November 2005 Indicant Weekly Stock Market Report

Nov 27, 2005 Indicant.Net Weekly Update

Volume 11, Issue 04 ISSN 1526 6516 © The Indicant Stock Market Report

The Heart and Soul of Bullish Seasonality Continues without Pizzazz - Part 2

Boring bulls are okay. They do not make front-page news nor mentioned on the major network evening news. Boring bulls are incognito to the public.

The majority of stock market participants react to the news. As the old saying goes, “buy on the rumor and sell on the news.” When the majority of stock market participants are doing the same thing, watch out. The market will shift directions. That is why the crowd generally ends up on the wrong side of the market.

The most bullish bi-monthly period is November-December. A 1950 $10,000 investment in the Dow only in the months of November and December grew to $58,283 by December 2004. The November-January rolling quarter is in a league by itself. A 1950 $10,000 S&P500 investment only in the November – January rolling quarter grew to $111,550 by January 2005. The second most bullish rolling quarter is October – December which grew to $89,770. Notice the big difference between the two most bullish rolling quarters. All other rolling quarters are half or lower of the October – December rolling quarter. That is why the Indicant refers to this time of year as the “heart and soul of bullish seasonality.” Most of the money earned in the stock market has historically occurred in the November – January rolling quarter.

This year’s seasonal Quick-term Bull is exceedingly tame. There is little volatility. There is no volume support, although it is common to endure low volume around the holiday periods. The current Quick-term Bull also lacks bullish convergence. These issues were discussed in last weeks report. We will not bore you making the same observations. Also, keep in mind boring bulls can make you money, albeit slower than exciting bulls.

You will notice ETF Force Vectors flattening out with some turning south. As indicated in the recent daily stock market newsletters, do not let that concern you. Vector Pressure is positive (bullish). Even boring bulls require periods of short-term profit taking. This Quick-term Bull probably needs a rest. The Force Vectors are configured in support of that analogy; just a mere rest at this point. The current Quick-term Bull is not a sprinter, but after a lengthy run this month, it should take a little break so it can finish out the heart and soul of bullish seasonality in strong fashion. Bearish aggressions are not supported by any Indicant attributes at this point.

As you will see later in this report, there was no buying or selling from last weeks configurations.

Weekly Buy/Sell Summary

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

Although there were no sell signals, the Mid-term Indicant is avoiding 51-stocks and funds of the 320 tracked by the Indicant. The avoided stocks and funds are down an average of 16.5% since the Mid-term Indicant signaled sell an average of 25.8-weeks ago.

There were 19-stocks and funds avoided at this time last year. The avoided stocks and funds one year ago were down an average of 43.4% since their respective sell signals an average of 54.8-weeks earlier. Two years ago, on November 29 2003, the Mid-term Indicant was avoiding 19-stocks and funds that were down an average of 27.1% since their respective sell signals an average of 35.0-weeks earlier. Three years ago on November 23, 2002, there were only 11-avoided stocks and funds. They were down 30.5% from their respective sell signals an average of 21.8-weeks earlier.

Although there were no buy signals this weekend, the Mid-term Indicant is signaling hold for 269 of the 320 stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 97.3%. That annualizes to 62.5%. The Mid-term Indicant has been signaling hold for these 253-stocks and funds for an average of 80.9-weeks.

One year ago, the Mid-term Indicant was holding 301-stocks and funds out of the 320 tracked at that time for an average of 53.1-weeks. They were up 70.4% (annualized at 68.9%). The Mid-term Indicant was signaling hold for 261-stocks and funds of the 296 tracked two years ago on November 29, 2003. They were up by an average of 58.0% (annualized at 88.5%) since their respective buy signals an average of 34.6-weeks earlier. There were 268-stocks and funds with a hold signal on November 23, 2002 since their buy signals an average of 9.4-weeks earlier. They were up 20.9% (annualized at 115.0%).

Exchange Traded Fund Buy/Sell Summary and Analysis

The SQI (Consolidated Quick-term/Short-term Indicant) generated no buy or sell signals last Friday. Read the daily exchange traded fund newsletter and Quick-term Indicant report for more analysis. The SQI is signaling hold for 29-ETF’s. They are up by an average of 55.8% (annualized at 32.1%) since their respective buy signal an average of 89.4-weeks ago. The SQI is avoiding one ETF. It is the ETF#28, Taiwan’s EWT. It is up 6.2% since its sell signal 5.6-weeks ago. Although it has moved contrary to the avoid signal, configurations have not shifted enough to signal buy.

Remember, the SQI model signals buy or sell when both the Short-term and Quick-term Indicant are signaling the same. Keep in mind the Quick-term Indicant is the most volatile, but it will help you with successive buying opportunities during various stages of an advancing bull. It also shows Force Vectors and Vector Pressure, providing you greater insight of the ETF’s quick-term bias.

The Short-term Indicant generated no buy signals and no sell signals last Friday. Although there were no buy signals, the Short-term Indicant is signaling hold for 30-Exchange Traded Funds. They are up by an average of 57.4% (annualized at 35.6%) since their respective buy signals an average of 82.9-weeks ago. The Short-term Indicant is not avoiding any of the 30-ETF’s tracked at this time.

The Quick-term Indicant generated no buy signals and no sell signals last Friday. Although there were no buy signals, the Quick-term Indicant is signaling hold for 28-Exchange Traded Funds (ETF’s). They are up by an average of 31.8% (annualized at 38.0%) since their respective buy signals an average of 43.1-weeks ago. Although there were no sell signals, the Quick-term Indicant is avoiding two ETF’s. They are up by an average of 1.7% since their respective sell signals an average of 6.8-weeks ago.

Twenty-six of the ETF’s are red bulls. All thirty are above their respective bullish red curves by an average of 3.1%. That is exceedingly bullish. There are no yellow bears.

The four non-red bulls are ETF#12, #13, #14, and #28. The links are below:

http://www.indicant.net/Members/Updates/QTI-ETF-Charts/QTI-ETF2-Charts.htm#12

As you can see, ETF#12, XLU, has a rising Force Vector. This ETF is up 79.4% since the Quick-term Indicant signaled buy on April 15, 2003. This ETF has been one of the more consistently bullish funds since the beginning of this Mid-term Bull. It is not surprising to see it being subjected to profit taking. Many of you recall how the Utilities has been the strongest performing bullish sector throughout the meandering periods in 2004 and 2005.

http://www.indicant.net/Members/Updates/QTI-ETF-Charts/QTI-ETF3-Charts.htm#13

ETF#13, EWH, is very similar to that of #12. It also has a rising Force Vector and negative Vector Pressure. It is up 35.2% since the Quick-term Indicant signaled buy on June 14, 2004.

http://www.indicant.net/Members/Updates/QTI-ETF-Charts/QTI-ETF3-Charts.htm#14

ETF#14, TLT, has a declining Force Vector and negative Vector Pressure. It is up 1.4% since the Quick-term Indicant signaled sell on October 26, 2005. It fell to yellow bear status with negative Vector Pressure at that time and thus the sell signal. As you can see, it has struggled around its bearish yellow curve and thus one reason for the continuing “avoid” signal.

http://www.indicant.net/Members/Updates/QTI-ETF-Charts/QTI-ETF5-Charts.htm#28

ETF#28, EWT, has also been struggling around its bearish yellow curve.

As earlier stated, Force Vectors are leveling off. This means the market is going to cool off a little on a Quick-term basis. That does not mean the market is about to become bearishly biased. It just means the market, although not red hot, may meander for several days, but in no way threatening the livelihood of the current Quick-term Bull.

The Short-term Indicant reveals individual Indicant Volume Indicators. Although the ETF’s Indicant Volume Indicators are not as conclusive as that of the major market indices, it sometimes obviates the market’s short-term intentions. Look for robustness, coupled with dynamic behavior.

The Short-term Indicant also identifies the breakout lines and breakdown lines for Exchange Traded Funds. There are 15 of the 30-ETF’s contacting their breakout lines which is exceedingly bullish. The average distance of all 30-ETF’s between their current price and their respective breakout lines is a mere 1.8%. The average distance between the current price and the ETF’s breakdown lines is a whopping 19.5%. That relationship is a significant bullish bias. Contact with breakdown lines is extremely bearish. As you can see, there is absolutely no threat of contact being made in the near future.

There are only two conflicts between the Quick-term and Short-term Indicant at this time. The Short-term Indicant is signaling hold for ETF#’s 14 and 28, while the Quick-term Indicant is signaling avoid. That suggests some minor residual doubts, regarding the sustainability of the current Quick-term Bull, but in no way suggests bearish dominance.

There were no buy or sell signals for ETF options this past Friday. That is the third consecutive quiet day.

Secular Market Blend

This section is a repeat from the last several months with a few modifications, reflecting recent secular influences. Although appearing redundant at times, it is important to read this section each week to keep abreast of secular market shifts. Remember, secular shifts can last twenty-five or more years.

