October 2005 Indicant Weekly Stock Market Report

Oct 30, 2005 Indicant.Net Weekly Update

Volume 10, Issue 05 ISSN 1526 6516 © The Indicant Stock Market Report

The Heart and Soul of Bullish Seasonality Is Here – Or Is It?

Friday’s bullish expression prevented the expiration of additional Mid-term Indicant bulls. Bullish expressions last Wednesday and last Friday did not reverse the new bear signals last weekend. The S&P500, which was designated as a bear last weekend, remains a bear. Click here to view the chart. As you can see, it remains below its Trip Line. The same is true for the S&P100, which also received a Mid-term Indicant Bear signal last weekend. Click here to view the chart. Remember, these links are more visible on the website.

Interestingly, one of the major indices was down last week. The lone bearish index last week was the NASDAQ100 Index. It was down by a mere 0.1%, while the other nine major indices were up by an average of 1.1%. The Indicant does not often engage in the past, like the general press and other stock market reports. The past is irrelevant. However, the strong bullish expression last Wednesday and Friday requires explanation with respect to the NASDAQ100’s incongruent performance last week.

Sustainable new bulls require convergent bullish expressions. New bulls do not discriminate against the weak. All new Quick-term Bulls that have mid-term and long-term breadth potential are supported with convergent bullish behavior. Convergent bullish behavior occurs when nearly all stocks, funds, and major indices move to the north at the same time. As the bull matures, the markets start discriminating and punish the weak securities.

Strong bear markets constantly punish the weak. Although there can be bearish convergence, strong bear markets have difficulty punishing stronger securities. This is not saying the NASDAQ100 is a weak index. This is saying that last week’s bullish behavior did not possess the desired bullish convergence one expects with the NASDAQ100’s bearish conclusion. Also, weak stocks did not move up last week, citing market divergence, which is not an attribute favorable to sustainable bulls.

The Quick-term attributes still do not possess bullish configurations, which is the first time this century those attributes have been missing this late into October. All Quick-term Bull signals were generated in either late September or early October since 2000. The 2001 Quick-term Bull signal resulted in a lazy quick-term burst, but at least it was consistent with the heart and soul of bullish seasonality. The strongest rolling third of the year starts in October and concludes in January. However, the Quick-term Indicant’s attributes are not configured to support this historical norm. There will be more about that later.

Expiring and Near Death of Mid-term Bulls Continued

The Dow30 remains above its Trip Line, but ever so slightly. This index epitomizes a meandering market. None of its components, with the exception of Walmart, possess much growth potential as most of those companies are dilettante infested. This index is up only 0.1% since the Mid-term Indicant signaled bull nearly a year ago on November 5, 2004. This can be frustrating to new investors, but a meanderer is okay for those of you who bought on the Mid-term Indicant buy signals in late 2002 and early 2003. As always, the Indicant does not forecast the market. It merely identifies bull and bear cycles. Although some would argue that its meager 0.1% growth in nearly a year could be qualified as a bull, there are stronger arguments, supported by arithmetic, that it is not a bear.

The Mid-term Indicant continues signaling bear for the S&P500 Index. As previously mentioned in this report, this Index remains below its incumbent Trip Line.

The NASDAQ Composite remains a Mid-term Indicant Bull. It is a healthy distance from its Trip Line. It has not meandered as much as some of the other indices. It has enjoyed a slightly more bullish direction last year. As stated last week, you may want to use the Quick-term Indicant for Exchange Traded Funds as your guide for selling or holding. The QQQQ will track closely to this index.

Last week’s bullish expression did not lift the S&P100 Index above its Trip Line. It remains a Mid-term Bear.

The NASDAQ100 Index remains a Mid-term Indicant Bull along the same lines as the NASDAQ Index. The QQQQ ETF is the same as the NASDAQ100. The QQQQ Quick-term Indicant got a little nervous last week, signaling sell and buy in the same week. However, the QQQQ Consolidated Quick-Short Indicant remained steadfast in signaling bull since the QQQQ Short-term Indicant remained bullish. As you can tell, the QQQQ has been meandering also for nearly a year.

Last week’s bullishness on Wednesday and Friday deferred the anticipated Mid-term Bear signal for the Dow Transports Index. As you can see, this index is nearing a bear signal for the first time since early 2004. This index has expressed tremendous resiliency against the onslaught of higher fuel prices.

The Dow Utilities is already below its Trip Line, but will not receive a bear signal until it is also below its bullish red curve. Remember, the stock market goes up more than it goes down. The Mid-term Indicant recognizes this and requires two reasons for signaling bear. The indices must be below both the bullish red curve and their corresponding incumbent Trip Lines. It will be a difficult decision to sell Utilities if this index receives a Mid-term Bear signal. You are locked into nice dividends from your October 2002 and March 2003 buys. Most of the stocks are triple digit gainers and it is unlikely you will endure a capital loss in the event a new bear signal is generated. You can use the ETF#12-Utilites as your short-term buy/sell guide. The Consolidated Quick-Short-term Indicant continues to signal hold for the related Exchange Traded Fund. It is up 75.8% since its April 15, 2003 buy signal. As you can see, it is nearing its Quick-term bearish yellow curve. Its Force Vector is moving north, but it has negative (bearish) Vector Pressure. The Short-term Indicant reveals little volume support for its recent bearishness. You will also notice the Indicant Volume Indicator did not show support for the current bullish cycle underway. That means very few of those who took losses in 2001 and 2002 have re-entered this sector. Thus the dilemma of the crowd.

The Dow Composites remains a Mid-term Indicant Bull on the strength of the Dow Utilities and the Dow Transports. It survived from receiving a bear signal with last week’s bullish expression. As you can see, its bullish status is hanging on by a thread.

The S&P400 has been one of the strongest Mid-term Bulls this past year. Its configuration is very similar to that of the Dow Utilities. It is already below its Trip Line and only has to fall below its bullish red curve to receive a bear signal. In that event, it will not be as difficult to sell underlying securities, as it will be for your utilities. Mid-cap-stocks do not offer the nice dividends as your 2002 and early 2003 utility dividend checks. The Mid-caps, although usually consisting of more talented management than the larger cap companies, require a strong economy. The market responded to favorable economic news late last week, but keep in the mind that is not the market’s focal point. It is focused on the March-June 2006 economy. So, do not be surprised if contemporary positive economic news accompanies bearish expressions in this index. ETF#18, S&P500 Mid-caps, which is the same as the S&P400 Index can be used for your quick-term and short-term buying/selling guidance. This Exchange Traded Fund is up 62.9% since the Consolidated Quick-Short Indicant signaled buy on April 22, 2003.

The S&P600 is very similar to that of the Dow Utilities and the S&P400 Index. It also simplifies buying and selling matters for you as it has little to offer in the way of nice dividends. This index, like the Mid-caps, is much more volatile than the larger caps. Its bull/bear cycles are much steeper in both directions. The problem is the popularity as the small caps. The more popular they become, the greater the probability of dynamic bearish expressions. That will weed out the crowd. The capital markets will not allow the majority to win in the short-term and mid-term. Use the combination of ETF#16, Small Growth, ETF#26, Small Blend, and ETF#24, Small Value, for your buying and selling guide. The links referenced in the previous sentence take you to the SQI Indicant, which is suggests fewer trades. If you prefer the Quick-term and Short-term Indicant for Exchange Traded Funds, then click here. It references to all three daily models for Exchange Traded Funds.

Bullish seasonality began last week. However, that does not mean the market will be bullish, even though historical standards favor that. Keep you eye on the daily reports to keep up with the market’s quick-term and short-term inclinations. Bullish seasonality can extend the life of the current Mid-term Bulls underway, but more bullish convergence is needed for sustainability.

Weekly Buy/Sell Summary

The Mid-term Indicant generated no buy signals and two sell signals for stocks and funds. Again, there were no sell signals for mutual funds. However, do not be surprised at increased selling activity in the event the market turns bearish next week.

In addition to the sell signals, the Mid-term Indicant is avoiding 102-stocks and funds of the 320 tracked by the Indicant. The avoided stocks and funds are down an average of 10.7% since the Mid-term Indicant signaled sell an average of 24.4-weeks ago.

There were 43-stocks and funds avoided at this time last year. The avoided stocks and funds one year ago were down an average of 33.3% since their respective sell signals an average of 53.8-weeks earlier. Two years ago, on November 1, 2003, the Mid-term Indicant was avoiding only 25-stocks and funds that were down an average of 23.9% since their respective sell signals an average of 31.6-weeks earlier. Three years ago on November 2, 2002, there were 38-avoided stocks and funds. They were down 29.6% from their respective sell signals an average of 19.1-weeks earlier.

Although there were no buy signals this weekend, the Mid-term Indicant is signaling hold for 216 of the 320 stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 104.2%. That annualizes to 53.9%. The Mid-term Indicant has been signaling hold for these 216-stocks and funds for an average of 100.5-weeks.

