May 30, 2010 Indicant Weekly Stock Market Report

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

Lawlessness, Egomania, and Constitutional Amendments

The term, illegal, suggests a violation of law. The United States and several other countries are nations of law. Breaking the law has traditionally resulted in punishment of some sort when caught.

It is interesting that some of the political elite say the phrase, “illegal aliens” and then pontificate as if no crime is committed with illegal aliens residing in the U.S. One could argue that the political elite are harboring a safe haven for violators of the law and thus are law breakers, themselves. In essence, these political elites should be arrested. Some of the established elite argue that point. Some even do it with a straight face on national television. These so-called elites have biased their thinking that suggests they know better than what is written and recognized as law. Their proclamation, by default, is “we are wise and the law is not as wise.”

The executive and legislative branches of the U.S. Government are posited at the highest organizational level of the nation’s law. The judicial branch of government is charged to keep the other two branches of government in check. The other two keep each other in check. However, as we have seen the past several months, sometimes the executive and legislative branches sing from the same hymnal. Since none of these three branches of government creates economic value, a high level of activity on their part is economically damaging and very much so.

The founding fathers of the U.S. Constitution obviously recognized the importance of being distrusting of happenstance politicians and people in general. In essence, they designed a system that minimizes the rise of evil empires. Unfortunately, they did not completely eliminate it. Some among the political elite have recently suggested the U.S. Constitution could be outdated. Some suggested amendments are recommended later in this report.

Just using the phrase, illegal aliens, suggest “case close.” If the political elite simply said aliens, then one could argue that people who sneak into the U.S. are not illegal. All they forgot to do was fill out some paper work. However, when one says, illegal aliens must be protected, suggests the speaker is supporting a break from law. If that person is an employee of the government, should they be arrested for breaking the law? After all, employees of the government are charged with enforcing the law.

Regardless of the legitimacy of the laws defining foreigners as illegal, it is the law. However, several among the legislative and executive branches of government express opinions contrary to law. In essence, those political elites are promoting lawlessness. They are pretty much two-dimensional folks and have not thought of the strategic long-term consequences of promoting lawlessness.

The problem with the political elite for the past hundred years or so is their increasing and excessive meddling in social issues. These meddlers unconsciously do not like themselves, albeit with massive egotistical mania. This unconscious disliking of oneself is a complex subject, but is clearly provable. After all, just entering politics means you have joined the ranks of other politicians. The only sure conclusion from doing is ridicule via hateful commentary by ones’ peers in the political fraternity. There is no argument, as we see this all the time; sometimes accurately so; sometimes inaccurately. These people are inflicted with egomaniacal desires, but yet, are not fond of themselves. Everything they desire is directed through controlled coercion.  It is hard to like oneself with that sort of attitude, as opposed to promotion or producing products of appeal.

Because they unconsciously have a self-inflicted disdain for oneself, they tend to think even lower of the populace who elected them. They reason that the majority must be stupid since they voted for such a pitiful soul. The newly elected then think along the lines of needing a sensation of being important. Standing on guard to protect the populace from foreign enemies will not do the trick for their diseased brains. That is not enough, unless, of course, the country is besieged with foreign invaders. That would damped boredom and feed their desires of being important. However, the greatness of 200-plus years of solid capitalism, no potential source of foreign invasion would dare attack. The last time that happened resulted in a humbling experience for the attacker.

So, politicians tinker with society and feeding their desires of being important. This tinkering always worsens society. Without politicians, the average life expectancy would already be approaching two hundred years of age. However, with them, it is not that much unchanged in the past two hundred years, excluding those shot with bows and arrows and small pox issues. Most modern day politicians promote zero population growth.

Politicians do not trust the populace to do the right thing from their frame of reference. The political elite feel they need to direct nearly everything. Their priorities are based on two principles; a sensation of being important and the populace are not that bright.

Here is a recent example. The people of Pennsylvania have been electing Senators for the past 230-years or so. They, like most states, can only elect those who desire to run for political office; egomaniacs.  Since the early 1900’s, only those inflicted with egomania run for political office. Prior to that, most politicians had another job and were more apt to making good decisions. So, Pennsylvania, like most states, must elect the least worse candidate. Most among the populace are used to doing that. We always vote for the least bad candidate. Great people, such as Babe Ruth, Ben Hogan, Henry Ford, Thomas Edison, Nicola Tesla, Bill Gates, or Michael Dell, etc. never run for political office. Only those with a gift to orate and with egomaniacal desires seek political offices.

The political elite in Washington D.C. do not think the citizens of Pennsylvania are capable of electing the least bad candidate. The political elite of Washington D.C. think they know better of who the candidates should be. Therefore, they bribe other candidates, such as Joe Sestak, to abandon his bid for the Senate. The political elite do not feel the people of Pennsylvania are capable of selecting a single choice from a simple multiple-choice question. In essence, the political elite want to feel they are in complete control when in fact they control very little of the essence of life. They depress it.

Of course, the system is better than most other contemporary systems around this world. At least the populace expressed its right to elect the least bad candidate, Joe Sestak, in spite of Washington D.C. politicians’ desires for others on that multiple-choice list.

Here is an example of the burgeoning problem that illustrates why all prior democracies have failed. The top 10% of Americans pay 60% of the income tax collected by the IRS. The bottom 40% of Americans pays no income tax at all. Egomaniacal politicians, such as Hillary Clinton, recently stated that wealthy Americans do not pay enough tax. That is because very few, if any, of the top 10% are going to attend political rallies. None of them are stupid enough to jump up and down with joy at any political rally. Hillary would not get that strong sensation of being important if only the top 10% attended her political rallies. However, those among the bottom 40% that pay no income tax go to those rallies. They jump up and down with joy at every political utterance. Hillary knows this and very much enjoyed those political rallies from 2008. She, like all politicians in any democracy, is catering to those with the most votes; the 40% that pay no taxes. Once they get it to 51%, this democracy will fade and fade fast.

The founding fathers framed the U.S. Constitution at a time when most people worked very hard and actually earned all of their possessions. They could not fathom ideas such as unionism, huge government payrolls, and government employees un-earning their income while surfing the internet for pornography. There are solutions to this problem.

In response to the social and political elite who suggest the U.S. Constitution is out of date, here are a few recommendations for amendments, keeping the original document in tact. The solution to preserving the Republic of the United States is to amend the U.S. Constitution. Here are some proposed amendments:

1.      If you pay no income tax, you cannot vote.

2.      If you pay no income tax, you cannot own a house; you must rent.

3.      If you are an employ of the United States government, you cannot vote.

4.      If you are a member of any union, you can vote within the union, but you cannot vote in any political election in the United States.

5.      If you are elected as a Congressman, your salary will be the average of all non-union, non-government workers in your district. Welfare recipients will be included in the averaging. In other words, the more people on welfare, the lower Congressman’s salary.

6.      If you are elected as a Senator, your salary will be the average of all the Congressmen from your state.

7.      All elected representatives will have no staff.

8.      All elected representatives will have to type their proposed changes to law via an old fashion typewriter. Computers will be forbidden since they consume a lot of power and even more in their production. Taxpayers will foot the bill for typing lessons for their elected officials.

9.      All elected representatives will pay their own living expenses.

10.  If an elected official promoted and voted for cap and trade and similar legislation, your only means of travel between your residence and Washington D.C. will be by horse and buggy. You will have to lead by example.

11.  Your residence that you pay for in Washington D.C. will be without any electrical wall sockets, no air conditioning or heating, running water, and flushable toilets. Teepees are okay and welcomed. The Federal Government will reimburse you for the ax and wood splitter you will have to purchase. Taxpayers will not object to this.

12.  You cannot purchase clothes since the production of store bought clothes consume huge amounts of the earth’s finite resources. During your buggy rides to and from Washington D.C., you will be permitted to shoot for game across state lines so that you can skin it for your clothing and food. This is another one of those lead by example things.

13.  You cannot shop at supermarkets or grocery chains. After all, tremendous petro resources were used to produce and transport those goods to those stores. Again, this is one of those lead by example things.

If the United States Constitution were amended tomorrow, as noted above, the Dow would be at 50,000 before yearend and the NASDAQ well above its March 2000 peak. The dilettantes running the rest of the world would have to run and hide. Horse buggy and horse feed producers would be a good buy. With that, though, animal rights activists would lose their right to vote, as well. Apparently, their brains are not busy and we do not want them voting, as well. Irrationality in all forms must be eradicated from the political process and in society. Now, that would be bullish; very bullish.

Keep your eye on the daily stock market report.

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 signal and no sell signals.

The Mid-term Indicant is signaling hold for 209 of the 333-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 29.2%. That annualizes to 31.3%. The Mid-term Indicant has been signaling hold for these 209-stocks and funds for an average of 48.5-weeks.

The Mid-term Indicant is avoiding 107-stocks and funds of 333- tracked by the Indicant. The avoided stocks and funds are down an average of 18.1% since the Mid-term Indicant signaled sell an average of 74.8-weeks ago.

One year ago, on May 29, 2009, the Mid-term Indicant was holding only 21-stocks and funds out of 344 tracked for an average of 98.6-weeks. They were up by an average of 124.6% (annualized at 65.7%). There were 322-avoided stocks and funds at that time. The avoided stocks and funds were down an average of 27.5% since their respective sell signals an average of 51.6-weeks earlier one year ago.

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

There were 313-stocks and funds with hold signals on May 25, 2007 since their buy signals an average of 100.5-weeks earlier. They were up by an average of 122.3% (annualized at 63.3%). There were 31-avoided stocks and funds at that time. They were down by an average of 13.6% from their respective sell signals an average of 26.9-weeks earlier.

On May 26, 2006, the Mid-term Indicant was signaling hold for 234-stocks and funds out of 345-tracked. They were up by an average of 142.5% (annualized at 70.6%) since their buy signals an average of 104.9-weeks earlier. The Mid-term Indicant was avoiding 100-stocks and funds at that time. They were down by an average of 5.6% since their sell signals an average of 15.9-weeks earlier.

Five years ago, on May 27, 2005, there were 208-hold signals for stocks and funds out of the 320 tracked by the Mid-term Indicant at that time. They were up an average of 98.6% (annualized at 58.0%) since their respective buy signals an average of 88.4-weeks earlier. There were 112-avoided stocks and funds then. They were down an average of 25.8% since their respective sell signals an average of 56.8-weeks earlier.

On May 28, 2004, there were 229-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 79.7%, annualizing 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 by an average of 12.6% since their sell signals an average of 18.4-weeks earlier.

There were 286-stocks and funds with hold signals on May 30, 2003. They were up by an average of 41.5%, annualizing at 118.7%, since their buy signals 18.2-weeks earlier. The six avoided stocks and funds were down an average of 24.9% since their respective sell signals an average of 27.3-weeks earlier.

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

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

Click this 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. Governmental and political behavior can have immediate and long-lasting unfavorable influences on the capital markets.

Some companies will perform well, regardless of the depth of the bear market. Buy signals will be muted if Congressional action threatens the capital markets. Legislation, regulation, and politicians are the biggest threat to the stock market bull.

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

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

The Long-term and Mid-term attributes have not yet succumbed to the stock market bear’s ambition. The Short-term Indicant is now being dominated with bearish attributes.

The Near-term cycle shifted in support of bearish inclinations in early Feb 2010, but quickly abandoned bearish bias in early March 2010. However, the past three weeks resulted in several sell signals for ETF’s due to bear attacks. The Dow Utilities also shifted in favor of the bear on a Mid-term basis in early Feb 2010. It remains pathetically configured with respect to bullish ambition. Some of the other indices joined ranks with the Dow Utilities last week, as they crossed below the Quick-term bearish yellow curve. The bull/bear battle is now being waged around this bearish yellow curve.

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

Stop Loss Management

The Mid-term Indicant recommends a trailing stop loss of 8%. For your longer-term holdings where you are enjoying triple and quadruple digit gains, you may want to set your stop at the bearish yellow price.

Floor traders are aware of stop loss positions. If prices near those stop losses against the grain of directional bias, the floor traders will drive the price down to those stop losses and then buy for themselves and then quickly sell for profits at your expense. Although seemingly immoral, it is the nature of free markets and contributes to the desired liquidity of stock markets. This is one reason why stop losses should be well below prevailing prices but well above your buy price. That perfection, of course, is not attainable shortly after buying, which is the most dangerous period for holding.

Long after a successful buy, monitor prices relative to the bearish yellow curve. That will minimize the number of trades, while protecting portfolio values.

For new buys, set stop losses at the blue or green values in the tables. If green is deeply lagging the prevailing price, you may want to average the blue and green prices for your stop losses. If the green curve is rising, set the stop loss just below it. Green is a common bouncing point so a stop loss a percentage below its value could be considered. Once green passes above your buy price, then adjust your stop losses, periodically, say weekly, at or just below green. Once yellow passes above your buy price, you may want to set the stop loss at the yellow price. That is a good tactic when longer-term holding positions are supported with expected fundamentals and your enjoyment of owning a piece of a great company or fund.

If your stop loss triggered sell, while Indicant continues signaling hold, normal advice would be to buy again. However, if the Near-term Indicant is signaling bear/avoid, it is better to wait for specific buy signals from the Mid-term Indicant. In other words, other opportunities will be presented.

The ETF’s are signaled on the Near-term, Quick-term, and Short-term Indicant and are updated daily. These shorter-term models attempt participation in significant bullish spurts and rallies, while the Mid-term Indicant is focused on fundamentals and longer-term technical data.

The Indicant Stock Market Report’s Secular Market Blend

The Dow is up 39.1% since its secular weekly low on October 9, 2002. The NASDAQ is up 102.6% and the S&P500 is up 40.3% since then. The small cap index, S&P600, is up 106.9% 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 NASDAQ is down 55.3% since its last weekly secular peak on March 9, 2000. The S&P500 is down 28.7% since its similar secular peak on March 23, 2000. The Dow is down by 13.5% 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 believed their proposed fixes in the 2006 congressional and 2008 presidential elections. All democracies eventually fail by virtue of tyranny by the stupid majority. We may be witnessing the early stages of that phenomenon, although recent events are suggesting resistance against the lazy brains of the 2006 and 2008 majority. More will be learned in Nov 2010. If the majority has their hands out, the markets will continue in their secular decline, using the pivot year of 2000. Since 2000, the capital markets are down. They will continue moving down if the majority has their hands out to their respective governments.

Politicians are now attempting to impose more constraints on business expansion and thus the continuation of wealth destruction should not be surprising. Politicians have deemed obsolete the normal efficiencies of capitalistic cleansing of the incompetent. That will wear down the capital markets as politicians continue their neurotic desires to expand their influence and control. Those leeches will eventually kill their host, but like all leeches, they continue on sucking away.

The NASDAQ year-to-date performance was bearish by 8.9% through this week in 2001. The NASDAQ finished 2001 down by 21.1%, which was congruent with standards of post-election-year-bearishness.

The NASDAQ was down by 15.3% through this weekend in 2002. Some of you recall the dynamic bear market in 2002, where the NASDAQ finished that year down by 31.5%. The bear cycle found bottom in October 2002, which was consistent with the mid-term year’s historical standards of finding bottoms in mid-term election years.

The NASDAQ YTD 2003 performance was up by 17.1%. 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 4.6% in 2005’s post election year, which was consistent with historical standards of losses and/or minimal gains. Many of you recall that 2004 and 2005 were meandering bear markets. The post election year of 2005 finished up by a mere 1.4%, which was an excellent year, based on post election year historical standards of bearishness.

In 2006, the NASDAQ 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 5.9% at this time in 2007 and finished that year in positive territory by 9.8%, which was consistent with pre-election year bullishness.

The NASDAQ was down by 6.2% on this weekend in 2008. It finished down by 40.5% in 2008. That was extreme contrarian performance to the standards of historical election year bullishness. It was the most bearish presidential election year since related records from 1832.

The NASDAQ was up 11.1% at this time last year. It finished 2009 up by 43.9% in extreme contrarian performance to historical standards. Keep in mind, this extraordinary bullish cycle in 2009 finished that year down by 20.6% from its prior Mid-term cyclical peak on October 31, 2007.  That extraordinary bullishness will be viewed by historians as a mere spurt (reverberation) from 2008’s severe bear market. The 2008 bear market more accurately reflected economic fundamentals than the 2009 bull market. Much of the 2009 bull market correlated well with declining political popularity.

The Dow was down 4.2% on this weekend last year but finished 2009 up by 18.1%. Although post election years are generally bearish, the Dow’s gain for 2009 was slightly below the average gain during years with post-election-year bullishness.

The Dow is down 28.4% since its last weekly closing peak on Oct 9, 2007. The NASDAQ is down 21.1% since its last peak on Oct 31, 2007. The S&P600-small cap index is down 20.6% 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.

Most 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 weekly bottom on November 20, 2008.

The current Near-term Bear cycle, originating during the weeks of May 9 and May 16, 2010, may not fall below the March 9, 2009 cyclical bottoms. Even with that, statistics supported by 100% confidence, suggest the Reverse Tangential Projections will occur at some future point. Those projections are above these cyclical bottoms, but well below prevailing prices.

Although exact simultaneous bottoming did not occur on March 9, 2009, tracking from that pivot-point has been and will continue to be appropriate. This inexactness lends credence to the reverse tangential projections with short-term view, albeit mildly so. Consequently, March 9, 2009 is the pivot date to monitor performance since the March 2009 bottoming from the 2007-2008 bear cycle.

The Dow is up 53.8% since March 9, 2009. The NASDAQ is up 77.9% and the S&P500 is up 61.0% since then. The S&P600, Small Cap Index, is up 94.4% since March 9, 2009. That March 2009-January 2010 bull leg was indeed powerful, but such cycles have occurred many times in the past only to be followed by bear cycles of varying breadth and depth. The Mid-term Indicant does not suggest impending bearishness, which is supported by the Short-term Indicant. Until the past four weeks, Near-term attributes were bullishly supportive, but continuing with bearish favorability.

Stock market corrections after such a rise do not need too much of an excuse to meander or even worse. Governments around the world, with the exception of China and possibly Japan, have borrowed too far ahead of real wealth creation. Monetary policies by those “fat governments” will not come from within, but with the harsh reality of their repeated impositions to real wealth creation. There is an upper limit to leech consumption, relative to the capacity for leeched items. Reality exerts itself without regard to its harshness or failing attempts by intellectuals, whose “real contribution/worth” is closer to zilch. The problem with leeches is their incessant desire to expand their capacity to do so.

Keep your eye on the daily stock market report.

Economic Conditions – Inflation, Currency, Interest Rates

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

Most of the hard economic data such as, interest rates, commodities, and currency exchange rates continue holding relatively constant. The discount rate is no longer a yellow bear. It is attempting a “technical U-turn” from the depths of its prior fall. The sinusoidal waves suggests interest rates are anxious to start rising again. They are doing so in China. Keep in mind, though, that interest rate depths remain as a non-threatening configuration to the stock market bull. The discount rate’s U-turn is to be monitored. It is set by a person with a three pound brain and one never knows when cerebral dysfunction can occur. It can occur at any moment and to make matters worse, such dysfunctional twists are not predictable.

