October 25, 2003 Indicant.Net Weekly Update

Volume 10, Issue 4 ISSN 1526 6516 © The Indicant Stock Market Report

Pleasant Memories – Part Two

Last week, we reported how the Mid-term Indicant signaled buy for 107 stocks and funds one year ago. Those buy signals were followed with thirty-seven more this week one year ago. This aggressive buying was followed by the worse December since 1931, but many of those buy signals held through that dismal market. With the lackluster January and down February, many of those same stocks held up very well. Some of them are featured later in this report.

Nearly all of the mutual funds were sold during February’s disappointing market performance, but were quickly followed by several buy signals in March of this year. Most of those funds are still being held, as they continued to move north during the bearish seasonality period. As most of you know, the market did not impose normal seasonality the past twelve months.

There is only one week remaining for normal bearish seasonality. So far, the Quick-term attributes are not supportive of any October surprises to the south.

Weekly Buy/Sell Summary

The Mid-term Indicant generated three buy signals and ten sell signals for stocks and funds. As stated the past several weeks, it is not the time for aggressive buying. There is only one week remaining for bearish seasonality. So far, the market’s correction has been lateral in nature and insignificant. As stated last week, some Quick-term attributes suggest the market is primed for more of the same, which occurred last week.

In addition to the sell signals, the Mid-term Indicant is avoiding only twenty-two stocks and funds of the 296 tracked by the Indicant. The avoided stocks and funds are down an average of 23.8% since the Mid-term Indicant signaled sell an average of 31.6 weeks ago.

The avoided stocks and funds contrast with one year ago when the Indicant was avoiding 75 stocks and funds. Those stocks and funds were down an average of 34.0% since their respective sell signals an average of 17.5 weeks earlier. The current bull market was in its embryonic stage at this time one year ago.

In addition to the buy signals, the Mid-term Indicant is signaling hold for 261 of the 296 stocks and funds currently tracked by the Indicant. The stocks and funds with hold signals are up an average of 50.6%, which is down slightly from last week. That annualizes to 89.5%, which is down from 124.1% reported twenty weeks ago, but up from 50.2% reported on February 15, 2003. The Mid-term Indicant has been signaling hold for these 266 stocks and funds for an average of 28.3 weeks.

The stocks/funds with hold signals contrast from one year ago when the Indicant was signaling hold for only 178 stocks and funds out of the 296 being tracked. At that time, the Mid-term Indicant was holding those stocks and funds for an average of 15.2 weeks. They were up 19.1% (annualized at 65.3%). Many of those stocks and funds continued to climb in the face of a severe bear market in 2002, which found bottom about one year ago and three weeks ago.

One week earlier than this week one year ago, there were 107 buy signals. Exactly one year ago, there were 37 buy signals. In the week prior one year ago, there were 27 buy signals. In the three weeks beginning October 11, 2002 there were 171 buy signals. The buying continued to the following week one year ago. Several of those stocks continue to maintain those same hold signals.

This paragraph is a repeat from the past several weeks. We want to make certain you understand this. The mid-term election year phenomenon found the market bottom, right on cue in 2002. The presidential pre-election year phenomenon is the most bullish year on the presidential election cycle. The following link will take you to charts that explain this phenomenon, which is currently underway and for you to enjoy. It is in a “members only” section. This paragraph will repeat throughout this year.

http://www.indicant.net/Members/Updates/History-Seasonal/HS0100.htm

Make certain you read the entire page on the above link. You will see there are exceptions. So far, this year does not appear to be an exception. If it becomes an exception, the Quick-term Indicant and the other Indicant models will let you know. Right now, the Quick-term and Short-term Indicant is signaling bear, but that can change quickly since this is a presidential pre-election year.

Stop Loss Management

Maintain tight stop losses of 5%. Bearish seasonality continues to attempt its influence on the market’s direction. There is only one week to go. Some of them continue finding comfort above their bullish red curves, while others continue expressing difficulty. It has been over three years since most of them enjoyed that lofty position. The Mid-term Indicant suggests that stocks that have not breeched their respective red curves or have yet to increase to that level are the most vulnerable in the event of a major market correction. Some of those stocks and funds enjoyed new buy signals this past week, but do not be surprised with some sell signals for the same group in the next two weeks.

Use either a 5% trailing stop loss or the yellow or green values you will find on the tables. 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 5% 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 5% trailing stop loss. If you are up by triple digit amounts and enjoy your ownership of the stock or fund, then use a 15% 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. Those types are more interested in burning your money for their pleasures, as opposed to making you money.

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 in those “bearish” conditions. They are configured for a possible rebound, while at the same time, it is important to set the stop losses mentioned in this report.

Based on the time of year and the current configurations of the Quick-term Indicant, now is not a good time for aggressive buying. If you elect to buy at this time, make certain you establish the prescribed stop losses when you place your order.

Comments about Stocks and Funds

Fuel Cell stocks had been exploding north. They took a pause last week. Several of them were featured in the last two weekly reports. Just scroll down to this section if you are reading this on the website.

During solid bull markets all blue chips either perform very well or stay in their same position. The current bull market does not possess that attribute at this time. Two blue chips are performing rather poorly since their recent sell signals.

Dow #27, Merck and Co, is somewhat victimized by the poorly performing pharmaceutical index. It is down 17.4% since the Mid-term Indicant signaled sell on August 2, 2003. If the market sours this stock may fall even further.

http://www.indicant.net/Members/Updates/MTI-Stks-DJIA/DS05.htm#27

Dow #29, Eastman Kodak, is down 18.6% since the Mid-term Indicant signaled sell on June 21, 2003. This company is in a secular decline, as it is old.

http://www.indicant.net/Members/Updates/MTI-Stks-DJIA/DS05.htm#29

Indicant Select Stock #36, Biovail, is down 27.8% since the Mid-term Indicant signaled sell on September 27, 2003. Again, the weak pharmaceutical sector is wreaking havoc on several of its constituents.

http://www.indicant.net/Members/Updates/MTI-Stks-Indicant%20Sel/S06.htm#36

Indicant Select Stock #46, D&K Health, was one of our star performers during 2001 and 2002. It provided triple digit gains until it crashed. This stock is down 15.0% since the Mid-term Indicant signaled sell on September 27, 2003.

http://www.indicant.net/Members/Updates/MTI-Stks-Indicant%20Sel/S08.htm#46

The above stocks, especially the blue chips, are not configuring attributes that are consistent with solid bull markets. The bull is resting.

Typically, weak stocks get weaker during bearish behavior, while the strong tend to hold their positions.

NAS100 #45-Imlcone, was one of those stocks receiving a buy signal one year ago. It has retreated significantly in the past few weeks, but it is still up 327.0% since the Mid-term Indicant signaled buy on October 25, 2002. This stock has been held for exactly one year. As you will see when you click the below link, this stock is on yellow, which is typically a sell stimulant. However, its price is still above the long-term blue curve and thus it continues to receive a hold signal.

http://www.indicant.net/Members/Updates/MTI-Stks-NAS100/NS08.htm#45

Indicant Select Stock #26, Nortel, was featured several times last year. The configuration of the chart was tantalizingly sweet. Several of you bought the stock one year and one week ago. It is up 558.7% since the Mid-term Indicant signaled buy on October 18, 2002. It is one of those stocks that will not fall prey to general bearish behavior. As you can see from the chart, it has not yet crossed above its long-term blue curve. Although this stock is up 558.7% since the Mid-term Indicant signaled buy, it is down over 80% from its all time high.

http://www.indicant.net/Members/Updates/MTI-Stks-Indicant%20Sel/S05.htm#26

The next section takes you to a link whereby the stocks and funds being held or avoided are listed in descending order of performance. You will notice several other high performing stocks that were bought about one year ago. The next major market correction will offer many more opportunities for triple digit success. It is most likely to occur in early 2005, but next spring may bring some earlier opportunities.

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. Be patient with this download. It takes a few minutes.

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 your portfolio. Never love its contents. Management stupidity can wreak havoc on any stock or fund at any time.

All update information is on a single page in the web site. Click the below link to that page. You will need your login ID.

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

Quick-term and Short-term Indicant Update

Two weeks ago, seven of the eight major indices were above the bullish red curve. Last week, only three of the indices were in that lofty position. Now, none of them reside above the bullish red curve. All eight indices are now below the red bullish curve by an average of 2.1%. The Quick-term Indicant continued to signal bear during this time, even though the market was up since the QT Bear signal. Many of the Quick-term configurations were slightly biased in favor of bearish behavior during this time period.

The Quick-term Indicant continues to express configurations in favor of bearish behavior. The configurations suggest mild bearishness. The fact that the indices are above the bearish yellow curve by an average of 3.2% suggest your holdings are safe from a major drop. That can change between now and Halloween. Make certain you read your nightly email.

Force Vectors continue to turn south. That is one such configuration that suggests bearish expectations. However, the negative direction of the Force Vectors is gentle. That suggests no immediate concern of a dramatic drop in the market. Vector Press remains positive (bullish). As long as Vector Pressure is positive, the market will not crash. However, do not be surprised with continuing southerly movements by the major indices this coming week.

To view the Quick-term Indicant charts, please click the following hyperlink:

http://www.indicant.net/Members/Updates/STI-Mkts/QT.htm

The Indicant Volume Indicator continues to express lethargic behavior. The Big Board’s Indicant Volume Indicator is showing some early signs of moving north, but the general movement is still lethargic. The NASDAQ’s Indicant Volume Indicator is showing no signs of being excited about any direction the market will take in the immediate future.

To view the Indicant Volume Indicator, please click the following hyperlink.

http://www.indicant.net/Members/Updates/STI-Mkts/IVI.htm

The Short-term Indicant signaled bear for the NASDAQ after the market’s close this past Friday. That supports the bearish bias of the other Quick-term configurations. The Short-term Indicant signaled bull on October 1, 2003 for the Dow. Although the Dow weakened last week, it is up 1.2% since the ST Indicant bull signal. The mixed signals between the Dow and the NASDAQ are indicative of the market’s recent lethargic behavior. Both bull and bear are snoozing somewhat.

