%, 46.3%, and 189.4%, 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 Mid-term Indicant 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 approximately 2,000% covering the past 100+ years. It will not be surprising to see the Mid-term Indicant outperform buy and hold by over 3,000% before the end of this decade, as the bear will gain momentum.

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

Mid-term Indicant Positions - NASDAQ100 Stocks

Click here to see NASDAQ100 report card history.

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

Mid-term Indicant Positions - Dow Jones 30 Industrial Stocks

Click here to see Dow 30 report card history.

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

Mid-term Indicant Positions - Dow Jones 15 Utility Stocks

Click here to see Dow Utilities Report Card history.

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

Mid-term Indicant Positions - Indicant Selected Stocks  

Click here to see Indicant Select Stock Report Card history.

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

Mid-term Indicant Positions - Mutual Funds

Click here to see Mutual Fund Report Card history.

The Mid-term Indicant signaled sell for ProFunds Ultra Short on April 3, 2009. It is down 12.8% since then. It is too risky to hold with the Near-term and threatening Quick-term bull cycle. Although this is classically a post-election-year hold, current technical indicators are advising to avoid this fund until the Near-term bullish cycle expires.

Click here for Mid-term Indicant Table of Mutual Funds

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

Long Term Indicant Positions - Dow Jones Industrial Average

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

The Dow is up 185.6% (annualized at 10.6%) since the Long-term Indicant signaled bull 915-weeks ago. Economic data is the primary influence on the Long-term Indicant. Recessions, deflation, inflation, and unreasonable interest rates have not been strong enough to signal bear since that bull signal. Even with today’s economy and stock market position, the 1991 investor is still up triple digit amounts, which remains above average performance when considering long-term planning. However, the Long-term Indicant is getting very close to signaling bear. A link to the Long-term Indicant is below:

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

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

Short-term Indicant Stock Market Report - Summary

Near-term bullish bias configured on March 31, 2009 with a solid bounce off of Blue. That attribute suggested this is not a short-term bullish spurt, but with a high probability of sustainability. The average duration of a Near-term cycle ranges from 10-14 weeks. (This one is ten weeks old).

Several indicators are moving north; Bullish Blue, Bearish Green, and Vector Pressure. Force Vector cycles are mature and most continue hovering in bullish domains, which correlates to cyclical sustainability on a short-term basis. A few, however, have fallen below bearish domains, suggesting a tiring bull. However, they can linger there for several more weeks before the Near-term Bull expires. There are several Quick-term Red Bulls, which mitigates dynamic bearish threats. It only takes one non-contrarian Red Bull to offer this obstinate resistance to bearish dominance.

Keep in mind, this Near-term Bull is fighting the trend, which is bearish. The Quick-term bearish yellow and bullish red curves continue moving south. Recent Red Bulls are challenging this bearish trend, but have not yet overcome it with the required breadth, but getting close to doing so. This is a long drawn out process. Commitments toward directional intensity of a sustainable duration are seldom smooth when confronting the underlying trend. The battle between bull and bear in the next few weeks will not be passive.

Keep in mind, classical bear market rallies do this. They make contact with one of the Quick-term Indicant curves, angering the bear. The Near-term Indicant will assists in determining if the bear has bite or just a harmless growl.

As stated the past several weeks, this Near-term cycle appears bent on contacting the Quick-term Red and/or Yellow Curves. That has now transpired with the exception of the Dow Utilities. This is a common occurrence in bear markets. The Quick-term curves are sloping to the south, so it will not take much bullishness for  this “technical achievement.” Once contact is made, dynamic bearishness usually follows. The breadth of contact is no longer minimal, as Red Bulls now hold a solid majority of the ETF’s and all but one of the major indices. However, keep in mind such contact and current configurations are classically aligned to that of a bear market rally.

The focal point will be on Force Vector’s interaction with Vector Pressure. The Near-term Bull does not want to see Force Vectors move solidly to the south into bearish domains. When Force Vectors cross into bearish domains and prices fall below bearish green, you will know that Near-term Bull will be nearing expiration. Early warnings will be highlighted by collapsing NTI bullish blue curves. That should be several days from now, but it can change quickly.

Previous comments regarding XLF and UGY are still pertinent. Please click this sentence to link to prior comments. XLF received a near-term buy signal on March 31, 2009. If you enjoy higher risks and related reward potential, you may prefer buying UGY. They are configured identically.

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

The Near-term Indicant signaled bull for the eleven major indices on Mar 31, 2009 and bear for Contrarian VIX on the same day. The 11-major indices are up by an average of 10.0% since that bull signal, annualizing at 80.6%. The VIX is down 25.0% since its bear signal.

The Quick-term Indicant is signaling bull for ten major indices. They are down by an average of 2.9% since their respective bull signals an average of 2.4-weeks ago. The DJU is the lone non-contrarian bear. Including contrarian VIX and the DJU, those two indices are down by an average of 20.1% since the QTI signaled bear an average of 23.6-weeks ago.

By default the Quick-term Indicant has to signal bull when prices cross above bullish red curve. Buying at that point will win 82% of the time. However, during bear market rallies, such crossings incite a bearish response. That is the other 18% of the time. So far, the response from the bear has not been silent. It is a bit too early to tell if the Near-term Bull and Quick-term Bull are about to expire, but do not be surprised if they do in the next few days/weeks. Current configurations are symmetrical to normal bear market behavior.