Most of the content in this section remains the same. Until conditions change, verbiage will change very little. The idea here is not entertainment, but retention of facts in spite of boring repeatability. At some future point they will change and influence drama. Monitoring them regularly is important to anticipate those magical moments.

As stated for several months, rising interest rates would normally threaten the stock market bull. However, they are so low, a prognosis of normalcy borders minutia. In essence, potential rate hikes are irrelevant to the stock market at these levels.

The Fed’s current strategy is to maintain low rates, conflicting with the normalcy of rate hikes during economic recovery. This, coupled with excessive government spending, is a recipe for hyperinflation and/or high interest rates at some future point. That will eventually lead to a stock market bear and high commodity prices, including gold. Keep in mind that the combination of high interest rates and inflation or deflation exceeding an absolute value of 8% has a history of being extremely bearish for both the stock market and the economy. Currently, that is not a threat when considering the United States as a single parameter. The world economy on the other hand is shaping a new dynamic.

Some prognosticate a future with deflation. The combination of prevailing interest rates and the absolute value of inflation/deflation exceeding eight percent produce very aggressive and deep stock market bears. At least that is the history. It does not matter which projection is accurate with respect to the stock market. Inflation or deflation exceeding the limits of tolerance will induce a stock market bear.

Evolving as a force are monetary policies of foreign governments. Projecting the U.S. Fed’s position is becoming a bit more complicated. These projections must now include China and even more recently, that of Europe. Economic leeches around the world continue draining the productive. At some point that will result in unmanageable disproportions between the productive and the non-productive. History suggests this is generally addressed by varying levels of civil discourse. That is usually bearish, depending on location and severity. You have recently witnessed civil discourse in Greece. The question is, how much will this spread? Also, what new political mumbo-jumbo leaders will evolve from such crises? Such crises typically propel militant sort of folks to the top of the political heap. This typically leads to war, which is ultimately bullish, albeit painful.

Some short-term rates have been nudging north the past few weeks. All major cycles, regardless of subject, begin with subtle movements in their favorable or unfavorable future paths. Sometimes there is nothing to it, but sometimes it is that point where one’s hindsight indicates the optimum point in time where one would have enjoyed taking profit-concluding action.

The Fed can do little for economic stimulation. Interest rates cannot go much lower. If the economy cools even more, the Fed’s contribution to solutions is limited. In essence, the Fed has laid all its cards on the table. Rest assured the Fed will take every opportunity to enhance its position to influence economic activity. In essence, interest rates will be quick to rise when economic recovery is perceived as real and sustainable. This is one reason why the dollar has been strengthening lately. The Fed backed that up with a hike in the discount rate several weeks ago. Another reason for the dollar’s strengthening is the weakening of foreign currencies. It is not based on the dollar’s merit, but based on European incompetence, laziness, and stupidity.

Oil prices continue vacillating in a range the Saudi Kingdom finds comfortable. As stated for several months, the kingdom continues asserting its leadership and regulating supplies to demands that will result in approximately $80/bbl for a lengthy period. Of course, normal human greed will occur and the result will be military action. Participants remain unknown, but most likely will begin with Israel and Iran, and concluding with the U.S. and Russia and possibly China. Any scenario is bullish for oil prices and bearish for the stock market from a longer-term perspective.

Several weeks ago, commodities began their elevation into the neutral zone from their bullish mini-cycle. Bearish yellow is now in a cyclical shift to the north, supporting a bullish cycle. However, they have been weakening the past few weeks, suggesting potential for a new bearish cycle. As earlier stated, a continuation of these configurations will eventually lead to inflation. Although commodity prices have weakened the past few weeks, their underlying Mid-term cyclical trend remains bullish. China’s credit tightening, coupled with expanding socialism in the West, is strategically bearish in the long-term for commodities and offering a bit of support to the prognosticators of deflation.

More recently, China is now expressing concerns regarding inflation. Commodity prices were rising, but that is against the trend for the time being. They have been taking it on the chin by the commodity bear the past few weeks. Increasing commodity prices will pressure rates more to the north. That will be non-bullish.

Gold is obviously anticipating significant inflationary behavior with paper currencies. It is also buffering portfolios against governmental policies around the world and a related increase is various forms of terrorism, militia developments, etc.

A tremendous amount of paper currency has been added to circulation well ahead of the productive efforts normally required to support those levels. Inflation typically follows that sort of political behavior. Increased socialism will inherently reduce supply of products and services, while paper money in the hands of the incompetent and non-productive will increase demand. At some future point, an I-Pod sort of product may cost well over $10,000. Only the “established elite” will enjoy those sort of possessions, while the masses will have to relearn the drumbeats from their primordial past. Once that nonsensicality has passed, deflation will most likely follow. Interestingly, 2009’s PPI decline was the largest since 1938. Scroll down when clicking the link in the previous sentence.

The stimulus package, which was similar to FDR’s, predictably did not work. If the economy stalls again, more debt will be needed for yet another non-working stimulus, based on the errant thinking of contemporary leadership. The only one that works is a tax cut. That allows money to be used at maximum efficiency; in your hands as opposed to some yawning government bureaucrat.

There is one burgeoning bright spot developing. The Tea Party movement is highlighting the excesses of members of the economic burden/overhead group. Those, who do not add economic wealth, are getting wealthier than those who do. That is a recipe for quite a bit of drama. Union labor management does not understand this phenomenon. You have seen their ignorance displayed in Greece during late April and early May. Most union members in the manufacturing sector also do not understand. They will slowly devolve, as they have been doing for years and many will go to their graves unconscious of the stupidity their union dues supported. More and more will not live the American dream and that is their fault. Politicians will continue catering to those large block of votes, but those large blocks will continue to shrivel. Hopefully, that will reverse the course of excessive economic leeching.

Educated economic overhead members do understand this phenomenon. They are very smart people. They are simply unproductive and do not add economic wealth. That does not deter them, though, from expanding their “taking” capacity. It is always interesting where the breech point occurs. The breech point is where they are slaughtered; either figuratively or physically. Economic wealth production is required in much more magnitude than the capacity to take. Since 2006, there is a gap of concern.

Gold was solidly bullish the past few days. It is moving up almost instantaneously to civil strife in Greece. The optimistic 2012 forecasted price of gold is holding at $1600. The low cyclical forecast for gold is holding at $1300. The meandering forecast increased to $1100. There are no quantifications suggesting a long-term decline in the price of gold in spite of the mysticism guiding its value.

As stated 87-weeks ago, once the euphoria of the socialistic methods begin displaying its harsh reality on the reduced quality of life, 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 the March 2009-January 2010 Bull Leg. That bullish spurt from late Feb through early May turned out to be a fake.

The heart and soul of bullish seasonality concluded a bit earlier this year. The pessimistic outlook for the market has a good chance to unfold now. Politicians successfully ended the conclusion of the heart and soul of bullish seasonality near the end of January 2010 with the president’s state of the union address. Bearishness typically follows those speeches and there was no exception this year. However, the capitalistic system rebounded very well as the capital markets surged a few weeks later in early March and continued doing so until the Greek’s started rioting. Civil strife can spread and do so rapidly. That is bearish. The wars that follow, however, tend to be bullish.

The above and below paragraphs may become obsolete, based on the mid-term elections this year. A high Congressional turnover should at the very least stalemate government; at best garnish enough veto overriding votes to repeal recent political stupidity.

The question remains, is public resistance to healthcare reform and other socialistic endeavors really from the grassroots? If so, and if its political influence results in cessation of the rampant stupidity in Washington D.C., the bull will find that too favorable to acquiesce to the bear on the immediate horizon. Although healthcare reform garnished most of the attention in 2009, cap and trade legislation will depress corporate profits, depress capitalistic adventurism, and thus will eventually depress the stock market. European economic failures threaten the bull as well.

This is getting trickier since nearly one-half of the U.S. population does not pay federal income tax. Coupling that to union voters and government employees, who pay federal income tax, suggests over 50% is permanently in favor of socialism. That does not bode well for the capital markets. A new group of economic leeches is evolving; hundreds of thousands are not making their mortgage payments. They are using mortgage money to buy flat panel televisions and I-Pods, I-Pads, and whatnot. The population of economic leeches is over 50%. Their lack of discipline, though, keeps a fraction of them away from the voting booths. For those of you who have a sense of reality should hope that fractional amount reduces their voting powers to less than 50% of the populace.

There was no bear market in 2009. However, previously mentioned threats remain, “if taxes are raised on the highly productive and capital gained, do not be surprised at a 1,000 Dow by 2010.” The bear was passive between March 2009 and January 2010. It has plenty of time to demonstrate its reflection of a souring culture. The Blue Dogs disappointed in the recent healthcare vote. The lower character elements of society rise to the top of the political elite. That is bearish.

As stated the past 39-weeks, on a positive note, it appears enough of the populace are influencing their political representatives to slow the progress of stupidity in spite of recent escapades by the stock market bear. If this happens, then bearish expectations of great magnitude will be muted. A measure of American voter stupidity will conclude in November 2010. The stock market may anticipate reduced stupidity and with that, the current bull market could continue through 2012, but recent political/leeching events suggest that is now unlikely. Regardless of long-term prognosis, there is nothing wrong in participating in the bull leg now underway, albeit in trouble.

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. The Mid-term Indicant signaled buy on Oct 16, 2009. It is down 3.7% since then. It has been bearish in eight out of the last 19-weeks, but solidly bullish in seven of the last 13-weeks. It was solidly bullish last week.

Fidelity Gold, Fund #28 received a buy signal on Sep 4, 2009. It is up 8.4% since then, annualizing at 11.4%. It was also solidly bullish last week.

Vanguard Energy #18, VGENX, was up 144.9% from since the Mid-term Indicant buy signal April 5, 2003 until its sell signal on October 3, 2008. It is up 1.6%, annualizing at 1.9% since its buy signal on July 31, 2009.

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. The Mid-term Indicant signaled sell on Sep 18, 2009, but endured a sell signal on May 21, 2010 without generating much return. It is down 3.3% since that sell signal last weekend.

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 was down 18.4% since that sell signal and the buy signal on January 8, 2010. The Mid-term Indicant signaled sell for this fund on Feb 12, 2010. It is down 8.6% since that sell signal. Although energy is an excellent long-term investment, cap and trade political threats and moratoriums on drilling in the U.S., coupled with the strengthening U.S. dollar may wreak more damage to this fund than previously computed. It has been solidly bullish the past two 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 3.4% since its buy signal on Sep 11, 2009.

The Quick-term Indicant signaled, sell, for ETF#03 – Energy and Natural Resources on May 20, 2010. It is up 1.7% since then. It was up 242.4% (annualized at 44.8%) since the buy signal on March 26, 2003 until the September 2008 sell signal. It was mildly bearish between the Sep 2009 buy signal and the May 20, 2010 sell signal. The Near-term Indicant signaled sell for this ETF on May 7, 2010. It is down 3.5% since then.

The Quick-term Indicant signaled buy for the GLD-ETF#11 on December 11, 2008. It is up 47.4% since that buy signal, annualizing at 32.0%. 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 27.1%.  The Near-term Indicant signaled buy on April 24, 2009 and it gained 17.3% until its sell signal on Feb 4, 2010. It received a buy signal again from the Near-term Indicant on Mar 2, 2010. It is up 7.1% since that buy signal, annualizing at 29.3%.

Most commodities were bullish last week while the energy services sector was mixed. It will be interesting to see how the moratorium on drilling in the U.S. will play out. Fundamentally, it should be bearish for the energy services sector, while the oil companies should do well since oil prices should move to the north. They will enjoy more profits with less expenses.

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 July 31, 2009 for all ten major indices. The Mid-term Indicant signaled bear on Feb 12, 2010 for the Dow Utilities. It is down 0.9% since that bear signal.

The nine remaining major indices retaining bull signals are up by an average of 14.5% since there respective bull signals an average of 43.0-weeks ago. That annualizes at 17.5%.

The Dow Utilities was the weakest bull since the July 31, 2009 bull signal and again enduring a bear signal. That contrasts with it being the strongest bull from 2003 through the overall stock market peaking in late 2007.

Other than the Dow Utilities, the remaining major indices remain with bullish attributes. The Dow Utilities has been pitifully bullish in this cycle, but it may receive a bull signal once pressure escapes convergence. That possibility diminished the past four weeks with solid market bearishness in three of those four weeks. Last week enjoyed mild bullishness.

The Mid-term Indicant Dow Jones Industrial Average performance is at $29,113,000. That beats buy and hold performance of $1,542,000 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $141,716. That beats buy and hold’s $106,711 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $205,681. That beats buy and hold’s $78,261 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 1787.8%, 32.8%, and 162.8%, respectively, for these indices as of this past week.

The Indicant’s percentage advantage over buy and hold does not change during bull signals. The advantage changes only during bear signals. That is because the buy and hold model has to keep holding, while the 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. If the market remains bullish during this time, we’ll eat crow. It needs bears to outperform.

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 57.8% since then. It will receive a buy signal only if the Quick-term Indicant signals buy for QID. Although this is classically a post-election-year hold, the Mid-term Indicant was unable to signal buy in 2009. The Short-term Bull displayed attributes of a thoroughbred in 2009 and thus no opportunities were available to shorting the stock market since the April 3, 2009 sell signal.

Click here for Mid-term Indicant Table of Mutual Funds

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

Long Term Indicant Positions - Dow Jones Industrial Average

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

The Dow is up 250.2% (annualized at 13.4%) since the Long-term Indicant signaled bull 969-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, including relative performance 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.

Influencing parameters in the LTI include prior bull cycles. The great bull market in the 1990’s was powerful enough to offset the 2008-2009 recessionary bear market in this long-term modeling.

The 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 included in this weekly report. This allows web-based retention records of the daily report for much longer than the last twelve months. This report is in the next section and a mere repeat of the daily report you received on the last trading day of the week, which is usually on Friday evening.

Short-term Indicant Stock Market Report - Summary

Force Vectors reversed course last Thursday, assisting the expected bullish spurt. Friday’s bearish aggression with rising Force Vector’s is adding bearish fervor. Such cycles are short; usually lasting four to eight days under normal conditions. The key phenomenon to monitor is their behavior upon interaction with Vector Pressure and or any attempt to penetrate bullish domains. That interaction should occur next week. If there is no interaction, the bear will gain even more momentum.

Configurations continue suggesting any price rise above NTI Green will be followed by additional bearishness. A few eclipsed NTI Green this past Thursday. A few more ETF’s/Indices have an equal ambition to do so. Do not be fooled by bullish behavior. Bearish bias remains dominant.

As stated for several days, bias strongly favors the bear based on volume relationships, the VIX’s profoundly strong Force Vector, and TLT Vector Pressure’s residence in bullish domains. VIX’s Vector Pressure is strongly elevating into bullish domains, which is bearish for the overall stock market.

Adding to that, an increasing number of ETF’s became yellow bears the past two weeks, in addition to some of the major indices. The QTI bearish yellow curve has been meek in offering resistance to bearish ambitions, even though it finally offered resistance this past Thursday, while offering a weak posture with this past Friday’s bearish aggression. Also, non-contrarian ETF’s and major indices Vector Pressure is succumbing to the gravity of bearish domains. This is bearish.

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

The Near-term Indicant signaled no new bulls and no new bears.

The Near-term Indicant is signaling bull for two major indices. They are up by an average of 22.3% since their bull signals an average of 8.4-weeks ago, annualizing at 138.5%. The bull signals include contrarian VIX, which could be construed as distorting performance.  It is up 40.0% since its Apr 27, 2010 bull signal.

The Near-term Indicant is signaling bear for ten indices. They are down by an average of 3.2% since their bear signals an average of 3.4-weeks ago.

The Quick-term Indicant signaled no new bulls and no new bears. Last week’s QTI bear signals were the first since last July.

The Quick-term Indicant is signaling bull for nine major indices. They are up by an average of 27.5%, annualizing at 30.6%, since their bull signals an average of 46.8-weeks ago.

The Quick-term Indicant is signaling bear for three indices. They are up by an average of 0.6% since their bear signals and average of 6.0-weeks ago.

-Short-term Trend Sensitive Attributes (Includes Near-term and Quick-term)

      Quick-term Attributes (This is a longer cycle than Near-term cycles)

      QTI-Red Bull Count; No non-contrarians;  no bullish support.

      QTI-Bullish Red Curve Trend; Seven non-contrarians; weakening bullish support.

      QTI-Yellow Bear Count; Two of the non-contrarians became inflicted with this bearish attribute on May 20, 2010. This has increased the probability of extending the bear’s breadth and magnitude. Keep in mind this can also reinvigorate the bull, but this remains a much lower probability at this time.

      QTI-Bearish Yellow Curve Trend; Non-bearish majority with seven of 11-non-contrarian indices in non-bearish trend, supporting non-bearish bias along this slower cycle. However, even this strong resistance point is losing its capacity to do so.

The Quick-term Indicant is no longer supportive of the QTI Bull due to the May 20, 2010 QTI bear signals. However, keep in mind, most of the major indices have not yet fallen below their respective QTI bearish yellow curves.

      Near-term Attributes (This is a shorter cycle than the Quick-term cycles)

      NTI-Blue Bull Count; Zero non-contrarians; no near-term bullish support.

      NTI-Bullish Blue Curve Trend; All non-contrarians sloping negatively; no longer with bullish support.

      NTI-Bearish Green Curve Trend; All non-contrarians sloping negatively; there is no non-bearish support.

The Near-term attributes are inflecting with an increasing bias, favoring the bear. Both NTI Bullish Blue and NTI Bearish Green are sloping south and thus solidly bearish on a near-term basis.

      Short-term Force Vectors and Pressure Attributes

      STI-Force Vector Domain Position; None of the non-contrarians are in bullish domains.

      STI-Force Vector Position Relative to Vector Pressure; One of the non-contrarians is above Pressure and still not supportive of the bull, except for a possible bullish spurt; some of which occurred today.

      STI-Force Vector Direction; Ten non-contrarians are moving north, supporting bullish spurt potential and not supporting bullish sustainability.

      STI-Vector Pressure Trend; None of the non-contrarian indices are moving bullishly; no bullish support.

      STI-Vector Pressure Position; Zero non-contrarians are in bullish domains; no bullish support. They remain in near convergence, which has been occurring for several weeks. This correlated to indecisiveness in directional intensity, but shifting in favor of the bear. VIX pressure is also in bullish domains, inspiring the stock market bear.

      Short-term Market Summary

      Short-term attributes are supporting the bear. Vector Pressure is no longer offering bullish hope. The last line of defense against the bear is the Quick-term bearish yellow curve. This potential resistance remains, but enduring proximity and related threats by the bear.

-Tangential Protection – None!

-Political Climate – Congress in session and doing economic damage. International politicians are cut from the same mold; all bearish.

-Reverse Tangential Bearish Detection – We can now monitor this phenomenon, as we are now enduring a significant Near-term bearish cycle. The timing is unknown, but there is 100% confidence the major indices and ETF’s will eventually fall to those prices noted in the below link.

Click this sentence to the table, highlighting RTP’s (Reverse Tangential Projections). The values and magnitudes are expressed in the table on the website. Keep in mind there is 100% confidence in these bearish projections. The problem is not knowing when, but odds favor before the first half of this year (2010). Much of this depends on political influences. There will be some unfavorable influences. There always is. The question is, when?