One year ago, the Mid-term Indicant was holding 243-stocks and funds out of the 296 tracked at that time for an average of 53.8-weeks. They were up 67.1% (annualized at 64.8%). The Mid-term Indicant was signaling hold for 261-stocks and funds of the 296 tracked two years ago on November 1, 2003. They were up by an average of 54.5% (annualized at 93.4%) since their respective buy signals an average of 30.4-weeks earlier. There were 211-stocks and funds with a hold signal on November 2, 2002. There were 42-buy signals on November 2, 2002, which was nearing the end of the 2002 buying spree.

Exchange Traded Fund Buy/Sell Summary

The SQI (Consolidated Quick-term/Short-term Indicant) generated no buy or sell signals last Friday. Read your daily reports for the Quick-term Indicant’s view of Exchange Traded Funds. The SQI is signaling hold for 26-ETF’s. They are up by an average of 46.3% (annualized at 24.9%) since their respective buy signal an average of 95.6-weeks ago. The SQI is avoiding four ETF’s. They are down an average of 0.4% since their respective sell signals an average of 4.3-weeks ago.

The Short-term Indicant generated two buy signals and no sell signals last Friday. In addition to the buy signals, the Short-term Indicant is signaling hold for 25-Exchange Traded Funds. They are up by an average of 57.3% (annualized at 31.1%) since their respective buy signals an average of 94.8-weeks ago. Although there were no sell signals, the Short-term Indicant is avoiding three ETF’s. They are down by an average of 1.8% since the respective sell signals an average of 3.7-weeks ago.

The Quick-term Indicant generated one buy signal and one sell signal last Friday. In addition to the buy signal, the Quick-term Indicant is signaling hold for 21-Exchange Traded Funds (ETF’s). They are up by an average of 38.0% (annualized at 31.7%) since their respective buy signals an average of 61.8-weeks ago. In addition to the buy signal, the Quick-term Indicant is avoiding ten ETF’s. They are down by an average of 0.7% since their respective sell signals an average of 5.1-weeks ago.

Remember, the SQI model signals bull or bear with both the Short-term and Quick-term Indicant signaling the same. Keep in mind the Quick-term Indicant is the most volatile, but it will help you with successive buying opportunities during various stages of an advancing bull.

Secular Market Blend

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

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

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

All industries, other than those that create wealth, are merely transfer agents of wealth. Some industries directly contribute to the productivity gains in the three that create wealth. That accelerates wealth building. For example, Microsoft products have helped millions improve their individual productivity. Many parlayed that improved individual performance toward improving the productivity of their respective industries. Dell is a manufacturer and out competed dilettante infested larger companies attempting to keep up with a passionate small cap that has now turned into a big cap. Watch that company, as dilettantes tend to gravitate to where the money is.

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

Those who attain capitalistic greatness threaten politicians. Many start-ups with tremendous economic opportunities could cross over into profound wealth building. Many cannot cross into capitalistic greatness due to political pressures, ranging from regulatory constraints to direct political intervention. Politicians can serve a good purpose, but the world would be better off if their influence was less than one-tenth of one-percent of today’s levels. The capital markets sense this and thus the reason for bearishness in post election years and the first half of mid-term election years.

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

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

The year, 2004, was consistent with normal bearish seasonality. Unfortunately, bearish expressions started ahead of schedule in 2004, leading to a meandering market with a gentle southeasterly trend. However, bullish expressions, which solidified in September 2004, synchronized beautifully with historical standards with a bullish outburst. The Quick-term Indicant accurately revealed an early start to bullish seasonality in late 2004. It accurately revealed the lack of respect for historical bearish standards in the August-September rolling bi-monthly period in 2004. However, the meandering market theme that began in 2004 has persisted throughout 2005. The two bear signals on October 22, 2005 are somewhat ominous when computing the normal bearishness leading to a mid-term election year. Last Wednesday’s and Friday’s bullish expression prevented additional Mid-term Indicant Bear signals.

Bullish seasonality ended on April 30, 2005. The market remains firmly situated into bearish seasonality. The market continues to configure itself to support historical standards by expressing bearish behavior, although mildly for the most part of this year. Some 2005 bullish spurts, which were consistently identified by the Quick-term Indicant as fake, were depressed by deep bearish seasonality in late 2005. As the Indicant has been stating, deep bearish seasonality exerted its influence in October 2005. This is a common attribute of a meandering market as it approached deep bearish seasonality.

Deep bearish seasonality ended last week. Normal bearish seasonality ends this coming Monday. However, those are defined by historical standards.

Although not surprising, the presidential post-election year, 2005, began with unfavorable performance to bullish seasonality standards. The Quick-term Indicant and Short-term Indicant signaled bear in January 2005. Bearish expressions followed. At first, these bearish expressions were mild, but 38-weeks ago, bearish behavior revealed greater aggression. However, that aggression was muted with several bullish spurts. Those bullish spurts were weak but possessed enough bullish steam to thwart dynamic bearish behavior. The Quick-term Indicant continued advising you those bullish spurts were without substance and not sustainable. The residual components of the prior Quick-term Bull and the constitution of the current Mid-term Bull are exhausted from having to thwart this bearish ambition. That is why deep bearish seasonality was able to exert its influence the past few weeks. This resulted in the expiration of the three-year old S&P100 Mid-term Bull.

All the Quick-term attributes remain biased with bearish tendencies even though the Mid-term Bull continues to demonstrate significant resistance to bearish ambition. As stated the past few weeks, there were some quick-term attributes shifting in support of even more bearish expressions. However, the bullish spurts have been demolished by deep bearish seasonality.

As previously stated, these bullish spurts and the uncharacteristic bullish May-July 2005 rolling quarter, and mixed September added continued life to the Mid-term Bulls. This has deferred massive selling that will unfold at the expiration of these Mid-term Bull markets. The Mid-term Indicant’s bullish seasonality starts next week. The Quick-term Indicant will keep you posted if bullish expressions are around the corner or a bear is in the offing.

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

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

Stop Loss Management

The Mid-term Indicant continues recommending a stop loss of 5% because of the Quick-term Bear. This stop loss was changed from 8% several month’s ago because of the expectation of increased bearish influence and at best, meandering behavior.

If you are up by 50% or more, you may find it advantageous to set your stop-loss at 15% from your current hold position. If you sold a stock on the stop loss and the Indicant continues to signal hold, do not buy the stock unless the Quick-term Indicant is signaling bull.

Use a 10% 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 10% trailing, whichever is greater. If your stock or fund is above the red curve and you bought at the Mid-term Buy signal, you should use the 10% trailing stop loss. If you are up by triple digit amounts and enjoy your ownership of the stock or fund, then use a 20% trailing stop loss or the slow moving blue curve price. If you really enjoy holding the stock, keep a close eye on the management. Dilettante managers have a way of worming into the business. Watch closely for cronyism and lazy-hazy management dialog. Keep your eye on lavish spending and excessive concerns about social issues. Those types are more interested in burning your money for their pleasures, as opposed to making you money. High performing companies remain focused on honoring the investments made by their shareholders.

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

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

Stock and Fund Update

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

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

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

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

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

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

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

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

Divergence versus Convergence

Bearish convergence has been dominant the past four weeks, but last Friday’s market demonstrated slight divergence. Even the contrarian energy sector expressed bearish behavior in two of those weeks. As stated two weeks ago, this degree of bearish convergence was somewhat ominous, but last weeks expressions softened this convergence somewhat.

As stated the past 24-weeks, the Mid-term Bull still has some fight in it. However, it continues expending too much energy in a defensive posture. There is not enough bullish convergence to ignite strong bullish behavior by the major indices.

Economic Conditions – Inflation, Currency, Interest Rates

There is nothing different from the last few weeks. Most currencies continue in their cyclical shift in support of continuing strength in the U.S. Dollar. This is apparent by the shift in the direction of the bearish yellow curve. This configuration suggests the Mid-term Indicant’s prognosis that commitments are made to a stronger U.S. Dollar.

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

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

There is nothing new to report on commodity prices. Commodity prices continue their bullish commitment from already stratospheric levels. This recent movement is dynamic. As stated the last several weeks, the trend in commodity prices will continue north as long as oil prices continue in that direction. The Mid-term Indicant Bull’s resilience in the face of this inflationary threat is indeed impressive. It is only a matter of time before this unrelenting pricing pressure on commodities produces unacceptable inflationary behavior.

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

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% one-hundred and seventy-five weeks ago since the MTI buy signal in April 2001. One-hundred and sixty-eight weeks ago, it closed up 30.1%. Last week it closed up 184.5%. The current annualized growth rate since the April 13, 2001 buy signal is 40.0%. After falling sharply 19-weeks ago, it bounced north in 15-weeks of the past 19-weeks. This fund moved north last week.

Fidelity Gold, Fund #28, is up 11.7% since the Mid-term Indicant signaled buy on August 26, 2005. That annualizes to 66.6%, which is not an impossible performance level if oil prices continue to mount. This fund should do well in the event this market turns into a 1970’s type of market. If oil reaches $100 per barrel, do not be surprised at gold moving up by triple digit amounts. This fund moved slightly to the north last week.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 248.1% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 76.4%. Vanguard Energy #18, VGENX, is up 130.0% (annualized at 50.0%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 97.7% (annualized at 50.8%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 106.7% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 47.8%. These energy related funds moved up, some significantly, last week.