On-going attribute watch for major indices:

-Near-term Directional Intensity Unanimity-All eleven major indices received a bull signal on March 31, 2009. They all bounced north of their respective Near-term Bullish Blue Curves in response to bearish aggression on Mar 27 and Mar 30. That was “near-term” bullish synergy with breadth, following the initial surge in early March.

QTI Red Bull Status—Quick-term bias, favoring the bear, continues being threatened with several recent new Quick-term Bull signals. Ten are Red Bulls. Dynamic bearish behavior cannot occur as long as there is at least one Quick-term Red Bull. The problem confronting this “baby bull” is that most of the indices are now below bullish red. This is typical of bear market rallies, when bullish red curve acts as a ceiling to rising stock prices. However, as long as the Near-term Bull remains in tact, the Quick-term Indicant cannot signal bear. Continue reading.

QTI Yellow Bear Status-Quick-term bias favors bear, but weakening, with the recent surge in Quick-term Bull signals. Quick-term yellow bears offer no resistance level to falling stock prices, but such resistance is now manifesting. This bearish resistance is softening and threatening this baby bull along the same lines as classical bear market rally. Contrarian VIX fell prey to the bull on April 16, 2009 as it received a Quick-term Bear Signal. It is a passive bear, poised for a bullish recoil when the Near-term Bull expires. For those of you who delight in bearish stock market behavior, patience is the key at this point. Stalk related options. This Near-term Bull may have a few more weeks of life before its expiration.

-NTI Blue Bull Direction-This indicator is moving north, favoring the Near-term Bull, but being confronted by the bear.

-NTI Green Bear Direction – Moving north; non-bearish.

-STI Force Vector Position- No longer in bullish domains and thus allowing bearish interest to manifest.

-STI Force Vector Direction – As stated yesterday, they are bearishly mature leaving open an opportunity for a bullish response. You saw the bullish response yesterday. The bull’s weakness in that response is cause for concern. Today’s mild bearish follow-on behavior heightens that concern. However, the bearish cycle is mature, which affords a bullish opportunity to express itself.

-Vector Pressure Position- Short-term bearish bias concluded on Mar 24, 2009. None are in bearish domains, except the VIX. As stated for the past several days, many are near a peak, though, suggesting this Near-term Bull is nearing respective peak prices in this near-term cycle. Keep in mind this “peaking” can last for several days.

-Vector Pressure Direction –Short-term bearish bias concluded on Mar 21, 2009. After moving in support of the bull, they are now being challenged by the bear. Due to their aggressively bullish position, increased volatility is highly likely. In other words, this Near-term Bull should not expire without a good fight.

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

-Reverse Tangential Bearish Detection -  Construction will begin upon the expiration of the current Near-term Bullish cycle now underway. It will identify a future lower trading range upon completion of its construction. It is 100% accurate in predicting this future phenomenon. In other words, after this bullish cycle completes, another bearish cycle will follow. Depending on breadth and bullish magnitude of the current near-term bullish cycle, do not be surprised at a 5,000 or lower Dow by August/September. This should lead to a 3,000 Dow just ahead of the mid-term election year in 2010. Of course, keep in mind, the Indicant does not officially forecast. Fundamentally, either inflation or deflation always favors the bear. Right now, the additive values of interest rates to the absolute value of inflation/deflation is okay (not supportive of the bear).

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

The tour is still being developed, but most of you are now familiar with the Near-term bull/bear cycles as well as the tangential protections and reverse tangential bearish detectors. Those latter two will be explained as they evolve in the next two to three weeks. It could be a bit longer as those constructions cannot occur until the current Near-term Bull cycle expires.

The NYSE and NASDAQ Indicant Volume Indicators  aborted robust behavior on Mar 31, 2009. As stated since then, they appeared to have pinnacled, which suggested stock market stability. Also, as stated since then, volatility should wane, which favors the underlying cycle of directional intensity.  That is bullish on a near-term basis. (This paragraph will be repeated until conditions change).

As stated on April 22, 2009, the NASDAQ Indicant Volume Indicator is rising again. This supports near-term bullishness. The NYSE halted its lethargic configuration. That is supportive of stability. That combination biases in favor of the Near-term Bull.

As stated on April 30, 2009 – Volume support has been mixed with vacillating Indicant Volume Indicators. Although this Near-term Bull is impressive, this lackluster volume support suggests it will be followed by an equally impressive Near-term Bear. Keep your eye on the Near-term Bullish Blue Curves; there is no need to anticipate. As long as they continue to rise, the Near-term Bull will remain in tact. The first thing to change before expiration is a collapsing of bullish blue.

Short-term Report Card, Status, and Charts

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

Although there were no buy signals, the Near-term Indicant is signaling hold for 28-ETF’s. They are up by an average of 12.6%, annualizing at 101.8% since their buy signals an average of 6.5-weeks ago. Although there were no sell signals, the NTI is avoiding three ETF’s. They are down by an average of 6.4% since their sell signals an average of 7.9-weeks ago.