The Quick-term bearish yellow curve stands between the above claim and prevailing prices. If prices fall below this bearish yellow curve, the probability of tangential bearishness in this cycle will be high. The Dow Utilities moved toward supporting this phenomenon several weeks ago. A few more major indices joined the Dow Utilities in the past few days.

Click the Short-term Indicant to see the combined table of the Near-term Indicant, Quick-term, and Short-term Indicant. The table has links to charts for each. Each chart contains all three models and there are two separate buy and sell signals for the Near-term and/or 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.

Indicant Volume Indicators  

Volume indicators are robustly configured. The majority of this robustness configured during solid bearish expressions. Therefore, volume relationships are biased in favor of the bear. (Recent chronological observations are expressed below in reverse order).

May 28, 2010-Fri-Again puny volume is indicative of bias continuations; bearish.

May 27, 2010-Thu-Puny volume indicates a bullish spurt is underway. Volume related bearish bias prevails.

May 26, 2010-Wed-Average volume on mild bearishness does nothing to suggest the obsolescence of bearish bias.

May 25, 2010-Tue-Correction to last Friday’s comment. Volume was average last Friday, as opposed to aggressive. This error in data had no impact to assessing directional intensity. Today’s volume was a bit more aggressive. Even though intraday volatility finished up on increasing volume, mostly due to trader nervousness, volume related bias continues favoring the bull.

May 24, 2010-Mon-Very low volume accompanied today’s bearish aggression. This relationship does not obviate any changes in directional intensity. The volume-bias continues in support of the bear.

May 21, 2010-Fri-Volume was again aggressive on a bullish response to recent bearish behavior. However, volume related bias continues favoring the bear.

Short-term ETF Report Card, Status, and Charts

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

The Near-term Indicant is signaling hold for 6-ETF’s. They are up by an average of 13.8%, annualizing at 32.0%, since their buy signals an average of 22.5-weeks ago.

The NTI is avoiding 25-ETF’s. They are down an average of 2.1% since their sell signals an average of 2.2-weeks ago.

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

The Quick-term Indicant is signaling hold for 20-ETF’s. They are up an average of 27.6% since their buy signals an average of 49.3-weeks ago. Those with hold signals are annualizing at 29.1%.

The Quick-term Indicant is avoiding eleven ETF’s. They are down by an average of 4.5% since their sell signals an average of 6.9-weeks ago. These avoided ETF’s include contrarian QID, which is down 60.4% since its QTI sell signal over a year ago on Mar 26, 2009.

Near-term Indicant ETF Key Attributes

NTI Blue Bull Count; zero-non-contrarians; no bullish support.

NTI Blue Curve Trend: All non-contrarians are sloping south; offering no bullish support.

NTI Green Bear Potential Count; all non-contrarians; there is no near-term non-bearish support.

NTI Green Curve Trend; none of the non-contrarians are sloping north; no non-bearish support.

Quick-term Indicant ETF Key Attributes

QTI Red Bull Count; no non-contrarians; no bullish support.

QTI Bullish Red Curve Trend; 15-sloping north in support of Quick-term Bull, but the population of this bullish attribute is declining.

QTI Yellow Bear Count; 24-non-contrarians represent a majority, supporting Quick-term non-bearishness, but losing bearish resistance potential.

QTI Bearish Yellow Curve Trend;  17-non-contrarians sloping north, highlighting non-bearishness along a slower moving plane. This non-bullish attribute is under bearish threat. ETF’s are no longer safe from the bear’s threat.

The Short-term Indicant ETF Key Attributes:

STI Force Vector Direction; all of the non-contrarians are moving bullishly. As expected, they all shifted north last Thursday. As stated yesterday, this is representative of classical bullish spurt behavior. As stated the past few days, their impending interaction with bullish domain penetration will be interesting. As stated last Wednesday, do not be surprised at a mild bullish spurt, followed by more bearish aggression in the next five to ten days.

STI Force Vector Position; None of the non-contrarians are populating bullish domains. None are greater than Pressure, offering the bull no help.

Vector Pressure Position; None of non-contrarians are in bullish domains; no bullish support and increasing bearish support. This attribute is a focal point since Pressure remains near zero and has for several weeks. The last bullish cycle did not escape Feb 2010 bearish convergence. This attribute is rapidly deteriorating. That is increasing threats to the remaining Near-term hold signals.

Vector Pressure Trend; none of the non-contrarians are moving north; no bullish support. A sustainable bearish threat will occur if pressure falls into bearish domains. None of the non-contrarians ETF’s remain in bullish domains.

Short-term Summary: Most attributes are supporting the Short-term Bear. Vector Pressure is no longer offering bullish hope.

Contrarian Funds

ETF#03-Natural Resources.  The Near-term Indicant signaled sell on May 7, 2010. It is down 3.5% since that sell signal. The Quick-term Indicant signaled sell on May 20, 2010, as its price fell below QTI Bearish yellow curve. It is up 1.7% since the QTI sell signal.  (Yesterday’s report erroneously stated this was down since the QTI Bear signal).

Fundamentally, this fund will be confused. The president’s ban on offshore drilling will depress the potential for corporate profits in this sector. On the other hand, this should drive energy prices north, which should invigorate exploration, drilling, and production around the world. Keep in mind and fortunately, we do not yet have a president of earth.

ETF#11-Gold and Precious Metals  is up 47.4% since the QTI signaled buy on December 11, 2008. Annualized growth is at 32.0%. Bearish yellow is a good price to set stop losses for a longer-term hold position, which is at $103.90 and still rising.

The Near-term Indicant signaled buy on Mar 2, 2010. It is up 7.1% since that buy signal, annualizing at 29.3%.

Click this sentence for additional charting and current forecasting of the actual price of gold.

As stated for the last year-plus months, 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 Quick-term Indicant will highlight that potential when this occurs. A strengthening dollar is somewhat of an evolving threat to gold, but again, continue holding until the price interacts with the bearish yellow curve.

ETF#14-TLT-Long Government  received a buy signal from both the Near-term and Quick-term Indicant models on Apr 27, 2010. It is up 5.9% since those buy signals, annualizing at 68.1%. This ETF is increasing its bullish attributes. It is usually contrarian to the overall stock market, which adds to an increased overall stock market bearishness prognosis.

It is a NTI Blue Bull and a QTI Red Bull after several months of languishing with a bearish trend. Also, Pressure is positive, which adds bullish fervor to this ETF. It will succumb to overall stock market bullishness the next few days, until this bullish spurt expires. That could take a few more days but Friday’s overall stock market bearishness help this fund.

The Near-term Indicant signaled buy for ETF#31-QID on Thursday, May 13, 2010. It is up 8.5% since then, annualizing at 204.1%.

The Quick-term Indicant signaled sell for QID on March 26, 2009. It is down 60.4% since then. The Quick-term Indicant will not signal buy until it contacts the bearish yellow curve, which is valued at $20.77 and still falling. Its rate of decline is slowing.

Major ETF Events

May 28, 2010-Fri-Bearish aggression did not upset rising Force Vectors, which suggests bullish spurt potential. However, do not rely on bullish spurt. Investing behavior should be contrary to near-term cyclical direction, which is bearish.

May 27, 2010-Thu-Bullish behavior is a mere spurt. It is configured to be very short-lived; three to five days before the bear resumes dominance.

May 26, 2010-Wed-The market opened with mild bullishness and weakened throughout the session. This facilitates the bearish undercurrent.

May 25, 2010-Tue-The stock market opened with bearish aggression and rebounded to flat performance. Force Vectors are at a cyclical minimum and thus the potential for meandering to non-bearish behavior is heightened.

May 24, 2010-Mon-TLT was not contrarian today. More Vector Pressures fell into bearish domains.

Current Strategy-Short-term Indicant- May 28, 2010-Fri-Same as previous comments. May 26, 2010-Wed-Same as yesterday. May 25, 2010-Tue-Do not be fooled if bullish behavior occurs in the next few days. May 24, 2010-Mon-The bear continues gaining momentum.

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

The stock market enjoyed mild bullish divergence last week. This mild divergent pattern offset a series of bearish convergence in three of the past five weeks.

Bearish convergence was endured for four consecutive weeks ending 16-weeks ago. Bearish convergence of four consecutive weeks is strategically bearish. It, however, has not upset the Mid-term Indicant bullish attributes. Its threat has diminished by virtue of recent successes at bullish convergence/divergence, but lingers since short-term attributes are having difficulty escaping a converging configuration. Recent bearishness, in essence, is placing the market at about the same point it was at the conclusion of those four consecutive weeks of bearish convergence from last February. In effect, the markets are saying, the March-April bullish behavior was a mere bullish spurt.

Indicant Conclusion

Conclusions remain relatively static for the past several weeks.

As stated the past thirty-three weeks, low interest rates are imposing narrowed alternative investment opportunities. The expiration of the Near-term Bull again suggests this is an increasingly irrelevant observation, relative to more worldly dynamics.

The capital markets crushed the early February threat by the stock market bear with a strong bullish spurt in March and April. Unfortunately, bearish behavior in three weeks of the last four weeks offset the March-April bullish surge. That suggests the early February bearish threat had more merit than the Mar-Apr bullish surge.

Fundamental economic data continues improving, but the bear is apparently being stimulated by more broad economic fundamentals. The bear’s delight is sourced primarily from Europe. Adding bearish punch is the cap and trade legislation, based on mystical global warming. Last week’s resurrection of drilling moratoriums should inspire the bear for yet more drama.

Short-term attributes remain a concern. As stated the past two weeks, the problem of Pressure remaining in a near-converging pattern for several weeks offered a technical avenue for the bear’s encouragement. Collapsing NTI Blue Curves and declining Vector Pressure are adding to the stock market bear’s arousal.

Short-term pressure is now residing in bearish domains. That provides bearish confidence on a short-term basis.

Recent bearishness appears more technical than fundamental. Riots in Greece, political attacks on Goldman Sachs, and Europe’s economic instability is fundamentally supportive of the bear’s ambition. Adding to that is the threat of profit taking from the energy services sector due to the oil spill in the Gulf of Mexico and the consequential moratorium on offshore drilling.

However, overall corporate earnings are expected to continue improving, which is the ultimate fundamental element. Austere measures by all governments, along with a reduction in civil strife, should inspire the bull once bearish momentum subsides. As of two weeks ago, though, the Short-term Indicant is suggesting an increased bearish bias.

Keep up with the daily stock market report as the Quick-term and Near-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

05/30/2010

May 23, 2010 Indicant Weekly Stock Market Report

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

Stock Market Review and Keynesian Economics

The Near-term Indicant is solidly configured with bearish bias. The Near-term Indicant bullish blue curves of the major indices are paralleling the NTI bearish green curve to the south – a bearish configuration.

For the first time in over nine months, one of the major indices fell below the Quick-term Indicant’s bearish yellow curve last week. This triggered the second Quick-term bear signal this year. The NYSE fell prey to bearish ambition last Thursday. This is inspirational to the stock market bear.

The VIX Index is a solid Quick-term Red Bull. The interesting element is the magnitude of its bullishness since the QTI signaled bull on April 27, 2010. It is up 74.0% since that bull signal. This bullish magnitude by the VIX far surpasses the bearish magnitude of the non-contrarian major indices, including the NYSE. This suggests expanding fears in the capital markets. Such a configuration is usually associated with solid bear markets.

You should also notice the Near-term Indicant is signaling bear for all of the major indices tracked by the Indicant with the exception of the Dow Transports. Although its NTI bullish blue curve collapsed last week, it did not endure a bear signal. This particular index has been very bullish since the March 2009 stock market bottoming. Its Vector Pressure remains solidly in bullish domains. Such a configuration disallows bear signals. This also suggests a glimmer of hope for the bull to resume dominance. The salient terms are glimmer and hope.

Wishing and hoping, of course are not real. Therefore, one should bias their thinking and action with bearish assumptions.

The stock market is not going to move linearly. It will move up and down while the aggregates of that up and down behavior will result in a bearish or bullish conclusion. You have witnessed a bearish result the past few weeks. Accompanying most of that bearish behavior was high volume.

Aggressive volume on aggressive stock market behavior is tricky, but for the most part, it is suggestive of the underlying bias. Sometimes high volume accompanies bearish aggression by several days or weeks ahead of a bullish rally. However, most of the time, high volume on bearish aggression suggests a strong bearish bias on the immediate horizon. The interpretation of which directional intensity will be prevailing requires a review of other short-term attributes.

Currently, most of the Quick-term attributes are not favoring the bear. Most prices are above the Quick-term bearish yellow curve. The Quick-term Indicant will not signal bear or sell until prices fall below that bearish yellow curve. The Near-term Indicant, on the other hand, will signal bear or sell without the bearish yellow curve restriction.

Last Thursday’s volume was high on solid bearish aggression. Last Friday’s volume was also high and that occurred on bullish aggression. The aggregate of those two days last week resulted in a bearish conclusion. In other words, last Friday’s bullishness was of less magnitude than last Thursday’s bearish aggression. Both days enjoyed near equally aggressive volume. The Near-term Indicant is enduing prices below their respective declining blue and green curves. Those declining curves, coupled with a cumulative volume aggregate computes the stock market as remaining bearishly biased.

Most of the Force Vectors are either bearishly mature, or they are shifting north. Such a configuration is typically bullish and at worse, non-bearish. Force Vector movement attempts to monitor spurt bias behavior, which typically last from four to eight days. Spurts are short cycles that move in a contrarian direction from the underlying short-term stock market cycles. If they indeed support bullishness next week, one should not conclude that the bull is regaining dominance.

It is common for prices to move back above the declining Near-term Indicant’s blue or green curves during bear markets. Some of the phenomenon is driven automatic buy points by high volume, high frequent trading practices. Some is simply emotional, which is never long lasting. As a result, prices start falling again after eclipsing the declining Near-term curves.

If prices fall below the Quick-term bearish yellow curve without resistance, the bear is inspired.  

Fundamentals are the only long-lasting elements that guide the stock market’s directional intensity. Difficult fiscal and monetary issues are confronting countries, such as Greece and other countries in Europe. Many states in the United States are facing the same.

Regulatory policies, coupled with irresponsible fiscal and monetary incompetence, are elemental to economic fundamentals. Economic fundamentals are, quite often, the first identified, as bearish or bullish. Political attempts to resolve economic fundamentals of a bearish twist typically worsen the situation.

Corporate earnings typically shrink shortly after economic fundamentals sour. Currently, corporate earnings continue to offer a fundamental element of bullishness. However, if the stock market senses a reduction in corporate earnings as a function of economic deterioration, the bear is immediately aroused. It will run over the bull at a much quicker pace than what the bull delivered leading up to the chaos.

Keynesian economists believe the fiscal policy of deficit spending is an economic stimulus. John Maynard Keynes developed his ideas, as a government bureaucrat, in 1930’s during the Great Depression. He was a pure member of the economic overhead group. Since he never added economic value to society, his aptitude of economic principles is challengeable.

In essence, Keynes promoted deficit spending as a solution to economic depression. FDR must have read his papers and believed them in spite of the underlying stupidity. The question is, how empty coffers can be used to stimulate economic activities? Inflation escaped Keynes’ arguments. Of course, most soft-handed elites of the economic overhead group, jumped on the Keynesian bandwagon, as they recognized their own economic benefit without having to work very hard.

One has to wonder what John Maynard Keynes would say, if asked, “what is the upper limit of debt per capita?” As stated in the Indicant Weekly Stock Market Report of April 4, 2010, the U.S. debt per capita will exceed $100,000 by 2040. There will be three to seven recessions before 2040 and possibly Great Depression #2. If Keynesian-based stupidity continues, unabated, that six-figure estimate will be low.

Today’s stock market is not concerned with economic or corporate fundamentals of 2040. However, it may be sensing Great Depression #2 or a wagon full of cash to buy a loaf of bread.

Now back to next week. If Force Vectors demonstrate difficulty climbing above Vector Pressure or back into bullish domains, do not be surprised at more aggression that is bearish. Also, it should be noted that some of the ETF’s are getting close to those reverse tangential projections that were introduced in July 2009. You should notice that ETF#06-EWJ-Japan is within 12.8% of its bearish manifestation.

If solid bullishness is coupled to aggressive volume and Vector Pressure starts to increase, the bull may resume dominance. Although, unlikely, the Short-term Indicant will signal buy, as it does not care about what should happen. It only cares about stock market directional intensity.

Keep your eye on the daily stock market report.

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 signal and twelve sell signals.

The Mid-term Indicant is signaling hold for 209 of the 333-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 27.9%. That annualizes to 30.6%. The Mid-term Indicant has been signaling hold for these 209-stocks and funds for an average of 47.5-weeks.

The Mid-term Indicant is avoiding 95-stocks and funds of 333- tracked by the Indicant. The avoided stocks and funds are down an average of 41.7% since the Mid-term Indicant signaled sell an average of 88.0-weeks ago.

One year ago, on May 22, 2009, the Mid-term Indicant was holding only 21-stocks and funds out of 344 tracked for an average of 98.0-weeks. They were up by an average of 117.0% (annualized at 62.1%). There were 323-avoided stocks and funds at that time. The avoided stocks and funds were down an average of 31.5% since their respective sell signals an average of 50.6-weeks earlier one year ago.

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

There were 314-stocks and funds with hold signals on May 18, 2007 since their buy signals an average of 99.5-weeks earlier. They were up by an average of 123.6% (annualized at 64.6%). There were 31-avoided stocks and funds at that time. They were down by an average of 13.9% from their respective sell signals an average of 26.1-weeks earlier.

On May 19, 2006, the Mid-term Indicant was signaling hold for 244-stocks and funds out of 345-tracked. They were up by an average of 126.7% (annualized at 66.7%) since their buy signals an average of 98.8-weeks earlier. The Mid-term Indicant was avoiding 92-stocks and funds at that time. They were down by an average of 6.8% since their sell signals an average of 16.1-weeks earlier.

Five years ago, on May 20, 2005, there were 201-hold signals for stocks and funds out of the 320 tracked by the Mid-term Indicant at that time. They were up an average of 99.4% (annualized at 57.0%) since their respective buy signals an average of 90.6-weeks earlier. There were 112-avoided stocks and funds then. They were down an average of 26.6% since their respective sell signals an average of 55.8-weeks earlier.

On May 21, 2004, there were 219-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 74.7%, annualizing 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 by an average of 10.9% since their sell signals an average of 12.3-weeks earlier.

There were 286-stocks and funds with hold signals on May 23, 2003. They were up by an average of 35.9%, annualizing at 108.1%, since their buy signals 17.3-weeks earlier. The 9-avoided stocks and funds were down an average of 25.1% since their respective sell signals an average of 26.5-weeks earlier.

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

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

Click this 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. Governmental and political behavior can have immediate and long-lasting unfavorable influences on the capital markets.

Some companies will perform well, regardless of the depth of the bear market. Buy signals will be muted if Congressional action threatens the capital markets. Legislation, regulation, and politicians are the biggest threat to the stock market bull.

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

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

The Long-term, Mid-term, and Quick-term attributes have not yet succumbed to the stock market bear’s ambition. The Mid-term Bull has not been threatened by recent bearish behavior. The Mid-term Bull remains solidly dominant.