Even more impressive was how the market synchronized with near perfection to normal seasonality in 2002. The April-October period was typically bearish, but the bear was a deep one in 2002. The upcoming mid-term election year of 2006, fundamentally, supports historical standards. In other words, expect no bullish enthusiasm with rising interest rates and rising energy costs as we head into the mid-term election year. The political establishment and its ugly influence on economic activity are typically at its worse in the presidential post election year, which is now nearing an end. The current Mid-term Bull has been surprisingly strong with weak fundamentals and the normal political threat in this post election year.

Keep in mind, the heart and soul of bullish seasonality (Nov-Jan) is historically bullish regardless of fundamental reason. The market can find a cyclical bottom in next year’s mid-term election year after the heart and soul of bullish seasonality elevates it. It would not be surprising for a nice rise during the heart and soul of bullish seasonality only to be followed with bearish expressions after January 2006. The current heart and soul of bullish seasonality has demonstrated normalcy so far, although mildly.

The Dow30 found bottom over three years ago on October 9, 2002 at 7286.27. The NASDAQ found bottom on the same day at 1114.11. As earlier stated, the Indicant began its buying barrage in October – November 2002 just after the market bottomed from the severe 2000-2002 Bear Market. There were 239 buy signals between October 5, 2002 and November 9, 2002 out of the 296 stocks and funds tracked by the Mid-term Indicant at that time. Even badly managed companies received a buy signal, which is a common attribute of sustainable new bull markets.

Some of you recall the Short-term Indicant Bear for the NASDAQ was the longest in history. It even exceeded the Dow’s 1929-1932 Short-term Indicant Bear in breadth and approached it in magnitude. The good news is that the NASDAQ’s decline did not lead to a depression, which is a clear indication of how little influence tech stocks have on the economy. There are two important axioms to remember. 1) Real economic wealth is created in only three ways - manufacturing, agriculture, and extraction. 2) The only positive influence politicians have on the economy is to undo their prior damage. They are now doing their damage, some of which will be undone in 2007; the next presidential pre-election year. That is why the market typically finds bottom in the mid-term election year. That is also why the presidential pre-election year is historically the most bullish on the four year cycle.

The political industry reduces wealth. Politicians continually attempt to redistribute wealth, which flies in the face of the laws of nature. They promote “middle class” attainment. The larger the middle class, the more power they have. The communists tried that in the past, resulting 99% poverty of their populace, while the ruling 1% lived like kings.

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

As stated the past few weeks, do not be surprised at increasing quick-term and short-term bullish expressions in the immediate future, followed by increased bearish expressions early next year. Fundamentals and historical standards support that scenario. The magnitude of early 2006 bearishness is not predictable. Also, simply wait for the various Indicant models advisement of bull/bear status, as forecasting the market is a waste of time.

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

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

Stop Loss Management

The Mid-term Indicant recommends a stop loss of 8% on recent buys because of the Quick-term Bull.

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

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

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

There are some instances where stocks rise during bear markets due to legitimate fundamental reasons. If the market emulates a 1970’s configuration, most stocks will plummet, but energy related stocks will skyrocket. It is unusual that energy has been skyrocketing the past three years, of which two of those years enjoyed bullish market behavior. The coexistence of a bullish energy sector and general equities does not make much fundamental sense, but the underlying economic fundamentals have supported this phenomenon. There is good reason to expect an abandonment of this phenomenon with record setting oil prices and rising interest rates. However, the heart and soul of bullish seasonality, more often than not, excludes fundamental reason in its normally bullish behavioral patterns. You are enjoying that now.

Stock and Fund Update

Click the following link to see sorted performance of stocks and funds with hold/avoid signals. In the past, we included them in this email message but now display them on the website. This is available to the public, while the specific buy and sell transactions are limited to members only.

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

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

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

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

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

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

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

Divergence versus Convergence

As stated the past two weeks, there is no bullish convergence. However, the current Quick-term and Short-term Bull markets are solid. This lack of bullish convergence suggests an increasing possibility the current Quick-term and Short-term bulls will peter out early next year, if not sooner. Such a scenario would result in political normalcy, when the market finds a bottom in the mid-term election year.

Economic Conditions – Inflation, Currency, Interest Rates

The 3-Month T-Bill, Federal Funds Closing Bid Rates, Fannie Mae, and Freddie Mac dropped last week. It is not that significant and certainly not a trend or even a new cycle. However, it is worthy of mention. If this turning point evolves into a trend or even a Mid-term Indicant cycle, the stock market will most likely violate the historical standards of mid-term election year bearishness.

There is nothing different from the last few weeks. Most world currencies continue in their cyclical shift in support of a strengthening U.S. Dollar. Some currencies are actually collapsing, which fosters an increasing probability of further drops in interest rates.

As repeatedly stated, the only exception to this is the Canadian Dollar. It has not yet made this cyclical mid-term commitment to weaken against the greenback. It strengthened significantly last week. As stated the past several weeks, the Athabasca Tar Sand Oil potential continues to threaten the Canadian cost advantage. The perception of huge imports to the U.S. will provide increased difficulty for the Canadian Dollar to continue weakening. This should hurt Canadian manufacturing. Many experts disagree with this, believing the Canadian dollar has peaked. So far, it has not revealed such a peak.

Even the lethargic General Motors has recognized this threat and will shut down much of their Canadian manufacturing operations. A very large portion of GM production occurs in Oshawa, Ontario Canada, which was due, in part, to a weak Canadian dollar. That weakest has eroded to near parity with the U.S. Dollar. The exchange rate is no longer a profit stream to shrinking GM.

Commodity prices continue showing signs of being past their peaks. OPEC does not want to see the Athabasca Tar Sand Oil be introduced into the petroleum supply chain in a big way. They also do not want to see dynamic energy conservation measures. OPEC will not consider a long-term strategy. Consequently, it is possible, although not likely, OPEC will force oil price reductions to mitigate growing competitiveness. Keep your eye on this, as rapidly declining oil prices will catapult the market into another strong bull leg.

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

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% one-hundred and seventy-nine weeks ago since the MTI buy signal on April 13, 2001. One-hundred and seventy-two weeks ago, it closed up 30.1%. Last week it closed up 212.1%. The current annualized growth rate since the April 13, 2001 buy signal is 45.3%. After falling sharply 23-weeks ago, it bounced north in 19-weeks of the past 23-weeks. This fund moved north for the fifth consecutive week.

Fidelity Gold, Fund #28, is up 32.1% since the Mid-term Indicant signaled buy on August 26, 2005. That annualizes to 127.0%, which is not an impossible performance level if oil prices resume their advance. This fund should do well in the event this market turns into a 1970’s type of market. This fund also moved to the north the past five weeks.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 272.5% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 81.9%. Vanguard Energy #18, VGENX, is up 142.4% (annualized at 53.1%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 114.8% (annualized at 57.4%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 118.7% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 51.4%. These energy related funds rose significantly the past two weeks after falling sharply three weeks ago.

These funds should do well even if the market turns extremely bearish. Continue to hold them until the Mid-term Indicant signals sell.

The SQI (Consolidated Short-term and Quick-term Indicant) model signaled buy for the GLD-ETF#11 on August 3, 2005. It is up 13.7% since then. It is annualized at 43.3%.

The SQI signaled buy for ETF#03 – Energy and Natural Resources on March 26, 2003. It is up 137.2% (annualized at 50.7%).

Quick-term and Short-term Indicant Update

Read your daily reports. The Quick-term Indicant signaled bull three weeks ago after signaling bear since January 4, 2005. The eight major indices are up 4.7% since the Quick-term Indicant’s bull signal on November 2, 2005. The Dow is up 3.9% since the Short-term Indicant signaled bull on November 3, 2005. The NASDAQ is up 5.5% since the Short-term Indicant signaled bull on November 2, 2005.

The NYSE Indicant Volume Indicator has succumbed into a lethargic pattern. Some of this configuration is due to holiday absences and simple lethargy prior to the holiday period.

For more information about the Quick-term Indicant, refer to last week’s daily reports.

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

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

All ten major indices are bulls. They are up by an average of 42.0% since the MTI-RYS signaled bull an average of 91-weeks ago. That annualizes to 23.9%. The strongest bull is the Dow Utilities. It is up 112.3% since the October 25, 2002 bull signal. The utilities moved north the past two weeks after moving south in the previous two weeks. Your utility hold positions remain safe, but keep your eye on this particular index. Severe bears show little mercy, regardless of dividend yields, while this index would be the mildest in the event a dynamic bearish cycle unfolds.

The Mid-term Indicant Dow Jones Industrial Average performance is now at $33,114,497. That beats buy and hold performance of $1,673,110 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $163,749. That beats buy and hold’s $124,229 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $189,348. That beats buy and hold’s $78,468 on an October 18, 1985 $10,000 investment. The Mid-term Indicant’s RYS model beats buy and hold by 1,879.2%, 31.8%, and 141.3%, respectively, for these indices as of this past week.

The Indicant’s percentage advantage over buy and hold does not change during bull signals. The advantage changes only during bear signals. That is because buy and hold model has to keep holding, while the MTI-RYS model avoids bear markets. The only purpose of the MTI-RYS model is to avoid the bear markets. That is why it beat buy and hold by nearly 2000% over the past 100+ years.