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

Although there were no buy signals, the Quick-term Indicant is signaling hold for 25-ETF’s. They are up an average of 1.6% since their buy signals an average of 3.8-weeks ago. Those with hold signals are annualizing at 22.2%. Six ETF’s are down by an average of 20.5% since their sell signals an average of 21.3-weeks ago.

The recent Quick-term Red Bulls significantly reduces the threat of dynamic bearish behavior. That attribute has not been enjoyed with the current breadth since early 2008. As long as there are Quick-term Red Bulls, one does not have to worry about bearish dominance.

The Near-term Bull remains in tact. Yesterday’s mild bullish response to last Wednesday’s bearish aggression is consistent with technical adjustments to a stock market remaining close to the desires of bullish ambition. The problem is that the bear is expressing its displeasure with the new Red Bulls. The bull/bear battle will continue for a few more days before directional intensity is again obviated.

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

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

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

Current Strategy-Short-term Indicant- May 15, 2009-Fri-Same as last Wednesday. May 14, 2009-Thu-Same as yesterday. May 13, 2009-Wed-Vector Pressure is past a peak and even though the Near-term Bull remains in tact, it will either rest for the next several days or expire. Explosive and sustainable bullish potential is low right now, while configurations are not in support of any dynamic and sustainable bearish behavior in the next few days. May 12, 2009-Tue-Same as Friday, May 1, 2009.  May 11, 2009-Mon-Same as Friday May 1. May 1, 2009-Fri-As long as the near-term bullish blue curve continues moving north, the Near-term Bull remains in tact. The newly forming Red Bulls are offering significant resistance to dynamic bearish behavior.

Contrarian Funds

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

The Near-term and Quick-term Indicant signaled sell for QID  on March 26, 2009. It is down 14.2% since then. Its configuration is similar to VIX, but the math of double downs/ups is sometimes distorting. It, along with VIX, is poised for a bullish cycle, but they can both linger for several more weeks by scraping along the edge of bearish domains. Recent behavior suggests they are comfortable laying in bearish domains, while they contemplate their next attack on the near-term bull. QID Force Vectors are supporting bullishness, but need to cross into bullish domains before a buy signal can be generated.

Note May 6, 2009-QQQQ’s Force Vectors are weak and have not participated dynamically in the recent bullish behavior. It was a leader and now stalling. It will be interesting to see if its bullish position erodes following the current stagnant configuration.

Note-May 11, 2009-On today’s above average bearishness, you noticed QQQQ was mildly bullish, contrasting its recent bearishness on bullish days. This money rotation and related synchronization suggests the underlying bias remains in tact; that is bullish.

Note-May 13, 2009-QQQQ’s Force Vector is bearishly mature. It is configured with bullish bounce  potential, while at the same time its Force Vector is threatening to cross into bearish domains. It will be interesting to see if it succumbs and falls into bearish domains.

Note-May 14, 2009-QQQQ enjoyed the anticipated bullish bounce today, while QID crossed above bearish yellow. QID did not receive a buy signal since the Near-term Indicant continues signaling the avoidance of QID.

ETF#03-Natural Resources   - The Quick-term Indicant signaled buy on May 4, 2009. It is down 0.2% since that buy signal.

Force Vector jumped north on Apr 3 and the Near-term Indicant signaled buy. It is up 4.3% since the Near-term Indicant signaled buy on April 3, 2009, annualizing at 36.9%. As stated since that buy signal, the Near-term bull is being challenged by the oil bear, but recent behavior suggests this bear is all growl and no bite. Its bullish blue curve is weakening, but still holding up. The problem with this hold signal is that Vector Pressure is at a maximum. This does not mean it is about to become bearish, but that has been the response to this configuration this past year when bullish blue is lazy. Set your stop loss at green price minus 50-cents or so. Green should rise and you need to reset every now and then.

ETF#11-Gold and Precious Metals  is up 13.5% since the QTI signaled buy on December 11, 2008. It is annualized growth is at 31.4%. The model’s intent is to beat buy and hold. Bearish yellow is a good price to set stop losses for a longer-term hold position.

The Near-term Indicant signaled buy on Apr 24, 2009. It is up 2.0% since then, annualizing at 35.0%. Its Force Vector moved into bullish domains and its price moved above the bullish blue curve. This buy signal is not a comfortable one as it is against the declining Vector Pressure. However, it is not at a maximum, offering the possibility of a new bullish cycle. As indicated several days ago, money rotation is shifting to gold, driving its price higher. You saw some of that last week with gold being strongly bullish, but stalled later in the week. It was again bullish most of this past week. Rest assured money will rotate into gold once the Near-term Bull expires for the stock market.

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

ETF#14-Long Government  is down 4.6% since the Near-term Indicant signaled sell on Apr 7, 2009. Although it’s Vector Pressure remains positioned to support bullish behavior, and very much so, its Force Vector remains in bearish domains and its price remains below bullish blue. Its bullish blue curve remains in collapsed condition. That is bearish on a near-term basis.

This fund is up 1.0% since the Quick-term Indicant signaled sell on May 1, 2009, when it fell below bearish yellow.

Major ETF Events Today

Following Transports Force Vector falling into bearish domains yesterday, the S&P400 and NASDAQ100 followed suit today. This is a bit unsettling to the Near-term Bull, but prices remain well above the rising Near-term Green curve, which provides non-bearish protection right now.