The Near-term cycle shifted in support of bearish inclinations in early Feb 2010, but quickly abandoned bearish bias in early March 2010. However, the past two weeks resulted in several sell signals for ETF’s due to bear attacks. The Dow Utilities also shifted in favor of the bear on a Mid-term basis in early Feb 2010. It remains pathetically configured with respect to bullish ambition.

With the exception of the DJU, most prices and major indices remain solidly above their respective bearish yellow curves in spite of recent bearish behavior. Bear and sell signals will not occur on these slower moving models until price interactions with bearish yellow.

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

Stop Loss Management

The Mid-term Indicant recommends a trailing stop loss of 8%. For your longer-term holdings where you are enjoying triple and quadruple digit gains, you may want to set your stop at the bearish yellow price.

Floor traders are aware of stop loss positions. If prices near those stop losses against the grain of directional bias, the floor traders will drive the price down to those stop losses and then buy for themselves and then quickly sell for profits at your expense. Although seemingly immoral, it is the nature of free markets and contributes to the desired liquidity of stock markets. This is one reason why stop losses should be well below prevailing prices but well above your buy price. That perfection, of course, is not attainable shortly after buying, which is the most dangerous period for holding.

Long after a successful buy, monitor prices relative to the bearish yellow curve. That will minimize the number of trades, while protecting portfolio values.

For new buys, set stop losses at the blue or green values in the tables. If green is deeply lagging the prevailing price, you may want to average the blue and green prices for your stop losses. If the green curve is rising, set the stop loss just below it. Green is a common bouncing point so a stop loss a percentage below its value could be considered. Once green passes above your buy price, then adjust your stop losses, periodically, say weekly, at or just below green. Once yellow passes above your buy price, you may want to set the stop loss at the yellow price. That is a good tactic when longer-term holding positions are supported with expected fundamentals and your enjoyment of owning a piece of a great company or fund.

If your stop loss triggered sell, while Indicant continues signaling hold, normal advice would be to buy again. However, if the Near-term Indicant is signaling bear/avoid, it is better to wait for specific buy signals from the Mid-term Indicant.

The ETF’s are signaled on the Near-term, Quick-term, and Short-term Indicant and are updated daily. These shorter-term models attempt participation in significant bullish spurts and rallies, while the Mid-term Indicant is focused on fundamentals and longer-term technical data.

The Indicant Stock Market Report’s Secular Market Blend

The Dow is up 39.9% since its secular weekly low on October 9, 2002. The NASDAQ is up 100.1% and the S&P500 is up 40.0% since then. The small cap index, S&P600, is up 104.7% since October 9, 2002. All of the major indices were at new lows on the same week in 2002, which is a common attribute for bottoming.

The NASDAQ is down 55.8% since its last weekly secular peak on March 9, 2000. The S&P500 is down 28.8% since its similar secular peak on March 23, 2000. The Dow is down by 13.0% 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 believed their proposed fixes in the 2006 congressional and 2008 presidential elections. All democracies eventually fail by virtue of tyranny by the stupid majority. We may be witnessing the early stages of that phenomenon, although recent events are suggesting resistance against the lazy brains of the 2006 and 2008 majority. More will be learned in Nov 2010. If the majority has their hands out, the markets will continue in their secular decline, using the pivot year of 2000. Since 2000, the capital markets are down. They will continue moving down if the majority has their hands out to their respective governments.

Politicians are now attempting to impose more constraints on business expansion and thus the continuation of wealth destruction should not be surprising. Politicians have deemed obsolete the normal efficiencies of capitalistic cleansing of the incompetent. That will wear down the capital markets as politicians continue their neurotic desires to expand their influence and control. Those leeches will eventually kill their host, but like all leeches, they continue on sucking away.

The NASDAQ year-to-date performance was bearish by 6.7% through this week in 2001. The NASDAQ finished 2001 down by 21.1%, which was congruent with standards of post-election-year-bearishness.

The NASDAQ was down by 14.7% 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 was consistent with the mid-term year’s historical standards of finding bottoms in mid-term election years.

The NASDAQ YTD 2003 performance was up by 11.6%. It finished up in that solidly bullish year by 50.0%, which was consistent with historical pre-election year results. It was down on this weekend in 2004 by 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 5.9% in 2005’s post election year, which was consistent with historical standards of losses and/or minimal gains. Many of you recall that 2004 and 2005 were meandering bear markets. The post election year of 2005 finished up by a mere 1.4%, which was an excellent year, based on post election year historical standards of bearishness.

In 2006, the NASDAQ was down 0.5% 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 6.8% at this time in 2007 and finished that year in positive territory by 9.8%, which was consistent with pre-election year bullishness.

The NASDAQ was down by 7.7% on this weekend in 2008. It finished down by 40.5% in 2008. That was extreme contrarian performance to the standards of historical election year bullishness. It was the most bearish presidential election year since related records from 1832.

The NASDAQ was up 7.5% at this time last year. It finished 2009 up by 43.9% in extreme contrarian performance to historical standards. Keep in mind, this extraordinary bullish cycle in 2009 finished that year down by 20.6% from its prior Mid-term cyclical peak on October 31, 2007.  That extraordinary bullishness will be viewed by historians as a mere spurt (reverberation) from 2008’s severe bear market. The 2008 bear market more accurately reflected economic fundamentals than the 2009 bull market. Much of the 2009 bull market correlated well with declining political popularity.

The Dow was down 5.5% on this weekend last year but finished 2009 up by 18.1%. Although post election years are generally bearish, the Dow’s gain for 2009 was slightly below the average gain during years with post-election-year bullishness.

The Dow is down 28.0% since its last weekly closing peak on Oct 9, 2007. The NASDAQ is down 22.0% since its last peak on Oct 31, 2007. The S&P600-small cap index is down 21.5% 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.

Most 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 weekly bottom on November 20, 2008.

The current Near-term Bear cycle, originating during the weeks of May 9 and May 16, 2010, may not fall below the March 9, 2009 cyclical bottoms. Even with that, statistics supported by 100% confidence, suggest the Reverse Tangential Projections will occur at some future point. Those projections are above these cyclical bottoms, but well below prevailing prices.

Although exact simultaneous bottoming did not occur on March 9, 2009, tracking from that pivot-point has been and will continue to be appropriate. This inexactness lends credence to the reverse tangential projections with short-term view, albeit mildly so. Consequently, March 9, 2009 is the pivot date to monitor performance since the March 2009 bottoming from the 2007-2008 bear cycle.

The Dow is up 55.7% since March 9, 2009. The NASDAQ is up 75.7% and the S&P500 is up 60.8% since then. The S&P600, Small Cap Index, is up 92.3% since March 9, 2009. That March 2009-January 2010 bull leg was indeed powerful, but such cycles have occurred many times in the past only to be followed by bear cycles of varying breadth and depth. The Mid-term Indicant does not suggest impending bearishness, which is supported by the Short-term Indicant. Until the past three weeks, Near-term attributes were bullishly supportive, but continuing with bearish favorability.

Stock market corrections after such a rise do not need too much of an excuse to meander or even worse. Governments around the world, with the exception of China and possibly Japan, have borrowed too far ahead of real wealth creation. Monetary policies by those “fat governments” will not come from within, but with the harsh reality of their repeated impositions to real wealth creation. There is an upper limit to leech consumption, relative to the capacity for leeched items. Reality exerts itself without regard to its harshness or failing attempts by intellectuals, whose “real contribution/worth” is closer to zilch. The problem with leeches is their incessant desire to expand their capacity to do so.

Keep your eye on the daily stock market report.

Economic Conditions – Inflation, Currency, Interest Rates

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

Most of the hard economic data such as, interest rates, commodities, and currency exchange rates continue holding relatively constant. The discount rate is no longer a yellow bear. It is attempting a “technical U-turn” from the depths of its prior fall. The sinusoidal waves suggests interest rates are anxious to start rising again. They are doing so in China. Keep in mind, though, that interest rate depths remain as a non-threatening configuration to the stock market bull. The discount rate’s U-turn is to be monitored. It is set by a person with a three pound brain and one never knows when cerebral dysfunction can occur. It can occur at any moment and to make matters worse, such dysfunctional twists are not predictable.

Most of the content in this section remains the same. Until conditions change, verbiage will change very little. The idea here is not entertainment, but retention of facts in spite of boring repeatability. At some future point they will change and influence drama. Monitoring them regularly is important to anticipate those magical moments.

As stated for several months, rising interest rates would normally threaten the stock market bull. However, they are so low, a prognosis of normalcy borders minutia. In essence, potential rate hikes are irrelevant to the stock market at these levels.

The Fed’s current strategy is to maintain low rates, conflicting with the normalcy of rate hikes during economic recovery. This, coupled with excessive government spending, is a recipe for hyperinflation and/or high interest rates at some future point. That will eventually lead to a stock market bear and high commodity prices, including gold. Keep in mind that the combination of high interest rates and inflation or deflation exceeding an absolute value of 8% has a history of being extremely bearish for both the stock market and the economy. Currently, that is not a threat when considering the United States as a single parameter. The world economy on the other hand is shaping a new dynamic.

Some prognosticate a future with deflation. The combination of prevailing interest rates and the absolute value of inflation/deflation exceeding eight percent produce very aggressive and deep stock market bears. At least that is the history. It does not matter which projection is accurate with respect to the stock market. Inflation or deflation exceeding the limits of tolerance will induce a stock market bear.

Evolving as a force are monetary policies of foreign governments. Projecting the U.S. Fed’s position is becoming a bit more complicated. These projections must now include China and even more recently, that of Europe. Economic leeches around the world continue draining the productive. At some point that will result in unmanageable disproportions between the productive and the non-productive. History suggests this is generally addressed by varying levels of civil discourse. That is usually bearish, depending on location and severity. You have recently witnessed civil discourse in Greece. The question is, how much will this spread? Also, what new political mumbo-jumbo leaders will evolve from such crises? Such crises typically propel militant sort of folks to the top of the political heap. This typically leads to war, which is ultimately bullish, albeit painful.

Some short-term rates have been nudging north the past few weeks. All major cycles, regardless of subject, begin with subtle movements in their favorable or unfavorable future paths. Sometimes there is nothing to it, but sometimes it is that point where one’s hindsight indicates the optimum point in time where one would have enjoyed taking profit-concluding action.

The Fed can do little for economic stimulation. Interest rates cannot go much lower. If the economy cools even more, the Fed’s contribution to solutions is limited. In essence, the Fed has laid all its cards on the table. Rest assured the Fed will take every opportunity to enhance its position to influence economic activity. In essence, interest rates will be quick to rise when economic recovery is perceived as real and sustainable. This is one reason why the dollar has been strengthening lately. The Fed backed that up with a hike in the discount rate several weeks ago. Another reason for the dollar’s strengthening is the weakening of foreign currencies. It is not based on the dollar’s merit, but based on European incompetence, laziness, and stupidity.

Oil prices continue vacillating in a range the Saudi Kingdom finds comfortable. As stated for several months, the kingdom continues asserting its leadership and regulating supplies to demands that will result in approximately $80/bbl for a lengthy period. Of course, normal human greed will occur and the result will be military action. Participants remain unknown, but most likely will begin with Israel and Iran, and concluding with the U.S. and Russia and possibly China. Any scenario is bullish for oil prices and bearish for the stock market from a longer-term perspective.

Several weeks ago, commodities began their elevation into the neutral zone from their bullish mini-cycle. Bearish yellow is now in a cyclical shift to the north, supporting a bullish cycle. As earlier stated, a continuation of these configurations will eventually lead to inflation. Although commodity prices have weakened the past few weeks, their underlying Mid-term cyclical trend remains bullish. China’s credit tightening, coupled with expanding socialism in the West, is strategically bearish in the long-term for commodities and offering a bit of support to the prognosticators of deflation.

More recently, China is now expressing concerns regarding inflation. Commodity prices were rising, but that is against the trend for the time being. They have been taking it on the chin by the commodity bear the past few weeks. Increasing commodity prices will pressure rates more to the north. That will be non-bullish.

Gold is obviously anticipating significant inflationary behavior with paper currencies. It is also buffering portfolios against governmental policies around the world and a related increase is various forms of terrorism, militia developments, etc.

A tremendous amount of paper currency has been added to circulation well ahead of the productive efforts normally required to support those levels. Inflation typically follows that sort of political behavior. Increased socialism will inherently reduce supply of products and services, while paper money in the hands of the incompetent and non-productive will increase demand. At some future point, an I-Pod sort of product may cost well over $10,000. Only the “established elite” will enjoy those sort of possessions, while the masses will have to relearn the drumbeats from their primordial past. Once that nonsensicality has passed, deflation will most likely follow. Interestingly, 2009’s PPI decline was the largest since 1938. Scroll down when clicking the link in the previous sentence.

The stimulus package, which was similar to FDR’s, predictably did not work. If the economy stalls again, more debt will be needed for yet another non-working stimulus, based on the errant thinking of contemporary leadership. The only one that works is a tax cut. That allows money to be used at maximum efficiency; in your hands as opposed to some yawning government bureaucrat.

There is one burgeoning bright spot developing. The Tea Party movement is highlighting the excesses of members of the economic burden/overhead group. Those, who do not add economic wealth, are getting wealthier than those who do. That is a recipe for quite a bit of drama. Union labor management does not understand this phenomenon. You have seen their ignorance displayed in Greece during late April and early May. Most union members in the manufacturing sector also do not understand. They will slowly devolve, as they have been doing for years and many will go to their graves unconscious of the stupidity their union dues supported. More and more will not live the American dream and that is their fault. Politicians will continue catering to those large block of votes, but those large blocks will continue to shrivel. Hopefully, that will reverse the course of excessive economic leeching.

Educated economic overhead members do understand this phenomenon. They are very smart people. They are simply unproductive and do not add economic wealth. That does not deter them, though, from expanding their “taking” capacity. It is always interesting where the breech point occurs. The breech point is where they are slaughtered; either figuratively or physically. Economic wealth production is required in much more magnitude than the capacity to take. Since 2006, there is a gap of concern.

Gold was solidly bullish the past few days. It is moving up almost instantaneously to civil strife in Greece. The optimistic 2012 forecasted price of gold is holding at $1600. The low cyclical forecast for gold is holding at $1300. The meandering forecast increased to $1100. There are no quantifications suggesting a long-term decline in the price of gold in spite of the mysticism guiding its value.

As stated 86-weeks ago, once the euphoria of the socialistic methods begin displaying its harsh reality on the reduced quality of life, 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 the March 2009-January 2010 Bull Leg. That bullish spurt from late Feb through early May turned out to be a fake.

The heart and soul of bullish seasonality concluded a bit earlier this year. The pessimistic outlook for the market has a good chance to unfold now. Politicians successfully ended the conclusion of the heart and soul of bullish seasonality near the end of January 2010 with the president’s state of the union address. Bearishness typically follows those speeches and there was no exception this year. However, the capitalistic system rebounded very well as the capital markets surged a few weeks later in early March and continued doing so until the Greek’s started rioting. Civil strife can spread and do so rapidly. That is bearish. The wars that follow, however, tend to be bullish.

The above and below paragraphs may become obsolete, based on the mid-term elections this year. A high Congressional turnover should at the very least stalemate government; at best garnish enough veto overriding votes to repeal recent political stupidity.

The question remains, is public resistance to healthcare reform and other socialistic endeavors really from the grassroots? If so, and if its political influence results in cessation of the rampant stupidity in Washington D.C., the bull will find that too favorable to acquiesce to the bear on the immediate horizon. Although healthcare reform garnished most of the attention in 2009, cap and trade legislation will depress corporate profits, depress capitalistic adventurism, and thus will eventually depress the stock market. European economic failures threaten the bull as well.

This is getting trickier since nearly one-half of the U.S. population does not pay federal income tax. Coupling that to union voters and government employees, who pay federal income tax, suggests over 50% is permanently in favor of socialism. That does not bode well for the capital markets. A new group of economic leeches is evolving; hundreds of thousands are not making their mortgage payments. They are using mortgage money to buy flat panel televisions and I-Pods, I-Pads, and whatnot. The population of economic leeches is over 50%. Their lack of discipline, though, keeps a fraction of them away from the voting booths. For those of you who have a sense of reality should hope that fractional amount reduces their voting powers to less than 50% of the populace.

There was no bear market in 2009. However, previously mentioned threats remain, “if taxes are raised on the highly productive and capital gained, do not be surprised at a 1,000 Dow by 2010.” The bear was passive between March 2009 and January 2010. It has plenty of time to demonstrate its reflection of a souring culture. The Blue Dogs disappointed in the recent healthcare vote. The lower character elements of society rise to the top of the political elite. That is bearish.

As stated the past 38-weeks, on a positive note, it appears enough of the populace are influencing their political representatives to slow the progress of stupidity in spite of recent escapades by the stock market bear. If this happens, then bearish expectations of great magnitude will be muted. A measure of American voter stupidity will conclude in November 2010. The stock market may anticipate reduced stupidity and with that, the current bull market could continue through 2012, but recent political/leeching events suggest that is now unlikely. Regardless of long-term prognosis, there is nothing wrong in participating in the bull leg now underway, albeit in trouble.

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. The Mid-term Indicant signaled buy on Oct 16, 2009. It is down 7.8% since then. It has been bearish in eight out of the last 18-weeks, but solidly bullish in six of the last twelve weeks. It was solidly bearish last week.

Fidelity Gold, Fund #28 received a buy signal on Sep 4, 2009. It is up 2.8% since then, annualizing at 3.9%. It was also solidly bearish last week.

Vanguard Energy #18, VGENX, was up 144.9% from since the Mid-term Indicant buy signal April 5, 2003 until its sell signal on October 3, 2008. It is up 0.7%, annualizing at 0.9% since its buy signal on July 31, 2009.

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. The Mid-term Indicant signaled buy on Sep 18, 2009. Unfortunately, it endured a sell signal this weekend without generating much return.

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 was down 18.4% since that sell signal and the buy signal on January 8, 2010. The Mid-term Indicant signaled sell for this fund on Feb 12, 2010. It is down 15.0% since that sell signal. Although energy is an excellent long-term investment, cap and trade political threats, coupled with the strengthening U.S. dollar may wreak more damage to this fund than previously computed. It was also solidly bullish last week and contrarian to sector bearishness.

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 3.5% since its buy signal on Sep 11, 2009.

The Quick-term Indicant signaled, sell, for ETF#03 – Energy and Natural Resources on May 20, 2010. It is up 1.7% since then. It was up 242.4% (annualized at 44.8%) since the buy signal on March 26, 2003 until the September 2008 sell signal. It was mildly bearish between the Sep 2009 buy signal and the May 20, 2010 sell signal. The Near-term Indicant signaled sell for this ETF on May 7, 2010. It is down 3.5% since then.

The Quick-term Indicant signaled buy for the GLD-ETF#11 on December 11, 2008. It is up 42.9% since that buy signal, annualizing at 29.3%. It gained 81.4% from its August 3, 2005 buy signal until the September 8, 2008 sell signal. Its annualized gain during that hold period amounted to 27.1%.  The Near-term Indicant signaled buy on April 24, 2009 and it gained 17.3% until its sell signal on Feb 4, 2010. It received a buy signal again from the Near-term Indicant on Mar 2, 2010. It is up 3.8% since that buy signal, annualizing at 17.8%.