To view the Short-term Indicant charts, please click the following hyperlink:

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

A link to the Dow’s Short-term Indicant table is as follows:

http://www.indicant.net/Non-Members/ST%20Tour/ST-Table%20DJIA1995-2002.htm

A link to the NASDAQ’s Short-term Indicant table is as follows:

http://www.indicant.net/Non-Members/ST%20Tour/ST-Table%20NAS1995-2002.htm

Perspectives

There is nothing different about this from last week. Therefore, this paragraph remains the same. Although not yet clearly visible, the major indices continue to back-off from their respective breakout curves. Remember the recent contact with the breakout curves are the first such event in over three years. As long as the indices remain close to the breakout curves, one can be comfortable with their stronger hold positions. E.g., price is higher than blue curve and red curve and the gain is at least a high double-digit gain.

To view the Perspective Charts (Quick-term Indicant, please click the following.

http://www.indicant.net/Members/Updates/STI-Mkts/QTP.htm

The Quick-term Volatility Index’s Force Vectors are again moving north. It still resides deep into bearish domains and the movement is more lateral than dynamic. Until more robust expressions are generated, this index will continue to be a bear. That bodes well for bullish behavior by the overall stock market.

As stated the past several weeks, the various indicant models remain mixed with a slight bias in favor of bullish behavior in terms of the number of bull signals. That can quickly change. If the Quick-term Indicators produce an obvious direction for the market, you will be notified via email.

Divergence versus Convergence

The Energy Services sector is now expressing bearish behavior on both a Quick-term and Mid-term basis. The other sectors are pretty much the same as last week passive behavior. However, more the sectors Force Vectors remain in bullish domains and nearly all of them are above their respective bearish yellow curves on a Quick-term basis.

Economic Outlook

As stated for the past several months, the U.S. Dollar remains cyclically weak. A stronger dollar may require an increase in interest rates, but productivity increases can have the same effect.

http://www.indicant.net/Members/Updates/Economic/E01.htm

Commodities continue to zoom north on the charts. This typically adds to inflationary pressures, but it also adds capital to the burgeoning profit margins. The improving economy will continue to apply demand pressures and elevate increasing prices. Eventually, capacity and supply will catch up.

http://www.indicant.net/Members/Updates/Economic/E03.htm

Interest rates are remaining at historically low levels. However, the six-month CD crossed above the yellow curve for the first time in over three years.

http://www.indicant.net/Members/Updates/Economic/E07.htm

All economic data is at the following link:

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

Fear Metrics: Economics and Terrorism

The Indicant signaled buy for Fidelity American Gold (FSAGX) - #28 on December 7, 2001. Seventy-two weeks ago, it was up 66.1% since that buy signal. Sixty-five weeks ago, it closed up 12.0% since that buy signal. Fifty-six weeks ago, it closed up 42.9% since the MTI buy signal of December 7, 2001. Last week it closed up 98.6%, which is significantly higher than 47.1% reported fourteen weeks ago. The current annualized growth rate is 51.7%, which is up from 28.8% reported fourteen weeks ago. Last week, it was up, while the stock market was down.

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% seventy weeks ago since the MTI buy signal in April 2001. Sixty-three weeks ago, it closed up 30.1%. Last week it closed up 109.6%, which is higher than the 75.9% reported eleven weeks ago. The current annualized growth rate since the April 13, 2001 buy signal is 42.7%, which is higher than 23.1% reported fourteen weeks ago. This fund gained ground last week, while the gold commodity prices expressed passivity.

As stated in the past you can monitor the above two funds and the options index to help you gauge fear related investments. These two funds require “avoid” signals for the market to embark upon a meaningful and lasting bull leg.

Links to both of the above funds are as follows:

http://www.indicant.net/Members/Updates/MTI-Mutual%20Funds/MF05.htm#28

http://www.indicant.net/Members/Updates/MTI-Mutual%20Funds/MF04.htm#19

Twenty-six weeks ago, the Gold and Silver Index fell below the long-term blue curve. As is typical, it bounced back above that curve the following week, forcing the Mid-term Indicant to signal new bull. Since the Mid-term Bull signal of May 3, 2003, this index is up 44.9%, which is up significantly from 18.8% reported thirteen weeks ago. The annualized growth rate is 92.4%, which is more than the 50.7% reported fourteen weeks ago, but lower than 142.5% reported eighteen weeks ago. It should tumble if terrorism and inflationary threats subside. It, along with the stock market, will also tumble in the improbable event of deflation. This index was up slightly during last week’s stock market rally, while on a Quick-term basis, it is also expressing passivity.

http://www.indicant.net/Members/Updates/MTI-Mkts-Index%20Options/I05.htm#25

Mid-term Indicant Positions - Major U.S. Market Indices

The Mid-term Indicant generated a new bear signal for the S&P100, which is the weakest of the eight major indices.

The seven remaining bulls are up an average of 14.3% for an annualized gain of 35.6% since the MTI Bull signals an average of 20.9 weeks ago. The annualized growth rate is down from 47.9% reported eighteen weeks ago, which is when the Indicant advised of the beginning of the gentle drift to the southeast due to summer time doldrums. The recent rallies have positioned the market slightly ahead of the pre-summer-time-doldrums.

The DJIA is up 12.4% since the MTI Bull signal on March 22, 2003 That is down from 14.1% reported last week. The NASDAQ Composite is the strongest Mid-term Bull. It is up 31.1% since the March 22, 2003 MTI Bull signal, which is down from 34.6% last week. That annualizes to 116.2%, which is up from 80.9% reported twelve weeks ago, but down from last weeks 128.4%.

Again, there was a new bear signal last week.

To view Mid-term Indicant charts for U.S. Market Indices, please click the following link.

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

Mid-term Indicant Positions - International Markets

There were two new bear signals.

Nineteen of the twenty-two foreign indexes tracked by the Indicant remain as Mid-term Bulls. They are up an average of 73.8% since the Mid-term Indicant signaled bull an average of 44.4 weeks ago for an annualized gain of 77.0%, which is higher than the 72.9% reported eighteen weeks ago. The trend is still up, although weakening.

In addition to the new bear signals, the lone bear market, China – SSEC, is down 6.5% since the Mid-term Indicant signaled bear 13.0 weeks ago. It rebounded slightly the past two weeks.

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

October 19, 2003 Indicant.Net Weekly Update

Volume 10, Issue 3 ISSN 1526 6516 © The Indicant Stock Market Report

Dear Indicant Members:

 This Week’s Report

Pleasant Memories

Exactly one year ago today, the Mid-term Indicant signaled buy for 107 stocks and funds. Some of you recall how nasty the market was during most of 2002. The Quick-term Indicant signaled bear in April 2002. That Quick-term Bear leg lasted all the way through most of August 2002. The Mid-term Indicant avoided most stocks and funds at that time with a few buy and sell signals each week. Some of you recall how the Mid-term Indicant advised that most market bottoms are found during presidential mid-term election years and that is exactly what happened.

In addition to the 107 buy signals one year ago, the Mid-term Indicant was holding seventy-six stocks and funds. Those stocks and funds were up an average of 25.8% (annualized at 62.5%). They had been held for an average of 21.5 weeks. There were three sell signals at this time one year ago. In addition to the sell signals, the Mid-term Indicant was avoiding 109 stocks and funds. They were down an average of 31.4% since their respective sell signals an average of 15.8 weeks earlier.

The buying continued during the next two weeks last year. The new bull was born, as the market found bottom in early October 2002. Seven of the eight major market indexes hit bottom on Wednesday, October 9, 2002. The NASDAQ100 found its bottom on October 7, 2002. The Dow Jones Industrial Average is up 33.4% since its bottom on October 9, 2002. The NASDAQ is up 71.6% since then.

Has the NASDAQ out-performed the Dow? It depends on your frame of reference. The NASDAQ is down 62.1% since its all time high of 5048.62 on March 9, 2000. The Dow is down 17.1% since its all time high of 11723 on January 14, 2000. Interestingly, the Dow fell 37.8% from its all time high to its 2002 low of 7286.27. The NASDAQ fell 77.9% from its all time high to the 2002 low of 1114.11. The NASDAQ100 fell 82.9% from its all time high of 4704.73 to its 2002 low of 804.64 on Monday October 7, 2002. The NASDAQ’s downside performance approached the great depression performance of the Dow in the early 1930’s.

More interestingly is how the Quick-term Indicant Bull market from March through August of this year violated normal seasonality. If you invested in Dow stocks from May through October, you will lose money on average since 1950. That was not the case this year. Since April 30, 2003 the Dow is up 14.6% as of the market’s close last Friday. The NASDAQ is up 30.6% since April 30, 2003. During bearish seasonality of 2002, the Dow dropped 15.6%. The NASDAQ dropped 21.2% between April 30, 2002 and October 31, 2002.

During normal seasonal bullishness from October 31, 2002 through April 30, 2003, the Dow was up a paltry 1.0%. The NASDAQ was up 10.1% with most of that gain during March 2003. Last year’s normal bullish seasonality brought us the worse December since 1931, which did not help the values of normalcy. However, during that period, many of the stocks and funds with buy signals from October 2002 held up very well. Several of those stocks are still being held.

Seasonal timing is gaining in popularity. If it continues to gain in popularity and more people begin trading on it, then it will quit working. There is one thing certain about the stock market. It has no consistent pattern. It is impossible for it to do so, as the cycle of greed must produce losers and winners and the number of winners are the minority. That is why over 70% of the day traders lose money.

Weekly Buy/Sell Summary

The Mid-term Indicant generated five buy signals and six sell signals for stocks and funds. As stated the past few weeks, it is not the time for aggressive buying. There are only two weeks remaining for bearish seasonality. So far, the market’s correction has been lateral in nature and insignificant. Some Quick-term attributes suggest the market is primed for more of the same.