These funds should do well even if the market turns extremely bearish. Continue to hold them. Bearish behavior the past two weeks is due mostly to short-term profit taking.

The SQI (Consolidated Short-term and Quick-term Indicant) model signaled buy for the GLD-ETF#11 on August 3, 2005. It is up 8.59% since then. It is annualized at 35.5%.

The SQI signaled buy for ETF#03 – Energy and Natural Resources on March 26, 2003. It is up 124.5% (annualized at 47.3%).

Quick-term and Short-term Indicant Update

Read your daily reports. The Quick-term Indicant continues signaling bear since January 4, 2005. The eight major indices are up 1.3% since then. The Short-term Indicant continues signaling bear since January 2005. The Dow is down 0.7% and the NASDAQ is up a mere 0.5% since then.

The NYSE Indicant Volume Indicator continues moving in a robust direction. Much of this robust configuration has been concurrent with bearish expressions. The past four weeks increased robustness and the market’s bearish behavior supports an increased probability of dynamic bearishness. You have seen some of that the past four weeks.

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

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

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

Eight of the ten major indices are bulls. They are up by an average of 41.8% since the MTI-RYS signaled bull an average of 109-weeks ago. That annualizes to 19.9%. The strongest bull is the Dow Utilities. It is up 108.1% since the October 25, 2002 bull signal. The utilities rebounded slightly to the north last week, after falling in each of the four preceding weeks. It is believed they will not be as prone to profit taking as other sectors since many of you are locked into some nice dividend yields from your October 2002 buys. Your utility hold positions remain safe, but keep your eye on this particular index. Severe bears show little mercy, regardless of dividend yields, while this index would be the mildest in the event a dynamic bearish cycle unfolds.

The Mid-term Indicant Dow Jones Industrial Average performance is now at $31,512,484. That beats buy and hold performance of $1,592,652 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $157,537. That beats buy and hold’s $115,544 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $174,862. That beats buy and hold’s $72,465 on an October 18, 1985 $10,000 investment. The Mid-term Indicant’s RYS model beats buy and hold by 1,878.6%, 36.3%, and 141.3%, respectively, for these indices as of this past week.

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

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

Mid-term Indicant Positions - NASDAQ100 Stocks

Click here to see NASDAQ100 report card history.

Click the following link to view this group of stocks:

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

Mid-term Indicant Positions - Dow Jones 30 Industrial Stocks

Click here to see Dow 30 report card history.

Click the following hyperlink to view this group of stocks:

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

Mid-term Indicant Positions - Dow Jones 15 Utility Stocks

Click here to see Dow Utilities Report Card history.

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

Mid-term Indicant Positions - Indicant Selected Stocks

Click here to see Indicant Select Stock Report Card history.

Click the following hyperlink to view this group of stocks:

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

Mid-term Indicant Positions - Mutual Funds

Click here to see Mutual Fund Report Card history.

ProFunds Ultra Short is down 17.0% since the Mid-term Indicant signaled buy on April 15, 2005. Since the Quick-term Indicant continues to signal bear, this fund can still be bought since it is cheaper than the buy signal price. Remember, this fund moves inversely to the market by exponential amounts. If the market turns deeply bearish, this fund will do well. If the market meanders, this fund will frustrate you. If you buy this fund, make certain you sell it when the Quick-term Indicant signals bull. This fund has been hurt by recent bullish spurts, but should do well in the next few weeks. Regardless of this fund’s performance in the next few weeks, expect a sell signal in the next few weeks since deep bearish seasonality has concluded. The resumption of bullish seasonality also threatens this fund’s performance. So far, the Quick-term attributes are not supportive of bullish behavior during the impending bullish seasonal period.

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

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

Long Term Indicant Positions - Dow Jones Industrial Average

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

The Dow is up 259.4% (annualized at 18.5%) since the Long-term Indicant signaled bull 730-weeks ago. Economic data is the primary influence on the Long-term Indicant. The recession, deflation, and inflation have not been strong enough to signal bear. A link to the Long-term Indicant is below:

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

Indicant Conclusion

As stated in the past several weekly reports, bullish spurts since the beginning of the year have been phony. The July bullish spurt demonstrated some substance, but as stated in the last 25-weekly reports, there is little likelihood of bullish sustainability. The Quick-term Indicant continues signaling bear, although the market has been meandering. Deep bearish seasonality began nine weeks ago, based on historical standards. It is over and it performed consistently with historical standards by expressing aggressive bearish behavior. The Quick-term Indicant’s attributes shifted from neutrality to a bearish bias five weeks ago. The market is down significantly since that shift. Read your daily reports as the market is configured for a directional shift one way or the other in the next few weeks. Performance the past four weeks added bearish confidence.

As stated in the last 24-weekly reports, the market is now enduring bearish seasonality. That coupled with the bearish tradition of a presidential post election year, suggests bearish expectations. The July-October rolling quarter is historically horrendously bearish. Deep bearish seasonality has concluded and normal bearish seasonality concludes this coming Monday. The various Indicant models will keep you posted if historical standards will be honored or if a variance from this standard is underway. Current configurations are favoring historical standards. The Quick-term Indicant’s bias continues favoring bearish expectations.

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

The daily updates are on the following link.

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

Hyperlinks

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

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

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

Happy Investing,

www.indicant.net

10/30/05

Oct 23, 2005 Indicant.Net Weekly Update

Volume 10, Issue 04 ISSN 1526 6516 © The Indicant Stock Market Report

Dear Indicant Members:

This Week’s Report

Deep Bearish Seasonality Concludes - Three-Year Old Bulls Expire

As stated in last Wednesday’s Indicant Daily Report, the Quick-term Indicant signaled bull in every October of this century. The first one occurred on October 4, 2001, after 911. This Quick-term Bull lacked height to it. Presidential post-election-year normalcy victimized that Quick-term Bull.

The second Fourth Quarter Quick-term Bull occurred in October 2002, which coincided with the mid-term election year phenomenon of finding market bottoms. The S&P100 Index enjoyed a Mid-term Indicant Bull signal on October 11, 2002. Click here to see the chart. Remember, some email programs will not receive this link. Just click the links on the top of this page to read this report on the website. The links display better for you. If you are a serious stock market investor, you will want to look at this chart and the links in the next paragraph.

The Mid-term Indicant signaled bear this weekend for the S&P100 Index. This Mid-term Indicant Bull lasted three-years and one week. As you can see from this chart, deep bearish seasonality was harmless in 2003, during the early stages of the Mid-term Indicant bull market. You will also notice that deep bearish seasonality was somewhat bearish in 2004’s meandering market. Many of you recall, and probably not with feelings of pleasantry, during 2004, the Indicant consistently advised 2004’s market was a meanderer with a gentle drift to the southeast. As you can, that is exactly what happened. There will be more about that later in this report under the Secular overview section.

The third Fourth Quarter Quick-term Bull Signal also occurred in October 2003, just like clockwork. It moved nicely along with the expectations of the heart and soul of bullish seasonality. That was a nice Quick-term Bull. It was so predictable and easy to detect that many of you made quite a bit of money on that one.

The fourth Fourth Quarter Quick-term Bull Signal occurred in September 2004, which was a little earlier than normal. It was beautiful. The market tried to trick most with its early start, but we detected it and enjoyed it. It was the only significant Quick-term Indicant bullish movement since 2003. That particular Quick-term Bull was the only bullish part of 2004. Without that Quick-term Bull, the 2004 market would have been down for the year, which is inconsistent with the standards of a presidential election year. However, the old money politics works hard to keep their incumbent pals in political power during presidential election years. It was an easy Quick-term Bull to detect. The crowd was fooled since September is typically bearish. The market loves to fool the masses and defeat the lethargic/passive investors. That is the beautiful part of capitalism. It is consistent with the laws of nature.

Another Mid-term Bull expired this weekend. The S&P500 dipped below the newly assigned Trip Line, which dealt the deathblow.

Fundamentally, there should be no surprises about this. The Producer Price Index is not behaving nicely. Its recent performance threatens everything bull markets cannot endure; rising interest rates and excessive inflation. Clicking the aforementioned link in this paragraph will take you to a chart that proves the point. A rising Producer Price Index typically slashes bullish enthusiasm. The differential monies that would normally flow into the equity markets flow elsewhere. That reduces the demand for stocks while the supply increases. That depresses stock prices.

However, the market is not always interested in conforming to fundamental expectations. This time, it appears keen on not fighting the curse of all curses; rising interest rates and excessive inflation.

Expiring and Near Death of Mid-term Bulls

Trip Line Assignments were made to the Mid-term Indicant for the ten major indices, which is a standard practice at the conclusion of deep bearish seasonality. The Trip Lines were assigned under the rules of the BRS-2 Cycle. The BRS-2 Cycle is deep bearish seasonality. That is a period when the stock market is bearish on a historical basis. History repeated this year with bearish behavior. You should not have been surprised, as the meanderer expended too much energy fighting off fundamental curses and bearish ambition. Each of the below link to the charts for your viewing of the new Trip Lines. Remember, if the links do not work from your email program, click the link at the top of this page that will take you directly to related website page.

The Dow30 Trip Line was assigned under Rule C. As you can see, the Dow30 is already below its bullish red curve. The newly assigned Trip Line is somewhat elevated. If next week is bearish, expect a bear signal.