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 the following link to view this group of stocks:

http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20MTI-NAS100-STKS.htm

Mid-term Indicant Positions - Dow Jones 30 Industrial Stocks

Click here to see Dow 30 report card history.

Click the following hyperlink to view this group of stocks:

http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20MTI-DJIA-STKS.htm

Mid-term Indicant Positions - Dow Jones 15 Utility Stocks

Click here to see Dow Utilities Report Card history.

http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20MTI-DJU-Stks.htm

Mid-term Indicant Positions - Indicant Selected Stocks

Click here to see Indicant Select Stock Report Card history.

Click the following hyperlink to view this group of stocks:

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

Mid-term Indicant Positions - Mutual Funds

Click here to see Mutual Fund Report Card history.

The Mid-term Indicant continues avoiding ProFunds Ultra Short due, in part, to the Quick-term Indicant’s bull signal and the heart and soul of bullish seasonality. The SQI (Consolidated Quick-term and Short-term Indicant) is signaling hold for the QQQQ, which is why ProFunds Ultra Short is being avoided.

Click here to see all Mutual Funds tracked by the Mid-term Indicant.

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

Long Term Indicant Positions - Dow Jones Industrial Average

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

The Dow is up 277.6% (annualized at 19.7%) since the Long-term Indicant signaled bull 734-weeks ago. Economic data is the primary influence on the Long-term Indicant. The recession, deflation, and inflation have not been strong enough to signal bear. A link to the Long-term Indicant is below:

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

Indicant Conclusion

The Quick-term Indicant continues to signal bull. Quick-term and Short-term attributes remain significantly bullishly biased. The heart and soul of bullish seasonality is now here and should last through January. Keep your eye on the daily reports, as the market from time to time aborts historical standards. Also, keep in mind that next year is the mid-term election year, which historically finds a market bottom. Since predecessor years leading up to the mid-term election year have not demonstrated dynamic bearishness, do not be surprised at a bearish cycle in early 2006. As always, await guidance from the various Indicant models. They will let you know when or if this expected bearishness will occur.

The current Quick-term Bull now possesses strong bullish configurations even though the Indicant Volume Indicator is now lethargic. None of the Quick-term, Short-term, and Mid-term attributes suggest bearish influence. Read your daily reports, as quick-term attributes can shift quickly. The market also lacks bullish convergence, which suggests a turn to bearish influences can occur quickly. Too many sectors are not participating in the current heart and soul of bullish seasonality.

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

The daily updates are on the following link.

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

Hyperlinks

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

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

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

Happy Investing,

www.indicant.net

11/27/05

Nov 20, 2005 Indicant.Net Weekly Update

Volume 11, Issue 03 ISSN 1526 6516 © The Indicant Stock Market Report

Dear Indicant Members:

This Week’s Report

The Heart and Soul of Bullish Seasonality Continues without Pizzazz

The good thing about bull markets is their not needing any technical support. Corporate America is capable of elevating earnings by fractional amounts over a several months. The underlying principle of the capital markets is to support only a fraction of the fractional improvements in earnings. The balance of the market’s growth is in the hard working efforts of the management and workers. As long as people work hard and smart everyday, the underlying principle of the capital markets remains in tact.

The speculative part of the market is what causes stock prices to be higher than fundamental justifications. Dynamic bull markets are a measure of the speculative optimism. When corporate fundamentals slip, the stock price immediately adjust to the south to what is fundamentally justified. Sometimes the stock price is penalized below fundamental justification to punish acts of stupidity or dishonesty. The capital markets will not knowingly support employment of stupidity or dishonesty.

The current bull market is not dynamic, although escaping its meandering behavior of the past two years. Normally, the heart and soul of bullish seasonality gallops to the north with gusto. It typically does this without regard to fundamentals. The heart and soul of bullish seasonality has its own drumbeat. If the beat is too far from fundamental justification, it reasons that a hard adjustment to the south is okay as soon as the heart and soul of bullish seasonality quits partying. That occurred earlier this year with some significant quick-term bearish cycles. Fortunately, those quick-term bearish cycles were followed by bullish spurts.

The result of quick-term bearish cycles and the following bullish spurts was a meandering market this year. The Dow was down 3.2% this year through October 31, 2005. The NASDAQ was down 2.5% and the S&P500 was down 0.4%. All year long, the Indicant advised of a meandering market with a bearish bias. That is what happened until the heart and soul of bullish seasonality unfolded three weeks ago.

Like clockwork, the Quick-term Indicant identified the birth of the new Quick-term Bull cycle. It is very easy to do this during the heart and soul of bullish seasonality. The Dow is up 3.1% this month. The NASDAQ is up 5.0% and the S&P500 is up 3.4%. All of the market’s growth this year will occur in the last three months, if indeed the market does finish up on the year. Right now, the Dow is still down for the year, while the S&P500 and NASDAQ are up slightly. This is impressive since the presidential post election year is historically the most bearish on the four-year cycle.

A lack of technical support is the primary reason the current Quick-term Bull is not dynamic. As stated last week, the Indicant Volume Indicator shifted from its robust cycle into a lethargic configuration.

Also, as stated last week, the market does not possess the required bullish convergence. The market is still discriminating against the dilettantes. The market knows the dilettante will conclude a good job is being done when the stock price rises. That is the nature of a dilettante. They take credit for good results even though they had nothing to do with those results. The market provided the dilettantes with this option in 2003 and 2004 in the heart and soul of bullish seasonality. Unfortunately, the dilettantes did not follow-through with the required increase in earnings. Therefore, the market meandered, awaiting the termination of the dilettantes. Some dilettantes have been removed, but they are hard to spot with the excesses of cronyism and crazy credentialism.

Dilettantes still infest several of the Dow30 companies. Intel received a buy signal. It is now participating in bullish convergence. However, several of those mentioned in last week’s report remain mired in dilettante infestations. Those continuing to move in a divergent pattern are: General Motors, #6, Merck #27, Eastman Kodak, #29, and International Paper, #30.

The great bull market of 2003 ignited with all stocks and most mutual funds receiving a buy signal. Even the dilettante infested companies enjoyed rising stock prices in late 2002 and early 2003. However, this Quick-term Bull is not enjoying that level of simplicity and predictability. If economic optimism increases significantly, the speculative component of bullish expressions will accelerate. That will fuel market convergence and help elevate all stock prices. The capital markets accurately reason that even idiots can make money during economic boom cycles. It is the punishment phase that eventually follows, which catches most investors by surprise. Thus one major reason for the Indicant’s existence.

Weekly Buy/Sell Summary

The Mid-term Indicant generated four buy signals and one sell signal for stocks and funds. Again, there were no sell signals for mutual funds. As stated last week, these buy signals are not similar to the October 2002 and March 2003 buying spree that led to the 2003 dynamic bull leg. Nearly all of the stocks and funds received Mid-term Indicant buy signals during that time, regardless of how badly managed they were. The early stages of bull markets do not discriminate against the incompetent. That occurs later. As earlier stated, the current Quick-term Bull market will require bullish convergence for sustainability.

In addition to the sell signal, the Mid-term Indicant is avoiding 50-stocks and funds of the 320 tracked by the Indicant. The avoided stocks and funds are down an average of 17.7% since the Mid-term Indicant signaled sell an average of 24.8-weeks ago.

There were 16-stocks and funds avoided at this time last year. The avoided stocks and funds one year ago were down an average of 45.4% since their respective sell signals an average of 55.5-weeks earlier. Two years ago, on November 22 2003, the Mid-term Indicant was avoiding 29-stocks and funds that were down an average of 25.2% since their respective sell signals an average of 33.8-weeks earlier. Three years ago on November 16, 2002, there were only 23-avoided stocks and funds. They were down 22.4% from their respective sell signals an average of 14.1-weeks earlier.

In addition to the buy signals this weekend, the Mid-term Indicant is signaling hold for 265 of the 320 stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 94.6%. That annualizes to 60.9%. The Mid-term Indicant has been signaling hold for these 253-stocks and funds for an average of 80.7-weeks.

One year ago, the Mid-term Indicant was holding 299-stocks and funds out of the 320 tracked at that time for an average of 52.4-weeks. They were up 67.6% (annualized at 67.1%). The Mid-term Indicant was signaling hold for 262-stocks and funds of the 296 tracked two years ago on November 22, 2003. They were up by an average of 51.7% (annualized at 79.9%) since their respective buy signals an average of 33.6-weeks earlier. There were 268-stocks and funds with a hold signal on November 16, 2002 since their buy signals an average of 14.1-weeks earlier. They were up 14.4% (annualized at 88.5%).

Exchange Traded Fund Buy/Sell Summary and Analysis

The SQI (Consolidated Quick-term/Short-term Indicant) generated no buy or sell signals last Friday. Read your daily reports for the Quick-term Indicant’s evaluation of Exchange Traded Funds. The SQI is signaling hold for 28-ETF’s. They are up by an average of 53.3% (annualized at 29.9%) since their respective buy signal an average of 91.6-weeks ago. The SQI is avoiding two ETF’s. They are up by an average of 5.0% since their respective sell signals an average of 6.40-weeks ago.