In addition to the sell signals, the Mid-term Indicant is avoiding only nineteen stocks and funds of the 296 tracked by the Indicant. The avoided stocks and funds are down an average of 23.3% since the Mid-term Indicant signaled sell an average of 31.7 weeks ago. Ten weeks ago, the thirty-three avoided stocks were down 11.0% from their respective sell signals since an average of 15.0 weeks earlier. As you can see, the population of avoided stocks is decreasing with the increasing bullish behavior, while their depressed state is deeper to the south. The weak get weaker, while the strong stay strong and even become stronger.

The avoided stocks and funds contrast with one year ago when the Indicant was avoiding 109 stocks and funds. Those stocks and funds were down an average of 31.4% since their respective sell signals an average of 15.8 weeks earlier. As stated the past few weeks, bearish seasonality has a higher probability of infecting other bullish phenomena at this time of year. However, so far, the presidential pre-election year phenomenon has had much more influence than normal seasonal influences.

It will be interesting to see how the market behaves during bullish seasonality, which begins in just two weeks on November 1, 2003. The perfect scenario is for stocks and funds to escape the gravitational forces of their bullish red curves. That would be a normal expression for a bona-fide bull market following a major three plus year bear market. Recently, stocks and funds have been experiencing difficulty escaping the gravitational forces of their bullish red curves with a few exceptions.

In addition to the buy signals, the Mid-term Indicant is signaling hold for 266 of the 296 stocks and funds currently tracked by the Indicant. The stocks and funds with hold signals are up an average of 51.8%, which is down slightly from last weeks 52.9%. That annualizes to 95.4%, which is down from 124.1% nineteen weeks ago, but up slightly from 50.2% reported on February 15, 2003. The Mid-term Indicant has been signaling hold for these 266 stocks and funds for an average of 28.3 weeks. If the past three weeks buy signals hold during next week, then the annualized rate of return will increase since many of them will have a holding period of only three weeks. The Indicant communicates annualized return rates so that you can assess the growth with respect to the movement of time. As you can see, the annualized rate of return has been decreasing as the market is trading in a tight range with more of a lateral movement with a slight bullish bias.

The stocks/funds with hold signals contrast from one year ago when the Indicant was signaling hold for only seventy-six stocks and funds out of the 296 being tracked. At that time, the Mid-term Indicant was holding those stocks and funds for an average of 21.5 weeks. They were up 25.8% (annualized at 62.5%). Many of those stocks and funds continued to climb in the face of a severe bear market in 2002, which found bottom about one year ago.

As stated earlier in this report, there were 107 buy signals by the Mid-term Indicant at this time last year. The market found its secular bottom two weeks earlier. The buying started two weeks earlier and continued throughout all of October 2002. There were some significant sell signals in January 2003 as the worst December since 1931 fostered some fear. But many of the stocks and funds bought in October 2002 held up very well and did not succumb to selling pressures.

Some of you recall that the mid-term election year contained the market’s bottom, as predicted. This bull did not start with a big bang. There was not even a Santa Clause rally last year. The market performed poorly after the onslaught of buy signals in October, but more than made-up during its surprising bullish performance during normal bearish seasonality in 2003.

This paragraph is a repeat from the past several weeks. We want to make certain you understand this. The mid-term election year phenomenon found the market bottom, right on cue in 2002. The presidential pre-election year phenomenon is the most bullish year on the presidential election cycle. The following link will take you to charts that explain this phenomenon, which is currently underway and for you to enjoy. It is in a “members only” section. This paragraph will repeat throughout this year.

http://www.indicant.net/Members/Updates/History-Seasonal/HS0100.htm

Make certain you read the entire page on the above link. You will see there are exceptions. So far, this year does not appear to be an exception. If it becomes an exception, the Quick-term Indicant and the other Indicant models will let you know. Right now, the Quick-term and Short-term Indicant is signaling bear, but that can change quickly since this is a presidential pre-election year.

Stop Loss Management

Maintain tight stop losses of 5%. Bearish seasonality continues to attempt its influence on the market’s direction. Many of the stocks and funds did not find comfort above their respective red curves a few weeks ago. Some of them continue finding comfort above their bullish red curves, while others continue expressing difficulty. It has been over three years since most of them enjoyed that lofty position. The Mid-term Indicant suggests that stocks that have not breeched their respective red curves or have yet to increase to that level are the most vulnerable in the event of a major market correction. Some of those stocks and funds enjoyed new buy signals this past week, but do not be surprised with some sell signals for the same group in the next two weeks.

Use either a 5% trailing stop loss or the yellow or green values you will find on the tables. 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 5% 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 5% trailing stop loss. If you are up by triple digit amounts and enjoy your ownership of the stock or fund, then use a 15% 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. Those types are more interested in burning your money for their pleasures, as opposed to making you money.

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 in those “bearish” conditions. They are configured for a possible rebound, while at the same time, it is important to set the stop losses mentioned in this report.

Based on the time of year and the current configurations of the Quick-term Indicant, now is not a good time for aggressive buying. If you elect to buy at this time, make certain you establish the prescribed stop losses when you place your order.

Comments about Stocks and Funds

Four weeks ago, fuel cell stocks exploded to the north. The Indicant Weekly Stock Market Report provided some fundamental reasons why that occurred. Those stocks continue to perform very well but one is wreaking havoc. These stocks have been bouncy in a tight trading range for many months. They are taking on the appearance of escaping the confines of that tight trading range and moving aggressively to the north. Some of that movement is based on fundamentals, but much of it on speculation. We reviewed these stocks the past few weeks and will continue to review them on a regular basis until such time it appears the movement is fake or there is some real progress in generating energy from low cost sources.

The first one is Indicant Stock #27, Fuel Cell Energy. It is up 50.9% since the August 16, 2003 Mid-term Indicant buy signal. It was down slightly last week. A link to that stock’s chart follows:

http://www.indicant.net/Members/Updates/MTI-Stks-Indicant%20Sel/S05.htm#27

Two weeks ago Indicant Stock #30, Millenium Cell, was up 77.7% since the Mid-term Indicant signaled buy on August 16, 2003. It is now up 87.1%. That is up about ten percentage points over last week. It is holding above it bullish red curve by a demonstrable amount. A link to its chart is as follows:

http://www.indicant.net/Members/Updates/MTI-Stks-Indicant%20Sel/S05.htm#30

Canadian based, Hydrogenic, is up 55.0% since the Mid-term Indicant signaled buy on July 26, 2003. That is about five percentage points higher than the prior week. It is a very well managed company and has tremendous potential. It is Indicant Stock #32. As you can see from the chart, it has produced an explosive move and quickly surpassed its red and long-term blue curves. A link to its chart is below:

http://www.indicant.net/Members/Updates/MTI-Stks-Indicant%20Sel/S06.htm#32

Indicant Select Stock #33, Proton Energy Systems, is up 10.6% since the Mid-term Indicant signaled buy on September 27, 2003. That is down from 18.1% the prior week. Indicant Stock #34, Ballard Power Systems is up 6.7% since the Mid-term Indicant signaled buy on September 20, 2003. It is down from being up 12.1% last week. It is one of the weaker fuel cell stocks tracked by the Indicant. However, even the weak companies move to the north in a bullish sector. Indicant Select Stock #35, Plug Power is up 25.0% since the Mid-term Indicant signaled buy on August 16, 2003. It enjoyed a slight increase last week. All of these stocks are on the following link. Just use you scroll bar to see the charts.

http://www.indicant.net/Members/Updates/MTI-Stks-Indicant%20Sel/S06.htm#35

Last weeks report stated Indicant Stock # 38, Energy Conversion, fell considerably. It bounced back to the north triggering a buy signal. Keep in mind this company is not managed well from an efficiency viewpoint, but has the potential to participate in the sector’s growth.

http://www.indicant.net/Members/Updates/MTI-Stks-Indicant%20Sel/S07.htm#38

Energy Conversion moved north along with the other Fuel Cell stocks a few weeks ago and then plummeted in one week. That triggered a sell signal. The stock has since rebounded and that triggered a buy signal. It then fell considerably triggering another sell signal. It then rebounded significantly; thus a new buy signal. Last week it fell again. It is down by 8.7% since the Mid-term Indicant signaled buy on October 11, 2003. Its fall was below the recommended stop loss, but not as bad as the fall two weeks ago. The Mid-term Indicant signaled hold this past week. When you see a hold signal for a down stock, it is okay to buy it. The Mid-term Indicant is continuing its hold signal based on this sector’s strength. If you buy this stock or the other fuel cell stocks in this report, make certain you apply the stop losses with your brokers. Please read on.

What you want to do is avoid a complete price collapse. This week, Eastman Kodak is down 18.4% since the Mid-term Indicant signaled sell on June 21, 2003. A link to the Dow stock #29 is below. As you can see, it rebounded slightly off yellow last week and could offer a good buying opportunity in a few weeks. However, keep in mind the big companies are infested with dilettante managers.

http://www.indicant.net/Members/Updates/MTI-Stks-DJIA/DS05.htm#29

One of the stocks receiving a buy signal in October 2002 was Nortel. It is Indicant Select Stock #26. It is up 623.8% since the Mid-term Indicant signaled buy one year ago on October 18, 2002. It was one of those 107 stocks receiving buy signals on this day one year ago. Not all of those stocks performed this well. Some of them have since received buy signals. That is why you should never invest more than 10% of your investment resources into a single stock. As you can see Nortel is still down over 90% since its all time high. It will be several years before it returns to its all time high. The buy and hold investor who is over sixty years old from the year 2000 will never break even on his or her investment, while those of you who bought last October are smiling.

http://www.indicant.net/Members/Updates/MTI-Stks-Indicant%20Sel/S05.htm#26

One week later at the height of Imclone and Martha Stewart fiasco, the Mid-term Indicant signaled buy for NAS100 #45, Imclone. Although the stock has been struggling lately and is riding bearish yellow, it is up 309.0% since the Mid-term Indicant signaled buy on October 25, 2002.

http://www.indicant.net/Members/Updates/MTI-Stks-NAS100/NS08.htm#45

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. Be patient with this download. It takes a few minutes.