Most commodities were mildly bullish last week while the energy services sector was bearish. This is most likely due to impending fines and penalties for the Gulf Coast clean up.

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 July 31, 2009 for all ten major indices. The Mid-term Indicant signaled bear on Feb 12, 2010 for the Dow Utilities. It is down 0.8% since that bear signal.

The nine remaining major indices retaining bull signals are up by an average of 13.5% since there respective bull signals an average of 42.0-weeks ago. That annualizes at 16.7%.

The Dow Utilities was the weakest bull since the July 31, 2009 bull signal and again enduring a bear signal. That contrasts with it being the strongest bull from 2003 through the overall stock market peaking in late 2007.

Other than the Dow Utilities, the remaining major indices remain with bullish attributes. The Dow Utilities has been pitifully bullish in this cycle, but it may receive a bull signal once pressure escapes convergence. That possibility diminished the past three weeks with solid market bearishness.

The Mid-term Indicant Dow Jones Industrial Average performance is at $29,276,483. That beats buy and hold performance of $1,550,797 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $141,492. That beats buy and hold’s $106,542 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $203,129. That beats buy and hold’s $77,290 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 1787.8%, 32.8%, and 162.8%, respectively, for these indices as of this past week.

The Indicant’s percentage advantage over buy and hold does not change during bull signals. The advantage changes only during bear signals. That is because the buy and hold model has to keep holding, while the 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. If the market remains bullish during this time, we’ll eat crow. It needs bears to outperform.

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 56.1% since then. It will receive a buy signal only if the Quick-term Indicant signals buy for QID. Although this is classically a post-election-year hold, the Mid-term Indicant was unable to signal buy in 2009. The Short-term Bull displayed attributes of a thoroughbred in 2009 and thus no opportunities were available to shorting the stock market since the April 3, 2009 sell signal.

Click here for Mid-term Indicant Table of Mutual Funds

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

Long Term Indicant Positions - Dow Jones Industrial Average

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

The Dow is up 252.1% (annualized at 13.5%) since the Long-term Indicant signaled bull 968-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, including relative performance 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.

Influencing parameters in the LTI include prior bull cycles. The great bull market in the 1990’s was powerful enough to offset the 2008-2009 recessionary bear market.

The 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 included in this weekly report. This allows web-based retention records of the daily report for much longer than the last twelve months. This report is in the next section and a mere repeat of the daily report you received on the last trading day of the week, which is usually on Friday evening.

Short-term Indicant Stock Market Report - Summary

Force Vectors appear mature and offering bullish spurt potential. Configurations suggest any price rise above NTI Green will be followed by additional bearishness.

As stated for several days, bias strongly favors the bear based on volume relationships, the VIX’s profoundly strong Force Vector, and TLT’s continued bullishness.

Adding to that, several ETF’s became yellow bears yesterday, along with a couple of major indices. That is decidedly bearish.

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

The Near-term Indicant signaled no new bulls and no new bears.

The Near-term Indicant is signaling bull for two major indices. They are up by an average of 39.1% since their bull signals an average of 7.4-weeks ago, annualizing at 259.4%. The bull signals include contrarian VIX, which could be construed as distorting performance.  It is up 74.0% since its Apr 27, 2010 bull signal.

The Near-term Indicant is signaling bear for ten indices. They are down by an average of 3.7% since their bear signals an average of 2.4-weeks ago.

The Quick-term Indicant signaled no new bulls and no new bears. Yesterday’s QTI bear signals were the first since last July.

The Quick-term Indicant is signaling bull for nine major indices. They are up by an average of 30.1%, annualizing at 34.2%, since their bull signals an average of 45.8-weeks ago.

The Quick-term Indicant is signaling bear for three indices. They are up by an average of 0.7% since their bear signals and average of 6.0-weeks ago.

-Short-term Trend Sensitive Attributes (Includes Near-term and Quick-term)

      Quick-term Attributes (This is a longer cycle than Near-term cycles)

      QTI-Red Bull Count; No non-contrarians;  no bullish support.

      QTI-Bullish Red Curve Trend; Eight non-contrarians; weakening bullish support.

      QTI-Yellow Bear Count; Two of the non-contrarians became inflicted with this bearish attribute on May 20, 2010. This has increased the probability of extending the bear’s breadth and magnitude. Keep in mind this can also reinvigorate the bull, but that is a much lower probability at this time.

      QTI-Bearish Yellow Curve Trend; Non-bearish majority with eight of 11-non-contrarian indices in non-bearish trend, supporting non-bearish bias along this slower cycle. However, even this strong resistance point is losing its capacity to do so.

The Quick-term Indicant is no longer supportive of the QTI Bull due to the May 20, 2010 QTI bear signals.

      Near-term Attributes (This is a shorter cycle than the Quick-term cycles)

      NTI-Blue Bull Count; Zero non-contrarians; no near-term bullish support.

      NTI-Bullish Blue Curve Trend; All non-contrarians sloping negatively; no longer with bullish support.

      NTI-Bearish Green Curve Trend; All non-contrarians sloping negatively; there is no non-bearish support.

The Near-term attributes are inflecting with an increasing bias, favoring the bear. Both NTI Bullish Blue and NTI Bearish Green are sloping south and thus solidly bearish on a near-term basis.

      Short-term Force Vectors and Pressure Attributes

      STI-Force Vector Domain Position; None of the non-contrarians are in bullish domains.

      STI-Force Vector Position Relative to Vector Pressure; None of the non-contrarians are above Pressure and not supportive of the bull.

      STI-Force Vector Direction; All non-contrarians shifted south. This is perpetuating the ominous configuration that is encouraging to the bear.

      STI-Vector Pressure Trend; None of the non-contrarian indices are moving bullishly; no bullish support.

      STI-Vector Pressure Position; One non-contrarian is in bullish domains; almost no bullish support. They remain in near convergence, which has been occurring for several weeks. This correlated to indecisiveness in directional intensity, but shifting in favor of the bear. VIX pressure is also in bullish domains, inspiring the bear.

      Short-term Market Summary

      Short-term attributes are supporting the bear. Vector Pressure is no longer offering bullish hope. Bearishly moving Force Vectors are mature, which may invoke bullish spurt behavior.

-Tangential Protection – None!

-Political Climate – Congress in session and doing economic damage. International politicians are cut from the same mold; all bearish.

-Reverse Tangential Bearish Detection – We can now monitor this phenomenon, as we are now enduring a significant Near-term bearish cycle. The timing is unknown, but there is 100% confidence the major indices and ETF’s will eventually fall to those prices noted in the below link.

Click this sentence to the table, highlighting RTP’s (Reverse Tangential Projections). The values and magnitudes are expressed in the table on the website. Keep in mind there is 100% confidence in these bearish projections. The problem is not knowing when, but odds favor before the first half of this year (2010). Much of this depends on political influences. There will be some unfavorable influences. There always is. The question is, when?

The Quick-term bearish yellow curve stands between the above claim and prevailing prices. If prices fall below this bearish yellow curve, the probability of tangential bearishness in this cycle will be high. The Dow Utilities moved toward supporting this phenomenon several days ago.

Click the Short-term Indicant to see the combined table of the Near-term Indicant, Quick-term, and Short-term Indicant. The table has links to charts for each. Each chart contains all three models and there are two separate buy and sell signals for the Near-term and/or 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.

Indicant Volume Indicators  

Volume indicators are robustly configured. The majority of this robustness configured during solid bearish expressions. Therefore, volume relationships are biased in favor of the bear. (Recent chronological observations are expressed below in reverse order).

May 21, 2010-Fri-Volume was again aggressive on a bullish response to recent bearish behavior. However, volume related bias continues favoring the bear.

May 20, 2010-Thu-Volume was aggressive on the bear’s successful aggressive assault to the bull.

May 19, 2010-Wed-Volume remains supportive to bear’s ambition.

May 18, 2010-Tue-Big board volume was mildly aggressive on bearish aggression, while the NASDAQ is not panicky. Overall volume-related bias continues favoring the bear on a short-term basis.

May 17, 2010-Mon-Average volume on a seesaw day suggests added uncertainty of directional intensity. With that, volume-bias continues favoring the bear.

May 14, 2010-Fri-More aggressive volume on bearish aggression is increasing directional intensity favoring the bear.

Short-term ETF Report Card, Status, and Charts

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

The Near-term Indicant is signaling hold for 6-ETF’s. They are up by an average of 13.7%, annualizing at 32.3%, since their buy signals an average of 21.5-weeks ago.

The NTI is avoiding 26-ETF’s. They are down an average of 2.9% since their sell signals an average of 1.2-weeks ago.

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

The Quick-term Indicant is signaling hold for 21-ETF’s. They are up an average of 26.9% since their buy signals an average of 48.4-weeks ago. Those with hold signals are annualizing at 27.9%.

The Quick-term Indicant is avoiding ten ETF’s. They are down by an average of 5.4% since their sell signals an average of 16.1-weeks ago. These avoided ETF’s include contrarian QID, which is down 58.7% since its QTI sell signal on Mar 26, 2009.

Near-term Indicant ETF Key Attributes

NTI Blue Bull Count; zero-non-contrarians; no bullish support.

NTI Blue Curve Trend: All non-contrarians are sloping south; offering no bullish support.

NTI Green Bear Potential Count; 27-non-contrarians; there is no near-term non-bearish support.

NTI Green Curve Trend; none of the non-contrarians are sloping north; no non-bearish support.

Quick-term Indicant ETF Key Attributes

QTI Red Bull Count; no non-contrarians; no bullish support.

QTI Bullish Red Curve Trend; majority of 23-sloping north in support of Quick-term Bull.

QTI Yellow Bear Count; eighteen non-contrarian represent a majority, supporting Quick-term non-bearishness, but losing bearish resistance potential.

QTI Bearish Yellow Curve Trend;  23-non-contrarians sloping north, highlighting non-bearishness along a slower moving plane. This non-bullish attribute is under a mixed bearish threat. ETF’s are no longer safe from the bear’s threat.

The Short-term Indicant ETF Key Attributes:

STI Force Vector Direction; none of the non-contrarians are moving bullishly. All shifted back to the south the past four days. They are mature, offering the bull some encouragement; most likely, though, just a bullish spurt to be followed by more bearishness.

STI Force Vector Position; None of the non-contrarians are populating bullish domains. None are greater than Pressure, offering the bull little help.

Vector Pressure Position; only two non-contrarians are in bullish domains; decreasing bullish support. This attribute is a focal point since Pressure remains near zero and has for several weeks. The last bullish cycle did not escape Feb 2010 bearish convergence. This attribute is rapidly deteriorating. That is increasing threats to the remaining Near-term hold signals.

Vector Pressure Trend; none of the non-contrarians are moving north; no bullish support. A sustainable bearish threat will occur if pressure falls into bearish domains.

Short-term Summary: Most attributes are supporting the Short-term Bear. Vector Pressure is on the verge of not offering any bullish support.

Contrarian Funds

ETF#03-Natural Resources.  The Near-term Indicant signaled sell on May 7, 2010. It is down 3.5% since that sell signal. The Quick-term Indicant signaled sell on May 20, 2010, as its price fell below QTI Bearish yellow curve.

ETF#11-Gold and Precious Metals  is up 42.8% since the QTI signaled buy on December 11, 2008. Annualized growth is at 29.3%. Bearish yellow is a good price to set stop losses for a longer-term hold position, which is at $103.32 and still rising.

The Near-term Indicant signaled buy on Mar 2, 2010. It is up 3.8% since that buy signal, annualizing at 17.0%.

It fell below NTI Blue on May 19, 2010, but not threatening to the hold signal; just cooling off a bit.

Click this sentence for additional charting and current forecasting of the actual price of gold.

As stated for the last year-plus months, 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 Quick-term Indicant will highlight that potential when this occurs. A strengthening dollar is somewhat of an evolving threat to gold, but again, continue holding until the price interacts with the bearish yellow curve.

ETF#14-TLT-Long Government  received a buy signal from both the Near-term and Quick-term Indicant models on Apr 27, 2010. It is up 8.0% since those buy signals, annualizing at 119.8%. This ETF is increasing its bullish attributes. It is usually contrarian to the overall stock market, which adds to an increased overall stock market bearishness prognosis.

It is a NTI Blue Bull and a QTI Red Bull after several months of languishing with a bearish trend. Also, Pressure is positive, which adds bullish fervor to this ETF. As expected, this fund has been non-bearish.

The Near-term Indicant signaled buy for ETF#31-QID on Thursday, May 13, 2010. It is up 13.0% since then, annualizing at 586.2%. Of course, that annualized number is based on its performance after only a few trading days since the buy signal.

The Quick-term Indicant signaled sell for QID on March 26, 2009. It is down 58.7% since then. The Quick-term Indicant will not signal buy until it contacts the bearish yellow curve, which is valued at $21.01 and still falling. It rate of decline is slowing.

Major ETF Events

May 21, 2010-Fri-Bullish behavior is just a mere spurt with little follow-on potential.

May 20, 2010-Thu-Aggressive bearish behavior, coupled with a volume surge, is solidly bearish. Also some major indices and several ETF’s fell below bearish yellow today.

May 19, 2010-Wed-There are more NTI sell signals. Other than that, the bear remains energized. It does not yet have complete breadth.

May 18, 2010-Tue-QQQQ endured a NTI sell signal. EWZ-Brazil endured a QTI sell signal; the first signal since its previous buy signal over a year ago on April 3, 2009. It was up over 55% since today’s sell signal.

May 17, 2010-Mon-There were two more sell signals.

Current Strategy-Short-term Indicant- May 21, 2010-Fri-Same. May 20, 2010-Same! May 19, 2010-Wed-The bear continues gaining momentum. May 18, 2010-Tue-Bearish bias increasing. Force Vectors are dipping south. This is an ominous configuration that should be inspirational to the bear. May 17, 2010-Mon-Configurations continue inflecting with non-bullish configurations with a bit more bias favoring the bear. Vector Pressure never escaped last February’s bearish behavior. They are teetering where the bull and bear engage in significant battles.

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

The stock market endured bearish convergence last week. It has endured this bearish attribute in three of the past four weeks.

Bearish convergence was endured for four consecutive weeks ending 15-weeks ago. Bearish convergence of four consecutive weeks is strategically bearish. It, however, has not upset the Mid-term Indicant bullish attributes. Its threat has diminished by virtue of recent successes at bullish convergence/divergence, but lingers since short-term attributes are having difficulty escaping a converging configuration. Recent bearishness, in essence, is placing the market at about the same point it was at the conclusion of those four consecutive weeks of bearish convergence from last February. In effect, the markets are saying, the March-April bullish behavior was a mere bullish spurt.

Indicant Conclusion

Conclusions remain relatively static for the past several weeks.

As stated the past thirty-two weeks, low interest rates are imposing narrowed alternative investment opportunities. The expiration of the Near-term Bull again suggests this is an increasingly irrelevant observation, relative to more worldly dynamics.

The capital markets crushed the early February threat by the stock market bear with a strong bullish spurt in March and April. Unfortunately, strong bearishness the past three weeks have offset the March-April bullish surge. That suggests the early February bearish threat had more merit than the Mar-Apr bullish surge. Fundamental economic data continues improving, but the bear is apparently being stimulated by more broad economic fundamentals. The bear’s delight is sourced primarily from Europe. Adding bearish punch is the cap and trade legislation, based on mystical global warming.

Short-term attributes remain a concern. As stated last week, the problem of Pressure remaining in a near-converging pattern for several weeks offered a technical avenue for the bear’s encouragement. Collapsing NTI Blue Curves and declining Vector Pressure are adding to the stock market bear’s arousal.

Recent bearishness appears more technical than fundamental. Riots in Greece, political attacks on Goldman Sachs, and Europe’s economic instability is fundamentally supportive of the bear’s ambition. Adding to that is the threat of profit taking from the energy services sector due to the oil spill in the Gulf of Mexico.

However, overall corporate earnings are expected to continue improving, which is the ultimate fundamental element. Austere measures by all governments, along with a reduction in civil strife, should inspire the bull once bearish momentum subsides. As of last week, though, the Short-term Indicant is suggesting an increased bearish bias.

Keep up with the daily stock market report as the Quick-term and Near-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

05/23/2010

May 16, 2010 Indicant Weekly Stock Market Report

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

 Robert Krentz Was Only One Vote and the Solution

Robert Krentz was no ordinary American. His high school football team won the state championship of Arizona in 1968. It is more difficult to do that than winning the Super Bowl. There are hundreds of high schools vying for state championships, while only 32-teams compete for the Super Bowl.

Mr. Krentz graduated with honors from the University of Arizona in Animal Science. He was not a member of the economic overhead group. He was involved in agriculture and extraction; two of the three economic wealth building activities. Upon graduating, he received a fellowship offer from Cornell University, but he moved back home to become an economic value adding member of society.

In February 2002, two illegal aliens were convicted of butchering one of Mr. Krentz calves. They were tried and convicted. They served 51-days in jail. They were ordered to pay $200 in restitution to the Krentz ranch. They never paid. After their release from jail, they merely blended back into society on either side of the border.

Mr. Krentz endured millions of dollars in losses due to illegal immigrants crossing the border. This unnerved the cattle, as they moved away to avoid the people. This caused weight loss and thus reduced revenues to the Krentz Ranch.

In his last day of life, Mr. Krentz was in the process of helping an illegal alien. Unfortunately, that illegal alien killed Mr. Krentz. This murder of an outstanding American led to Arizona’s SB-1070 bill, which, for the most part, plagiarized federal law.

Question: When the Federal Government violates law, who can arrest it? Well, history suggests that all organizations eventually fail. The U.S. Government is behaving as if it will be no exception.

The United States Government did not protect Mr. Krentz’s human rights. The United States Government did not protect Mr. Krentz’s property. The United States Government did not protect Mr. Krentz’s civil rights.

Why did the United States fail Mr. Krentz? Well, he is only one vote. His family represents only a few more votes. Politicians are eyeing the millions of votes they can garnish by legalizing illegal aliens. They do not care about those pitifully few votes along the U.S.-Mexican border.

Since the U.S. Government has demonstrated limited application with respect to the term “illegal aliens,” an implicit interpretation by action (or inaction) is the removal of the word, illegal. People are simply aliens and “not illegal;” not from the word of law, but from the demonstrated inaction by the Federal Government.

Since these aliens are generally not recognized, as illegal by the Federal government, the capture and arrest of these aliens by Arizona officials should be processed as follows:

1.      Do not send Mexicans back to Mexico. All they will do is simply return to the U.S.

a.       Forget about building fences. It is much easier to build a ladder than a fence.

b.      It is also very easy to dig a tunnel. All you need is a big Rota rooter or auger.

2.      Buy three hundred and sixty-five busses. (That would help the manufacturing sector).

3.      Each day, load one bus of these aliens and transport them to Washington D.C.

a.       Since there is a right to bear arms in the U.S., make certain you return to the aliens all of their firearms you may have confiscated when you captured them.

b.      To be fair and help protect the innocent aliens, provide firearms to all those who did not possess when captured. The Arizona taxpayer should pay for these new firearms. It, along with the busses, will be cheaper than what you are trying to do. (These additional firearms will help the manufacturing economy; especially Spain’s, who needs the help).

c.       Respecting the private property of the alien drug smugglers, return the drugs to them that you may have confiscated upon their capture.