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

Other links:

Short-term Indicant for DJIA and NASDAQ

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

Short-term Indicant Table for the NASDAQ Composite Index

Indicant Volume Indicator

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

Divergence versus Convergence

Bearish convergence occurred last week, following nine consecutive weeks of combined bullish convergence/divergence. This data point of bearish convergence is non-threatening to the bull at this time.

Obviations of sustainable bullishness do not occur until there are four consecutive weeks of bullish convergence. That occurred seven weeks ago. We now have a Near-term bullish cycle underway that has sustainability; as least through the month of April. Now that April is over, the key attribute to monitor is the Near-term Indicant’s bullish blue curve. As long as it does not collapse, the bull persists.

In spite of the newly forming bullish cycle, the bear market has not yet expired. Depending on political landscape, this bear could last for decades. FDR-like economic meddling will continue to erode economic wealth. Those responsible are either 1) stupid, 2) do not care, or 3) have motives that typically lead to war.

Indicant Conclusion

There were again no Mid-term Indicant buy signals for non-contrarian Mutual Funds. All 99-of those funds are with avoid signals. Additionally, the Mid-term Indicant is avoiding contrarian ProShares Fund, mentioned earlier in this report, due to the Near-term Bull currently underway. All 100-mutual funds remain with avoid signals.

Those funds tracked by the Mid-term Indicant are down by an average of 29.8% since their sell signals an average of 45.9-weeks ago. Although the Quick-term and Short-term Indicant models are holding a few of the ETF’s, the Mid-term Indicant will not signal buy for most of the Mutual Funds until they remove themselves from bearish domains. Current configurations suggest it could be a year or longer for that to occur. Although the Near-term Bull has been impressive, it has not shifted the funds to a buy position.

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

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

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

Keep up with the daily stock market report as the Quick-term attributes can shift quickly.

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

The daily updates are on the following link.

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

Hyperlinks

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

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

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

Happy Investing,

www.indicant.net

05/17/09

May 10, 2009 Indicant Weekly Stock Market Report

Volume 5, Issue 02 ISSN 1526 6516 © The Indicant Stock Market Report

This Week’s Report

Near-term Bull Remains in Tact

The Near-term Indicant remains in tact. Bullish Blue continues rising. Many of the Quick-term bullish Red Curves are starting to rise.

The question remains in the minds of many, “is this a bear market rally or the early stages of a long running bull market?” Plenty of pundits offer their opinions; some with reasoning; most with hope.

http://www.indicant.net/Non-Members/Back%20Issues/Supplements/May/2009-0510%20Supplement.htm

QQQQ (Nasdaq100) was non-participative in last week’s bull market. It was bearish. Some suggests this is bearish, overall. That is certainly possible. Technology stocks usually rise more and fall more than the steadier DJIA. However, QQQQ’s Near-term Indicant’s bullish blue curve continues to rise. This rise is mature at 10-weeks old and the average Near-term cycle approximates 10-14-weeks. You will notice its Vector Pressure solidly within bullish domains. Its Force Vector is struggling a bit, but has not yet dipped into bearish domains.

Fundamentally, there is little reason to expect cash flow as a percentage of shareholder equity to represent support for a DJIA of 8,000 or so. EBITDA and earnings per share should also not support the DJIA, NASDAQ, or S&P500 at current levels. The next round of earnings will most likely disappoint. With that, the stock market should resume its bearish nature.

There are a couple of issues regarding any representation of earnings. The Sarbanes Oxley accounting treatment that was created in response to voodoo bookkeeping by Enron is no longer so clear. Mark to market accounting leaves open tremendous latitude on asset valuations. That latitude is shrouded in subjectivity. This directly impacts earnings. That is why fundamentalists should, and the good ones do, look at cash flow as a percentage of shareholder equity. It looks past the pencil whipping by voodoo bookkeepers.

Outright voodoo bookkeeping is also a threat. Some are incapable of “incompetence acknowledgement.” The are prone to implement voodoo bookkeeping; just long enough to capture that next bonus check. Even when such dilettantes are caught, they get three months or so in country club prison, keep their unearned millions, and retire to a life of luxury.

Voodoo bookkeeping can falsify earnings, but it loses effectiveness when the barometer is cash flow as a percentage of shareholder equity. If inventories are going down rapidly, one should be suspicious of revaluations, especially during recessions.

The stock market focuses on corporate guidance in addition to earnings. Guidance is entirely subjective. That requires forecasting, of which finding an accurate one is more a stroke of luck than precise competence. The recession invokes southerly revenues. Most of the large cap organizations “follow” the demand curve as opposed to leading it. That is why you see huge layoffs well after the losses are incurred. Look at Chrysler and General Motors. They kept on pumping production during the throes of recession. Very few big companies get in front of the demand curve. The investment community recognized their “following” ways and drove the stock price of General Motors to pre 1950 levels in late 2007 and early 2008.

Dilettante management is all about finger pointing as opposed to taking risks. Protecting shareholder value is the job, but most work toward hanging onto one more bonus check. This system is allowed by cronyism and little shareholder influence on board members.

Regardless of all this, the Near-term bull remains in tact. The stock market is influenced from time to time based on emotion, as opposed to the “numbers.” The Near-term Bullish blue curve is continuing to rise and until it collapses enjoy the bull market.