The Short-term Indicant generated no buy signals and no sell signals last Friday. Although there were no buy signals, the Short-term Indicant is signaling hold for 30-Exchange Traded Funds. They are up by an average of 54.7% (annualized at 34.3%) since their respective buy signals an average of 81.9-weeks ago. The Short-term Indicant is not avoiding any of the 30-ETF’s tracked at this time.

The Quick-term Indicant generated no buy signals and no sell signals last Friday. Although there were no buy signals, the Quick-term Indicant is signaling hold for 27-Exchange Traded Funds (ETF’s). They are up by an average of 30.7% (annualized at 36.1%) since their respective buy signals an average of 43.7-weeks ago. Although there were no sell signals, the Quick-term Indicant is avoiding three ETF’s. They are up by an average of 1.0% since their respective sell signals an average of 6.6-weeks ago.

There are only three conflicts between the Quick-term and Short-term Indicant at this time. The Short-term Indicant is signaling hold for ETF#’s 14, 28, and 29, while the Quick-term Indicant is signaling avoid. That suggests some remaining doubts, regarding the sustainability of the current Quick-term Bull market, but in no way suggests bearish dominance.

There were no buy or sell signals for ETF options this past Friday. That is the second consecutive quiet day.

Secular Market Blend

The current Mid-term Bull market and buying barrage started over three years ago in late 2002. It followed the predicted market bottom in 2002, which was a mid-term election year. The mid-term presidential election year phenomenon was consistent with history in 2002. Even more impressive was how the market synchronized with near perfection to normal seasonality in 2002. The upcoming mid-term election year of 2006, fundamentally, supports historical standards. In other words, expect no bullish enthusiasm with rising interest rates and rising energy costs as we head into the mid-term election year. The political establishment and its ugly influence on economic activity are typically at its worse in the presidential post election year, which is now nearing an end.

Keep in mind, the heart and soul of bullish seasonality (Nov-Jan) is historically bullish regardless of fundamental reason. The market can find a cyclical bottom in next year’s mid-term election year after the heart and soul of bullish seasonality elevates it. It would not be surprising for a nice rise during the next few months only to be followed with bearish expressions after January 2006. The current heart and soul of bullish seasonality has demonstrated normalcy so far.

Some of you recall the Short-term Indicant Bear for the NASDAQ was the longest in history. It even exceeded the Dow’s 1929-1932 Short-term Indicant Bear in breadth and approached it in magnitude. The good news is that the NASDAQ’s decline did not lead to a depression, which is a clear indication of how little influence tech stocks have on the economy. There are two important axioms to remember. 1) Real economic wealth is created in only three ways - manufacturing, agriculture, and extraction. 2) The only positive influence politicians have on the economy is to undo their prior damage. They are now doing their damage, some of which will be undone in 2007; the next presidential pre-election year. That is why the market typically finds bottom in the mid-term election year. That is also why the presidential election year is historically the most bullish on the four year cycle.

The political industry reduces wealth. Politicians continually attempt to redistribute wealth, which flies in the face of the laws of nature. They promote “middle class” attainment. The larger the middle class, the more power they have. The communists tried that same thing in the past, resulting 99% poverty of their populace, while the ruling 1% lived like kings.

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

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

Stop Loss Management

The Mid-term Indicant recommends a stop loss of 8% on recent buys because of the Quick-term Bull.

Stock and Fund Update

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

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

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

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

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

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

Divergence versus Convergence

As stated last week, there is no bullish convergence. However, the current Quick-term and Short-term Bull markets are solid. This lack of convergence suggests an increasing possibility the current Quick-term and Short-term bulls will peter out early next year, if not sooner. Such a scenario would result in political normalcy, when the market finds a bottom in the mid-term election year.

Economic Conditions – Inflation, Currency, Interest Rates

There is nothing different from the last few weeks. Most currencies continue in their cyclical shift in support of continuing strength in the U.S. Dollar. This is apparent by the shift in the direction of the bearish yellow curve. This configuration suggests the Mid-term Indicant’s prognosis that commitments are made to a stronger U.S. Dollar. Historically, that has weakened the U.S. economy, which is consistent in a presidential post election year based on politically minded policies.

As repeatedly stated, the only exception to this is the Canadian Dollar. It has not yet made this cyclical mid-term commitment to weaken against the greenback. As stated the past several weeks, the Athabasca Tar Sand Oil potential continues to threaten the Canadian cost advantage. The perception of huge imports to the U.S. will provide increased difficulty for the Canadian Dollar to continue weakening. This should hurt Canadian manufacturing. Many experts disagree with this, believing the Canadian dollar has peaked. So far, it has not revealed such a peak. All other major currencies have an identified cyclical shift in weakening against the greenback, except the Canadian dollar.

This paragraph will remain unchanged until such time conditions change. Rising interest rates tend to strengthen the dollar. That will damage export business and eventually hurt the U.S. manufacturing economy. This is consistent with historical “political management” of the U.S. economy. In other words, the political community understands power retention is a function of economic health on Election Day. After presidential elections, there is no immediate concern for economic health. That is the case right now. That sort of thing is typically more pronounced in a lame duck term, which is underway. The stock market’s meandering nature is indeed impressive in this lame duck, post presidential election year.

Commodity prices again appear to have peaked. OPEC does not want to see the Athabasca Tar Sand Oil be introduced into the petroleum supply chain in a big way. They also do not want to see dynamic energy conservation measures. OPEC will not consider a long-term strategy. Consequently, it is possible, although not likely, OPEC will force oil price reductions to mitigate growing competitiveness. Keep your eye on this, as rapidly declining oil prices will catapult the market into another strong bull leg.

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

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% one-hundred and seventy-eight weeks ago since the MTI buy signal on April 13, 2001. One-hundred and seventy-one weeks ago, it closed up 30.1%. Last week it closed up 205.5%. The current annualized growth rate since the April 13, 2001 buy signal is 44.0%. After falling sharply 22-weeks ago, it bounced north in 18-weeks of the past 22-weeks. This fund moved north for the fourth consecutive week.

Fidelity Gold, Fund #28, is up 27.1% since the Mid-term Indicant signaled buy on August 26, 2005. That annualizes to 115.9%, which is not an impossible performance level if oil prices resume their advance. This fund should do well in the event this market turns into a 1970’s type of market. This fund also moved to the north the past four weeks.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 248.3% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 75.1%. Vanguard Energy #18, VGENX, is up 133.5% (annualized at 50.2%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 103.5% (annualized at 52.3%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 110.0% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 48.0%. These energy related funds rose significantly last week after falling significantly in the prior week.

These funds should do well even if the market turns extremely bearish. Continue to hold them until the Mid-term Indicant signals sell.

The SQI (Consolidated Short-term and Quick-term Indicant) model signaled buy for the GLD-ETF#11 on August 3, 2005. It is up 11.3% since then. It is annualized at 37.9%.

The SQI signaled buy for ETF#03 – Energy and Natural Resources on March 26, 2003. It is up 128.1% (annualized at 47.6%).

Quick-term and Short-term Indicant Update

Read your daily reports. The Quick-term Indicant signaled bull three weeks ago after signaling bear since January 4, 2005. The eight major indices are up 3.1% since the Quick-term Indicant’s bull signal on November 2, 2005. The Dow is up 2.3% since the Short-term Indicant signaled bull on November 3, 2005. The NASDAQ is up 3.9% since the Short-term Indicant signaled bull on November 2, 2005.

The NYSE Indicant Volume Indicator has succumbed into a lethargic pattern. That suggests an increasing probability this Quick-term Bull may not have much sustainability.

For more information about the Quick-term Indicant, refer to last week’s daily reports.

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

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

All ten major indices are bulls. They are up by an average of 39.8% since the MTI-RYS signaled bull an average of 90-weeks ago. That annualizes to 22.9%. The strongest bull is the Dow Utilities. It is up 108.3% since the October 25, 2002 bull signal. The utilities moved north last week after moving south in the previous two weeks. Your utility hold positions remain safe, but keep your eye on this particular index. Severe bears show little mercy, regardless of dividend yields, while this index would be the mildest in the event a dynamic bearish cycle unfolds.

The Mid-term Indicant Dow Jones Industrial Average performance is now at $32,613,794. That beats buy and hold performance of $1,647,963 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $161,169. That beats buy and hold’s $122,272 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $186,341. That beats buy and hold’s $77,222 on an October 18, 1985 $10,000 investment. The Mid-term Indicant’s RYS model beats buy and hold by 1,879.0%, 31.8%, and 141.3%, respectively, for these indices as of this past week.

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 the following link to view this group of stocks:

http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20MTI-NAS100-STKS.htm

Mid-term Indicant Positions - Dow Jones 30 Industrial Stocks

Click here to see Dow 30 report card history.