4.      Upon arriving to Washington D.C. get them as close to the White House and Legislative buildings as possible.

a.       Drop them as close to governmental buildings as the Secret Service will allow.

b.      If the bus arrives late in the evening, drop the aliens off near the finest restaurants, where the politicians dine.

c.       On weekends, drop them off near the finest country clubs in the surrounding area where politicians and their Fortune 500 cronies hang out. (That will help commerce as the drug smugglers can immediately find good paying customers).

5.      After dropping off the aliens, return to Arizona with an empty bus.

6.      Continue repeating this process every day until the Federal Government treats the word, illegal, as it really is.

a.       Or eliminate the border, conquer Mexico, and arrest all of their corrupt politicians.

7.      Rest assured, the only time thinking and action becomes accurate in any individual, is when one is directly engaged with the problem source, just as Mr. Krentz was.

Many of these aliens will turn out to be great American citizens. They are very hard working people. They have stared tyranny in the face, just as our founding fathers did. It would not be surprising they would be more supportive of the U.S. Constitution than the current incumbents, most of whom married money, as opposed to working hard.

Of course, that would take some time. Between now and then, the dynamics of the next few years would indeed be entertaining to those of us who are immune to the problems Arizona faced during the 2000’s what Washington D.C. would face on the immediate horizon. If would be very entertaining, indeed, if Arizona adopts this proposal, verbatim.

Overall, this would be bullish for the stock market. More freed people. As a matter of interest, if a descendent of one of these aliens rose to become the President of the United States, I would be worried if I was the President of Mexico and/or among the corrupt elite, which is the primary source of the problem. That would be bullish also.

Keep your eye on the daily stock market report.

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 signal and two sell signals.

The Mid-term Indicant is signaling hold for 221 of the 333-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 31.1%. That annualizes to 35.6%. The Mid-term Indicant has been signaling hold for these 221-stocks and funds for an average of 45.5-weeks.

The Mid-term Indicant is avoiding 93-stocks and funds of 333- tracked by the Indicant. The avoided stocks and funds are down an average of 31.1% since the Mid-term Indicant signaled sell an average of 87.0-weeks ago.

One year ago, on May 15, 2009, the Mid-term Indicant was holding only 21-stocks and funds out of 344 tracked for an average of 97.4-weeks. They were up by an average of 112.5% (annualized at 60.0%). There were 323-avoided stocks and funds at that time. The avoided stocks and funds were down an average of 32.2% since their respective sell signals an average of 49.6-weeks earlier one year ago.

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

There were 312-stocks and funds with hold signals on May 11, 2007 since their buy signals an average of 98.8-weeks earlier. They were up by an average of 121.6% (annualized at 64.0%). There were 31-avoided stocks and funds at that time. They were down by an average of 13.7% from their respective sell signals an average of 25.3-weeks earlier.

On May 12, 2006, the Mid-term Indicant was signaling hold for 253-stocks and funds out of 345-tracked. They were up by an average of 131.2% (annualized at 71.0%) since their buy signals an average of 96.0-weeks earlier. The Mid-term Indicant was avoiding 71-stocks and funds at that time. They were down by an average of 7.9% since their sell signals an average of 18.5-weeks earlier.

Five years ago, on May 13, 2005, there were 201-hold signals for stocks and funds out of the 320 tracked by the Mid-term Indicant at that time. They were up an average of 93.9% (annualized at 54.5%) since their respective buy signals an average of 89.6-weeks earlier. There were 117-avoided stocks and funds then. They were down an average of 28.0% since their respective sell signals an average of 54.7-weeks earlier.

On May 14, 2004, there were 218-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 75.4%, annualizing 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 by an average of 10.0% since their sell signals an average of 11.3-weeks earlier.

There were 275-stocks and funds with hold signals on May 16, 2003. They were up by an average of 36.3%, annualizing at 111.9%, since their buy signals 16.8-weeks earlier. The 8-avoided stocks and funds were down an average of 26.0% since their respective sell signals an average of 26.4-weeks earlier.

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

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

Click this 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. Governmental and political behavior can have immediate and long-lasting unfavorable influences on the capital markets.

Some companies will perform well, regardless of the depth of the bear market. Buy signals will be muted if Congressional action threatens the capital markets. Legislation, regulation, and politicians are the biggest threat to the stock market bull.

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

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

The Long-term, Mid-term, and Quick-term attributes have not yet succumbed to the stock market bear’s ambition. The Mid-term Bull has not been threatened by recent bearish behavior. The Mid-term Bull remains solidly dominant.

The Near-term cycle shifted in support of bearish inclinations in early Feb 2010, but quickly abandoned bearish bias in early March 2010. However, the past two weeks resulted in several sell signals for ETF’s due to bear attacks. The Dow Utilities also shifted in favor of the bear on a Mid-term basis in early Feb 2010. It remains pathetically configured with respect to bullish ambition.

With the exception of the DJU, most prices and major indices remain solidly above their respective bearish yellow curves in spite of recent bearish behavior. Bear and sell signals will not occur on these slower moving models until price interactions with bearish yellow.

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

Stop Loss Management

The Mid-term Indicant recommends a trailing stop loss of 8%. For your longer-term holdings where you are enjoying triple and quadruple digit gains, you may want to set your stop at the bearish yellow price.

Floor traders are aware of stop loss positions. If prices near those stop losses against the grain of directional bias, the floor traders will drive the price down to those stop losses and then buy for themselves and then quickly sell for profits at your expense. Although seemingly immoral, it is the nature of free markets and contributes to the desired liquidity of stock markets. This is one reason why stop losses should be well below prevailing prices but well above your buy price. That perfection, of course, is not attainable shortly after buying, which is the most dangerous period for holding.

Long after a successful buy, monitor prices relative to the bearish yellow curve. That will minimize the number of trades, while protecting portfolio values.

For new buys, set stop losses at the blue or green values in the tables. If green is deeply lagging the prevailing price, you may want to average the blue and green prices for your stop losses. If the green curve is rising, set the stop loss just below it. Green is a common bouncing point so a stop loss a percentage below its value could be considered. Once green passes above your buy price, then adjust your stop losses, periodically, say weekly, at or just below green. Once yellow passes above your buy price, you may want to set the stop loss at the yellow price. That is a good tactic when longer-term holding positions are supported with expected fundamentals and your enjoyment of owning a piece of a great company.

If your stop loss triggered sell, while Indicant continues signaling hold, normal advice would be to buy again. However, if the Near-term Indicant is signaling bear/avoid, it is better to wait for specific buy signals from the Mid-term Indicant.

The ETF’s are signaled on the Near-term, Quick-term, and Short-term Indicant and are updated daily. These shorter-term models attempt participation in significant bullish spurts and rallies, while the Mid-term Indicant is focused on fundamentals and longer-term technical data.

The Indicant Stock Market Report’s Secular Market Blend

The Dow is up 45.8% since its secular weekly low on October 9, 2002. The NASDAQ is up 110.6% and the S&P500 is up 46.5% since then. The small cap index, S&P600, is up 117.9% 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 NASDAQ is down 53.5% since its last weekly secular peak on March 9, 2000. The S&P500 is down 25.6% since its similar secular peak on March 23, 2000. The Dow is down by 9.4% 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 believed their proposed fixes in the 2006 congressional and 2008 presidential elections. All democracies eventually fail by virtue of tyranny by the stupid majority. We may be witnessing the early stages of that phenomenon, although recent events are suggesting resistance against the lazy brains of the 2006 and 2008 majority. More will be learned in Nov 2010. If the majority has their hands out, the markets will continue in their secular decline, using the pivot year of 2000. Since 2000, the capital markets are down. They will continue moving down if the majority has their hands out to their respective governments.

Politicians are now attempting to impose more constraints on business expansion and thus the continuation of wealth destruction should not be surprising. Politicians have deemed obsolete the normal efficiencies of capitalistic cleansing of the incompetent. That will wear down the capital markets as politicians continue their neurotic desires to expand their influence and control. Those leeches will eventually kill their host, but like all leeches, they continue on sucking away.

The NASDAQ year-to-date performance was bearish by 15.7% through this week in 2001. The NASDAQ finished 2001 down by 21.1%, which was congruent with standards of post-election-year-bearishness.

The NASDAQ was down by 11.9% 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 was consistent with the mid-term year’s historical standards of finding bottoms in mid-term election years.

The NASDAQ YTD 2003 performance was up by 14.9%. 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 4.9% and finished up by 8.6% for that year, which was congruent with election year bullishness, although shy of magnitude standards. 

It was down 9.1% in 2005’s post election year, which was consistent with historical standards of losses and/or minimal gains. Many of you recall that 2004 and 2005 were meandering bear markets. The post election year of 2005 finished up by a mere 1.4%, which was an excellent year, based on post election year historical standards of bearishness.

In 2006, the NASDAQ was up 1.7% on this weekend and finished that year with a 9.5%-gain, which again maintained congruency of historical bullishness for a mid-term election year. It was up by 5.4% at this time in 2007 and finished that year in positive territory by 9.8%, which was consistent with pre-election year bullishness.

The NASDAQ was down by 5.9% on this weekend in 2008. It finished down by 40.5% in 2008. That was extreme contrarian performance to the standards of historical election year bullishness. It was the most bearish presidential election year since related records from 1832.

The NASDAQ was up 7.1% at this time last year. It finished 2009 up by 43.9% in extreme contrarian performance to historical standards. Keep in mind, this extraordinary bullish cycle in 2009 finished that year down by 20.6% from its prior Mid-term cyclical peak on October 31, 2007.  That extraordinary bullishness will be viewed by historians as a mere spurt (reverberation) from 2008’s severe bear market. The 2008 bear market more accurately reflected economic fundamentals than the 2009 bull market. Much of the 2009 bull market correlated well with declining political popularity.

The Dow was down 5.1% on this weekend last year but finished 2009 up by 18.1%. Although post election years are generally bearish, the Dow’s gain for 2009 was slightly below the average gain during years with post-election-year bullishness.

The Dow is down 25.0% since its last weekly closing peak on Oct 9, 2007. The NASDAQ is down 17.9% since its last peak on Oct 31, 2007. The S&P600-small cap index is down 16.4% 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.

Most 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 weekly bottom on November 20, 2008.

The next Near-term Bear cycle may not fall below the March 9, 2009 cyclical bottoms. Even with that, statistics supported by 100% confidence, suggest the Reverse Tangential Projections will occur at some future point. Those projections are above these cyclical bottoms, but well below prevailing prices.

Although exact simultaneous bottoming did not occur on March 9, 2009, tracking from that pivot-point has been and will continue to be appropriate. This inexactness lends credence to the reverse tangential projections with short-term view, albeit mildly so. Consequently, March 9, 2009 is the pivot date to monitor performance since the March 2009 bottoming from the 2007-2008 bear cycle.

The Dow is up 62.2% since March 9, 2009. The NASDAQ is up 85.0% and the S&P500 is up 67.9% since then. The S&P600, Small Cap Index, is up a whopping 104.6% since March 9, 2009. That March 2009-January 2010 bull leg was indeed powerful, but such cycles have occurred many times in the past only to be followed by bear cycles of varying breadth and depth. The Mid-term Indicant does not suggest impending bearishness, which is supported by the Short-term Indicant. Until the past two weeks, Near-term attributes were bullishly supportive, but now shifting in favor of the bear.

Stock market corrections after such a rise do not need too much of an excuse to meander or even worse. Governments around the world, with the exception of China and possibly Japan, have borrowed too far ahead of real wealth creation. Monetary policies by those “fat governments” will not come from within, but with the harsh reality of their repeated impositions to real wealth creation. There is an upper limit to leech consumption, relative to the capacity for leeched items. Reality exerts itself without regard to its harshness or failing attempts by intellectuals, whose “real contribution/worth” is closer to zilch. The problem with leeches is their incessant desire to expand their capacity to do so.

Keep your eye on the daily stock market report.

Economic Conditions – Inflation, Currency, Interest Rates

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

Most of the hard economic data such as, interest rates, commodities, and currency exchange rates continue holding relatively constant. The discount rate is no longer a yellow bear. It is attempting a “technical U-turn” from the depths of its prior fall. The sinusoidal waves suggests interest rates are anxious to start rising again. They are doing so in China. Keep in mind, though, that interest rate depths remain as a non-threatening configuration to the stock market bull. The discount rate U-turn is to be monitored. It is set by a person with a three pound brain and one never knows when dysfunction can occur.

Most of the content in this section remains the same. Until conditions change, verbiage will change very little. The idea here is not entertainment, but retention of facts in spite of boring repeatability. At some future point they will change and influence drama. Monitoring them regularly is important to anticipate those magical moments.

As stated for several months, rising interest rates would normally threaten the stock market bull. However, they are so low, a prognosis of normalcy borders minutia. In essence, potential rate hikes are irrelevant to the stock market at these levels.

The Fed’s current strategy is to maintain low rates, conflicting with the normalcy of rate hikes during economic recovery. This, coupled with excessive government spending, is a recipe for hyperinflation and/or high interest rates at some future point. That will eventually lead to a stock market bear and high commodity prices, including gold. Keep in mind that the combination of high interest rates and inflation or deflation exceeding an absolute value of 8% has a history of being extremely bearish for both the stock market and the economy. Currently, that is not a threat.

Some prognosticate a future with deflation. The combination of prevailing interest rates and the absolute value of inflation/deflation exceeding eight percent produce very aggressive and deep stock market bears. At least that is the history. It does not matter which projection is accurate with respect to the stock market. Inflation or deflation exceeding the limits of tolerance will induce a stock market bear.

Evolving as a force are monetary policies of foreign governments. Projecting the U.S. Fed’s position is becoming a bit more complicated. These projections must now include China and even more recently, that of Greece. Economic leeches around the world continue draining the productive. At some point that will result in unmanageable disproportions between the productive and the non-productive. History suggests this is generally addressed by varying levels of civil discourse. That is usually bearish, depending on location and severity. You are now seeing civil discourse in Greece. The question is, how much will this spread? Also, what new political mumbo-jumbo leaders will evolve from such crises? Such crises typically propel militant sort of folks to the top of the political heap. This typically leads to war, which is bullish.

Some short-term rates have been nudging north the past few weeks. All major cycles, regardless of subject, begin with subtle movements in their favorable or unfavorable future paths. Sometimes there is nothing to it, but sometimes it is that point where one’s hindsight indicates the optimum point in time where one would have enjoyed taking profit-concluding action.

The Fed can do little for economic stimulation. Interest rates cannot go much lower. If the economy cools even more, the Fed’s contribution to solutions is limited. In essence, the Fed has laid all its cards on the table. Rest assured the Fed will take every opportunity to enhance its position to influence economic activity. In essence, interest rates will be quick to rise when economic recovery is perceived as real and sustainable. This is one reason why the dollar has been strengthening lately. The Fed backed that up with a hike in the discount rate several weeks ago. Another reason for the dollar’s strengthening is the weakening of foreign currencies. It is not based on the dollar’s merit, but based on European incompetence, laziness, and stupidity.

Oil prices continue vacillating in a range the Saudi Kingdom finds comfortable. As stated for several months, the kingdom continues asserting its leadership and regulating supplies to demands that will result in approximately $80/bbl for a lengthy period. Of course, normal human greed will occur and the result will be military action. Participants remain unknown, but most likely will begin with Israel and Iran, and concluding with the U.S. and Russia and possibly China. Any scenario is bullish for oil prices and bearish for the stock market from a longer-term perspective.

Several weeks ago, commodities began their elevation into the neutral zone from their bullish mini-cycle. Bearish yellow is now in a cyclical shift to the north, supporting a bullish cycle. As earlier stated, a continuation of these configurations will eventually lead to inflation. Although commodity prices have weakened the past few weeks, their underlying Mid-term cyclical trend remains bullish. China’s credit tightening, coupled with expanding socialism in the West, is strategically bearish in the long-term for commodities and offering a bit of support to the prognosticators of deflation.

More recently, China is now expressing concerns regarding inflation. Commodity prices are rising, but that is against the trend for the time being. The increased commodity prices will pressure rates more to the north. That will be non-bullish.

Gold is obviously anticipating significant inflationary behavior with paper currencies. It is also buffering portfolios against governmental policies around the world and a related increase is various forms of terrorism, militia developments, etc.

A tremendous amount of paper currency has been added to circulation well ahead of the productive efforts normally required to support those levels. Inflation typically follows that sort of political behavior. Increased socialism will inherently reduce supply of products and services, while paper money in the hands of the incompetent and non-productive will increase demand. At some future point, an I-Pod sort of product may cost well over $10,000. Only the “established elite” will enjoy those sort of possessions, while the masses will have to relearn the drumbeats from their primordial past. Once that nonsensicality has passed, deflation will most likely follow. Interestingly, 2009’s PPI decline was the largest since 1938. Scroll down when clicking the link in the previous sentence.

The stimulus package, which was similar to FDR’s, predictably did not work. If the economy stalls again, more debt will be needed for yet another non-working stimulus, based on the errant thinking of contemporary leadership. The only one that works is a tax cut. That allows money to be used at maximum efficiency; in your hands as opposed to some yawning government bureaucrat.

There is one burgeoning bright spot developing. The Tea Party movement is highlighting the excesses of members of the economic burden/overhead group. Those, who do not add economic wealth, are getting wealthier than those who do. That is a recipe for quite a bit of drama. Union labor management does not understand this phenomenon. You have seen their ignorance displayed in Greece during late April and early May. Most union members in the manufacturing sector also do not understand. They will slowly devolve, as they have been doing for years and many will go to their graves unconscious of the stupidity their union dues supported. More and more will not live the American dream and that is their fault. Politicians will continue catering to those large block of votes, but those large blocks will continue to shrivel. Hopefully, that will reverse the course of excessive economic leeching.

Educated economic overhead members do understand this phenomenon. They are very smart people. They are simply unproductive and do not add economic wealth. That does not deter them, though, from expanding their “taking” capacity. It is always interesting where the breech point occurs. The breech point is where they are slaughtered; either figuratively or physically. Economic wealth production is required in much more magnitude than the capacity to take. Since 2006, there is a gap of concern.

Gold was solidly bullish the past few days. It is moving up almost instantaneously to civil strife in Greece. The optimistic 2012 forecasted price of gold is holding at $1600. The low cyclical forecast for gold is holding at $1300. The meandering forecast increased to $1100. There are no quantifications suggesting a long-term decline in the price of gold in spite of the mysticism guiding its value.

As stated 85-weeks ago, once the euphoria of the socialistic methods begin displaying its harsh reality on the reduced quality of life, 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 the March 2009-January 2010 Bull Leg.

The heart and soul of bullish seasonality concluded a bit earlier this year. The pessimistic outlook for the market has a good chance to unfold now. Politicians successfully ended the conclusion of the heart and soul of bullish seasonality near the end of January 2010 with the president’s state of the union address. Bearishness typically follows those speeches and there was no exception this year. However, the capitalistic system rebounded very well as the capital markets surged a few weeks later in early March and continued doing so until the Greek’s started rioting. Civil strife can spread and do so rapidly. That is bearish. The wars that follow, however, tend to be bullish.