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

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

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

The Mid-term Indicant generated no buy signals and no sell signals. There have been 540-sell signals since October 26, 2007 and 38-buy signals since October 31, 2008.

Although there were no buy signals, the Mid-term Indicant is signaling hold for only 21 of the 344-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 116.6%. That annualizes to 62.6%. The Mid-term Indicant has been signaling hold for these 21-stocks and funds for an average of 96.8-weeks.

Although there were no sell signals, the Mid-term Indicant is avoiding 323-stocks and funds of 344- tracked by the Indicant. The avoided stocks and funds are down an average of 29.4% since the Mid-term Indicant signaled sell an average of 48.6-weeks ago.

The Mid-term Indicant is avoiding all 100-Mutual Funds tracked by the Indicant, excluding the 31-ETF tracked daily. The Mid-term Indicant funds are down an average of 26.0% since their sell signals an average of 46.9-weeks ago. The 31-ETF’s trade more frequently and are updated in the daily stock market report.

One year ago, on May 9, 2008, the Mid-term Indicant was holding 210-stocks and funds out of the 345 tracked for an average of 125.0-weeks. They were up by an average of 145.1% (annualized at 60.3%). There were 132-avoided stocks and funds at that time. The avoided stocks and funds were down an average of 16.6% since their respective sell signals an average of 28.6-weeks earlier.

The Mid-term Indicant was signaling hold for 296-stocks and funds of the 345-tracked two years ago on May 11, 2007. They were up by an average of 121.6% (annualized at 64.0%) since their respective buy signals an average of 98.8-weeks earlier. The Mid-term Indicant was avoiding 31-stocks and funds at that time. They were down an average of 13.7% since their respective sell signals an average of 25.3-weeks earlier.

There were 272-stocks and funds with hold signals on May 12, 2006 since their buy signals an average of 96.0-weeks earlier. They were up by an average of 131.2% (annualized at 71.0%). There were 71-avoided stocks and funds at that time. They were down by an average of 7.9% from their respective sell signals an average of 18.5-weeks earlier.

On May 13, 2005, the Mid-term Indicant was signaling hold for 201-stocks and funds out of 320-tracked. They were up by an average of 93.9% (annualized at 54.5%) since their buy signals an average of 89.6-weeks earlier. The Mid-term Indicant was avoiding 117-stocks and funds at that time. They were down by an average of 28.0% since their sell signals an average of 54.7-weeks earlier.

Five years ago, on May 8, 2004, there were 219-hold signals for stocks and funds out of the 296 tracked by the Mid-term Indicant at that time. They were up an average of 70.8% (annualized at 70.8%) since their respective buy signals an average of 56.5-weeks earlier. There were only 28-avoided stocks and funds then. They were down an average of 12.8% since their respective sell signals an average of 15.8-weeks earlier.

On May 10, 2003, there were 266-stocks and funds with hold signals from the listing of 296-tracked by the Mid-term Indicant at that time. They were up an average of 32.0%, annualizing at 101.5%, since the buy signals an average of 16.4-weeks earlier. There were 17-avoided stocks and funds then. They were down by an average of 31.9% since their sell signals an average of 30.7-weeks earlier. There were 119-buy signals on Mar 22, 2003, which was the beginning of a nice Mid-term Bull Leg that lasted through that year. Most continued to hold through the meandering bear of 2004 and early 2005. Several did not receive sell signals until late 2007 and early 2008 since those March 2003 buy signals.

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

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

Link to this week’s buy and sell signals.

As repeatedly stated, do not hold more than 10% of your investment resources in a single stock and do not hold more than 20% of your investment resources into a single mutual fund. Also, never fall in love with a stock or fund. Only love the value of your portfolio. Never love its contents. Management stupidity can wreak havoc on any stock or fund at any time. Socio-economic interference can devastate your holdings from time to time. Right now, the pendulum is swinging to the left. That is not good for stock equity related investing.

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

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

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

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

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

The current Near-term Indicant’s Bull is solid in spite of its illogical behavior. The Near-term, Quick-term, and Short-term models are insensitive fundamental reason. This Near-term is solid and has been increasingly so with support from the Quick-term Indicant. There have been a few Quick-term buy signals the past few days for the first time in several months.

There are some early signs the Near-term Indicant is nearing a peak. Vector Pressure is at or near a maximum value. Force Vector is not being as responsive to bullish rallies, as it was earlier in the cycle (early March). However, until you see Near-term sell signals, the Near-term bull will remain in tact.

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

http://www.indicant.net/Members/Updates/STI-Mkts/STI-10-Indices/STI08.htm

The Quick/Short-term Indicant Stock Market Report

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

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

The Indicant Stock Market Report’s Secular Market Blend

The Dow is up 17.7% since its secular weekly low on October 9, 2002. The NASDAQ is up 56.1% and the S&P500 is up 19.6% since then. The small cap index, S&P600, is up 60.4% since October 9, 2002. All of the major indices were at new lows on the same week in 2002, which is a common attribute for bottoming. Interestingly, the NASDAQ100 is up 72.7% since October 9, 2002, which is more than the other major indices. RIMM, Apple, and a few others who have strongly performed are the primary contributors. Now, the current economic environment is challenging them. They did not participate in last week’s bullishness. That is a source of concern at this time.