Click the following hyperlink to view this group of stocks:

http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20MTI-DJIA-STKS.htm

Mid-term Indicant Positions - Dow Jones 15 Utility Stocks

Click here to see Dow Utilities Report Card history.

http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20MTI-DJU-Stks.htm

Mid-term Indicant Positions - Indicant Selected Stocks

Click here to see Indicant Select Stock Report Card history.

Click the following hyperlink to view this group of stocks:

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

Mid-term Indicant Positions - Mutual Funds

Click here to see Mutual Fund Report Card history.

The Mid-term Indicant continues avoiding ProFunds Ultra Short due, in part, to the Quick-term Indicant’s bull signal and the heart and soul of bullish seasonality. This is the second consecutive year where money was lost on this fund, after generating over 70% profit in 2002. The lesson learned here is to not buy this fund when the SQI (Consolidated Quick-term and Short-term Indicant) is signaling hold for the QQQQ. This is one reason why the Quick-term Indicant will track overall market performance on ETF’s, as opposed to the eight major indices.

Click here to see all Mutual Funds tracked by the Mid-term Indicant.

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

Long Term Indicant Positions - Dow Jones Industrial Average

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

The Dow is up 271.9% (annualized at 19.3%) since the Long-term Indicant signaled bull 733-weeks ago. Economic data is the primary influence on the Long-term Indicant. The recession, deflation, and inflation have not been strong enough to signal bear. A link to the Long-term Indicant is below:

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

Indicant Conclusion

The Quick-term Indicant continues to signal bull. Quick-term and Short-term attributes remain bullishly biased. The heart and soul of bullish seasonality is now here and should last through January. Keep your eye on the daily reports, as the market from time to time aborts historical standards. Also, keep in mind that next year is the mid-term election year, which historically finds a market bottom. Since predecessor years leading up to the mid-term election year have not demonstrated dynamic bearishness, do not be surprised at a bearish cycle in early 2006. However, as always, await guidance from the various Indicant models. They will let you know when or if this expected bearishness will occur.

The current Quick-term Bull continues lacking strong bullish configurations. The Indicant Volume Indicator is losing robustness. However, none of the attributes suggest bearish influence on a quick-term basis. Read your daily reports to keep up with this important attribute. The market also lacks bullish convergence. Too many sectors are not participating in the current heart and soul of bullish seasonality. However, it is a Quick-term Bull market. It simply lacks magnitude, but a bull is a bull, regardless of height.

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

The daily updates are on the following link.

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

Hyperlinks

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

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

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

Happy Investing,

www.indicant.net

11/20/05

Nov 13, 2005 Indicant.Net Weekly Update

Volume 11, Issue 02 ISSN 1526 6516 © The Indicant Stock Market Report

Dear Indicant Members:

This Week’s Report

The Heart and Soul of Bullish Seasonality is not Automatic

Last week’s report had an error in it. It erroneously stated normal bullish seasonality occurs from May through October. That is actually the period of normal bearish seasonality. We corrected that copy online. Normal bullish seasonality occurs from November through April.

There are a couple of problems confronting the current heart and soul of bullish seasonality. Volume is declining. However, that is a quick-term attribute. It can shift direction quickly. The concern is the declining Indicant Volume Indicator. It has not yet shifted into a lethargic pattern, but it has lost its robust pattern, which obviates a bullish bias.

The second problem confronting the current Quick-term Bull is the lack of market convergence. Several of the Dow stocks are not participating in the heart and soul of bullish seasonality. Nearly all of the mutual funds tracked by the Indicant are in a hold position, but not all are moving to the north. This divergent pattern reflects a bull lacking confidence. Recent bullish expressions, although consistent, have been timid. Most Quick-term Bulls enjoy three or four dynamic expressions to the north. This one, so far, has been rather passive.

The non-participating Dow stocks in the current Quick-term Bull are discussed below. There are several links embodied in this discussion that are clearly visible on the website. They may not be accessible in various email programs. These links, which are clearly visible on the website, will take you directly to the charts.

General Motors, #6, is not participating in this Quick-term Bull due to fundamental reasons. The company is infested with dilettante management. Although there are several good employees at General Motors, some of their leadership has continued the wayward ways of the 1980’s Roger Smith regime. The company did well in the roaring nineties, but as a friend once told me, “volume hides a lot of problems.” Their products are lag there competitors in price, quality, and delivery. The management continues to point to legacy costs as their only problem. The problem is their continued inability to focus on the substance of their issues. Companies, such as General Motors, can move to the south in the “heart and soul” of bullish cycles, due to fundamental shortcomings. This stock is not contributing to the concerns regarding the lack of bullish stamina in this season’s heart and soul of bullish seasonality.

The overall Dow Jones Industrial Average Index weights Intel, #26, which is weighted differently on the NASDAQ100 Index. Intel is a member of both indices. It did enjoy a bullish movement recently, but it needs to nudge a little more to the north before the Mid-term Indicant will signal buy. This company is still a good one, but most likely, it has already crossed its half-life due to being under third generation management.

Merck #27 also nudged north last week. It lacks the gusto, deserving of a buy signal.

Eastman Kodak, #29, and International Paper, #30, also lack the required energy to be a viable participant in the heart and soul of bullish seasonality.

Solid quick-term bull cycles invite all stocks to participate. Even badly managed companies can enjoy increased earnings during economic booms due to the increased production and selling volume. The concern is the lack of participation. The market is not smelling strong economic growth in the next six to nine months. This lack of convergence is somewhat troubling to the normalcy expectations of the heart and soul of bullish seasonality. However, this dismal report can shift quickly. That is the reason for your continued reading of the daily reports.

Weekly Buy/Sell Summary

The Mid-term Indicant generated 13-buy signals and no sell signals for stocks and funds. Again, there were no sell signals for mutual funds. Also, keep in mind these buys are not similar to the October 2002 and March 2003 buying spree that led to the 2003 dynamic bull leg. Nearly all of the stocks and funds received Mid-term Indicant buy signals during that time, regardless of how badly managed they were. The early stages of bull markets do not discriminate against the incompetent. That occurs later.

Although there were no sell signals, the Mid-term Indicant is avoiding 54-stocks and funds of the 320 tracked by the Indicant. The avoided stocks and funds are down an average of 16.1% since the Mid-term Indicant signaled sell an average of 25.5-weeks ago.

There were 17-stocks and funds avoided at this time last year. The avoided stocks and funds one year ago were down an average of 45.6% since their respective sell signals an average of 54.6-weeks earlier. Two years ago, on November 15 2003, the Mid-term Indicant was avoiding only 22-stocks and funds that were down an average of 24.3% since their respective sell signals an average of 33.3-weeks earlier. Three years ago on November 9, 2002, there were only 21-avoided stocks and funds. They were down 16.1% from their respective sell signals an average of 13.9-weeks earlier.

In addition to the buy signals this weekend, the Mid-term Indicant is signaling hold for 253 of the 320 stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 93.4%. That annualizes to 58.6%. The Mid-term Indicant has been signaling hold for these 253-stocks and funds for an average of 82.9-weeks.

One year ago, the Mid-term Indicant was holding 297-stocks and funds out of the 296 tracked at that time for an average of 51.7-weeks. They were up 68.7% (annualized at 69.1%). The Mid-term Indicant was signaling hold for 264-stocks and funds of the 296 tracked two years ago on November 15, 2003. They were up by an average of 54.9% (annualized at 89.6%) since their respective buy signals an average of 31.9-weeks earlier. There were 249-stocks and funds with a hold signal on November 9, 2002. There were 22-buy signals on November 9, 2002, which was nearing the end of the 2002 buying spree.

Exchange Traded Fund Buy/Sell Summary

The SQI (Consolidated Quick-term/Short-term Indicant) generated no buy or sell signals last Friday. Read your daily reports for the Quick-term Indicant’s evaluation of Exchange Traded Funds. The SQI is signaling hold for 27-ETF’s. They are up by an average of 51.7% (annualized at 28.3%) since their respective buy signal an average of 94.0-weeks ago. The SQI is avoiding four ETF’s. They are up by an average of 5.1% since their respective sell signals an average of 5.0-weeks ago.

The Short-term Indicant generated no buy signals and no sell signals last Friday. Although there were no buy signals, the Short-term Indicant is signaling hold for 30-Exchange Traded Funds. They are up by an average of 52.9% (annualized at 33.6%) since their respective buy signals an average of 80.9-weeks ago. The Short-term Indicant is not avoiding any of the 30-ETF’s tracked at this time.

The Quick-term Indicant generated no buy signals and no sell signals last Friday. Although there were no buy signals, the Quick-term Indicant is signaling hold for 26-Exchange Traded Funds (ETF’s). They are up by an average of 30.2% (annualized at 34.9%) since their respective buy signals an average of 44.4-weeks ago. Although there were no sell signals, the Quick-term Indicant is avoiding four ETF’s. They are up by an average of 1.5% since their respective sell signals an average of 5.3-weeks ago.