The S&P500 Trip Line was assigned under Rule C. As previously mentioned the S&P500 received a bear signal this weekend. It fell below its Trip Line.

The NASDAQ Composite Trip Line was assigned under Rule C. You will notice the algorithm and heuristic has produced a fairly wide gap between the current price and the next bear signal. Although this protects somewhat against a loss, the meanderer did not produce a profit situation for you. If your stocks and funds parallel the activity of this index, you may want to use the Quick-term Indicant for Exchange Traded Funds as your guide for selling or holding.

The S&P100 Index Trip Line was assigned under Rule C. This dilettante infested index, along with the S&P500 Index, was the first to receive bear signals. The combination of lethargy and/or high energy stupidity has the same effect. Although most investors do not understand this, the market always smells the incompetence.

The NASDAQ100 Index Trip Line was assigned under Rule C. This index is very similar to the NASDAQ Index.

The Dow Transports Index Trip Line was assigned under Rule C. As you can see, this index is nearing a bear signal for the first time since early 2004.

The Dow Utilities Trip Line was assigned under Rule A. This is the most powerful bullish index. Even it did not avoid the gruel results of deep bearish seasonality. However, notice its Trip Line is elevated quite significantly. If it falls to bear levels, the Mid-term Indicant will accelerate sell signals. The tough decision for some of you will be the trade-off from the nice dividends you have been receiving against the possible capital losses. One idea would be to lower your stop loss so that you will not lose your triple digit capital gains. Calculate how long it would take for the dividends to recoup a 20% drop for those of you on a five year plan. For those of you on a twenty-plus year plan, holding is highly recommended if you bought on the Mid-term Buy Signals in October 2002 and March 2003. You are enjoying those nice yields based on the depressed prices at the time you bought in late 2002 and early 2003.

The Dow Composites Trip Line was assigned under Rule C. It barely fell into the Red Hybrid category. As you can see, the Trip Line and the Bullish Red curve are approximates the value of one another. If the market is bearish next week, it will get a bear signal. This particular index is important in gauging convergent/divergent behavior. It is an excellent indicator of the market’s overall interpretation of the economy’s contribution to corporate profits for mediocre managed driven companies.

The S&P400 Trip Line was assigned under Rule A. This index remains a Red Bull, but barely. Mid-caps was the most bullish during most of this year. It even out-paced the normally stronger small-caps. As you can see, it is on the verge of receiving a bear signal.

The S&P600 Trip Line was assigned under Rule A. This powerfully bullish index remains a Red Bull. If it had become a hybrid red bull, the Trip Line would be lower than the newly assigned Trip Line. This threatens the longevity of this bull. This index represents a disproportionate number of managers who have a passion for what they manage. The capital markets typically reward those types than the dilettante infested managed companies. If you are holding a triple digit winner from this sector, you may not want to sell. You may want to adopt a strategy similar to that of the Utility investor, even if you are not receiving healthy dividend checks every quarter. Use the combination of ETF#16, Small Growth, ETF#26, Small Blend, and ETF#24, Small Value, as you buying and selling guide. The links referenced in the previous sentence take you to the SQI Indicant, which is offers fewer trades. If you prefer the Quick-term and Short-term Indicant for Exchange Traded Funds, then click here. It references to all three daily models for Exchange Traded Funds.

The Mid-term Indicant’s Bullish seasonality begins next week. Historical standards support a bullish response to deep bearish seasonality. Such a response can reverse the two new bear signals and defer new bear signals for the other indices. Normal bullish seasonality begins in a few weeks. So, do not be surprised at bullish obstinacy to the recent bearish onslaught. However, make absolutely certain you read your daily reports. They will keep you informed about the market’s condition and bias. If the bias remains bearish, you should know how to react.

Weekly Buy/Sell Summary

The Mid-term Indicant generated no buy signals and three sell signals for stocks and funds. Again, there were no sell signals for mutual funds. However, do not be surprised at increased selling activity in the event the market turns bearish next week.

In addition to the sell signals, the Mid-term Indicant is avoiding 100-stocks and funds of the 320 tracked by the Indicant. The avoided stocks and funds are down an average of 11.3% since the Mid-term Indicant signaled sell an average of 24.0-weeks ago.

There were 49-stocks and funds avoided at this time last year. The avoided stocks and funds one year ago were down an average of 33.0% since their respective sell signals an average of 52.3-weeks earlier. Two years ago, on October 25, 2003, the Mid-term Indicant was avoiding only 22-stocks and funds that were down an average of 23.8% since their respective sell signals an average of 31.6-weeks earlier. Three years ago on October 25, 2002, there were 75-avoided stocks and funds. They were down 34.0% from their respective sell signals an average of 17.5 weeks earlier.

Although there were no buy signals this weekend, the Mid-term Indicant is signaling hold for 218 of the 320 stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 103.0%. That annualizes to 54.1%. The Mid-term Indicant has been signaling hold for these 218-stocks and funds for an average of 98.9-weeks.

One year ago, the Mid-term Indicant was holding 239-stocks and funds out of the 296 tracked at that time for an average of 52.3-weeks. They were up 64.7% (annualized at 63.0%). The Mid-term Indicant was signaling hold for 261-stocks and funds of the 296 tracked two years ago on October 25, 2003. They were up by an average of 50.6% (annualized at 89.5%) since their respective buy signals an average of 31.6-weeks earlier. There were 178-stocks and funds with a hold signal on October 25, 2002. Most of that was energy-related stocks as they were bullish before the October-November 2002 buying spree. There were 37-buy signals on October 25, 2002, which was mired in 2002 buying spree. One week earlier on October 17, 2002, there were an impressive 107 buy signals for stocks and funds. Even the bad companies got buy signals, which is a consistent attribute of the birth of sustainable bull markets.

Exchange Traded Fund Buy/Sell Summary

The SQI (Consolidated Quick-term/Short-term Indicant) generated one sell signal this past week. That means both the Quick-term and Short-term Indicants were signaling avoid. Read your daily reports for the Quick-term Indicant’s view of Exchange Traded Funds. The SQI is signaling hold for 26-ETF’s. They are up by an average of 44.4% (annualized at 24.2%) since their respective buy signal an average of 94.6-weeks ago. The SQI is avoiding four ETF’s. They are down an average of 1.6% since their respective sell signals an average of 3.3 weeks ago.

The Short-term Indicant is signaling hold for 27-Exchange Traded Funds. They are up by an average of 52.8% (annualized at 29.6%) since their respective buy signals an average of 91.7-weeks ago. The Short-term Indicant is avoiding three ETF’s. They are down by an average of 2.6% since the respective sell signals an average of 2.7-weeks ago.

The Quick-term Indicant is signaling hold for 21-Exchange Traded Funds (ETF’s). The are up by an average of 36.1% (annualized at 27.0%) since their respective buy signals an average of 68.8-weeks ago. The Quick-term Indicant is avoiding nine ETF’s. They are down by an average of 1.6% since their respective sell signals an average of 4.8-weeks ago.

Remember, the SQI model signals bull or bear with both the Short-term and Quick-term Indicant signal the same. Also, keep in mind the Quick-term Indicant is the most volatile, but it will help you with successive buying opportunities during various stages of an advancing bull.

Secular Market Blend

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

Politicians are threatened by those who attain capitalistic greatness. Many start-ups with tremendous economic opportunities could cross over into profound wealth building. Many cannot cross into capitalistic greatness due to political pressures, ranging from regulatory constraints to direct political intervention. Politicians can serve a good purpose, but the world would be better off if their influence was less than one-tenth of one-percent of today’s levels. The capital markets sense this and thus the reason for bearishness in post election years and the first half of mid-term election years.

Although not surprising, 2005 began with unfavorable performance to bullish seasonality standards. The Quick-term Indicant and Short-term Indicant signaled bear in January 2005. Bearish expressions followed. At first, these bearish expressions were mild, but 37-weeks ago, bearish behavior revealed greater aggression. However, that aggression was muted with several bullish spurts. Those bullish spurts were weak but possessed enough bullish steam to thwart dynamic bearish behavior. The residual components of the prior Quick-term Bull and the constitution of the current Mid-term Bull are exhausted from having to thwart this bearish ambition. That is why deep bearish seasonality was able to exert its influence the past few weeks. This resulted in the expiration of the three year old S&P100 Mid-term Bull.

All the Quick-term attributes remain biased with bearish tendencies even though the Mid-term Bull continues to demonstrate significant resistance to bearish ambition, until October 22, 2005. As stated the past few weeks, there were some quick-term attributes shifting in support of even more bearish expressions. However, the bullish spurts have been demolished by deep bearish seasonality.

The presidential post election year is, historically, the most bearish year on the four-year presidential election cycle. Like all things, there are exceptions to historical normalcy. As this year progresses, the various Indicant models will advise if 2005 is an exception or normal. So far, this year appears normal; that is bearish. The Quick-term and Short-term Indicant continue signaling bear, as they have been doing since early January 2005. The Mid-term and Long-term Indicant models continue to signal bull, but those long-standing bulls are being threatened by this year’s deep bearish seasonality, which expires next weekend. Two Mid-term Bulls expired this past weekend.