The Dow is down 39.5% since its last weekly closing peak on Oct 9, 2007. The NASDAQ is down 39.2% since its last peak on Oct 31, 2007. The S&P600-small cap index is down 38.5% since its last closing peak on Jul 19, 2007.

The NASDAQ is down 65.6% since its last weekly secular peak on March 9, 2000. The S&P500 is down 39.2% since its similar secular peak on March 23, 2000. The Dow is down by 26.9% since January 13, 2000 when it peaked from the 1990’s roaring bull. As stated the past several years in this report, do not be surprised at the NASDAQ equaling its March 9, 2000 high until after 2025.

As socialism increases, the NASDAQ may not hit its 2000 peak until after 2050. Even that depends on resurgence in entrepreneurialism and related capitalism. Politicians screwed up the economy and the majority apparently believes their proposed fixes.

The good news is the politicians in Washington D.C. have reduced their power by weakening their already weak constituents. International competitiveness will continue reducing their power and influence. With that, capitalists around the world will continue providing products of appeal, while politicians continue exuding irrelevant commentary. Let’s just hope that products of appeal is not weaponry, alone.

The Dow is down 2.3% so far this year. The NASDAQ is up 10.3% so far this year. Keep in mind the post election year is the most bearish and has lost money since 1832. So far, the stock market is conforming to this historical standard, but the NASDAQ is currently arguing with that standard.

The NASDAQ year-to-date performance was bearish by 11.0% through this week in 2001. Keep in mind the NASDAQ finished 2001 down by 21.1%., which was congruent with standards of post-election-year-bearishness.

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

The NASDAQ YTD 2003 performance was down by 4.3%. It finished up in that solidly bullish year by 50.0%, which was consistent with historical pre-election year results. It was down on this weekend in 2004 by 4.3% and finished up by 8.6% for that year, which was congruent with election year bullishness although shy of magnitude standards.  It was down by 9.6% in 2005’s post election year, which maintained congruency to the historical standards of losses. Many of you recall that 2004 and 2005 were meandering bear markets. 2005 finished up by a mere 1.4%, which was an excellent year based on post election year historical standards. In 2006, it was up 6.3% on this weekend and finished that year with a 9.5%-gain, which again maintained congruency of historical bullishness for a mid-term election year. It was down by 6.5% at this time in 2007 with the Alan Greenspan scare but finished up that year by 9.8%, which was consistent with pre-election year bullishness. It was down 7.6% at this time last year. The NASDAQ finished down by 40.5% in 2008. That was contrarian performance to historical election year bullishness and the most bearish presidential election year since related records from 1832.

So far, this presidential post election year is performing consistently with historical standards. The capital markets understand socio-political influences are predominant in the first year of most incoming administrations and thus generally non-bullish. Politicians offer nothing pertinent to the quality of life, including health or wealth. They “talk about it” but just one RN offers more toward health and one good entrepreneur offers more toward wealth than the collection of all politicians, kings, queens, and dictators since the beginning of time. Those “control freaks” only talk and rob folks of their wealth and health.

Keep your eye on the daily stock market report.

Stop Loss Management

The Mid-term Indicant recommends a trailing stop loss of 8% due to increasing bullish influences for your longer-term holdings. The Mid-term Indicant for major indices is supporting with a bull signal while it is much more conservative in signaling buy for funds and stocks.

Most of the longer-term holdings of stocks and funds continue with “avoid” signals, but a few are still holding. The risk of continued holding, even for the likes of Apple, remains relaxed.

If you feel you will need cash within the next two years, you should consider selling all stocks and funds. (The Indicant is not signaling hold for any mutual funds, including those that short the market at this time). The ETF’s are signaled on the Near-term, Quick-term, and Short-term Indicant and are updated daily. These shorter-term models participate in bullish spurts, while the Mid-term Indicant is focused on fundamentals and longer-term technical data, which remains bearish.

If your stock or fund is above the bearish yellow curve and below the green curve, set your stop loss equal to the greater of the yellow curve and the trailing stop loss. If your stock or fund is above the green curve, set your stop loss at no less the value of the green curve or 8% trailing, whichever is greater. If your stock or fund is above the red curve and you bought at the Mid-term Buy signal, you should use the 10% trailing stop loss.

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

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

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

Economic Conditions – Inflation, Currency, Interest Rates

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

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

You can see some early warning signs of impending inflation. Oil prices are beginning to rise. OPEC will be meeting a few weeks and a supply reduction is being anticipated. Demand for fuel will not subside with increasing socialism. Research and development for alternative fuel sources will slow down during this socialistic phase of humanity. That will be inflationary. The capitalistic system will elevate the economy; nothing else will. If socialism existed to the extent of today in 1900, we would still be traveling by foot or horse and buggy.

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

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

As stated the past several weeks, the idea of capitalism is to borrow or capitalize and expanding the supply of money (wealth) through productive effort. That is not what is going on right now. Wealth creation will continue to slow and maybe even capsize. With that, there will be a reduction of the quality of life, which typically leads to war.