There are only four conflicts between the Quick-term and Short-term Indicant at this time. The Short-term Indicant is signaling hold for ETF#’s 14, 25, 28, and 29, while the Quick-term Indicant is signaling avoid. That suggests some remaining doubts, regarding the sustainability of the current Quick-term Bull market, but in no way suggests bearish dominance.

Secular Market Blend

The current Mid-term Bull market and buying barrage started three years ago in late 2002. It followed the predicted market bottom in 2002, which was a mid-term election year. The mid-term presidential election year phenomenon was consistent with history in 2002. Even more impressive was how the market synchronized with near perfection to normal seasonality in 2002. The upcoming mid-term election year of 2006, fundamentally, supports historical standards. In other words, expect no bullish enthusiasm with rising interest rates and rising energy costs as we head into the mid-term election year. The political establishment and its ugly influence on economic activity are typically at its worse in the presidential post election year, which is now underway.

Keep in mind, the heart and soul of bullish seasonality (Nov-Jan) is historically bullish regardless of fundamental reason. In other words, the market can find a cyclical bottom in next year’s mid-term election year after the heart and soul of bullish seasonality elevates it. It would not be surprising for a nice rise during the next few months only to be followed with bearish expressions after January 2006.

Some of you recall the Short-term Indicant Bear for the NASDAQ was the longest in history. It even exceeded the Dow’s 1929-1932 Short-term Indicant Bear in breadth and approached it in magnitude. The good news is that the NASDAQ’s decline did not lead to a depression, which is a clear indication of how little influence tech stocks have on the economy. There are two important axioms to remember. 1) Real economic wealth is created in only three ways - manufacturing, agriculture, and extraction. 2) The only positive influence politicians have on the economy is to undo their prior damage. They are now doing their damage, some of which will be undone in 2007; the next presidential pre-election year. That is why the market typically finds bottom in the mid-term election year. That is also why the presidential election year is historically the most bullish on the four year cycle.

The political industry reduces wealth. Politicians continually attempt to redistribute wealth, which flies in the face of the laws of nature. They promote “middle class” attainment. The larger the middle class, the more power they have. The communists tried that same thing in the past, resulting 99% poverty of their populace, while the ruling 1% lived like kings.

You will notice many of the mutual fund buy signals occurred in March 2003. Many of you recall how the market did not synchronize with the heart and soul of bullish seasonality from November 2002 through February 2003. December 2002 was the most bearish since 1931. After the asynchronous behavior in the November 2002 rolling third of the year, the market turned bullish in March 2003 and again did not synchronize with normal seasonality. The Mid-term Indicant continued signaling bull during bearish seasonality during most of 2003. The market continued moving north during that time, contrary to historical standards. As stated in most of 2004, bearish expressions on a Mid-term basis between May and October 2004 should not be surprising. That is exactly what occurred. The result was a meandering market during most of 2004 and 2005. The market was bearish during bullish seasonality in 2005 while expressing mild bullishness during bearish seasonality. Again, the market drifted slightly to the southeast with minor bearishness from January through October 2005. The only significant bullish cycle occurred in late 2004, which was appropriately and profitably identified by the Quick-term and Short-term Indicants. The Quick-term and Short-term Indicant are doing the same this year.

The year, 2004, was consistent with normal bearish seasonality. Unfortunately, bearish expressions started ahead of schedule in 2004, leading to a meandering market with a gentle southeasterly trend. However, bullish expressions, which solidified in September 2004, synchronized beautifully with historical standards with a bullish outburst. The Quick-term Indicant accurately revealed an early start to bullish seasonality in late 2004. It accurately revealed the lack of respect for historical bearish standards in the August-September rolling bi-monthly period in 2004. However, the meandering market theme that began in 2004 persisted throughout most of 2005. Last week’s Quick-term and Short-term Bull signals suggest this meandering pattern is expiring.

Bullish seasonality ended on April 30, 2005. Bearish seasonality concluded on October 31, 2005

Do not be surprised at increasing quick-term and short-term bullish expressions in the immediate future, followed by increased bearish expressions early next year. Fundamentals and historical standards support that scenario. The magnitude of early 2006 bearishness is not predictable. Also, simply wait for the various Indicant models advisement of bull/bear status, as forecasting the market is a waste of time.

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

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

Stop Loss Management

The Mid-term Indicant recommends a stop loss of 8% on recent buys because of the Quick-term Bull.

Do not short on stocks if they are up from an avoid signal. Stocks go up more often than they go down. Stocks have a tendency to march to their own drumbeat when rising. Some stocks rise and continue to rise in the most severe of bear markets. Short selling opens up an opportunity for the snakes on Wall Street to take everything you own. They can cause a stock to rise at their whim and without any regard to fundamental reason. It usually does not make sense to bet against the sweat and toil of hard-working people. There are some instances where stocks rise during bear markets due to legitimate fundamental reasons. If the market emulates a 1970’s configuration, most stocks will plummet, but energy related stocks will skyrocket. It is unusual that energy has been skyrocketing the past three years, of which two of those years enjoyed bullish market behavior. The coexistence of a bullish energy sector and general equities does not make much fundamental sense, but the underlying economic fundamentals have supported this phenomenon. There is good reason to expect an abandonment of this phenomenon with record setting oil prices and rising interest rates. However, the heart and soul of bullish seasonality, more often than not, excludes fundamental reason in its normally bullish behavioral patterns.

Stock and Fund Update

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

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

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

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

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

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

Divergence versus Convergence

Although there is no bullish convergence, the current Quick-term and Short-term Bull markets are solid. This lack of convergence suggests an increasing possibility the current Quick-term and Short-term bulls will peter out early next year, if not sooner. Such a scenario would result in political normalcy, when the market finds a bottom in the mid-term election year.

Economic Conditions – Inflation, Currency, Interest Rates

There is nothing different from the last few weeks. Most currencies continue in their cyclical shift in support of continuing strength in the U.S. Dollar. This is apparent by the shift in the direction of the bearish yellow curve. This configuration suggests the Mid-term Indicant’s prognosis that commitments are made to a stronger U.S. Dollar. Historically, that has weakened the U.S. economy, which is okay, in a presidential post election year based on politically minded policies.

Commodity prices again appear to have peaked. They may, indeed, have pinnacled. OPEC does not want to see the Athabasca Tar Sand Oil be introduced into the petroleum supply chain in a big way. They also do not want to see dynamic energy conservation measures. OPEC will not consider a long-term strategy. Consequently, it is possible, although not likely, OPEC will force oil price reductions to mitigate growing competitiveness. Keep your eye on this, as rapidly declining oil prices will catapult the market into another strong bull leg.

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

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% one-hundred and seventy-seven weeks ago since the MTI buy signal on April 13, 2001. One-hundred and seventy weeks ago, it closed up 30.1%. Last week it closed up 198.2%. The current annualized growth rate since the April 13, 2001 buy signal is 42.7%. After falling sharply 21-weeks ago, it bounced north in 17-weeks of the past 21-weeks. This fund moved north for the third consecutive week.

Fidelity Gold, Fund #28, is up 20.3% since the Mid-term Indicant signaled buy on August 26, 2005. That annualizes to 95.1%, which is not an impossible performance level if oil prices resume their advance. This fund should do well in the event this market turns into a 1970’s type of market. This fund moved to the north the past three weeks.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 238.5% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 72.6%. Vanguard Energy #18, VGENX, is up 127.7% (annualized at 48.3%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 93.3% (annualized at 47.6%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 102.7% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 45.2%. These energy related funds fell significantly last week.

These funds should do well even if the market turns extremely bearish. Continue to hold them until the Mid-term Indicant signals sell.

The SQI (Consolidated Short-term and Quick-term Indicant) model signaled buy for the GLD-ETF#11 on August 3, 2005. It is up 7.5% since then. It is annualized at 27.0%.

The SQI signaled buy for ETF#03 – Energy and Natural Resources on March 26, 2003. It is up 120.8% (annualized at 45.2%).

Quick-term and Short-term Indicant Update

Read your daily reports. The Quick-term Indicant signaled bull two weeks ago after signaling bear since January 4, 2005. The eight major indices are up 1.9% since the Quick-term Indicant’s bull signal on November 2, 2005. The Dow is up 2.0% since the Short-term Indicant signaled bull on November 3, 2005. The NASDAQ is up 5.9% since the Short-term Indicant signaled bull on November 2, 2005.

The NYSE Indicant Volume Indicator has relaxed its robust configuration. That suggests an increasing probability this Quick-term Bull may not have much sustainability.

For more information about the Quick-term Indicant, refer to last week’s daily reports.

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

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

All ten major indices are bulls. They are up by an average of 37.9% since the MTI-RYS signaled bull an average of 89-weeks ago. That annualizes to 22.1%. The strongest bull is the Dow Utilities. It is up 103.9% since the October 25, 2002 bull signal. The utilities moved south the past two weeks. Your utility hold positions remain safe, but keep your eye on this particular index. Severe bears show little mercy, regardless of dividend yields, while this index would be the mildest in the event a dynamic bearish cycle unfolds.