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 your portfolio. Never love its contents. Management stupidity can wreak havoc on any stock or fund at any time.

All update information is on a single page in the web site. Click the below link to that page. You will need your login ID.

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

Quick-term and Short-term Indicant Update

Last week, seven of the eight major indices were above the bullish red curve. The Quick-term Indicant was continuing to signal bear at that time due to a bearish flavor by my of the quick-term attributes. This past week, the market softened slightly, leaving only three of the indices above the bullish red curve. There are now only two weeks remaining for bearish seasonality.

The eight major indices are below the bullish red curve by an average of 0.1%. They are above the bearish yellow curve by 5.6%, which did not change from last week.

Force Vectors finally turned south last week. They are without form, which is a testament to the strength of the bull market. One technical faction, seasonal bearishness, is battling market fundamentals and the presidential pre-election year phenomenon. So far, market fundamentals and the presidential pre-election year phenomenon are winning the battle. Normal seasonality has not come into play this year, as the market was bearish during most the seasonal bullishness period and conversely bullish since last March. Force Vectors remain in bullish domains.

Vector Pressure is moving north but still close to the neutral zone just into bullish domains. The increasing Vector Pressure supports continued protection against any down side surprises.

To view the Quick-term Indicant charts, please click the following hyperlink:

http://www.indicant.net/Members/Updates/STI-Mkts/QT.htm

The Indicant Volume Indicator continues to express lethargic behavior. That is why the market was flat last week. It will be interesting to see how the Indicant Volume Indicator behaves at the conclusion of bearish seasonality on November 1, 2003.

To view the Indicant Volume Indicator, please click the following hyperlink.

http://www.indicant.net/Members/Updates/STI-Mkts/IVI.htm

The Short-term Indicant signaled bull on October 1, 2003 for the Dow and the NASDAQ. The two major indexes are up by an average of 3.5% since their respective bull signals. That is up 0.1% since last week. As you can see, the markets flattened out last week. The Dow is up 2.7%. The NASDAQ is up 4.4% since the Short-term Bull signal. The overall annualized gain is 79.2%, which is half of last week’s annualized gain.

To view the Short-term Indicant charts, please click the following hyperlink:

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

A link to the Dow’s Short-term Indicant table is as follows:

http://www.indicant.net/Non-Members/ST%20Tour/ST-Table%20DJIA1995-2002.htm

A link to the NASDAQ’s Short-term Indicant table is as follows:

http://www.indicant.net/Non-Members/ST%20Tour/ST-Table%20NAS1995-2002.htm

Perspectives

There is nothing different about this from last week. Therefore, this paragraph remains the same. Although not yet clearly visible, the major indices continue to back-off from their respective breakout curves. Remember the recent contact with the breakout curves are the first such event in over three years. As long as the indices remain close to the breakout curves, one can be comfortable with their stronger hold positions. E.g., price is higher than blue curve and red curve and the gain is at least a high double-digit gain.

To view the Perspective Charts (Quick-term Indicant, please click the following.

http://www.indicant.net/Members/Updates/STI-Mkts/QTP.htm

The Quick-term Volatility Index has discontinued its bias for bullish behavior. Its Force Vector now resides deep into bearish domains. It is attempting to bottom out, but its configuration takes on the appearance of a wounded duck. That bodes well for bullish behavior by the overall stock market.

As stated last week, the various indicant models are mixed with a slight bias in favor of bullish behavior in terms of the number of bull signals. That can quickly change. If the Quick-term Indicators produce an obvious direction for the market, you will be notified via email.

Divergence versus Convergence

The biotech and pharmaceutical index are expressing bearish behavior on a Quick-term basis. Gold and precious metals are doing the same, but attempting a rebound. Oil field services are also configured with bearish attributes. There are quite a few sell signals last week for those stocks, as well as the prior week. Internet and high techs are in the middle, but still safely in bullish domains.

Economic Outlook

The U.S. Dollar remains cyclically weak, but bouncing around near the top of the cycle. As stated last week, the market would like to see a stronger dollar, but that is not possible without a rise in interest rates or profound productivity increases in the manufacturing sector. The stock market would prefer to see the latter unfold.

http://www.indicant.net/Members/Updates/Economic/E01.htm

Commodities appeared to be nearing cyclical highs the past few weeks, but are now setting new highs. Steer prices are setting record highs with the imbalance of supply and demand.

http://www.indicant.net/Members/Updates/Economic/E03.htm

Interest rates are remaining at historically low levels.

http://www.indicant.net/Members/Updates/Economic/E07.htm

All economic data is at the following link:

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

Fear Metrics: Economics and Terrorism

The Indicant signaled buy for Fidelity American Gold (FSAGX) - #28 on December 7, 2001. Seventy-one weeks ago, it was up 66.1% since that buy signal. Sixty-four weeks ago, it closed up 12.0% since that buy signal. Fifty-five weeks ago, it closed up 42.9% since the MTI buy signal of December 7, 2001. Last week it closed up 87.3%, which is significantly higher than 47.1% reported thirteen weeks ago. The current annualized growth rate is 46.2%, which is up from 28.8% reported thirteen weeks ago. Last week, it was up, while the stock market was relatively flat.

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% sixty-nine weeks ago since the MTI buy signal in April 2001. Sixty-two weeks ago, it closed up 30.1%. Last week it closed up 104.7%, which is higher than the 75.9% reported ten weeks ago. The current annualized growth rate since the April 13, 2001 buy signal is 41.0%, which is higher than 23.1% reported thirteen weeks ago. This fund gained ground last week, while the gold commodity prices expressed passivity.

As stated in the past you can monitor the above two funds and the options index to help you gauge fear related investments. These two funds require “avoid” signals for the market to embark upon a meaningful and lasting bull leg.

Links to both of the above funds are as follows:

http://www.indicant.net/Members/Updates/MTI-Mutual%20Funds/MF05.htm#28

http://www.indicant.net/Members/Updates/MTI-Mutual%20Funds/MF04.htm#19

Twenty-five weeks ago, the Gold and Silver Index fell below the long-term blue curve. As is typical, it bounced back above that curve the following week, forcing the Mid-term Indicant to signal new bull. Since the Mid-term Bull signal of May 3, 2003, this index is up 36.0%, which is up significantly from 18.8% reported twelve weeks ago. The annualized growth rate is 77.1%, which is more than the 50.7% reported thirteen weeks ago, but lower than 142.5% reported seventeen weeks ago. It should tumble if terrorism and inflationary threats subside. It, along with the stock market, will also tumble in the improbable event of deflation. This index was up slightly during last week’s stock market rally, while on a Quick-term basis, it is also expressing passivity.

http://www.indicant.net/Members/Updates/MTI-Mkts-Index%20Options/I05.htm#25

Mid-term Indicant Positions - Major U.S. Market Indices

The Mid-term Indicant did not generate any new signals.

All eight major indexes continue as bulls. They are up an average of 13.8% for an annualized gain of 40.6% since the MTI Bull signals an average of 17.6 weeks ago. The annualized growth rate is down from 47.9% reported seventeen weeks ago, which is when the Indicant advised of the beginning of the gentle drift to the southeast due to summer time doldrums. The recent rallies have positioned the market slightly ahead of the pre-summer-time-doldrums.

The DJIA is up 14.1% since the MTI Bull signal on March 22, 2003 The NASDAQ Composite is the strongest Mid-term Bull. It is up 34.6% since the March 22, 2003 MTI Bull signal. That annualizes to 128.4%, which is up from 80.9% reported twelve weeks ago.

None of the eight major indices are mid-term bears.

To view Mid-term Indicant charts for U.S. Market Indices, please click the following link.

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

Mid-term Indicant Positions - International Markets

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

Twenty-one of the twenty-two foreign indexes tracked by the Indicant remain as Mid-term Bulls. They are up an average of 68.5% since the Mid-term Indicant signaled bull an average of 44.4 weeks ago for an annualized gain of 80.2%, which is higher than the 72.9% reported seventeen weeks ago.

The lone bear market, China – SSEC, is down 7.2% since the Mid-term Indicant signaled bear 12.0 weeks ago. It rebounded slightly last week.

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

October 12, 2003 Indicant.Net Weekly Update

Volume 10, Issue 2 ISSN 1526 6516 © The Indicant Stock Market Report

Dear Indicant Members:

This Week’s Report

This Bull Continues to Impress – Part 2

The eight major indexes increased an average of 1.1% last week with several of the Quick-term Indicators in neutral to bearish position. The NASDAQ100 increased the most at 2.1%. The NASDAQ Composites increased 1.8%. The NASDAQ Composites are up 34.8% since the Mid-term Indicant signaled bull on March 22, 2003. The bull has moved through normal bearish seasonality with only two minor corrections. A minor correction occurs when the market dips to the Quick-term bearish yellow curve and bounces north.

The Dow Jones Industrial Average is up 13.5% since the Mid-term Indicant signaled bull on March 22, 2003. The direction for both these indexes has been the same with the NASDAQ Composites expressing more bullish behavior than the blue chips. The NASDAQ100 did dip below the Quick-term Bearish yellow curve last August, but quickly rebounded. The strength in this market is more from the former NASDAQ100 stocks than the current members of the NASDAQ100 family. In a few months, we will be modifying the NASDAQ100 content of as quite a few have changed over the past year.

There are only two weeks remaining during for the normal bearish period for the stock market. The Dow is up 14.1% since April 30, 2003, which was the last day for bullish seasonality. The Dow has exceeded this level of bullish performance only once since 1950. That was in 1982 when the great bull market began.

The NASDAQ Composite is up 30.8% since April 30, 2003, but its history is shorter, beginning in 1971. The NASDAQ has more pronounced seasonal behavior with its normal bearish cycle during July through October. The NASDAQ is up 18.0% since June 30, 2003, while the Dow is up only 7.7%. The NASDAQ has exceeded 18.0% only once since 1971. Therefore, this bull market is indeed very impressive.