However, as the world shrinks and asset ownership is not isolated geographically, world wars will diminish as an option to overcome displeasure. It will be interesting to see what replaces it. Displeasure by the masses is certainly not an ever-lasting option. In the end, though, those with the most talent at physical object creation are always the winners.

The U.S. dollar continues enduring resistance in strengthening its bullish cycle. The dollar’s significance as an international currency is now under attack by the Chinese, who will eventually become the economic world power. The United States has been weakened severely by its “tyranny by the majority” and excessive focus on socio-economic programs that have absolutely nothing to do with cultural strength and economic wealth. The printing presses and “politburo style politics” in the U.S. will reduce the dollar to just another world currency.

The U.S. economy is perceived to have the greatest chance of returning to robustness when compared to other countries. As stated the past fifteen weeks, the exception to this is China, who may or may not need U.S. consumption to bolster their economy. A weakening dollar against the Yuan may enjoy a longer-term labor relationship with the West. However, the stock market is focused only on the next six to nine months. China’s government can undo this bullish outlook for China in seconds, so keep your eye on it (the government). Their political leaders are no different from ours; that is they have the same “control freak” psychological problems as those of the west.

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

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

As stated 30-weeks ago, once the euphoria of the socialistic methods are complete, rest assured the bear market will continue and with gusto. This is not technical. This is fundamental. You will see that prognosis continuing in spite of recent bullish expressions.

As stated 26-weeks ago, “probabilities remain high that any bullish cycle will be followed by a deep bear market in 2009. If taxes are raised on the highly productive and capital gains, do not be surprised at a 1,000 Dow by 2010.”

As stated 22-weeks ago, this bear has teeth, is hungry, and is nowhere near expiration. Cyclical spurts of a bullish configuration will occur from time to time, but the trend should remain bearish throughout this year and into 2010. Bullish spurts will occur from time to time. As we learned from the November 28, 2008 – January 21, 2009 bullish spurt, profit potential from them is limited and in some cases disappoint rather rapidly. The attempted spurt on Feb 6, 2009 faded quickly and expired on Feb 19, 2009. The short-term trader will trade on those spurts, which is occurring now, while mid-to-long-term investor should remain on the sidelines. Finally, the current spurt underway has potential for sustainability through April and as you saw, it did that. So far, it has performed well. April has now concluded and the Near-term Indicant is now the primary focal point. As of this writing, it is still bullish.

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 162.2% from its April 13, 2001 buy signal until the Mid-term Indicant sell signal on October 3, 2008. It is down 20.4% since that sell signal. It has been bearish in ten of the last 18-weeks. It has been bullish the past four weeks.

Fidelity Gold, Fund #28 is down 7.0% since the Midterm Indicant signaled sell on August 1, 2008. It was bullish last week, following solid bearishness the past five weeks.

Vanguard Energy #18, VGENX, was up 144.9% from since the Mid-term Indicant buy signal April 5, 2003. It received a sell signal on October 3, 2008. It is down 7.0% since that sell signal. It has been bullish in seven of the last eight weeks.

Fidelity Energy Services #40, FSESX, was up 107.2% since the Mid-term Indicant signaled buy on December 6, 2003. It received a sell signal on October 3, 2008. It is down 20.5% since that sell signal. It has been bullish the past nine weeks.

State Street Research Global #9, SSGRX, was up 174.2% from its August 16, 2002 buy signal to the Mid-term Indicant sell on October 3, 2008. It is down 37.7% since that sell signal and enjoyed bullishness the past few weeks, including the past three weeks.

Fidelity Energy #39, FSENX, was up 81.2% since the Mid-term Indicant signaled buy on August 16, 2003 and the sell signal on October 3, 2008. It is down 5.5% since that sell signal and bullish the past few weeks.

Following three weeks of solid bullishness and one week of mixed behavior, energy related funds have been bullish the past three weeks. They have endured significant bearishness in 19 of the last 38-weeks, but significant bullishness in seven of the last eight weeks. The balance of supply and demand for oil appears to taking hold and with that, pricing stability. Also, OPEC is expected to cut production in the near future.

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

The Near-term Indicant signaled buy for ETF#03 – Energy and Natural Resources on April 3, 2009. It is up 12.6% since then, annualizing at 130.1%. The Quick-term Indicant continues to signaled buy on May 4, 2009. It is up 5.5% since then, annualizing at 492.6%. It was up 242.4% (annualized at 44.8%) since its previous buy signal on March 26, 2003 until the September 2008 sell signal.

The Quick-term Indicant signaled buy for the GLD-ETF#11 on December 11, 2008. It is up 11.6% since that buy signal, annualizing at 28.1%. It gained 81.4% from its August 3, 2005 buy signal until the September 8, 2008 sell signal. Its annualized gain during that hold period amounted to 26.0%.  The Near-term Indicant signaled buy on April 24, 2009. This is a technical buy with not real strong attributes. Vector Pressure is drifting south. It is up 0.3% since the Near-term buy signal, annualizing at 7.5%.

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

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

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

The Mid-term Indicant signaled bull on April 3, 2009 for the ten major indices. The ten major indices are up 8.9% since then, annualizing at 464.1%. This “reluctant bull signal” was due to the strongly configuring near-term and quick-term bullish indicators. Do not be surprised at a bear signal once this short-term bullish cycle completes.

Click this sentence to view a summary of their performance.