The Mid-term Indicant Dow Jones Industrial Average performance is now at $32,370,576. That beats buy and hold performance of $1,635,748 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $159,420. That beats buy and hold’s $120,944 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $184,283. That beats buy and hold’s $76,369 on an October 18, 1985 $10,000 investment. The Mid-term Indicant’s RYS model beats buy and hold by 1,878.6%, 31.8%, and 141.3%, respectively, for these indices as of this past week.

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 the following link to view this group of stocks:

http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20MTI-NAS100-STKS.htm

Mid-term Indicant Positions - Dow Jones 30 Industrial Stocks

Click here to see Dow 30 report card history.

Click the following hyperlink to view this group of stocks:

http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20MTI-DJIA-STKS.htm

Mid-term Indicant Positions - Dow Jones 15 Utility Stocks

Click here to see Dow Utilities Report Card history.

http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20MTI-DJU-Stks.htm

Mid-term Indicant Positions - Indicant Selected Stocks

Click here to see Indicant Select Stock Report Card history.

Click the following hyperlink to view this group of stocks:

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

Mid-term Indicant Positions - Mutual Funds

Click here to see Mutual Fund Report Card history.

Click here to see all Mutual Funds tracked by the Mid-term Indicant.

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

Long Term Indicant Positions - Dow Jones Industrial Average

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

The Dow is up 269.2% (annualized at 19.1%) since the Long-term Indicant signaled bull 732-weeks ago. Economic data is the primary influence on the Long-term Indicant. The recession, deflation, and inflation have not been strong enough to signal bear. A link to the Long-term Indicant is below:

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

Indicant Conclusion

The Quick-term Indicant continues to signal bull. Quick-term and Short-term attributes remain bullishly biased. The heart and soul of bullish seasonality is now here and should last through January. Keep your eye on the daily reports, as the market from time to time aborts historical standards. Also, keep in mind that next year is the mid-term election year, which historically finds a market bottom. Since predecessor years leading up to the mid-term election year have not demonstrated bearishness, do not be surprised at a bearish cycle in early 2006. However, as always, await guidance from the various Indicant models. They will let you know when or if this expected bearishness will occur.

The current Quick-term Bull does not possess strong configurations as of last week’s performance. The Indicant Volume Indicator is losing robustness. Read your daily reports to keep up with this important attribute. The market also lacks bullish convergence. Too many sectors are not participating in the current heart and soul of bullish seasonality.

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

The daily updates are on the following link.

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

Hyperlinks

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

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

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

Happy Investing,

www.indicant.net

11/13/05

Nov 06, 2005 Indicant.Net Weekly Update

Dear Indicant Members:

This Week’s Report

The Heart and Soul of Bullish Seasonality Is Here!

The Quick-term Indicant and Short-term Indicant signaled bull for the eight major indices last Wednesday/Thursday. The Mid-term Indicant signaled bull the S&P500 and S&P100 Indices just after two weeks of being a bear. The Indicant Volume Indicator is now supporting a bullish bias.

Normal bearish seasonality, which occurs from May through October, was bullish. The Dow30 was up 2.4%. The S&P500 was up 4.3%. The NASDAQ was up a whopping 10.3%. The market did not deliver seasonal normalcy in the most recent seasonally bearish period.

However, the Dow30 is down 2.3% for the year. The S&P500 is up by a miniscule 0.7%. The NASDAQ is down by 0.3% for the year. The Quick-term Indicant signaled bear in early January 2005 and did not again signal bull until this past week. The market has been meandering for nearly two years with the only substantive bullish moves occurring during the heart and soul of bullish seasonality, which is now underway. The heart and soul of bullish seasonality historically occurs from late October through January. Current configurations are not as bullishly strong this year as it has been the past three years, where the heart and soul of bullish seasonality exerted its influence on the market.

As you can deduct, the market was bearish during normal bullish seasonality. That asynchronous bearishness with respect to historical standards occurred from January through April. The NASDAQ was down a whopping 11.7% in the January-April rolling third. The Dow30 was down 5.5%. The Quick-term Indicant signaled bear during this normally bullish period and maintained that bear signal until last week. Unsustainable bullish spurts during the course of 2005 did not contain enough gusto to signal bull. The market simply meandered with a gentle drift to the southeast, even though several bullish spurts interrupted this ever so slight bearish trend. The market takes delight in its periodic aberrations from historical standards.

Deep bearish seasonality performed as expected in October, wiping out all the effects of the 2005 bullish spurts. As you can see from the Mid-term Indicant charts for the ten major indices, deep bearish seasonality was pronounced and performed to historical standards. The first week after the conclusion of deep bearish seasonality resulted in bullish expressions. This reversed the recent Mid-term Bear signals for the S&P100 and S&P500. Please read on.

You will notice in the next section that there were an unusually high number of buy signals this weekend. The characteristics of these buy signals are not the same as those in October 2002 and March 2003. Several stocks are not participating in this Quick-term Indicant shift into a bullish bias. The weak companies remained weak last week. There is no obvious bullish convergence, which suggests the heart and soul of bullish seasonality will not be dynamic.

Weekly Buy/Sell Summary

The Mid-term Indicant generated 44-buy signals and seven sell signals for stocks and funds. Again, there were no sell signals for mutual funds. Also, keep in mind these buys are not similar to the October 2002 and March 2003 buying spree that led to the 2003 dynamic bull leg.

In addition to the sell signals, the Mid-term Indicant is avoiding 60-stocks and funds of the 320 tracked by the Indicant. The avoided stocks and funds are down an average of 17.2% since the Mid-term Indicant signaled sell an average of 28.7-weeks ago.

There were 21-stocks and funds avoided at this time last year. The avoided stocks and funds one year ago were down an average of 41.0% since their respective sell signals an average of 53.7-weeks earlier. Two years ago, on November 8, 2003, the Mid-term Indicant was avoiding only 23-stocks and funds that were down an average of 24.5% since their respective sell signals an average of 32.6-weeks earlier. Three years ago on November 9, 2002, there were only 21-avoided stocks and funds. They were down 25.4% from their respective sell signals an average of 13.9-weeks earlier.

In addition to the buy signals this weekend, the Mid-term Indicant is signaling hold for 209 of the 320 stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 113.6%. That annualizes to 57.0%. The Mid-term Indicant has been signaling hold for these 209-stocks and funds for an average of 103.6-weeks.

One year ago, the Mid-term Indicant was holding 277-stocks and funds out of the 296 tracked at that time for an average of 53.6-weeks. They were up 69.8% (annualized at 67.7%). The Mid-term Indicant was signaling hold for 267-stocks and funds of the 296 tracked two years ago on November 8, 2003. They were up by an average of 55.3% (annualized at 93.6%) since their respective buy signals an average of 30.7-weeks earlier. There were 249-stocks and funds with a hold signal on November 9, 2002. There were 22-buy signals on November 9, 2002, which was nearing the end of the 2002 buying spree.

Exchange Traded Fund Buy/Sell Summary

The SQI (Consolidated Quick-term/Short-term Indicant) generated no buy or sell signals last Friday. Read your daily reports for the Quick-term Indicant’s view of Exchange Traded Funds. The SQI is signaling hold for 26-ETF’s. They are up by an average of 50.1% (annualized at 26.7%) since their respective buy signal an average of 96.6-weeks ago. The SQI is avoiding four ETF’s. They are up by an average of 2.4% since their respective sell signals an average of 5.3-weeks ago.

The Short-term Indicant generated zero buy signals and zero sell signals last Friday. In addition to the buy signals, the Short-term Indicant is signaling hold for 29-Exchange Traded Funds. They are up by an average of 53.0% (annualized at 33.0%) since their respective buy signals an average of 82.7-weeks ago. Although there were no sell signals last Friday, the Short-term Indicant is avoiding one ETF. It is flat since its sell signal late last week.

The Quick-term Indicant generated zero buy signals and zero sell signals last Friday. In addition to the buy signal, the Quick-term Indicant is signaling hold for 22-Exchange Traded Funds (ETF’s). They are up by an average of 34.4% (annualized at 34.4%) since their respective buy signals an average of 51.4-weeks ago. Although there were no sell signals, the Quick-term Indicant is avoiding eight ETF’s. They are up by an average of 0.3% since their respective sell signals an average of 6.6-weeks ago.

Remember, the SQI model signals bull or bear with both the Short-term and Quick-term Indicant signaling the same. Keep in mind the Quick-term Indicant is the most volatile, but it will help you with successive buying opportunities during various stages of an advancing bull. It also shows Force Vectors and Vector Pressure providing you greater insight of the market’s quick-term bias.

Secular Market Blend

Some of you recall the Short-term Indicant Bear for the NASDAQ was the longest in history. It even exceeded the Dow’s 1929-1932 Short-term Indicant Bear in breadth and approached it in magnitude. The good news is that the NASDAQ’s decline did not lead to a depression, which is a clear indication of how little influence tech stocks have on the economy. There are two important axioms to remember. 1) Real economic wealth is created in only three ways - manufacturing, agriculture, and extraction. 2) The only positive influence politicians have on the economy is to undo their prior damage. They are now doing their damage, some of which will be undone in 2007; the next presidential pre-election year. That is why the market typically finds bottom in the mid-term election year. That is also why the presidential election year is historically the most bullish on the four year cycle.