Interestingly, the NASDAQ has expressed unusual bearish performance in presidential pre-election years during is four months of bearish seasonality from July through October. It was down in 1971, 1975, 1979, 1983, 1987, and 1999 by 2.5%, 11.5%, 1.9%, 13.9%, 23.9%, 10.4%, respectively. The only two bullish moves in bearish seasonality was in 1991 and 1995 when the NASDAQ increased by 14.1% and 11.0% in presidential pre-election years. The only time since 1970 the NASDAQ exceeded its current bullish performance during bearish seasonality was in 1980 and 1982 when it rose 22.2% and 24.1%, respectively, from July through October.

With two weeks remaining in October, this is no time to relax. You will later see the Quick-term Indicators are not solidly positioned for a high degree of confidence in continuing bullish behavior, while the bias has been and still in favor of slight bullish behavior.

Weekly Buy/Sell Summary

The Mid-term Indicant generated nine buy signals and no sell signals for stocks and funds. As stated the past few weeks, it is not the time for aggressive buying. As stated last week, it would not be surprising to see the market correct to the south between now and the end of October. With red bullish sentiment, such corrections would be minor.

The Mid-term Indicant is avoiding only twenty-four stocks and funds of the 296 tracked by the Indicant. The avoided stocks and funds are down an average of 22.5% since the Mid-term Indicant signaled sell an average of 31.0 weeks ago. Nine weeks ago, the thirty-three avoided stocks were down 11.0% from their respective sell signals since an average of 15.0 weeks earlier. As you can see, the population of avoided stocks is decreasing with the increasing bullish behavior, while their depressed state is deeper to the south.

The avoided stocks and funds contrast with one year ago when the Indicant was avoiding 212 stocks and funds. Those stocks and funds were down an average of 25.6% since their respective sell signals an average of 10.1 weeks earlier. As stated last week, bearish seasonality has a higher probability of infecting other bullish phenomena at this time of year. However, so far, the presidential pre-election year phenomenon has had much more influence than normal seasonal influences.

It will be interesting to see how the market behaves during bullish seasonality, which begins in two weeks. The perfect scenario is for stocks and funds to escape the gravitational forces of their bullish red curves. That would be a normal expression for a bona-fide bull market following a major three plus year bear market. So far, stocks and funds have been experiencing difficulty escaping the gravitational forces of their respective bullish red curves with a few exceptions.

In addition to the buy signals, the Indicant is signaling hold for 263 of the 296 stocks and funds currently tracked by the Indicant. The stocks and funds with hold signals are up an average of 52.9%. That annualizes to 98.7%, which is down from 124.1% eighteen weeks ago, but up slightly from 50.2% reported on February 15, 2003. The Mid-term Indicant has been signaling hold for these 263 stocks and funds for an average of 27.9 weeks. If the past two weeks buy signals hold during next week, then the annualized rate of return will increase since many of them will have a holding period of only two weeks. The Indicant generally communicates annualized return rates so that you can assess the growth with respect to the movement of time.

The stocks/funds with hold signals contrast from one year ago when the Indicant was signaling hold for only fifty-two stocks and funds out of the 296 being tracked. At that time, the Mid-term Indicant was holding those stocks and funds for an average of 24.8 weeks. They were up 25.2% (annualized at 52.8%). Many of those stocks and funds continued to climb in the face of a severe bear market in 2002, which found bottom about one year ago.

Many of you recall there were over one-hundred buy signals about this time one year ago. There will be more about that in next week’s report, as it was on October 18, 2002 when the Mid-term Indicant signaled “buy” for over one-hundred stocks and funds. The market was nearing its secular bottom at this time one year ago. Some of you recall that the mid-term election contained the market’s bottom, as predicted.

This paragraph is a repeat from the past several weeks. We want to make certain you understand this. The mid-term election year phenomenon found the market bottom, right on cue in 2002. The pre-election year phenomenon, which is the most bullish year on the presidential election cycle, will regain influence a few weeks from now. The following link will take you to charts that explain this phenomenon, which is currently underway and for you to enjoy. It is in a “members only” section. This paragraph will repeat throughout this year.

http://www.indicant.net/Members/Updates/History-Seasonal/HS0100.htm

Make certain you read the entire page on the above link. You will see there are exceptions. So far, this year does not appear to be an exception. If it becomes an exception, the Quick-term Indicant and the other Indicant models will let you know. Right now, the Quick-term and Short-term Indicant is signaling bear, but that can change quickly since this is a presidential pre-election year.

Stop Loss Management

Maintain tight stop losses of 5%. Bearish seasonality continues to attempt its influence on the market’s direction. Many of the stocks and funds did not find comfort above their respective red curves a few weeks ago. Some of them continue finding comfort above their bullish red curves, while others continue expressing difficulty. It has been over three years since most of them enjoyed that lofty position. The Mid-term Indicant suggests that stocks that have not breeched their respective red curves or have yet to increase to that level are the most vulnerable in the event of a major market correction. Some of those stocks and funds enjoyed new buy signals this past week, but do not be surprised with some sell signals for the same group in the next two weeks.

Use either a 5% trailing stop loss or the yellow or green values you will find on the tables. 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 5% 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 5% trailing stop loss. If you are up by triple digit amounts and enjoy your ownership of the stock or fund, then use a 15% 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. Those types are more interested in burning your money for their pleasures, as opposed to making you money.

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 in those “bearish” conditions. They are configured for a possible rebound, while at the same time, it is important to set the stop losses mentioned in this report.

Based on the time of year and the current configurations of the Quick-term Indicant, now is not a good time for aggressive buying. If you elect to buy at this time, make certain you establish the prescribed stop losses when you place your order.

Comments about Stocks and Funds

Three weeks ago, fuel cell stocks exploded to the north. The Indicant Weekly Stock Market Report provided some fundamental reasons why that occurred. Those stocks continue to perform very well. These stocks have been bouncy in a tight trading range for many months. They are taking on the appearance of escaping the confines of that tight trading range and moving aggressively to the north. Some of that movement is based on fundamentals, but much of it on speculation.

The first one is Indicant Stock #27, Fuel Cell Energy. It is up 52.7% since the August 16, 2003 Mid-term Indicant buy signal. A link to that stock’s chart follows:

http://www.indicant.net/Members/Updates/MTI-Stks-Indicant%20Sel/S05.htm#27

Last week Indicant Stock #30, Millenium Cell, was up 77.7% since the Mid-term Indicant signaled buy on August 16, 2003. It is now up 78.8%. It is holding above it bullish red curve by a demonstrable amount. A link to its chart is as follows:

http://www.indicant.net/Members/Updates/MTI-Stks-Indicant%20Sel/S05.htm#30

Canadian based, Hydrogenic, is up 50.1% since the Mid-term Indicant signaled buy on July 26, 2003. It is a very well managed company and has tremendous potential. It is Indicant Stock #32. As you can see from the chart, it has produced an explosive move and quickly surpassed its red and long-term blue curves. A link to its chart is below:

http://www.indicant.net/Members/Updates/MTI-Stks-Indicant%20Sel/S06.htm#32

Indicant Select Stock #33, Proton Energy Systems, is up 18.1% since the Mid-term Indicant signaled buy on September 27, 2003. Indicant Stock #34, Ballard Power Systems is up 12.1% since the Mid-term Indicant signaled buy on September 20, 2003. It is one of the weaker fuel cell stocks tracked by the Indicant. However, even the weak companies move to the north in a bullish sector. Indicant Select Stock #35 is up 23.8% since the Mid-term Indicant signaled buy on August 16, 2003. All of these stocks are on the following link. Just use you scroll bar to see the charts.

http://www.indicant.net/Members/Updates/MTI-Stks-Indicant%20Sel/S06.htm#35

Last weeks report stated Indicant Stock # 38, Energy Conversion, fell considerably. It bounced back to the north triggering a buy signal. Keep in mind this company is not managed, very well, from an efficiency viewpoint, but has the potential to participate in the sector’s growth. Such companies learn more about escaping the age-old rule of physics, which says energy cannot be created or destroyed.

http://www.indicant.net/Members/Updates/MTI-Stks-Indicant%20Sel/S07.htm#38

Energy Conversion moved north along with the other Fuel Cell stocks a few weeks ago and then plummeted in one week. That triggered a sell signal. The stock has since rebounded and that triggered a buy signal. If you buy this stock or the other fuel cell stocks in this report, make certain you apply the stop losses with your brokers. Please read on.

What you want to avoid is a complete price collapse. Indicant Stock #36, Biovail, which was down 15.4% last week. This week it is down 26.4%. The stock is in a definite spiral to the south. You do not want to hold such stocks.

http://www.indicant.net/Members/Updates/MTI-Stks-Indicant%20Sel/S06.htm#36

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 your portfolio. Never love its contents. Management stupidity can wreak havoc on any stock or fund at any time.

All update information is on a single page in the web site. Click the below link to that page. You will need your login ID.

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

Quick-term and Short-term Indicant Update

The Quick-term Indicant continues to signal bear. Although seven of the eight major indices are above the bullish red curve, which provides a safety net against collapse, the Force Vectors, Vector Pressure, and other Quick-term indicators are mixed in their gauging the posture of the bull and overall stock market. The two weeks remaining of bearish seasonality is influencing the Quick-term Indicant’s assessment of the market.

Force Vectors continued to increase last week. They are again in the bullish domain, but that bullish cycle is maturing. The market’s Quick-term intentions have been unclear the past few weeks with a slight bias in favor of bullishness. The prior short oscillating movements suggested the bull was losing energy, but it is a very strong bull. This bull has reacted to adversity very well since last March, but has not demonstrated the continuing underlying strength that it expressed from March 2003 through most of August.

Vector Pressure continues to hover near the neutral zone just into bullish domains. Last week’s Vector Pressure pulled Vector Pressure to the north. Vector Pressure is moving north for all eight major indices. The concern is that they are very close to bearish domains. If they continue to move north, then the bull will even become stronger.

The eight major indices are above the bullish red curve by an average of 0.5%. The S&P100 is the only index that is below the bullish red curve.