The above and below paragraphs may become obsolete, based on the mid-term elections this year. A high Congressional turnover should at the very least stalemate government; at best garnish enough veto overriding votes to repeal recent political stupidity.

The question remains, is public resistance to healthcare reform and other socialistic endeavors really from the grassroots? If so, and if its political influence results in cessation of the rampant stupidity in Washington D.C., the bull will find that too favorable to acquiesce to the bear on the immediate horizon. Although healthcare reform garnished most of the attention in 2009, cap and trade legislation will depress corporate profits, depress capitalistic adventurism, and thus will eventually depress the stock market. European economic failures threaten the bull as well.

This is getting trickier since nearly one-half of the U.S. population does not pay federal income tax. Coupling that to union voters and government employees, who pay federal income tax, suggests over 50% is permanently in favor of socialism. That does not bode well for the capital markets. A new group of economic leeches is evolving; hundreds of thousands are not making their mortgage payments. They are using mortgage money to buy flat panel televisions and I-Pods, I-Pads, and whatnot. The population of economic leeches is over 50%. Their lack of discipline, though, keeps a fraction of them away from the voting booths. For those of you who have a sense of reality should hope that fractional amount reduces their voting powers to less than 50% of the populace.

There was no bear market in 2009. However, previously mentioned threats remain, “if taxes are raised on the highly productive and capital gained, do not be surprised at a 1,000 Dow by 2010.” The bear was passive between March 2009 and January 2010. It has plenty of time to demonstrate its reflection of a souring culture. The Blue Dogs disappointed in the recent healthcare vote. The lower character elements of society rise to the top of the political elite. That is bearish.

As stated the past 37-weeks, on a positive note, it appears enough of the populace are influencing their political representatives to slow the progress of stupidity in spite of recent escapades by the stock market bear. If this happens, then bearish expectations of great magnitude will be muted. A measure of American voter stupidity will conclude in November 2010. The stock market may anticipate reduced stupidity and with that, the current bull market could continue through 2012, but recent political/leeching events suggest that is now unlikely. Regardless of long-term prognosis, there is nothing wrong in participating in the bull leg now underway, albeit in trouble.

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. The Mid-term Indicant signaled buy on Oct 16, 2009. It is up 0.7% since then, annualizing at 1.1%. It has been bearish in seven out of the last 17-weeks, but solidly bullish in six of the last eleven weeks. It was solidly bullish last week, following two weeks of strong bearishness.

Fidelity Gold, Fund #28 received a buy signal on Sep 4, 2009. It is up 15.0% since then, annualizing at 21.5%. 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 until its sell signal on October 3, 2008. It is up 6.2%, annualizing at 7.8% since its buy signal on July 31, 2009.

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. The Mid-term Indicant signaled buy on Sep 18, 2009. It is down 0.5% since that buy signal, annualizing at -0.5%.

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 was down 18.4% since that sell signal and the buy signal on January 8, 2010. The Mid-term Indicant had to signal sell for this fund on Feb 12, 2010. It is down 3.0% since that sell signal. Although energy is an excellent long-term investment, cap and trade political threats, coupled with the strengthening U.S. dollar may wreak more damage to this fund than previously computed. It was also solidly bullish last week and contrarian to sector bearishness.

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 up 3.2% since its buy signal on Sep 11, 2009, annualizing at 4.6%.

The Quick-term Indicant signaled buy for ETF#03 – Energy and Natural Resources on Aug 3, 2009. It is up 9.4% since then, annualizing at 11.9%. It was up 242.4% (annualized at 44.8%) since its previous buy signal on March 26, 2003 until the September 2008 sell signal. The Near-term Indicant signaled buy for this ETF on Mar 3, 2010, but had to signal sell on May 7, as it fell under bearish influences.

The Quick-term Indicant signaled buy for the GLD-ETF#11 on December 11, 2008. It is up 49.2% since that buy signal, annualizing at 34.2%. 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 27.1%.  The Near-term Indicant signaled buy on April 24, 2009 and it gained 17.3% until its sell signal on Feb 4, 2010. It received a buy signal again from the Near-term Indicant on Mar 2, 2010. It is up 8.4% since that buy signal, annualizing at 41.5%.

Most commodities were mildly bullish last week while the energy services sector was bearish. This is most likely due to impending fines and penalties for the Gulf Coast clean up.

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 July 31, 2009 for all ten major indices. The Mid-term Indicant signaled bear on Feb 12, 2010 for the Dow Utilities. It is up 4.2% since that bear signal.

The nine remaining major indices retaining bull signals are up by an average of 19.2% since there respective bull signals an average of 41.0-weeks ago. That annualizes at 24.4%.

The Dow Utilities was the weakest bull since the July 31, 2009 bull signal and again enduring a bear signal. That contrasts with it being the strongest bull from 2003 through the overall stock market peaking in 2007.

Other than the Dow Utilities, the remaining major indices remain with bullish attributes. The Dow Utilities has been pitifully bullish in this cycle, but it may receive a bull signal once pressure escapes convergence. That possibility was diminished the past two weeks with solid market bearishness.

The Mid-term Indicant Dow Jones Industrial Average performance is at $30,502,164. That beats buy and hold performance of $1,615,725 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $147,735. That beats buy and hold’s $111,243 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $213,865. That beats buy and hold’s $81,375 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 1787.8%, 32.8%, and 162.8%, respectively, for these indices as of this past week.

The Indicant’s percentage advantage over buy and hold does not change during bull signals. The advantage changes only during bear signals. That is because the buy and hold model has to keep holding, while the 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. If the market remains bullish during this time, we’ll eat crow. It needs bears to outperform.

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 59.7% since then. It will receive a buy signal only if the Quick-term Indicant signals buy for QID. Although this is classically a post-election-year hold, the Mid-term Indicant was unable to signal buy in 2009. The Short-term Bull displayed attributes of a thoroughbred in 2009 and thus no opportunities were available to shorting the stock market since the April 3, 2009 sell signal.

Click here for Mid-term Indicant Table of Mutual Funds

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

Long Term Indicant Positions - Dow Jones Industrial Average

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

The Dow is up 266.9% (annualized at 14.4%) since the Long-term Indicant signaled bull 967-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, including relative performance 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.

Influencing parameters in the LTI include prior bull cycles. The great bull market in the 1990’s was powerful enough to offset the 2008-2009 recessionary bear market.

The 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 included in this weekly report. This allows web-based retention records of the daily report for much longer than the last twelve months. This report is in the next section and a mere repeat of the daily report you received on the last trading day of the week, which is usually on Friday evening.

Short-term Indicant Stock Market Report - Summary

Force Vector behavior is a focal point. They, for the most part, rose this past week. That was expected. If they start retreating back to the south early next week, there will be more Near-term bear and sell signals. If they continue penetrating bullish domains, sell signals will be muted.

The bias is strongly favoring the bear based on volume relationships, the VIX’s profoundly strong Force Vector, and TLT’s continued bullishness the past few days. Also, Vector Pressure never escaped convergence from last February’s bearish behavior.

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

The Near-term Indicant signaled no new bulls and one new bear.

The Near-term Indicant is signaling bull for six major indices. They are up by an average of 10.2% since their bull signals an average of 9.0-weeks ago, annualizing at 59.2%. The bull signals include contrarian VIX, which could be construed as distorting performance.  It is up 35.5% since its Apr 27, 2010 bull signal.

The Near-term Indicant is signaling bear for four indices. They are down by an average of 1.4% since their bear signals an average of 3.5-weeks ago.

The Quick-term Indicant signaled no new bulls and no new bears.

The Quick-term Indicant is signaling bull for 11-major indices. They are up by an average of 27.9%, annualizing at 32.9%, since their bull signals an average of 44.1-weeks ago.

The Quick-term Indicant is signaling bear for the Dow Jones Utilities. It is up 3.9% since its bear signal 13.6-weeks ago.

-Short-term Trend Sensitive Attributes (Includes Near-term and Quick-term)

      Quick-term Attributes (This is a longer cycle than Near-term cycles)

      QTI-Red Bull Count; Two non-contrarians;  deteriorating bullish support.

      QTI-Bullish Red Curve Trend; Eleven non-contrarians; solid bullish support.

      QTI-Yellow Bear Count; None of the non-contrarians is inflicted with this attribute and thus non-bearish. Longer-term holders should focus on this attribute; especially if you enjoy the fundamentals of your holdings and have accumulated significant gains.

      QTI-Bearish Yellow Curve Trend; Non-bearish majority with 11 of 11-non-contrarian indices in non-bearish trend, supporting non-bearish bias along this slower cycle.

The Quick-term Indicant remains supportive of the QTI Bull. It will continue doing so until the indices interact with bearish yellow.

      Near-term Attributes (This is a shorter cycle than the Quick-term cycles)

      NTI-Blue Bull Count; Zero non-contrarians; nervous and no near-term bullish support.

      NTI-Bullish Blue Curve Trend; No non-contrarians; no longer with bullish support.

      NTI-Bearish Green Curve Trend; No non-contrarians; there is no non-bearish support.

The Near-term attributes are inflecting with an increasing bias, favoring the bear. Both NTI Bullish Blue and NTI Bearish Green are sloping south and thus solidly bearish on a near-term basis.

      Short-term Force Vectors and Pressure Attributes

      STI-Force Vector Domain Position; Five non-contrarians in bullish domains; those five crossed into bullish domains today, 5/14-Fri. They are mature and expended significant energy just getting there. This is an ominous configuration on a short-term basis. If they retreat quickly back into bearish domains, expect bearish sustainability.

      STI-Force Vector Position Relative to Vector Pressure; Four non-contrarians are above Pressure. Again, they are mature, and appear to be losing energy.

      STI-Force Vector Direction; All non-contrarians still moving north, but mostly from bearish domains; limited bullish support.

      STI-Vector Pressure Trend; None of the non-contrarian indices are moving bullishly; no bullish support.

      STI-Vector Pressure Position; Eight non-contrarians are in bullish domains; decreasing bullish support. They remain in near convergence, which has been occurring for several weeks. This correlates to indecisiveness in directional intensity, but now leaning in favor of the bear. VIX pressure is also in bullish domains, adding to this indecisiveness. Bearish aggression, along with support from the short-term attributes the past several days, is increasing decisiveness favoring the bear.

      Short-term Market Summary

      Short-term attributes are no longer solidly supporting the bull. Vector Pressure is the current remaining hope for the bull and it is under assault by the bear.

-Tangential Protection – The Dow Composite, Dow Transports, NASDAQ, NAS100, and S&P600 have tangential protection. Tangential protection, once formed, helps avoid the pitfalls of fluttering behavior. The S&P400 lost this protection on May 10, 2010. The NAS100 was removed today, but no bear signal yet.

-Political Climate – International political behavior will confuse markets for a period.

-Reverse Tangential Bearish Detection – We will have to wait for the next Near-term bear cycle to monitor this tangential phenomenon. The timing is unknown, but there is 100% confidence the major indices and ETF’s will eventually fall to those prices noted in the below link.

Click this sentence to the table, highlighting RTP’s (Reverse Tangential Projections). The values and magnitudes are expressed in the table on the website. Keep in mind there is 100% confidence in these bearish projections. The problem is not knowing when, but odds favor before the first half of this year (2010). Much of this depends on political influences. There will be some unfavorable influences. There always is. The question is, when? As long as the aforementioned attributes are suggesting bullishness and non-bearishness, the Mid-term bull will continue dominance.

The Quick-term bearish yellow curve stands between the above claim and prevailing prices. If prices fall below this bearish yellow curve, the probability of tangential bearishness in this cycle will be high. The Dow Utilities moved toward supporting this phenomenon several days ago. Recent bullish bounces continues with little challenge this theme.

Click the Short-term Indicant to see the combined table of the Near-term Indicant, Quick-term, and Short-term Indicant. The table has links to charts for each. Each chart contains all three models and there are two separate buy and sell signals for the Near-term and/or 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.

Indicant Volume Indicators  

Volume indicators are robustly configured. The majority of this robustness configured during solid bearish expressions. Therefore, volume relationships are biased in favor of the bear. (Recent chronological observations are expressed below in reverse order).

May 14, 2010-Fri-More aggressive volume on bearish aggression is increasing directional intensity favoring the bear.

May 13, 2010-Thu-Although the bear had its way today, it was without supporting volume. However, this does not reverse the underlying volume-bias, favoring the bear.

May 12, 2010-Wed-Bullish aggression, coupled with flat volume and other short-term attributes, suggest a technical adjustment to recent bearish aggression.

May 11, 2010-Tue-Normal volume on flat stock market behavior indicates a predominance of indecisiveness and analysis. This is the first normal volume in several days. Although intraday stock market behavior was volatile, the bulls and bears countered each other. It is just a matter of time, say within one week, before the victor in known.

May 10, 2010-Mon-Volume was aggressive on bullish aggression. However, volume was relatively passive when comparing to last week’s bearish aggression. These combinations support bearish bias when considering the volume element.

May 7, 2010-Fri-Again, bearish aggression coupled with aggressive volume remains solidly bearish.

Short-term ETF Report Card, Status, and Charts

The Near-term Indicant generated no buy signals and three sell signals. Yesterday’s report, as emailed, neglected to indicate there was one buy signal. It was QID and its buy signal was described on yesterday’s report in the contrarian section.

The Near-term Indicant is signaling hold for 17-ETF’s. They are up by an average of 8.5%, annualizing at 31.5%, since their buy signals an average of 14.0-weeks ago.

The NTI is avoiding 11-ETF’s. They are up by an average of 0.1% since their sell signals an average of 1.3-weeks ago.

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

The Quick-term Indicant is signaling hold for 28-ETF’s. They are up an average of 30.4% since their buy signals an average of 47.3-weeks ago. Those with hold signals are annualizing at 33.4%.

The Quick-term Indicant is avoiding three ETF’s. They are down by an average of 19.7% since their sell signals an average of 20.5-weeks ago. These avoided ETF’s include contrarian QID, which is down 62.1% since its QTI sell signal on Mar 26, 2009.

Near-term Indicant ETF Key Attributes

NTI Blue Bull Count; one-non-contrarians; very limited bullish support.

NTI Blue Curve Trend; 15-non-contrarians are sloping north; mild bullish support.

NTI Green Bear Potential Count; 12-non-contrarians; there is limited near-term non-bearish support.

NTI Green Curve Trend; none of the non-contrarians are sloping north; no non-bearish support.

Quick-term Indicant ETF Key Attributes

QTI Red Bull Count; 10-non-contrarians; mild and decreasing bullish support.

QTI Bullish Red Curve Trend; majority of 26-sloping north in support of Quick-term Bull.

QTI Yellow Bear Count; one non-contrarian represents a solid majority, supporting Quick-term non-bearishness. (This is a potential source of resistance to bearish aggression). One dipped into bearish domains last Thu; the first since July 2009.

QTI Bearish Yellow Curve Trend;  25-sloping north, highlighting non-bearishness along a slower moving plane. This non-bullish attribute is under a mild bearish threat.

The Short-term Indicant ETF Key Attributes:

STI Force Vector Direction; All non-contrarians moving bullishly, but from within bearish domains. It will be interesting to see how Force Vectors behave early next week. It appears doubtful they will rise fast enough to help keep Pressure from falling into bearish domains. A few slipped into bearish domains today.

STI Force Vector Position; 15-of the non-contrarians are populating bullish domains, as they crossed today, but expended significant energy doing so. The bear sensed this and dominated; 15-greater than Pressure, but that occurred today as there is little difference between Force Vectors and the demarcation between bearish and bullish domains.

Vector Pressure Position; a minority of 15-non-contrarians in bullish domains; decreasing bullish support. This attribute is a focal point since Pressure remains near zero and has for several weeks. The last bullish cycle did not escape Feb 2010 bearish convergence. This attribute is degrading. That is increasingly threatening to the remaining Near-term hold signals.

Vector Pressure Trend; only one non-contrarian is moving north; no bullish support. A sustainable bearish threat will occur if pressure falls into bearish domains.

Short-term Summary: Most attributes have discontinued supporting the Short-term Bull. The only attribute supporting the short-term cycle is Vector Pressure. It is weakening in that support.

Contrarian Funds

ETF#03-Natural Resources.  The Near-term Indicant signaled sell on May 7, 2010. It is up 2.3% since that sell signal. The Quick-term Indicant signaled buy on August 3, 2009. It is up 9.4% since that buy signal, annualizing at 11.9%.

Pressure dipped into bearish domains. Force did move to the north, as expected, this week. There is an increased likelihood it will be avoided for several more months with these configurations. As of Friday, May 14, 2010, it has not crossed above Pressure.

The Quick-term Indicant will signal sell only after the price drops below QTI Yellow Curve with assistance from other attributes.

ETF#11-Gold and Precious Metals  is up 49.2% since the QTI signaled buy on December 11, 2008. Annualized growth is at 34.2%. Bearish yellow is a good price to set stop losses for a longer-term hold position, which is at $102.75 and still rising.

The Near-term Indicant signaled buy on Mar 2, 2010. It is up 8.4% since that buy signal, annualizing at 41.5%.

It remains as a Near-term Blue Bull and a QTI Red Bull. Sell signals never occur with those two attributes.

Click this sentence for additional charting and current forecasting of the actual price of gold.

As stated for the last year-plus months, 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 Quick-term Indicant will highlight that potential when this occurs. A strengthening dollar is somewhat of an evolving threat to gold, but again, continue holding until the price interacts with the bearish yellow curve.

ETF#14-TLT-Long Government  received a buy signal from both the Near-term and Quick-term Indicant models on Apr 27, 2010. It is up 4.1% since those buy signals, annualizing at 86.6%. This ETF is increasing its bullish attributes. It is usually contrarian to the overall stock market, which adds to an increased overall stock market bearishness prognosis.

It is also a NTI Blue Bull and a QTI Red Bull after several months of languishing with a bearish trend. Also, Pressure is positive, which adds bullish fervor to this ETF. It’s Force is now declining, as expected, but not that damaging to the hold position. It will be interesting to see how this fund behaves the next few weeks. At worse, it appears configured for non-bearishness.

The Near-term Indicant signaled buy for ETF#31-QID on Thursday, May 13, 2010. It is up 3.7% since then, annualizing at 1,324.5%. Of course, that annualized number is based on its performance after only one day since the buy signal.

The Quick-term Indicant signaled sell for QID on March 26, 2009. It is down 62.1% since then. The Quick-term Indicant will not signal buy until it contacts the bearish yellow curve, which is valued at $21.30 and still falling. It rate of decline is slowing.

Major ETF Events

May 14, 2010-Fri-Again Gold was not contrarian with today’s stock market bearish aggression and again TLT was strongly bullish. Gold is not in trouble though. There were three more Near-term sell signals today. The Near-term Indicant signaled bear for the Dow, while it did not signal sell for DIA. Sell signals are slightly muted based on profitability of current hold positions.

May 13, 2010-Thu-Gold was not contrarian, as it was mildly bearish on today’s stock market bearish aggression. However, TLT was bullish.

May 12, 2010-Wed-VIX Force Vector remains stratospheric. That is non-bullish for the stock market. There is no volume related evidence the bull has enough muster to mount a charge. TLT has succumbed to profit taking, but not destructive to its hold position. All of these are suggesting a higher probability for bearish dominance.