The political industry reduces wealth. Politicians continually attempt to redistribute wealth, which flies in the face of the laws of nature. They promote “middle class” attainment. The larger the middle class, the more power they have. The communists tried that same thing in the past, resulting 99% poverty of their populace, while the ruling 1% lived like kings.

You will notice many of the mutual fund buy signals occurred in March 2003. Many of you recall how the market did not synchronize with the heart and soul of bullish seasonality from November 2002 through February 2003. December 2002 was the most bearish since 1931. After the asynchronous behavior in the November 2002 rolling third of the year, the market turned bullish in March 2003 and again did not synchronize with normal seasonality. The Mid-term Indicant continued signaling bull during bearish seasonality during most of 2003. The market continued moving north during that time, contrary to historical standards. As stated in most of 2004, bearish expressions on a Mid-term basis between May and October 2004 should not be surprising. That is exactly what occurred. The result was a meandering market during most of 2004 and 2005. The market was bearish during bullish seasonality in 2005 while expressing mild bullishness during bearish seasonality. Again the market drifted slightly to the southeast with minor bearishness from January through October 2005. The only significant bullish cycle occurred in late 2004, which was appropriately and profitably identified by the Quick-term and Short-term Indicants. The Quick-term and Short-term Indicant are doing the same this year with last week’s bullish signal.

Bullish seasonality ended on April 30, 2005. Bearish seasonality concluded on October 31, 2005

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

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

Stop Loss Management

The Mid-term Indicant recommends a stop loss of 8% on recent buys because of the Quick-term Bull. This stop loss was changed from the 5% of several months because we are now into the heart and soul of bullish seasonality. The Quick-term Indicant’s underlying support of a bullish bias supports this more relaxed stop loss. Profit-taking can cause short-term swings but the 8% should save you commission expense.

Stock and Fund Update

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

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

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

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

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

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

Divergence versus Convergence

Bearish convergence of the past few weeks was decimated last week. Even the contrarian energy sector expressed bearish behavior in two of those weeks. The heart and soul of bullish seasonality is now exerting its influence on the market. The problem, right now, is the lack of bullish convergence. So far, bullish convergence is not as strong as it was the last three years at the beginning of the heart and soul of bullish seasonality.

Economic Conditions – Inflation, Currency, Interest Rates

There is nothing new to report on commodity prices. Commodity prices continue their bullish commitment from already stratospheric levels. This recent movement is dynamic, but the past two weeks have demonstrated some bearish tendencies. Unfortunately, there are no cyclical shifts in its current unfavorable direction. As stated the last several weeks, the trend in commodity prices will continue north as long as oil prices continue in that direction. The Mid-term Indicant Bull’s resilience in the face of this inflationary threat is indeed impressive. It is only a matter of time before this unrelenting pricing pressure on commodities produces unacceptable inflationary behavior.

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

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% one-hundred and seventy-six weeks ago since the MTI buy signal in April 2001. One-hundred and sixty-nine weeks ago, it closed up 30.1%. Last week it closed up 191.1%. The current annualized growth rate since the April 13, 2001 buy signal is 41.3%. After falling sharply 20-weeks ago, it bounced north in 16-weeks of the past 20-weeks. This fund moved north for the second consecutive week.

Fidelity Gold, Fund #28, is up 16.9% since the Mid-term Indicant signaled buy on August 26, 2005. That annualizes to 86.7%, which is not an impossible performance level if oil prices continue to mount. This fund should do well in the event this market turns into a 1970’s type of market. If oil reaches $100 per barrel, do not be surprised at gold moving up by triple digit amounts. This fund moved to the north the past two weeks.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 257.7% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 78.9%. Vanguard Energy #18, VGENX, is up 137.1% (annualized at 52.3%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 103.2% (annualized at 53.1%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 112.2% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 49.8%. These energy related funds moved up, some significantly, the past two weeks, even though oil prices softened. Remember, the market is not interesting in the “right now.” As of the past two weeks, it sees higher oil prices about six to nine months from now.

These funds should do well even if the market turns extremely bearish. Continue to hold them.

The SQI (Consolidated Short-term and Quick-term Indicant) model signaled buy for the GLD-ETF#11 on August 3, 2005. It is up 4.5% since then. It is annualized at 17.6%.

The SQI signaled buy for ETF#03 – Energy and Natural Resources on March 26, 2003. It is up 130.2% (annualized at 49.1%).

Quick-term and Short-term Indicant Update

Read your daily reports. The Quick-term Indicant signaled bull last week after signaling bear since January 4, 2005. The eight major indices are up 0.06% since the last Thursday’s bull signal. The Short-term Indicant also signaled bull last week after signaling bear since January 2005. The Dow is up 0.6% since the Short-term Indicant signaled bull on November 3, 2005. The NASDAQ is up 4.3% since the Short-term Indicant signaled bull on November 2, 2005.

The NYSE Indicant Volume Indicator continues moving in a robust direction. Although much of this robust configuration was concurrent with bearish expressions, the past two weeks robustness paralleled bullish expressions. That coupled with the bullish configurations in other Quick-term attributes supports a bullish bias on a Quick-term basis.

For more information about the Quick-term Indicant, refer to last week’s daily reports.

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

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

In addition to the two new bull signals, eight of the ten major indices are bulls. They are up by an average of 45.5% since the MTI-RYS signaled bull an average of 110-weeks ago. That annualizes to 21.5%. The strongest bull is the Dow Utilities. It is up 106.5% since the October 25, 2002 bull signal. The utilities moved slightly to the south last week. Your utility hold positions remain safe, but keep your eye on this particular index. Severe bears show little mercy, regardless of dividend yields, while this index would be the mildest in the event a dynamic bearish cycle unfolds.

The Mid-term Indicant Dow Jones Industrial Average performance is now at $31,900,196. That beats buy and hold performance of $1,612,124 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $157,537. That beats buy and hold’s $115,544 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $181,518. That beats buy and hold’s $75,223 on an October 18, 1985 $10,000 investment. The Mid-term Indicant’s RYS model beats buy and hold by 1,878.6%, 36.3%, and 141.3%, respectively, for these indices as of this past week.

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 the following link to view this group of stocks:

http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20MTI-NAS100-STKS.htm

Mid-term Indicant Positions - Dow Jones 30 Industrial Stocks

Click here to see Dow 30 report card history.

Click the following hyperlink to view this group of stocks:

http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20MTI-DJIA-STKS.htm

Mid-term Indicant Positions - Dow Jones 15 Utility Stocks

Click here to see Dow Utilities Report Card history.

http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20MTI-DJU-Stks.htm

Mid-term Indicant Positions - Indicant Selected Stocks

Click here to see Indicant Select Stock Report Card history.

Click the following hyperlink to view this group of stocks:

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

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 in light of the Quick-term Indicant’s bull signal and the heart and soul of bullish seasonality. This is the second consecutive year where money was lost on this fund, after generating over 70% profit in 2002. The lesson learned here is to not buy this fund when the SQI (Consolidated Quick-term and Short-term Indicant) is signaling hold for the QQQQ. This is one reason why the Quick-term Indicant will track overall market performance on ETF’s, as opposed to the eight major indices.

Click here to see all Mutual Funds tracked by the Mid-term Indicant.

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

Long Term Indicant Positions - Dow Jones Industrial Average

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

The Dow is up 263.8% (annualized at 18.8%) since the Long-term Indicant signaled bull 731-weeks ago. Economic data is the primary influence on the Long-term Indicant. The recession, deflation, and inflation have not been strong enough to signal bear. A link to the Long-term Indicant is below:

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

Indicant Conclusion

As stated in the past several weekly reports, bullish spurts since the beginning of the year were phony. The July bullish spurt demonstrated some substance, but as stated in the previous 26-weekly reports, there was little likelihood of bullish sustainability. That is exactly what happened. As mentioned earlier in this report, the Dow30 is down 2.3% for the year. The S&P500 is down 0.3% and the NASDAQ is up 0.7% for the year. Although meandering market behavior was gentle, the heart and soul of bullish seasonality is now upon us, supported by bullish Quick-term and Short-term attributes. Therefore, expect bullish bias the next few weeks.

The Quick-term Indicant signaled bull last week. Quick-term and Short-term attributes are bullishly biased. The heart and soul of bullish seasonality is now here and will last through January. Keep your eye on the daily reports, as the market from time to time aborts historical standards. Also, keep in mind that next year is the mid-term election year, which historically finds a market bottom. Since predecessor years leading up to the mid-term election year have not demonstrated bearishness, do not be surprised at a bearish cycle in early 2006. However, as always, await guidance from the various Indicant models. They will let you know when or if this expected bearishness will occur.

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

The daily updates are on the following link.

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

Hyperlinks

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

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

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

Happy Investing,

www.indicant.net

11/06/05