The eight major indices are above the bearish yellow curve by 5.6%, which is significantly higher than 0.4% that was reported two weeks ago, but down slightly from 6.5% reported three weeks ago.

To view the Quick-term Indicant charts, please click the following hyperlink:

http://www.indicant.net/Members/Updates/STI-Mkts/QT.htm

The Indicant Volume Indicator is expressing increased passivity, but does not possess the lethargic attributes of 2002. Although it has been demonstrating robust behavior on both up and down swings the past few weeks, it is now not favoring a bias for bullish or bearish market behavior. It is also expressing neutrality along with the other Quick-term Indicators.

To view the Indicant Volume Indicator, please click the following hyperlink.

http://www.indicant.net/Members/Updates/STI-Mkts/IVI.htm

The Short-term Indicant signaled bull this past week on October 1, 2003 for the Dow and the NASDAQ. Currently, the two major indexes are up by an average of 3.4% since their respective bull signals. The Dow is up 2.2%. The NASDAQ is up 4.5% since the Short-term Bull signal. The overall annualized gain is 183.3%.

To view the Short-term Indicant charts, please click the following hyperlink:

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

A link to the Dow’s Short-term Indicant table is as follows:

http://www.indicant.net/Non-Members/ST%20Tour/ST-Table%20DJIA1995-2002.htm

A link to the NASDAQ’s Short-term Indicant table is as follows:

http://www.indicant.net/Non-Members/ST%20Tour/ST-Table%20NAS1995-2002.htm

Perspectives

There is nothing different about this from last week. Therefore, the paragraph remains the same. Although not yet clearly visible, the major indices continue to back-off from their respective breakout curves. Remember the recent contact with the breakout curves are the first such event in over three years. As long as the indices remain close to the breakout curves, one can be comfortable with the majority of their hold positions.

To view the Perspective Charts (Quick-term Indicant, please click the following.

http://www.indicant.net/Members/Updates/STI-Mkts/QTP.htm

The Quick-term Volatility Index has discontinued its bias for bullish behavior. It is now riding yellow and its Force Vectors are solidly in bearish domains. However, the Force Vector cycle appears maturing. You will later see, the Mid-term Indicant signaled bear for the Volatility Index. Remember, the Volatility Index moves inversely to the stock market. There will be more about that later.

As stated last week, the various indicant models are mixed with a slight edge toward bullish behavior in terms of the number of bull signals. That can quickly change. If the Quick-term Indicators produce an obvious direction for the market, you will be notified via email.

Divergence versus Convergence

Nearly all sectors moved north last week. Drugs continue to express passive to bearish behavior. Gold and precious metals is expressing same on a Quick-term basis, but continues to remain in strong positions. Overall, the markets are in strong bullish positions. Remember the concerns being expressed by the Quick-term Indicant.

Economic Outlook

The U.S. Dollar rebounded slightly this past week, but remains cyclically weak. The market would like to see a stronger dollar, but that is not possible without a rise in interest rates or profound productivity increases in the manufacturing sector. The stock market would prefer to see the latter unfold.

http://www.indicant.net/Members/Updates/Economic/E01.htm

As you can see from the charts from the below link, commodities also continue to remain cyclically related to higher inflation. After resting a few weeks commodity prices have zoomed northward. Although Steers are not critical to the economy, you can see the effects of supply and demand. Demand has been relatively constant for many years, but the recent rise in Dr. Atkins popularity has stimulated increased demand for beef products. That coupled with Mad Cow’s supply decreases has caused a meteoric rise in the price of Steers.

http://www.indicant.net/Members/Updates/Economic/E03.htm

Interest rates are remaining at historically low levels. After inching upward, the three-month T-Bill is now inching downward. This is the case for most interest rates. The stock market enjoys declining interest rates.

http://www.indicant.net/Members/Updates/Economic/E07.htm

All economic data is at the following link:

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

Fear Metrics: Economics and Terrorism

The Indicant signaled buy for Fidelity American Gold (FSAGX) - #28 on December 7, 2001. Seventy weeks ago, it was up 66.1% since that buy signal. Sixty-three weeks ago, it closed up 12.0% since that buy signal. Fifty-four weeks ago, it closed up 42.9% since the MTI buy signal of December 7, 2001. Last week it closed up 84.0%, which is significantly higher than 47.1% reported twelve weeks ago. The current annualized growth rate is 44.9%, which is up from 28.8% reported twelve weeks ago. Last week, it was up, while the stock market moved north.

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% sixty-eight weeks ago since the MTI buy signal in April 2001. Sixty-one weeks ago, it closed up 30.1%. Last week it closed up 102.1%, which is higher than the 75.9% reported nine weeks ago. The current annualized growth rate since the April 13, 2001 buy signal is 40.3%, which is higher than 23.1% reported twelve weeks ago. This fund gained ground last week, while the gold commodity prices expressed passivity.

As stated in the past you can monitor the above two funds and the options index to help you gauge fear related investments. These two funds require “avoid” signals for the market to embark upon a meaningful and lasting bull leg.

Links to both of the above funds are as follows:

http://www.indicant.net/Members/Updates/MTI-Mutual%20Funds/MF05.htm#28

http://www.indicant.net/Members/Updates/MTI-Mutual%20Funds/MF04.htm#19

Twenty-four weeks ago, the Gold and Silver Index fell below the long-term blue curve. As is typical, it bounced back above that curve the following week, forcing the Mid-term Indicant’s New Bull signal. Since the Mid-term Bull signal of May 3, 2003, this index is up 34.8%, which is up significantly from 18.8% reported eleven weeks ago. The annualized growth rate is 77.8%, which is more than the 50.7% reported twelve weeks ago, but lower than 142.5% reported sixteen weeks ago. It should tumble if terrorism and inflationary threats subside. It, along with the stock market, will also tumble in the improbable event of deflation. This index was up slightly during last week’s stock market rally, while on a Quick-term basis, it is expressing passivity.

http://www.indicant.net/Members/Updates/MTI-Mkts-Index%20Options/I05.htm#25

Mid-term Indicant Positions - Major U.S. Market Indices

The Mid-term Indicant did not generate any new signals.

All eight major indexes continue as bulls. They are up an average of 13.7% for an annualized gain of 42.7% since the MTI Bull signals an average of 16.6 weeks ago. The annualized growth rate is down from 47.9% reported sixteen weeks ago, which is when the Indicant advised of the beginning of the gentle drift to the southeast due to summer time doldrums. The recent rallies have positioned the market slightly ahead of the pre-summer-time-doldrums.

The DJIA is up 13.5% since the MTI Bull signal on March 22, 2003 The NASDAQ Composite is the strongest Mid-term Bull. It is up 34.8% since the March 22, 2003 MTI Bull signal. That annualizes to 129.1%, which is up from 80.9% reported eleven weeks ago.

None of the eight major indices are mid-term bears.

To view Mid-term Indicant charts for U.S. Market Indices, please click the following link.

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

Mid-term Indicant Positions - International Markets

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

Twenty-one of the twenty-two foreign indexes tracked by the Indicant remain as Mid-term Bulls. They are up an average of 65.3% since the Mid-term Indicant signaled bull an average of 43.4 weeks ago for an annualized gain of 78.2%, which is higher than the 72.9% reported sixteen weeks ago.

The lone bear market, China – SSEC, is down 5.0% since the Mid-term Indicant signaled bear 11.0 weeks ago. It rebounded slightly last week.

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

October 5, 2003 Indicant.Net Weekly Update

Volume 10, Issue 1 ISSN 1526 6516 © The Indicant Stock Market Report

Dear Indicant Members:

This Week’s Report

This Bull Continues to Impress

The market rebounded significantly this past week. However, Vector Pressure is now negative for seven of the eight major indexes. That provides for an increased probability of bearish behavior. The increasing Force Vectors are normally bullish, but they are increasing in bearish domains, which mean a reversal in direction is always bearish.

The large number of sell signals last week was followed by a large increase in buy signals. However, the number of buy signals this week is not as big as the number of sell signals last week. That is a minor testament that the bull is tiring somewhat.

The month of October has a history of producing unpleasant surprises from time to time. That was a major reason for taking profits from a few of the triple-digit and double-digit gainers last week. Most of last week’s sell signals were assigned to stocks and funds that had fallen below the green curve that were below the long-term blue curve. Many of those stocks and funds increased back above their respective green curves this past week and thus the generated buy signals.

As you can see from the charts, there has been some turbulent behavior as many stocks and funds are having difficulty finding comfort above their respective bullish red curves. Many stocks and funds recently crossed above their respective bullish red curves. These recent events have produced some minor turbulence in the stock market. It has been over three years since the market has endured these dynamics and there is a natural discomfort associated with it. It is like the stocks and funds are asking if their performance has been worthy enough to enjoy a lofty position even if the bullish red curves are in a depressed state.

Several indicators are configuring themselves in favor of some volatility, but so far, there is nothing to indicate extreme volatility. The market seldom crashes with an increasing yellow curve. The S&P600 yellow curve is flattening out, while the other indices are increasing. The negative Vector Pressure is of major concern. The Quick-term Indicant will not signal bull with negative Vector Pressure, while the Short-term Indicant did signal bull last week. The Short-term Indicant is an old model and uses the same set of data that was available in the early 1900’s, while the Quick-term Indicant is multi-dimensional and uses more modern data, much of which, became available in the early 1970’s. As you can see, the various models are mixed right now. The indices are below the bullish red curve and that combination adds a slight bias in favor of bearish expressions. There will be more about the Quick-term Indicant later in this report.

Weekly Buy/Sell Summary

The Mid-term Indicant generated forty-four buy signals and three sell signals for stocks and funds. As stated the past few weeks, it is not the time for aggressive buying. As stated last week, it would not be surprising to see a major market correction between now and the end of October. We will keep you posted on that.

The message is the same as the past several weeks. Do not aggressively buy at this time. E.g., buy one-hundred shares if you want to buy two-hundred shares. ProFunds Ultra short again disappointed and the Mid-term Indicant had to signal sell. As long as the market is above bearish yellow with many of the Indicant models signaling bull, this fund will continue to be volatile.