As previously stated, these bullish spurts and the uncharacteristic bullish May-July 2005 rolling quarter, and mixed September added continued life to the Mid-term Bulls. This has deferred massive selling that will unfold at the expiration of these Mid-term Bull markets. As stated the past few months, do not be surprised with increased bearish behavior over the next few weeks. However, the Mid-term Indicant’s bullish seasonality starts next week. The Quick-term Indicant will keep you posted if bullish expressions are around the corner or a bear is in the offing.

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

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

Stop Loss Management

Stock and Fund Update

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

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

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

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

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

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

Divergence versus Convergence

Bearish convergence has been dominant the past three weeks. Even the contrarian energy sector expressed bearish behavior in two of those weeks. As stated last week, this degree of bearish convergence is somewhat ominous.

As stated the past 23-weeks, the Mid-term Bull still has some fight in it. However, it continues expending too much energy in a defensive posture. There is not enough bullish convergence to ignite strong bullish behavior by the major indices.

Economic Conditions – Inflation, Currency, Interest Rates

There is nothing different from last week. Most currencies continue in their cyclical shift in support of continuing strength in the U.S. Dollar. This is apparent by the shift in the direction of the bearish yellow curve. This configuration suggests the Mid-term Indicant’s prognosis that commitments are made to a stronger U.S. Dollar.

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

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% one-hundred and seventy-four weeks ago since the MTI buy signal in April 2001. One-hundred and sixty-seven weeks ago, it closed up 30.1%. Last week it closed up 181.5%. The current annualized growth rate since the April 13, 2001 buy signal is 39.6%. After falling sharply 18-weeks ago, it bounced north in 14-weeks of the past 18-weeks. It has fallen sharply in three of the past four weeks.

Fidelity Gold, Fund #28, is up 10.0% since the Mid-term Indicant signaled buy on August 26, 2005. That annualizes to 64.3%, which is not an impossible performance level if oil prices continue to mount. This fund should do well in the event this market turns into a 1970’s type of market. If oil reaches $100 per barrel, do not be surprised at gold moving up by triple digit amounts. This fund moved down the past two weeks.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 239.2% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 74.3%. Vanguard Energy #18, VGENX, is up 121.2% (annualized at 46.9%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 84.7% (annualized at 44.5%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 96.8% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 43.7%. These energy related funds are down significantly the past two weeks, as a part of bearish convergence.

These funds should do well even if the market turns extremely bearish. Continue to hold them. Bearish behavior the past two weeks is due mostly to short-term profit taking.

The SQI (Consolidated Short-term and Quick-term Indicant) model signaled buy for the GLD-ETF#11 on August 3, 2005. It is up 6.9% since then. It is annualized at 31.3%.

The SQI signaled buy for ETF#03 – Energy and Natural Resources on March 26, 2003. It is up 114.0% (annualized at 43.6%).

Quick-term and Short-term Indicant Update

Read your daily reports. The Quick-term Indicant continues signaling bear since January 4, 2005. The eight major indices are up 0.2% since then. The Short-term Indicant continues signaling bear since January 2005. The Dow is down 2.4% and the NASDAQ is up a mere 0.1% since then.

The Indicant Volume Indicator continues moving in a robust direction. Much of this robust configuration has been concurrent with bearish expressions. The past three weeks increased robustness and the market’s bearish behavior supports an increased probability of dynamic bearishness. You have seen some of that the past three weeks.

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

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

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

Eight of the ten major indices are bulls. They are up by an average of 39.7% since the MTI-RYS signaled bull an average of 108-weeks ago. That annualizes to 19.1%. The strongest bull is the Dow Utilities. It is up 103.2% since the October 25, 2002 bull signal. The utilities fell for the fourth consecutive week. They succumbed to the influences of deep bearish seasonality the past three weeks. It is believed they will not be as prone to profit taking as other sectors since many of you are locked into some nice dividend yields from your October 2002 buys. Your utility hold positions remain safe, but keep your eye on this particular index. Severe bears show little mercy, regardless of dividend yields.

The Mid-term Indicant Dow Jones Industrial Average performance is now at $30,944,350. That beats buy and hold performance of $1,564,118 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $157,537. That beats buy and hold’s $115,544 on a December 31, 1971 $10,000 investment. The MTI - NASDAQ is at $174,220. That beats buy and hold’s $72,299 on an October 18, 1985 $10,000 investment. The Mid-term Indicant’s RYS model beats buy and hold by 1,878.5%, 36.3%, and 141.3%, respectively, for these indices as of this past week.

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

Mid-term Indicant Positions - NASDAQ100 Stocks

Click here to see NASDAQ100 report card history.

Click the following link to view this group of stocks:

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

Mid-term Indicant Positions - Dow Jones 30 Industrial Stocks

Click here to see Dow 30 report card history.

Click the following hyperlink to view this group of stocks:

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

Mid-term Indicant Positions - Dow Jones 15 Utility Stocks

Click here to see Dow Utilities Report Card history.

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

Mid-term Indicant Positions - Indicant Selected Stocks

Click here to see Indicant Select Stock Report Card history.

Click the following hyperlink to view this group of stocks:

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

Mid-term Indicant Positions - Mutual Funds

Click here to see Mutual Fund Report Card history.

ProFunds Ultra Short is down 17.8% since the Mid-term Indicant signaled buy on April 15, 2005. Since the Quick-term Indicant continues to signal bear, this fund can still be bought since it is cheaper than the buy signal price. Remember, this fund moves inversely to the market by exponential amounts. If the market turns deeply bearish, this fund will do well. If the market meanders, this fund will frustrate you. If you buy this fund, make certain you sell it when the Quick-term Indicant signals bull. This fund has been hurt by recent bullish spurts, but should do well in the next few weeks. Regardless of this fund’s performance in the next few weeks, expect a sell signal in the next few weeks after deep bearish seasonality and the resumption of bullish seasonality. So far, the Quick-term attributes are not supportive of bullish behavior during the impending bullish seasonal period.

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

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

Long Term Indicant Positions - Dow Jones Industrial Average

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

The Dow is up 252.9% (annualized at 18.0%) since the Long-term Indicant signaled bull 729-weeks ago. Economic data is the primary influence on the Long-term Indicant. The recession, deflation, and inflation have not been strong enough to signal bear. A link to the Long-term Indicant is below:

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

Indicant Conclusion

As stated in the past several weekly reports, bullish spurts since the beginning of the year have been phony. The July bullish spurt demonstrated some substance, but as stated in the last 24-weekly reports, there is little likelihood of bullish sustainability. The Quick-term Indicant continues signaling bear, although the market has been meandering. Deep bearish seasonality began eight weeks ago, based on historical standards. It is over and it performed consistently with historical standards by expressing aggressive bearish behavior. The Quick-term Indicant’s attributes shifted from neutrality to a bearish bias four weeks ago. The market is down significantly since that shift. Read your daily reports as the market is configured for a directional shift one way or the other in the next few weeks. Performance the past three weeks added bearish confidence.

As stated in the last 23-weekly reports, the market is now enduring bearish seasonality. That coupled with the bearish tradition of a presidential post election year, suggests bearish expectations. The July-October rolling quarter is historically horrendously bearish. Keep in mind the market has occasionally aborted historical standards. The various Indicant models will keep you posted if historical standards will be honored or if a variance from this standard is underway. Current configurations are favoring historical standards. The Quick-term Indicant’s bias continues favoring bearish expectations.

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

The daily updates are on the following link.

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

Hyperlinks

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

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

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

Happy Investing,

www.indicant.net

10/23/05

Oct 16, 2005 Indicant.Net Weekly Update

Volume 10, Issue 03 ISSN 1526 6516 © The Indicant Stock Market Report

Dear Indicant Members:

This Week’s Report

Is The Meanderer Tiring – Part 2?

Last week’s report referred to the bearish energy sector. A bearish energy sector, coupled with overall market bearishness is indeed ominous. There are several interpretations of this bearish convergence among all sectors.

The more optimistic view is simply profit-taking selling in the energy sector. Short-term traders who bought ahead of the hurricanes are the type who sells for their short-term profits. Looking at State Street Global Energy Fund supports that optimistic view. A quick look at the chart does not reveal systemic bearish configurations. This fund is up 253.2% since the Mid-term Indicant signaled buy on August 16, 2002. The chart reveals intuitively that a decline in price is not out of order. It looks natural. Technically, it remains above it bullish red curve and the long-term lag line. Although this fund is down the last two weeks, technical factors are not supportive of a sell signal.

The market smells unfavorable economic activity for 2006. This is the more pessimistic view. Although there is good reason to view the next six to nine months with fundamental bearishness, the Mid-term Indicant continues signaling bull. However, trip line assignments next weekend will be more elevated than the current ones. Do not be surprised at bear signals in the next few weeks, even though the market is about to enter bullish seasonality.

Technically, which has no optimism or pessimism, deep bearish seasonality finally exerted its historical influences on the market. Review the Mid-term Indicant charts. Just click the index below to view each of the charts. You will notice the white line on the charts. It represents deep bearish seasonality. As you can see, all of the indices succumbed to deep bearish seasonality.