May 11, 2010-Tue-Volume was normal, but the cumulative effects of the past four weeks remain in solid bearish support.

May 10, 2010-Mon-Bullish aggression appears emotionally based. Volume not that supportive. Force Vectors did not shift north. Vector Pressure remains in decline.

May 7, 2010-Fri-More sell signals occurred. If the bull does not quickly respond, a new Near-term Bear will be born. The Quick-term Bull is not yet being threatened, but it could also expire in a few weeks if the Bull remains passive.

Current Strategy-Short-term Indicant- May 14, 2010-Fri-Force Vectors are at bull bear domain demarcation. They expended significant energy just getting there. The bear sense that weakness and attacked. Do not be surprised at more sell signals on a near-term basis next week. May 13, 2010-Same. Force Vectors are moving as expected, but somewhat passively so, suggesting increased bearishness on a near-term cycle. QID received a buy signal today, which could be considered as “protective” for the time being. May 12, 2010-Same as last yesterday and last Monday. May 11, 2010-Tue-Same as yesterday, but Volume, VIX, and Gold are strongly suggesting bearish stock market behavior on the immediate horizon. May 10, 2010-Mon-Sell signals are being delayed, pending Force Vector behavior for the next few days. If they continue south, this bear cycle will be deep and most likely with breadth. If they turn north, but retreat on contact with Pressure, the bear will dominate. QID may offer participative profit opportunities if the bear indeed regains dominance. May 7, 2010-Fri-If Force Vectors do not shift north early next week, regardless of stock market behavior, sell any securities that you have not been holding for at least seven months. If you are focused on the QTI Bearish Yellow curve with profit position, continue holding.

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

The stock market enjoyed bullish convergence last week, in spite of late week bearishness this past week. This is a bit refreshing since the prior two weeks endured bearish divergence. The energy services sector was bearish last week, while commodities were bullish. This contrarian relationship is unusual. This is most likely due to politicians involvement with the services sector. The politicians threaten future profitability of companies, such as Halliburton and thus one reason for bearish behavior in that sector.

Bearish convergence was endured for four consecutive weeks ending 14-weeks ago. Bearish convergence of four consecutive weeks is strategically bearish. It, however, has not upset the Mid-term Indicant bullish attributes. Its threat has diminished by virtue of recent successes at bullish convergence/divergence, but lingers since short-term attributes are having difficulty escaping a converging configuration. Recent bearishness, in essence, is placing the market at about the same point it was at the conclusion of those four consecutive weeks of bearish convergence from last February. In effect, the markets are saying, the March-April bullish behavior was a mere bullish spurt.

Indicant Conclusion

Conclusions remain relatively static for the past several weeks.

As stated the past thirty-one weeks, low interest rates are imposing narrowed alternative investment opportunities. The expiration of the Near-term Bull suggested this was increasingly an irrelevant observation, relative to more worldly dynamics, which appeared to have been leaning in favor of the bear until twelve weeks ago, but reasserting potential bearish again.

The capital markets crushed the early February threat by the stock market bear with a strong bullish spurt in March and April. Unfortunately, strong bearishness the past two weeks have nearly offset the March-April bullish surge. That suggests the early February bearish threat may have had more merit than the Mar-Apr bullish surge. Fundamental economic data continues improving, but the bear has obviously been motivated by more broad economic fundamentals. The bear’s delight is sourced primarily from Europe. Adding bearish punch is the cap and trade legislation, based on mystical global warming.

Short-term attributes remain a concern. As stated last week, the problem of Pressure remaining in a near-converging pattern for several weeks offered a technical avenue for the bear’s encouragement.

Recent bearishness appears more technical than fundamental. Riots in Greece, political attacks on Goldman Sachs, and Europe’s economic instability is fundamentally supportive of the bear’s ambition. Adding to that is the threat of profit taking from the energy services sector due to the oil spill in the Gulf of Mexico.

However, overall corporate earnings are expected to continue improving, which is the ultimate fundamental element. Austere measures by all governments, along with a reduction in civil strife, should inspire the bull once bearish momentum subsides. As of last week, though, the Short-term Indicant is suggesting an increased bearish bias.

Keep up with the daily stock market report as the Quick-term and Near-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

05/16/2010

May 9, 2010 Indicant Weekly Stock Market Report

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

Conflicting Fundamentals

Fundamentals encompass several elements, such as corporate earnings, economic environment, a civil populace, and political abstinence from the capital markets. These distinct fundamental groupings are typically congruent as favorable or unfavorable from time to time.

Sometimes incongruent patterns emerge. Algebraically, any single negative factored into an infinite array of positives produces a negative result. This phenomenon occurred the past two weeks. Civil unrest in Greece and political hacking about Wall Street greed by greedy politicians is unsettling to a positive outlook. So, it has apparently shifted to a negative outlook.

At a time, when corporate earnings are increasing at a very healthy rate, the stock market has endured bearish influences the past two weeks. Economically, unemployment conditions are improving. The prognosis for corporate earnings and employment continues to be bullish.

Incongruence can be motivational to the bear, regardless of which fundamental element is misbehaving.

There are a couple of extraneous fundamentals that have little to do with earnings potential or the economic environment. A civil populace is usually not an issue during improving economic conditions. However, incivility is generally threatening to capital markets. That is occurring in Greece.

Incivility results in the destruction of physical assets. That destroys the book value of the owners of those assets.  Replacing the destroyed assets has a discounting effect on future flows of income. The disruption to the organization reduces immediate productivity in the organization, adding to future discounted earnings. Forecasting a conclusion to incivility is difficult, adding bearish fervor.

Civil strife in Greece is not bullish. If this incivility remained only in Greece, the stock markets would probably not be bearish except for those corporations with significant assets in Greece. The question addressed by the capital stock market is, “will the civil strife in Greece spread to other countries?”

The threat of expanding incivility directly correlates to the threat of the destruction of property and related corporate earnings. Such a threat is more serious in that it contains many unknowns related to magnitude and breadth.

Increasing incivility typically invites a different breed of politician to arise to the top of that crummy heap of humanity. This breed, to be successful, must have a military background. Experience in such matters is required to restore civility. Of course, that restored civility is not by choice among the populace. The new political leader coerces it. “Behave or die” is their mantra.

When incivility spreads on a multinational basis, government spending is directed toward a build up of military. Restless young males are conscripted into military service and the factories are ordered to build weapons. After all, that is all the new political leader knows. He is preparing for war. The cause is unimportant. It is one of those, “if the only tool you have is a hammer, you tend to see every problem as a nail” sort of things. Irrationality becomes more the rule of order.

Once the military buildup is completed, the world is now prepared for massive destruction of property. Although the build up of military related products helped corporate earnings, the unknown amount of impending destruction is always bearish. A healthy war can more than wipe out the accumulate earnings from building bullets and tanks. The unknown inspires the bear.

Political jibber-jabber adds to the stock market bear’s energy. The bull and the bear both understand the threat of politicians. The bull wants to be corralled and the bear is not about to hibernate with this sort of excitement. Their respective DNA recalls the profound damage by Franklin D. Roosevelt, which resulted in eight years of economic suffering for millions around the world. That led to World War II and the death to millions more. The market turned bullish upon the death of FDR and the conclusion of World War II. Peace and capitalism is all that is required for bull markets.

The political jabs at Goldman Sachs is not a venue the bull finds comfortable. The bull knows the political idiots will inflict more damage than resolution to any problem. The bull tends to head to the corral and lets the bear have its way with every spattering lunacy for political mouths.

The stock market constantly attempts prognosticating the future of corporate earnings. Doing this requires an economic outlook. Incivility has to be factored into the economic outlook. If unfavorable, the stock market will anticipate reduced earnings. When that happens, the stock market will shift bearishly.

Sometimes the stock market prognosticates a souring future for a few days or weeks and then changes its mind. That invokes short-term, but sharp, bearish cycles. That is usually due to simple human emotions. From time to time, such negative emotions propel the stock market downward.

The stock market bull responds when those emotions are checked with a resurrection of rational projections. Logic and reality are not emotional. They are what they are, regardless of what one wants them to be. When emotions and logic are incongruent, the stock market eventually sides with logic. Sometimes this “correction” takes awhile and sometimes very sudden. Regardless of the amount of time it takes, a return to rational understanding of events and the shape of those events on the future shifts emotional contributions to the stock market’s directional intensity.

The question always is, “is this a bearish spurt or bearish sustainability?” The Quick-term Indicant’s bearish yellow curve lags the depths of all previous bearish spurts and bear markets. When the indices and securities fall below bearish yellow, the probability of bearish sustainability is significant. That coupled with negative Vector Pressure enhances the significance of that bearish probability. Such a combination enhances the probability of bearish sustainability. There is no measure for bearish magnitude. A bear is a bear, regardless of magnitude.

Currently, all the major indices remain above the Quick-term bearish yellow curve. Some of the internationally related ETF’s, however, are encountering bearish yellow. However, there is little objective evidence of sustainable bearish potential on the immediate horizon. It is getting close, though.

The Mid-term Indicant’s bearish yellow curve, which moves along a slower cycle, is being threatened. Many stocks and funds are fluttering around bearish yellow. This proximity between prevailing prices and mid-term yellow leaves the bear a window of opportunity to captivate and dominate the capital markets.

However, even with bearish aggression last week, the bear has not yet breeched either the Quick-term or the Mid-term bearish yellow curves with the exception of a few internationally related ETF’s. It is getting close, but not yet there for the major indices and related ETF’s. Until price interaction with bearish yellow and if breeching occurs, consider this recent bearish aggression as a bearish spurt. Bearish spurts are a bit scary, but when they are in fact just spurts, bullish rallies more than offset their damage.

Keep your eye on the daily stock market report.

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 signal and five sell signals.

The Mid-term Indicant is signaling hold for 223 of the 333-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 26.8%. That annualizes to 31.3%. The Mid-term Indicant has been signaling hold for these 223-stocks and funds for an average of 44.5-weeks.

The Mid-term Indicant is avoiding 88-stocks and funds of 333- tracked by the Indicant. The avoided stocks and funds are down an average of 31.3% since the Mid-term Indicant signaled sell an average of 86.0-weeks ago.

One year ago, on May 8, 2009, the Mid-term Indicant was holding only 21-stocks and funds out of 344 tracked for an average of 96.2-weeks. They were up by an average of 116.6% (annualized at 62.6%). There were 323-avoided stocks and funds at that time. The avoided stocks and funds were down an average of 29.4% since their respective sell signals an average of 48.6-weeks earlier one year ago.

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

There were 308-stocks and funds with hold signals on May 4, 2007 since their buy signals an average of 98.5-weeks earlier. They were up by an average of 122.4% (annualized at 64.6%). There were 33-avoided stocks and funds at that time. They were down by an average of 12.0% from their respective sell signals an average of 23.2-weeks earlier.

On May 5, 2006, the Mid-term Indicant was signaling hold for 270-stocks and funds out of 345-tracked. They were up by an average of 144.4% (annualized at 75.5%) since their buy signals an average of 99.7-weeks earlier. The Mid-term Indicant was avoiding 67-stocks and funds at that time. They were down by an average of 5.8% since their sell signals an average of 18.6-weeks earlier.

Five years ago, on May 6, 2005, there were 201-hold signals for stocks and funds out of the 320 tracked by the Mid-term Indicant at that time. They were up an average of 98.0% (annualized at 57.5%) since their respective buy signals an average of 88.7-weeks earlier. There were 117-avoided stocks and funds then. They were down an average of 27.8% since their respective sell signals an average of 53.7-weeks earlier.

On May 7, 2004, there were 219-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 76.9%, annualizing at 70.8%, since their respective buy signals an average of 56.5-weeks earlier. There were 18-avoided stocks and funds then. They were down by an average of 12.8% since their sell signals an average of 15.8-weeks earlier. (There were 18-sell signals on this weekend, which caused a significant difference in the holding period).

There were 255-stocks and funds with hold signals on May 9, 2003. They were up by an average of 32.0%, annualizing at 101.5%, since their buy signals 16.4-weeks earlier. The 17-avoided stocks and funds were down an average of 31.9% since their respective sell signals an average of 30.7-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.

Click this 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. Governmental and political behavior can have immediate and long-lasting unfavorable influences on the capital markets.

Some companies will perform well, regardless of the depth of the bear market. Buy signals will be muted if Congressional action threatens the capital markets. Legislation, regulation, and politicians are the biggest threat to the stock market bull.

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

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

The Long-term, Mid-term, and Quick-term attributes have not yet succumbed to the stock market bear’s ambition. The Near-term cycle shifted in support of bearish inclinations in early Feb 2010, but quickly abandoned bearish bias in early March 2010. However, this past week resulted in several sell signals for ETF’s due to bear attacks. The Dow Utilities also shifted in favor of the bear on a Mid-term basis in early Feb 2010. It remains pathetically configured with respect to bullish ambition.

With the exception of the DJU, most prices and major indices remain solidly above their respective bearish yellow curves in spite of last week’s bearish behavior. Bear and sell signals will not occur on these slower moving models until price interactions with bearish yellow.

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

Stop Loss Management

The Mid-term Indicant recommends a trailing stop loss of 8%. For your longer-term holdings where you are enjoying triple and quadruple digit gains, you may want to set your stop at the bearish yellow price.

Floor traders are aware of stop loss positions. If prices near those stop losses against the grain of directional bias, the floor traders will drive the price down to those stop losses and then buy for themselves and then quickly sell for profits at your expense. Although seemingly immoral, it is the nature of free markets and contributes to the desired liquidity of stock markets. This is one reason why stop losses should be well below prevailing prices but well above your buy price. That perfection, of course, is not attainable shortly after buying, which is the most dangerous period for holding.

Long after a successful buy, monitor prices relative to the bearish yellow curve. That will minimize the number of trades, while protecting portfolio values.

For new buys, set stop losses at the blue or green values in the tables. If green is deeply lagging the prevailing price, you may want to average the blue and green prices for your stop losses. If the green curve is rising, set the stop loss just below it. Green is a common bouncing point so a stop loss a percentage below its value could be considered. Once green passes above your buy price, then adjust your stop losses, periodically, say weekly, at or just below green. Once yellow passes above your buy price, you may want to set the stop loss at the yellow price. That is a good tactic when longer-term holding positions are supported with expected fundamentals and your enjoyment of owning a piece of a great company.

If your stop loss triggered sell, while Indicant continues signaling hold, normal advice would be to buy again. However, if the Near-term Indicant is signaling bear/avoid, it is better to wait for specific buy signals from the Mid-term Indicant.

The ETF’s are signaled on the Near-term, Quick-term, and Short-term Indicant and are updated daily. These shorter-term models attempt participation in significant bullish spurts and rallies, while the Mid-term Indicant is focused on fundamentals and longer-term technical data.

The Indicant Stock Market Report’s Secular Market Blend

The Dow is up 42.5% since its secular weekly low on October 9, 2002. The NASDAQ is up 103.4% and the S&P500 is up 43.0% since then. The small cap index, S&P600, is up 105.4% 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.

The NASDAQ is down 55.1% since its last weekly secular peak on March 9, 2000. The S&P500 is down 27.3% since its similar secular peak on March 23, 2000. The Dow is down by 11.5% 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 believed their proposed fixes in the 2006 congressional and 2008 presidential elections. All democracies eventually fail by virtue of tyranny by the stupid majority. We may be witnessing the early stages of that phenomenon, although recent events are suggesting resistance against the lazy brains of the 2006 and 2008 majority. More will be learned in Nov 2010. If the majority has their hands out, the markets will continue in their secular decline, using the pivot year of 2000. Since 2000, the capital markets are down. They will continue moving down if the majority has their hands out to their respective governments.

Politicians are now attempting to impose more constraints on business expansion and thus the continuation of wealth destruction should not be surprising. Politicians have deemed obsolete the normal efficiencies of capitalistic cleansing of the incompetent. That will wear down the capital markets as politicians continue their neurotic desires to expand their influence and control. Those leeches will eventually kill their host, but like all leeches, they continue on sucking away.

The NASDAQ year-to-date performance was bearish by 12.0% through this week in 2001. The NASDAQ finished 2001 down by 21.1%, which was congruent with standards of post-election-year-bearishness.

The NASDAQ was down by 19.3% through this weekend in 2002. Some of you recall the dynamic bear market in 2002, where the NASDAQ finished that year down by 31.5%. The bear cycle found bottom in October 2002, which was consistent with the mid-term year’s historical standards of finding bottoms in mid-term election years.

The NASDAQ YTD 2003 performance was up by 12.8%. 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 9.6% in 2005’s post election year, which was consistent with historical standards of losses and/or minimal gains. Many of you recall that 2004 and 2005 were meandering bear markets. 2005’s post election year finished up by a mere 1.4%, which was an excellent year based on post election year historical standards of bearishness.

In 2006, the NASDAQ was up 6.2% 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 6.4% at this time in 2007 and finished that year in positive territory by 9.8%, which was consistent with pre-election year bullishness.

The NASDAQ was down by 8.1% on this weekend in 2008. It finished down by 40.5% in 2008. That was extreme contrarian performance to the standards of historical election year bullishness. It was the most bearish presidential election year since related records from 1832.

The NASDAQ was up 8.8% at this time last year. It finished 2009 up by 43.9% in extreme contrarian performance to historical standards. Keep in mind, this extraordinary bullish cycle in 2009 finished that year down by 20.6% from its prior Mid-term cyclical peak on October 31, 2007.  That extraordinary bullishness will be viewed by historians as a mere spurt (reverberation) from 2008’s severe bear market. The 2008 bear market more accurately reflected economic fundamentals than the 2009 bull market. Much of the 2009 bull market correlated well with declining political popularity.

The Dow was down 0.5% on this weekend last year but finished 2009 up by 18.1%. Although post election years are generally bearish, the Dow’s gain for 2009 was slightly below the average gain during years with post-election-year bullishness.

The Dow is down 26.7% since its last weekly closing peak on Oct 9, 2007. The NASDAQ is down 20.8% since its last peak on Oct 31, 2007. The S&P600-small cap index is down 21.2% 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.

Most 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 weekly bottom on November 20, 2008.

The next Near-term Bear cycle may not fall below the March 9, 2009 cyclical bottoms. Even with that, statistics supported by 100% confidence, suggest the Reverse Tangential Projections will occur at some future point. Those projections are above these cyclical bottoms, but well below prevailing prices.

Although exact simultaneous bottoming did not occur on March 9, 2009, tracking from that pivot-point has been and will continue to be appropriate. This inexactness lends credence to the reverse tangential projections with short-term view, albeit mildly so. Consequently, March 9, 2009 is the pivot date to monitor performance since the March 2009 bottoming from the 2007-2008 bear cycle.

The Dow is up 58.1% since March 9, 2009. The NASDAQ is up 78.6% and the S&P500 is up 64.2% since then. The S&P600, Small Cap Index, is up a whopping 92.9% since March 9, 2009. That March 2009-January 2010 bull leg was indeed powerful, but such cycles have occurred many times in the past only to be followed by bear cycles of varying breadth and depth. The Mid-term Indicant does not suggest impending bearishness, which is supported by the Short-term Indicant. Even the Near-term attributes are bullishly supportive, but remaining precariously close to supporting a bearish bias.