The Mid-term Indicant Dow Jones Industrial Average performance is at $27,276,738.

That beats buy and hold performance of $1,304,526 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $133,158. That beats buy and hold’s $91,021 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $174,525. That beats buy and hold’s $60,298 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 1990.9%, 46.3%, and 189.4%, 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 Mid-term Indicant 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 approximately 2,000% covering the past 100+ years. It will not be surprising to see the Mid-term Indicant outperform buy and hold by over 3,000% before the end of this decade, as the bear will gain momentum.

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

Mid-term Indicant Positions - NASDAQ100 Stocks

Click here to see NASDAQ100 report card history.

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

Mid-term Indicant Positions - Dow Jones 30 Industrial Stocks

Click here to see Dow 30 report card history.

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

Mid-term Indicant Positions - Dow Jones 15 Utility Stocks

Click here to see Dow Utilities Report Card history.

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

Mid-term Indicant Positions - Indicant Selected Stocks  

Click here to see Indicant Select Stock Report Card history.

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

Mid-term Indicant Positions - Mutual Funds

Click here to see Mutual Fund Report Card history.

The Mid-term Indicant signaled sell for ProFunds Ultra Short on April 3, 2009. It is down 12.8% since then. It is too risky to hold with the Near-term and threatening Quick-term bull cycle. Although this is classically a post-election-year hold, current technical indicators are advising to avoid this fund until the Near-term bullish cycle expires.

Click here for Mid-term Indicant Table of Mutual Funds

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

Long Term Indicant Positions - Dow Jones Industrial Average

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

The Dow is up 183.7% (annualized at 11.2%) since the Long-term Indicant signaled bull 914-weeks ago. Economic data is the primary influence on the Long-term Indicant. Recessions, deflation, inflation, and unreasonable interest rates have not been strong enough to signal bear since that bull signal. Even with today’s economy and stock market position, the 1991 investor is still up triple digit amounts, which remains above average performance when considering long-term planning. However, the Long-term Indicant is getting very close to signaling bear. A link to the Long-term Indicant is below:

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

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

Short-term Indicant Stock Market Report - Summary

Near-term bullish bias configured on March 31, 2009 with a solid bounce off of Blue. That attribute suggested this is not a short-term bullish spurt, but with a high probability of sustainability. The average duration of a Near-term cycle ranges from 10-14 weeks. (This one is ten weeks old ).

Several indicators are moving north; Bullish Blue, Bearish Green, and Vector Pressure. Force Vector cycles are mature and continue hovering in bullish domains, which correlates to cyclical sustainability on a short-term basis. They can linger there for several more weeks before the Near-term Bull expires. There are several Quick-term Red Bulls, which mitigates dynamic bearish threats. It only takes one non-contrarian Red Bull to offer this obstinate resistance to bearish dominance.

Keep in mind, this Near-term Bull is fighting the trend, which is bearish. The Quick-term bearish yellow and bullish red curves continue moving south. Recent Red Bulls are challenging this bearish trend, but have not yet overcome it with the required breadth, but getting close to doing so.

On the other hand, keep in mind, classical bear market rallies do this. They make contact with one of the Quick-term Indicant curves, angering the bear. The Near-term Indicant will assists in determining if the bear has bite or just a harmless growl.

As stated the past several weeks, this Near-term cycle appears bent on contacting the Quick-term Red and/or Yellow Curves. That has now transpired with the exception of the Dow Utilities. This is a common occurrence in bear markets. The Quick-term curves are sloping to the south, so it will not take much bullishness for  this “technical achievement.” Once contact is made, dynamic bearishness usually follows. The breadth of contact is no longer minimal, as Red Bulls now hold a solid majority of the ETF’s and all but one of the major indices.

The focal point will be on Force Vector’s interaction with Vector Pressure. The Near-term Bull does not want to see Force Vectors move solidly to the south into bearish domains. When Force Vectors cross into bearish domains and prices fall below bearish green, you will know that Near-term Bull will be nearing expiration. Early warnings will be highlighted by collapsing NTI bullish blue curves. That should be several days from now, but it can change quickly.

As stated last Thursday after the market closed, Thursday’s bearish expression did not inflict any damage to the Near-term Bull. Price retractions with overly elevated prices relative to bullish blue are required. The Near-term Bull is without threat until prices fall below bullish blue with supportive Force Vector behavior.

Previous comments regarding XLF and UGY are still pertinent. Please click this sentence to link to prior comments. XLF received a near-term buy signal on March 31, 2009. If you enjoy higher risks and related reward potential, you may prefer buying UGY. They are configured identically.

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

The Near-term Indicant signaled bull for the eleven major indices on Mar 31, 2009 and bear for Contrarian VIX on the same day. The 11-major indices are up by an average of 16.3% since that bull signal, annualizing at 156.3%. The VIX is down 27.8% since its bear signal.

The Quick-term Indicant signaled bull for two more major indices today. In addition to those two new bull signals, it is signaling bull for eight major indices. They are up by an average of 2.6% since their respective bull signals an average of 1.4-weeks ago. The DJU is the lone bear. Including contrarian VIX to the DJU, those two indices are down by an average of 19.7% since the QTI signaled bear an average of 22.6-weeks ago.

On-going attribute watch for majo