In addition to the sell signals, the Mid-term Indicant is avoiding thirty stocks and funds of the 296 tracked by the Indicant. The avoided stocks and funds are down an average of 20.9% since the Mid-term Indicant signaled sell an average of 29.7 weeks ago. Eight weeks ago, the avoided stocks were down 11.0% from their respective sell signals since an average of 15.0 weeks earlier. As you can see, the population of avoided stocks is increasing and their depressed state is deeper to the south.

The avoided stocks and funds contrast with one year ago when the Indicant was avoiding 226 stocks and funds. Those stocks and funds were down an average of 24.7% since their respective sell signals an average of 10.1 weeks earlier. As stated last week, bearish seasonality has a higher probability of infecting other bullish phenomena at this time of year. However, so far, the presidential pre-election year phenomenon has had much more influence than normal seasonal influences. It will be interesting to see how the market behaves during bullish seasonality, which begins in three weeks. The perfect scenario is for stocks and funds to escape the gravitational forces of their bullish red curves. That would be a normal expression for a bona-fide bull market following a major three plus year bear market.

In addition to the buy signals, the Indicant is signaling hold for 219 of the 296 stocks and funds currently tracked by the Indicant. The stocks and funds with hold signals are up an average of 58.5%. That annualizes to 98.0%, which is down from 124.1% seventeen weeks ago, but up from 50.2% reported on February 15, 2003. The Mid-term Indicant has been signaling hold for these 219 stocks and funds for an average of 31.0 weeks. If this past week’s buy signals hold during next week, then the annualized rate of return will increase since many of them will have a holding period of only one week. The Indicant generally communicates annualized return rates so that you can assess the growth with respect to the movement of time.

The stocks/funds with hold signals contrast from one year ago when the Indicant was signaling hold for only fifty-four stocks and funds out of the 296 being tracked. At that time, the Mid-term Indicant was holding those stocks and funds for an average of 21.6 weeks. They were up 20.2% (annualized at 48.6%). Many of those stocks and funds continued to climb in the face of a severe bear market in 2002. The market was nearing its secular bottom at this time one year ago. Some of you recall that the mid-term election contained the market’s bottom, which is safely protected with this year’s profound increase.

Last weekend’s sell signals were due to the stocks and funds falling below their respective green curves. This past week, many of those same stocks and funds climbed back above their green curves. The Mid-term Indicant had to signal buy, as it is too risky to avoid stocks that are above green on increasing yellow values. Waiting for dips is never the thing to do. However, make certain your stop losses are in place as the month of October can disappoint bullish demeanors.

This paragraph is a repeat from the past several weeks. We want to make certain you understand this. The mid-term election year phenomenon found the market bottom, right on cue in 2002. The pre-election year phenomenon, which is the most bullish year on the presidential election cycle, will regain influence a few weeks from now. The following link will take you to charts that explain this phenomenon, which is currently underway and for you to enjoy. It is in a “members only” section. This paragraph will be repeated throughout this year.

http://www.indicant.net/Members/Updates/History-Seasonal/HS0100.htm

Make certain you read the entire page on the above link. You will see there are exceptions. So far, this year does not appear to be an exception. If it becomes an exception, the Quick-term Indicant and the other Indicant models will let you know. Right now, the Quick-term and Short-term Indicant is signaling bear, but that can change quickly since this is a presidential pre-election year.

Stop Loss Management

Maintain tight stop losses of 5%. Bearish seasonality continues to attempt its influence on the market’s direction. Many of the stocks and funds did not find comfort above their respective red curves a few weeks ago. Some of them continue finding comfort above their bullish red curves, while others have not. It has been over three years since most of them enjoyed that lofty position. The Mid-term Indicant suggests that stocks that have not breeched their respective red curves or have yet to increase to that level are the most vulnerable in the event of a major market correction. Some of those stocks and funds enjoyed new buy signals this past week, but do not be surprised with some sell signals for the same group in the next three weeks.

Use either a 5% trailing stop loss or the yellow or green values you will find on the tables. 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 5% 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 5% trailing stop loss. If you are up by triple digit amounts and enjoy your ownership of the stock or fund, then use a 15% 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. Those types are more interested in burning your money for their pleasures, as opposed to making you money.

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 in those “bearish” conditions. They are configured for a possible rebound, while at the same time, it is important to set the stop losses mentioned in this report.

Based on the time of year and the current configurations of the Quick-term Indicant, now is not a good time for aggressive buying. If you elect to buy at this time, make certain you establish the prescribed stop losses when you place your order.

Comments about Stocks and Funds

Two weeks ago, fuel cell stocks exploded to the north. Last week, many of those stocks retreated while the market moved north. On the contrary, Indicant Stock #30, Millenium Cell, increased and is now up 77.7% since the Mid-term Indicant signaled buy on August 16, 2003. Last week it was up 61.0%.

http://www.indicant.net/Members/Updates/MTI-Stks-Indicant%20Sel/S05.htm#30

Indicant Stock # 38, Energy Conversion, fell considerably. As you can see, not all fuel cell stocks are continuing to do well. You can see the importance of stop loss management with this stock. It rose above red and blue, like the other fuel cell stocks and then collapsed. The combination of manipulative market behavior and over-paid management can induce such volatility. The stock is resting on yellow, but it is too risky to buy or hold. The floor could be zero.

http://www.indicant.net/Members/Updates/MTI-Stks-Indicant%20Sel/S07.htm#38

What you want to avoid is a complete price collapse. Take Indicant Stock #36, Biovail, which is down 15.4% since last week’s sell signal. Sometimes stocks bounce north off of yellow, while others continue to plummet. This plummeting effect suggests the market is readying itself for some volatile behavior. Very few stocks were moving south in the first few months after the March Quick-term bull. Now, more and more stocks are moving south.

http://www.indicant.net/Members/Updates/MTI-Stks-Indicant%20Sel/S06.htm#36

NAS100 Stock #18, Synopsys, fell dramatically during last week’s up market. It is now riding yellow. The stock is up 40.3% since the Mid-term Indicant signaled buy on February 22, 2003. The reason the Mid-term Indicant did not signal sell is because it is above the long-term blue curve. This stock has moved independently from the market in the past. E.g., it moved up sharply during the early days of the NASDAQ’s Short-term Bear market in 2000 and 2001. You should set your stop loss at no less than the blue curve. The current price is $3.05 above blue.

http://www.indicant.net/Members/Updates/MTI-Stks-NAS100/NS03.htm#18

Although the blue chips are less volatile than other groups of stocks, Dow #29, Eastman Kodak, is down 24.7% since the Mid-term Indicant signaled sell on June 21, 2003. As you can see, this company continues to express profound bearish behavior. The management is over-paid and most likely stifled by cronyism and credentialism. Once management decay sets in, it is nearly impossible for the company to rebound. This is a company whose days are numbered.

http://www.indicant.net/Members/Updates/MTI-Stks-DJIA/DS05.htm#29

On the other hand, Dow #1, Alcoa, bounced back last week and prompted a new buy signal. The price moved higher than its red curve price. The Mid-term Indicant will never avoid or sell a stock above its red curve price unless the Quick-term Indicant is clearly signaling troubled conditions for extreme volatility. Last week, the Mid-term Indicant signaled sell for a 25.4% profit and then re-signaled buy this weekend. As you can see from the chart, there are expressions of weariness, but it is above red and thus the buy signal. If you buy, set the prescribed stop loss. The market is now meandering between red and yellow, as opposed to hovering around bullish red.

http://www.indicant.net/Members/Updates/MTI-Stks-DJIA/DS01.htm#1

The Dow Utilities continue to hold up very well. Utility stock #5, AES, is up 346.1% since the Mid-term Indicant signaled buy on November 23, 2002. Interestingly, this stock is a technical laggard. It just achieved its red price this past weekend, but is still very short of its long-term blue price. Maintain your stop-loss at the 15% trailing if you bought it last November. If the current bull market manifests to a secular bull market, another good buy point would be at the long-term blue curve. If you bought on last November’s buy signal, then you have an excellent opportunity for dividends and a quadruple gainer over the next few years. However, if the stock misbehaves and falls dramatically, sell it on the sell signal or the prescribed stop loss. If you prefer stability and fully understand the fundamentals driving the success or failure of the company and believe in them, then by all means, enjoy your hold position for years to come.

http://www.indicant.net/Members/Updates/MTI-Stks-DJU/DJU-01.htm#5

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 your portfolio. Never love its contents. Management stupidity can wreak havoc on any stock or fund at any time.

All update information is on a single page in the web site. Click the below link to that page. You will need your login ID.

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

Quick-term and Short-term Indicant Update

The Quick-term Indicant continues to signal bear. It is doing this even though at a performance disadvantage, which it never likes. The Quick-term Indicant can generate many reversing signals very quickly, but the past two years have held some very long periods of continuously signaling the same.

The Quick-term Bear signal in April 2002 did not reverse itself until August 2002. The Quick-term Bull signal in March 2003 lasted even longer. The Quick-term Bear signal in early August was premature since the indexes never fell below yellow. The Quick-term Indicant was influenced by the Short-term Bear signal that did not last very long and the increasing threat of bearish seasonality, which has yet to materialize.

The major indices are still above yellow, but for the first time since last February, they are now threatened with negative Vector Pressure. The S&P100 and S&P500 endured a few days of negative Vector Pressure in early August, but all of the indexes rebounded shortly thereafter. Even though the market enjoyed a bullish move last week, Vector Pressure continued to decline, even in the face of increasing Force Vectors. You will notice last week’s increase kept the indexes below bullish red. The last rally propelled the market above bullish red.

Force Vectors continue to oscillate with short up and down waves. Last week saw Force Vectors increase, but from deeper in bearish domains. It has been quite some time since the Force Vectors have expressed robust movement. Last weekend, there were early signs of increasing robust movement in support of bearish expressions, but as the cycle matured, the bull in the market snorted loudly and said, “not yet.” Remember, Force Vectors and Vector Pressure are eight dimensional and cannot be plotted.