DJIA is very near the trip line (the green line extending horizontally on the chart). As you can see, the Dow has been meandering for nearly two years. It is actually down from January 2004. The bull leg lasted from March 2003 through January 2004 or about ten months. A new trip line will be constructed at the conclusion of the current deep bearish cycle next weekend. The Dow is currently in a neutral cycle since it is between the bullish red curve and the bearish yellow curve. If it remains that way next week, the new trip line will be assigned from the minimum point of the current deep bearish cycle. If the market does not move north the following week, the Mid-term Indicant will signal bear for the Dow.

The S&P500 fell to neutral domains last week. It dipped below its bullish red curve under the influence of deep bearish seasonality. This puts it in the same category with the Dow. Without a bullish response after the conclusion of the current deep bearish cycle, the Mid-term Indicant will signal bear.

The NASDAQ Index also fell into neutral territory this past week. If it remains there next week, its new trip line will also be constructed off the deep bearish minimum point. That will elevate the next bear signal point. Fundamentally, there is little reason for the market to see next year as being economically bullish. However, the Mid-term Indicant will wait until this index moves below whatever incumbent trip line is underway. You will notice the NASDAQ is also down from January 2004. Interestingly, the NASDAQ moved north during deep bearish seasonality in 2004. Many of you recall the Quick-term and Short-term Indicant models signaling bull early in last year’s fourth quarter. The market moved solidly to the north for about four months and then petered out into a meandering market since then.

The S&P100 Index is up 30.2% since the Mid-term Indicant bull signal on October 11, 2002. It is the oldest bull leg of all the Mid-term Indicant bulls. It is 157 weeks old, which is an above average bull leg in terms of breadth. Its magnitude is not that impressive with its annualized gain of only 10% since the birth of this Mid-term Indicant bull. It is also in neutral territory. You will notice deep bearish seasonality exerted its influence in late 2004. It is again doing it this year.

The NASDAQ100 also fell victim to deep bearish seasonality. It barely dropped into neutral territory last week, but remains a healthy distance from its trip line. Unfortunately, without the typical fourth quarter bullish expression, the Mid-term Indicant will most likely signal bear after the new trip line is assigned.

The Dow Transports has continued to be impressive. Rising fuel costs appears to be finally taking its toll on this sector. It is barely a red bull. It is also vulnerable to succumbing to the normal bearish leading into the mid-term election year.

The Dow Utilities looks like the tech stocks of the late 1990’s. Well, maybe its rise is not as impressive of the 1990’s tech stocks, but certainly containing more financial and economic substance. This has consistently been the strongest index since October 2002. It is up 107.1% since the Mid-term Indicant signaled bull on October 25, 2002. Its annualized gain of 35.9% is something that most of you can live with. As you can see from the chart, it also succumbed to the influence of deep bearish seasonality. As you can see from the chart, this is a powerful red bull. However, its impending trip line assignment, if it remains a red bull will be constructed for the maximum point of the current deep bearish cycle. That significantly elevates the bear signal potential. However, red bulls cannot receive a bear signal until the index falls below both the trip line and the bullish red curve. You will notice a similar procedure in late 2004. You can see the trip line assignment at the deep bearish seasonality maximum point. You will also notice this index never threatened the trip line or the red curve in 2004, as it galloped to the north with dynamic gusto.

The Dow Composites remains a red bull, but barely. Its bullish strength has been derived from the Dow Utilities and the Dow Transports. Although this index is redundant to the Dow30, Dow Transports, and the Dow Utilities, tracking it helps gauge the market’s overall economic perception from the three perspectives, combined.

The S&P400, which has been the most bullish this year on a Quick-term Indicant basis, also succumbed to deep bearish seasonality. It has attributes similar to the Dow Composites.

The S&P600, which is typically the most obstinate against bearish ambitions, also succumbed to deep bearish seasonality. It also remains a red bull.

Deep bearish seasonality expires next weekend. New trip lines will be assigned next weekend. If the market does not engage in its normal fourth quarter bullish expression, several of the Mid-term Indicant bulls will perish. That will foster increased selling of funds and stocks. Exchange Traded Funds, as tracked by the Quick-term and Short-term Indicant will also influence the selling activity.

So far this century, there has been a market rally starting in October of each year. That phenomenon is supported by historical standards. However, it does not occur every year. The Quick-term and Short-term Indicant models have detected these bullish rallies in plenty of time for you to enjoy most of those gains.

In addition to the optimistic, pessimistic, and technical views of stock market inclinations, a third phenomenon could be underway. The congressional mid-term election year, although bullish, typically finds a market bottom. That historical phenomenon needs a bearish cycle between now and the first quarter of next year. If that occurs, historical standards would be supported, if the second half of 2006 were bullish.

Overall, this meandering market that we have been discussing off and on since January 2004 may be tiring. It has been battling bearish ambitions with significant energy for almost two years. It may, indeed, be tiring. That lends support to increased bearish behavior. Read the daily reports to keep up with this next week.

Weekly Buy/Sell Summary

The Mid-term Indicant generated two buy signals and three sell signals for stocks and funds. Again, there were no sell signals for mutual funds.

In addition to the sell signals, the Mid-term Indicant is avoiding 97-stocks and funds of the 320 tracked by the Indicant. The avoided stocks and funds are down an average of 12.0% since the Mid-term Indicant signaled sell an average of 24.0-weeks ago.

There were 52-stocks and funds avoided at this time last year. The avoided stocks and funds one year ago were down an average of 33.1% since their respective sell signals an average of 51.5-weeks earlier. Two years ago, on October 11, 2003, the Mid-term Indicant was avoiding only 24-stocks and funds that were down an average of 22.5% since their respective sell signals an average of 31.0-weeks earlier. Three years ago on October 11, 2002, there were 212-stocks and funds being avoided. They were down 25.6% from their respective sell signals an average of 11.3 weeks earlier. There were 27-buy signals on October 11, 2002, which was the beginning of the late 2002 buying spree.

In addition to the buy signals, the Mid-term Indicant is signaling hold for 218 of the 320 stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 103.2%. That annualizes to 54.8%. The Mid-term Indicant has been signaling hold for these 218-stocks and funds for an average of 97.9-weeks.

One year ago, the Mid-term Indicant was holding 240-stocks and funds out of the 296 tracked at that time for an average of 51.5-weeks. They were up 63.7% (annualized at 63.5%). The Mid-term Indicant was signaling hold for 263-stocks and funds of the 296 tracked two years ago on October 11, 2003. They were up by an average of 52.9% (annualized at 98.7%) since their respective buy signals an average of 31.0-weeks earlier. There were only 52-stocks and funds with a hold signal on October 11, 2002. Most of that was energy-related stocks as they were bullish before the October-November 2002 buying spree. As previously stated, the Mid-term Indicant signaled buy for 27-stocks and funds on October 11, 2002.

Exchange Traded Fund Buy/Sell Summary

The SQI (Consolidated Quick-term/Short-term Indicant) generated one sell signal this past week. That means both the Quick-term and Short-term Indicants were signaling avoid. The ETF receiving the sell signal was ETF#25, DVY. This is the Dow’s selection of Mid-cap value. Keep in mind the mid-caps has been the most bullish sector this year, but succumbed to deep bearish seasonality last week.

Secular Market Blend

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

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

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

The political industry reduces wealth. Politicians continually attempt to redistribute wealth. They promote “middle class” attainment. The larger the middle class, the more power they have. The communists tried that same thing in the past, resulting in poverty of 99% of their populace. Politicians are threatened by those who attain capitalistic greatness. Many start-ups with tremendous economic opportunities could cross over into profound wealth building. Many cannot cross into capitalistic greatness due to political pressures, ranging from regulatory constraints to direct political intervention. Politicians can serve a good purpose, but the world would be better off if their influence was less than one-tenth of one-percent of today’s levels. The capital markets sense this and thus the reason for bearishness in post election years and the first half of mid-term election years.

The year, 2004, was consistent with normal bearish seasonality. Unfortunately, bearish expressions started ahead of schedule in 2004. However, bullish expressions, which solidified in October 2004, synchronized beautifully with historical standards with a bullish outburst. The Quick-term Indicant accurately revealed an early start to bullish seasonality in late 2004. It accurately revealed the lack of respect for historical bearish standards in the August-September rolling bi-monthly period in 2004. However, the meandering market theme that began in 2004 has persisted throughout 2005.

Bullish seasonality ended on April 30, 2005. The market remains firmly situated into bearish seasonality. The market continues to configure itself to support historical standards by expressing bearish behavior, although mildly for the most part of this year. Recent bullish spurts, which were consistently identified by the Quick-term Indicant as fake, were recently depressed by deep bearish seasonality. As the Indicant has been stating, deep bearish seasonality exerted its influence the past few weeks.

Although not surprising, 2005 began with unfavorable performance to bullish seasonality standards. The Quick-term Indicant and Short-term Indicant signaled bear in January 2005. Bearish expressions followed. At first, these bearish expressions were mild, but 36-weeks ago, bearish behavior revealed greater aggression. However, that aggression was muted with several bullish spurts. Those bullish spurts were weak but possessed enough bullish steam to thwart dynamic bearish behavior. The residual components of the prior Quick-term Bull and the constitution of the current Mid-term Bull are exhausted from having to thwart this bearish ambition. That is why deep bearish seasonality was able to exert its influence the past few weeks.