Only two of the eight major indexes are red bulls and their advantage is very slight. Overall, the eight indexes are below the bullish red curve by an average of 0.4%, which is up from last week’s 3.8%. You can intuitively see the indexes are biasing their behavior closer to bearish yellow and further from bullish red right now.

The eight major indexes are above the bearish yellow curve by 4.3%, which is significantly higher than last weeks 0.4%, but down slightly from 6.5% reported two weeks ago. The market did not fall to yellow last week, which was very possible. That contrarian behavior solidified the safety of continuing to hold your stocks and funds with hold signals. That also re-generated several buy signals. Do not be surprised with some turbulent behavior while several stocks and funds continue to seek comfort at or near their respective red and blue curves. Remember, it has been awhile since they have ventured into that position. Discomfort is natural in unfamiliar terrain.

To view the Quick-term Indicant charts, please click the following hyperlink:

http://www.indicant.net/Members/Updates/STI-Mkts/QT.htm

The Indicant Volume Indicator continued to express robust movement in last weeks up market. That is the exact opposite of last week’s robust movement on a down week. The market approached the bearish yellow curve on increasing volume and then bounced north on increasing volume. That bodes well for those desiring bullish behavior, while at the same time, some big money did move out of the market last week. However, a lot of 401K money moved into the market on the first day of the month and triggered the Short-term Bull signal.

To view the Indicant Volume Indicator, please click the following hyperlink.

http://www.indicant.net/Members/Updates/STI-Mkts/IVI.htm

The Short-term Indicant signaled bull this past week on October 1, 2003 for the Dow and the NASDAQ. Currently, the two major indexes are up by an average of 1.9% since their respective bull signals. The Dow is up 1.1%. The NASDAQ is up 2.1% since the Short-term Bull signal.

To view the Short-term Indicant charts, please click the following hyperlink:

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

A link to the Dow’s Short-term Indicant table is as follows:

http://www.indicant.net/Non-Members/ST%20Tour/ST-Table%20DJIA1995-2002.htm

A link to the NASDAQ’s Short-term Indicant table is as follows:

http://www.indicant.net/Non-Members/ST%20Tour/ST-Table%20NAS1995-2002.htm

Perspectives

Although not yet clearly visible, the major indices continue to back-off from their respective breakout curves. Remember that the recent contact with the breakout curves are the first such event in over three years. As long as the indices remain close to the breakout curves, one can be comfortable with their hold positions across the board.

To view the Perspective Charts (Quick-term Indicant, please click the following.

http://www.indicant.net/Members/Updates/STI-Mkts/QTP.htm

As stated the past two weeks, the Quick-term Volatility Index was forming a slight bias supporting bullish behavior. It continues to appear building baseline support for bullish bias. That is another reason the Quick-term Indicant continues to signal bear even with a performance disadvantage. Keep in mind the Volatility Index moves inversely to the market.

Right now, the various indicant models are mixed with a slight edge toward bullish behavior in terms of the number of bull signals. The one ominous indicator is the growing negative Vector Pressure. The Mid-term Indicant and the Short-term Indicant are signaling bull and the Quick-term Indicant is signaling bear, but at a performance disadvantage. The major concern is the negative Vector Pressure. Do not be surprised with a gentle drift to the southeast on the charts. Watch the market’s behavior around the bearish yellow curve. If it continues to bounce north, then the bull is in charge. If it moves below yellow without a positive reaction, then the bull is exhausted and selling the marginal performers would be appropriate. It is better to incur a commission expense than hold through a double-digit correction to the south, unless you prefer a long-term view. A long-term bullish view right now appears healthy.

Divergence versus Convergence

Banks, utilities, energy, gold, and the volatility indices are the only sectors with positive Vector Pressure, along with some international indices. All the others are negative. Most of them are negative for the first time since last February and for a few brief days last August. Force Vectors are increasing but from a lower position in bearish domains. With the exception of banks and utilities, this configuration supports overall bearish expressions in general equities. Again, the signals are mixed as there is a power struggle between bearish seasonality and the presidential pre-election year phenomena. The bias is in favor of non-bullish expressions as opposed to outright bearish expressions but there is an increasing threat of outright bearish expressions. These mixed signals occur from time to time, but the signals to buy, sell, hold, and avoid are always clear. Just make certain you are maintaining tight stop losses at this time of year.

Economic Outlook

The U.S. Dollar has taken it on the chin the past few weeks. The market ignored this weakness last week, while other economic data influenced the psychological behavior of many with a bullish aura. However, as soon as big money reads page two and three, it would not be surprising to see fits of depression. A weakening dollar will eventually lead to increases in interest rates. The stock market will not like that. However, such activity will most likely not unfold until after next year’s presidential elections.

http://www.indicant.net/Members/Updates/Economic/E01.htm

As you can see from the charts from the below link, commodities also continue to remain cyclically related to higher inflation. Although commodity prices remain cyclically high, most are resting. Oil prices continue to meander in a tight trading range. The stock market would prefer stability in oil prices and so far, it has been accommodating. Other commodities continue to hover at high levels. The stock market has been anticipating their eventual decline. If they do not decline, commodity prices may move to page one and set off fits of psychological depression and thus bearish stock market expressions.

http://www.indicant.net/Members/Updates/Economic/E03.htm

Interest rates are remaining at historically low levels. The three-month T-Bill continues to inch upward, along with CD’s. The Freddie Mac and Fannie Mae mortgage continued their southerly drift after exploding north the past few weeks. As long as CD’s and Money Market rates continue in their depressed state, the idea of leaving money in the those accounts will not be favorable to many. Thus, the stock market has a natural floor when money is in positions that yield less than the consumer price index. The masses will eventually see no other alternative other than the stock market. The last quarter to one-third of the masses to enter the market will lose. Many have yet to move into the market.

http://www.indicant.net/Members/Updates/Economic/E07.htm

All economic data is at the following link:

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

Fear Metrics: Economics and Terrorism

The Indicant signaled buy for Fidelity American Gold (FSAGX) - #28 on December 7, 2001. Sixty-nine weeks ago, it was up 66.1% since that buy signal. Sixty-two weeks ago, it closed up 12.0% since that buy signal. Fifty-three weeks ago, it closed up 42.9% since the MTI buy signal of December 7, 2001. Last week it closed up 77.6%, which is significantly higher than 47.1% reported eleven weeks ago. The current annualized growth rate is 41.9%, which is up from 28.8% reported eleven weeks ago. Last week, it was down, while the stock market moved north.

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% sixty-seven weeks ago since the MTI buy signal in April 2001. Sixty weeks ago, it closed up 30.1%. Last week it closed up 94.7%, which is higher than the 75.9% reported eight weeks ago. The current annualized growth rate since the April 13, 2001 buy signal is 37.7%, which is higher than 23.1% reported eleven weeks ago. Surprisingly, this fund gained ground last week.

As stated in the past you can monitor the above two funds and the options index to help you gauge fear related investments. These two funds require “avoid” signals for the market to embark upon a meaningful and lasting bull leg.

Links to both of the above funds are as follows:

http://www.indicant.net/Members/Updates/MTI-Mutual%20Funds/MF05.htm#28

http://www.indicant.net/Members/Updates/MTI-Mutual%20Funds/MF04.htm#19

Twenty-three weeks ago, the Gold and Silver Index fell below the long-term blue curve. As is typical, it bounced back above that curve the following week, forcing the Mid-term Indicant’s New Bull signal. Since the Mid-term Bull signal of May 3, 2003, this index is up 31.2%, which is up significantly from 18.8% reported ten weeks ago. The annualized growth rate is 73.0%, which is more than the 50.7% reported eleven weeks ago, but lower than 142.5% reported fifteen weeks ago. It should tumble if terrorism and inflationary threats subside. It, along with the stock market, will also tumble in the improbable event of deflation. This index was down slightly during last week’s stock market rally.

http://www.indicant.net/Members/Updates/MTI-Mkts-Index%20Options/I05.htm#25

Mid-term Indicant Positions - Major U.S. Market Indices

The Mid-term Indicant signaled new bull for two of the eight major indexes. The market is a little nervous right now on a Mid-term basis. Last weeks bullish expressions prompted the Mid-term Indicant to signal Bull for these two weaker indices; S&P100 and S&P500.

In addition to the new bull signals, six of the major indexes continue as bulls. They are up an average of 16.0% for an annualized gain of 40.0% since the MTI Bull signals an average of 20.8 weeks ago. The annualized growth rate is down from 47.9% reported fifteen weeks ago, which is when the Indicant advised of the beginning of the gentle drift to the southeast due to summer time doldrums. The recent rallies have positioned the market slightly ahead of the pre-summer-time-doldrums.

The DJIA is up 12.3% since the MTI Bull signal on March 22, 2003 The NASDAQ Composite is the strongest Mid-term Bull. It is up 32.3% since the March 22, 2003 MTI Bull signal. That annualizes to 120.1%, which is up from 80.9% reported ten weeks ago.

The Mid-term Indicant expected more new bears this past week, but instead reversed the new bears from last weekend to bulls this weekend. That is a testament to this bull’s strength, but do not be surprised at a reversal this coming week. Negative Vector Pressure is of primary concern.

To view Mid-term Indicant charts for U.S. Market Indices, please click the following link.

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

Mid-term Indicant Positions - International Markets

There were three new bull signals and no new bear signals. The three bull signals reversed last week’s three new bear signals, as the international community rebounded also last week.

In addition to the new bull signals, eighteen of the twenty-two foreign indexes tracked by the Indicant remain as Mid-term Bulls. They are up an average of 70.5% since the Mid-term Indicant signaled bull an average of 49.4 weeks ago for an annualized gain of 74.2%, which approximates the 72.9% reported fifteen weeks ago. Those markets are in a holing pattern much like the U.S. Markets.

The lone bear market, China – SSEC, is down 7.5% since the Mid-term Indicant signaled bear 10.0 weeks ago. Its decline is very gradual, but the direction continues to be southerly.

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

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