As previously stated, these bullish spurts and the uncharacteristic bullish May July, and mixed September added continued life to the Mid-term Bulls. This has deferred massive selling that will unfold at the expiration of these Mid-term Bull markets. As stated the past few months, do not be surprised with increased bearish behavior over the next few weeks.

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

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

Stop Loss Management

Stock and Fund Update

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

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

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

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

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

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

Divergence versus Convergence

There has bearish convergence the past two weeks. Even the contrarian energy sector expressed bearish behavior. As stated last week, this degree of bearish convergence is somewhat ominous.

As stated the past 22-weeks, the Mid-term Bull still has some fight in it. However, it continues expending too much energy in a defensive posture. There is not enough bullish convergence to ignite strong bullish behavior by the major indices.

Economic Conditions – Inflation, Currency, Interest Rates

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

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% one-hundred and seventy-three weeks ago since the MTI buy signal in April 2001. One-hundred and sixty-six weeks ago, it closed up 30.1%. Last week it closed up 190.1%. The current annualized growth rate since the April 13, 2001 buy signal is 41.6%. After falling sharply 17-weeks ago, it bounced north in 14-weeks of the past 17-weeks. It fell last week, after falling sharply the week before last.

Fidelity Gold, Fund #28, is up 12.7% since the Mid-term Indicant signaled buy on August 26, 2005. That annualizes to 93.3%, which is not an impossible performance level if oil prices continue to mount. This fund should do well in the event this market turns into a 1970’s type of market. If oil reaches $100 per barrel, do not be surprised at gold moving up by these amounts. This fund was also down last week.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 253.2% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 78.9%. Vanguard Energy #18, VGENX, is up 130.2% (annualized at 50.8%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 90.6% (annualized at 48.1%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 104.1% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 47.4%. These energy related funds were down last week as a part of bearish convergence.

These funds should do well even if the market turns extremely bearish. Continue to hold them. Last week’s bearish behavior is mostly due to short-term profit-taking.

The SQI (Consolidated Short-term and Quick-term Indicant) model signaled buy for the GLD-ETF#11 on August 3, 2005. It is up 7.5% since then. It is annualized at 37.7%.

The SQI signaled buy for ETF#03 – Energy and Natural Resources on March 26, 2003. It is up 124.8% (annualized at 48.2%).

Quick-term and Short-term Indicant Update

Read your daily reports. This section will be replaced by daily reports on Exchange Traded Funds next week.

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

The Indicant Volume Indicator continues moving in a robust direction. Much of this robust configuration has been concurrent with bearish expressions. The past two weeks increased robustness and the market’s bearish behavior supports an increased probability of dynamic bearishness. You have seen some of that the past two weeks.

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

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

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

All ten major indices are bulls. They are up by an average of 35.7% since the MTI-RYS signaled bull an average of 107-weeks ago. That annualizes to 17.4%. The strongest bull is the Dow Utilities. It is up 107.1% since the October 25, 2002 bull signal. The utilities fell for the third consecutive week after bounding strongly to the north in the prior three weeks. They succumbed to the influences of deep bearish seasonality the past two weeks. It is believed they will not be as prone to profit taking as other sectors since many of you are locked into some nice dividend yields from your October 2002 buys. Your utility hold positions remain safe.

The Mid-term Indicant Dow Jones Industrial Average performance is now at $31,162,819. That beats buy and hold performance of $1,575,091 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $158,469. That beats buy and hold’s $116,228 on a December 31, 1971 $10,000 investment. The MTI - NASDAQ is at $172,766. That beats buy and hold’s $71,596 on an October 18, 1985 $10,000 investment. The Mid-term Indicant’s RYS model beats buy and hold by 1,878.5%, 36.3%, and 141.3%, respectively, for these indices as of this past week.

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

Mid-term Indicant Positions - NASDAQ100 Stocks

Click here to see NASDAQ100 report card history.

Click the following link to view this group of stocks:

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

Mid-term Indicant Positions - Dow Jones 30 Industrial Stocks

Click here to see Dow 30 report card history.

Click the following hyperlink to view this group of stocks:

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

Mid-term Indicant Positions - Dow Jones 15 Utility Stocks

Click here to see Dow Utilities Report Card history.

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

Mid-term Indicant Positions - Indicant Selected Stocks

Click here to see Indicant Select Stock Report Card history.

Click the following hyperlink to view this group of stocks:

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

Mid-term Indicant Positions - Mutual Funds

Click here to see Mutual Fund Report Card history.

ProFunds Ultra Short is down 15.6% since the Mid-term Indicant signaled buy on April 15, 2005. Since the Quick-term Indicant continues to signal bear, this fund can still be bought since it is cheaper than the buy signal price. Remember, this fund moves inversely to the market by exponential amounts. If the market turns deeply bearish, this fund will do well. It was up by 1% last week and by 6% the past two weeks. If the market meanders, this fund will frustrate you. That has been the case for several weeks in addition to the pestering bullish spurts. If you buy this fund, make certain you sell it when the Quick-term Indicant signals bull. This fund has been hurt by recent bullish spurts, but should do well in the next few weeks. Regardless of this fund’s performance in the next few weeks, expect a sell signal in the next few weeks after deep bearish seasonality and the resumption of bullish seasonality. So far, the Quick-term attributes are not supportive of bullish behavior during the impending bullish seasonal period.

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

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

Long Term Indicant Positions - Dow Jones Industrial Average

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

The Dow is up 255.4% (annualized at 18.2%) since the Long-term Indicant signaled bull 728-weeks ago. Economic data is the primary influence on the Long-term Indicant. The recession, deflation, and inflation have not been strong enough to signal bear. A link to the Long-term Indicant is below:

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

Indicant Conclusion

As stated in the past several weekly reports, bullish spurts since the beginning of the year have been phony. The July bullish spurt demonstrated some substance, but as stated in the last 23-weekly reports, there is little likelihood of bullish sustainability. The Quick-term Indicant continues signaling bear, although the market has been meandering. Deep bearish seasonality began seven weeks ago, based on historical standards. It will last one more week this year. The Quick-term Indicant’s attributes shifted from neutrality to a bearish bias three weeks ago. Read your daily reports as the market is configured for a directional shift one way or the other in the next few weeks. Performance the past two weeks added some bearish confidence.

As stated in the last 22-weekly reports, the market is now enduring bearish seasonality. That coupled with the bearish tradition of a presidential post election year, suggests bearish expectations. The July-October rolling quarter is historically horrendously bearish. Keep in mind the market has occasionally aborted historical standards. The various Indicant models will keep you posted if historical standards will be honored or if a variance from this standard is underway. Current configurations are favoring historical standards. The Quick-term Indicant’s bias continues favoring bearish expectations.

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

The daily updates are on the following link.

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

Hyperlinks

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

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

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

Happy Investing,

www.indicant.net

10/16/05

Oct 09, 2005 Indicant.Net Weekly Update

Volume 10, Issue 02 ISSN 1526 6516 © The Indicant Stock Market Report

Dear Indicant Members:

This Week’s Report

Is The Meanderer Tiring?

As stated last week, September’s performance was uncharacteristically bullish, albeit mildly. October is the most volatile month of the year, based on historical standards. It is not getting off to a good start with last week’s aggressive bearishness. Even the Dow Utilities and the energy related sector took it on the chin last week. When all sectors express bearish behavior, the market is signaling a weak economic future. It is somewhat ominous when the energy sector, which can be contrarian to overall bearish behavior, succumbs to bearish influences.

Last week’s bearish behavior was consistent with the historical standards of deep bearish seasonality. The Indicant has been advising of this deep bearish threat for quite some time. The strength of the Mid-term Indicant bull markets had been countering bearish ambitions during the bearish seasonal period. However, mature bulls, such as the one underway, lack the stamina to fend off the effects of deep bearish seasonality. There are two weeks remaining of deep bearish seasonality. Do not be surprised at increased bearish aggressiveness in the next two weeks.

Although there were very few sell signals this past week, there are several stocks and a few funds just barely hanging on to their hold signals. If the market opens with strong bearish enthusiasm next week, you should sell those stocks and funds that do not have triple digit gains. The weaker stocks and funds always fall the most during strong bearish expressions.

The interesting thing about the month of October is its average position. It is in the middle of the pack, being the sixth most bearish month and the seventh most bullish month. However, it is the most volatile month. It has a min-max range performance of over 33.9%, which is in a league by itself. Its most bullish expression since 1950 was in 2002 with a 10.6% gain in the Dow. The NASDAQ rose 13.5% in October 2002, which is its best October since 1971. Interestingly, the NASDAQ’s second best October occurred in 2001 with a 12.8% rise. 2001 was a presidential post election year and the market was in a bearish direction. The Quick-term Indicant signaled bull in October 2001, but the market floundered shortly thereafter. The Quick-term Indicant signaled bear in April 2002, which lasted more than six months.

On the other extreme, since 1950 the Dow endured its largest ever monthly drop in October of 23.2%. That occurred in 1987. The October 1987 NASDAQ was even deeper at 27.2%. That remains the record for both indices. The Indicant is not suggesting a repeat of this sort of torment. It is merely illustrating the significance of volatility of this particular time of year. The bias favors the bear and there is an increasing threat of significant bearish behavior on the immediate horizon. You will notice, though, that most of the ETF’s continue receiving hold signals. They too, however, are just barely hanging on to those hold signals.

This year, 2005, is also a presidential post election year and the market has been meandering, as opposed to demonstrating bullish or bearish behavior. The Dow is down 4.6% so far this year. The NASDAQ is down 3.9% this year. The S&P500 is down 1.3%. This can be described as a meanderer since it is not down that much. The Indicant does not care about magnitude; a bear is a bear. One purpose of the Indicant is to avoid bear markets, regardless of their depth. That is one reason why the Quick-term Indicant has been signaling bear since January 2005.

The market was not that impressive in 2004. It was also a meanderer until about this time one year ago when the Quick-term Indicant signaled bull. The only growth period in the market in 2004 was in the fourth quarter, which consistently supports the birth of bullish seasonality. Every fourth quarter this century has enjoyed a Quick-term Bull market.

The concern this year is the increasing probability that the typical fourth quarter bullish expressions may not manifest. This is due to souring economic fundamentals. Rising interest rates, rising fuel costs, rising commodity prices, and a softening economy are worthy of notice here. However, regardless of economic fundamentals, the Quick-term Indicant will identify the birth of any new bullish inspiration and you will be among the first to know. Most of you are use to those types of bull signals at this time of year. Do not be surprised if that does not happen in the immediate future.

Weekly Buy/Sell Summary

The Mid-term Indicant generated no buy signals and three sell signals for stocks and funds. Again, there were no sell signals for mutual funds.

In addition to the sell signals, the Mid-term Indicant is avoiding 96-stocks and funds of the 320 tracked by the Indicant. The avoided stocks and funds are down an average of 10.8% since the Mid-term Indicant signaled sell an average of 23.2-weeks ago.

There were 50-stocks and funds avoided at this time last year. The avoided stocks and funds one year ago were down an average of 32.6% since their respective sell signals an average of 51.1-weeks earlier. Two years ago, on October 11, 2003, the Mid-term Indicant was avoiding only 24-stocks and funds that were down an average of 22.5% since their respective sell signals an average of 31.0-weeks earlier. On October 5, 2002, there were 226-stocks and funds being avoided.

Although there were no buy signals, the Mid-term Indicant is signaling hold for 221 of the 320 stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 105.8%. That annualizes to 56.8%. The Mid-term Indicant has been signaling hold for these 221-stocks and funds for an average of 96.8-weeks.

One year ago, the Mid-term Indicant was holding 240-stocks and funds out of the 296 tracked at that time for an average of 51.2-weeks. They were up 64.3% (annualized at 65.3%). The Mid-term Indicant was signaling hold for 263-stocks and funds of the 296 tracked two years ago on October 11, 2003. They were up by an average of 52.9% (annualized at 98.7%) since their respective buy signals an average of 31.0-weeks earlier. There were only 54-stocks and funds with a hold signal on October 5, 2002. Most of that was energy-related stocks as they were bullish before the October-November 2002 buying spree.

The SQI did not generate any buy or sell signals this past week, although there was some Quick-term and Short-term activity. There was a high number of put option buy signals, which turned out profitable for many of you.

Secular Market Blend

This section is a repeat from the last several months with a few modifications, reflecting recent secular influences. Although appearing redundant at times, it is important to read it each week to detect secular market shifts. The current Mid-term Bull market and buying barrage in late 2002 followed the predicted market bottom in 2002. The mid-term presidential election year phenomenon was consistent with history. Even more impressive was how the market synchronized with near perfection to normal seasonality in 2002. Based on historical standards, the upcoming mid-term election year of 2006, fundamentally, supports historical standards. In other words, there will be no bullish enthusiasm with rising interest rates and rising energy costs.

The Dow30 found bottom on October 9, 2002 at 7286.27. The NASDAQ found bottom on the same day at 1114.11. As earlier stated, the Indicant began its buying barrage in October – November 2002 just after the market bottomed from the severe 2000-2002 Bear Market. There were 239 buy signals between October 5, 2002 and November 9, 2002 out of the 296 stocks and funds tracked by the Mid-term Indicant at that time.

The political industry reduces wealth. Politicians continually attempt to redistribute wealth. They promote “middle class” attainment. The larger the middle class, the more power they have. They are threatened by those who attain capitalistic greatness. Many start-ups with tremendous economic opportunities could cross over into profound wealth building, but few can cross that line from so-so to greatness. Many cannot cross that line due to political pressures, ranging from regulatory constraints to direct political intervention. Politicians can serve a good purpose, but the world would be better off if their influence was less than one-tenth of one-percent of today’s levels. The capital markets sense this and thus the reason for bearishness in post election years and the first half of mid-term election years.

You will notice many of the mutual fund buy signals occurred in March 2003. Many of you recall how the market did not synchronize with the heart and soul of bullish seasonality from November 2002 through February 2003. After the asynchronous behavior in the November 2002 rolling third of the year, the market turned bullish in March 2003 and again did not synchronize with normal seasonality. The Mid-term Indicant continued signaling bull during bearish seasonality during most of 2003. The market continued moving north during that time, contrary to historical standards. As stated in most of 2004, bearish expressions on a Mid-term basis between May and October 2004 should not be surprising. That is exactly what occurred.

Bullish seasonality ended on April 30, 2005. The market remains firmly situated into bearish seasonality. The market continues to configure itself to support historical standards by expressing bearish behavior, although mildly. However, recent bullish spurts have pushed some indices up during this bearish seasonal period. As the Indicant has been stating, a solid bearish shift occurred in three of the past four weeks, reinforcing the standards of bearish seasonality.

Although not surprising, 2005 began with unfavorable performance to bullish seasonality standards. The Quick-term Indicant signaled bear in early January 2005. Bearish expressions followed. At first, these bearish expressions were mild, but 35-weeks ago, bearish behavior revealed greater aggression. However, that aggression was muted with several bullish spurts. Those bullish spurts were weak but possessed enough bullish steam to thwart dynamic bearish behavior. The residual components of the prior Quick-term Bull and the constitution of the current Mid-term Bull are exhausted from having to thwart bearish ambition.

The presidential post election year is, historically, the most bearish year on the four-year presidential election cycle. Like all things, there are exceptions to historical normalcy. As this year progresses, the various Indicant models will advise if 2005 is an exception or normal. So far, this year appears normal; that is bearish. The Quick-term and Short-term Indicant continue signaling bear, as they have been doing since early January 2005. The Mid-term and Long-term Indicant models continue to signal bull. The mid-term and long-term trends exerted their authority over the shorter cycles in the last three weeks of July. Bearish behavior followed in August 2005. Mixed behavior followed in September, which is the most bearish month, based on historical standards.

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

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

Stop Loss Management

Stock and Fund Update

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

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

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

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

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

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

Divergence versus Convergence

There was definite bearish convergence last week. Even the contrarian energy sector expressed bearish behavior. Overall, this degree of bearish convergence is somewhat ominous.

As stated the past 21-weeks, the Mid-term Bull still has some fight in it. However, it continues expending too much energy in a defensive posture. There is not enough bullish convergence to ignite strong bullish behavior by the major indices.

Economic Conditions – Inflation, Currency, Interest Rates

Most currencies continue in their cyclical shift in support of continuing strength in the U.S. Dollar. This is apparent by the shift in the direction of the bearish yellow curve. This configuration suggests the Mid-term Indicant’s prognosis that commitments are made to a stronger U.S. Dollar.

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

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% one-hundred and seventy-two weeks ago since the MTI buy signal in April 2001. One-hundred and sixty-five weeks ago, it closed up 30.1%. Last week it closed up 194.0%. The current annualized growth rate since the April 13, 2001 buy signal is 42.6%. After falling sharply 16-weeks ago, it bounced north in 14-weeks of the past 16-weeks. It fell sharply last week.

Fidelity Gold, Fund #28, is up 19.0% since the Mid-term Indicant signaled buy on August 26, 2005. That annualizes to 162.5%, which is not an impossible performance level if oil prices continue to mount. This fund should do well in the event this market turns into a 1970’s type of market. If oil reaches $100 per barrel, do not be surprised at gold moving up by these amounts. This fund was also down sharply last week.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 257.1% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 80.6%. Vanguard Energy #18, VGENX, is up 134.9% (annualized at 53.0%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 94.3% (annualized at 50.6%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 108.5% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 49.9%. These energy related funds were down sharply last week.

These funds should do well even if the market turns extremely bearish. Continue to hold them. Last week’s bearish behavior is mostly due to short-term profit-taking.

The SQI (Consolidated Short-term and Quick-term Indicant) model signaled buy for the GLD-ETF on August 3, 2005. It is up 8.8% since then. It is annualized at 48.7%.

Quick-term and Short-term Indicant Update

Read your daily reports. This section will be replaced by daily reports on Exchange Traded Funds next week.

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

The Indicant Volume Indicator continues moving in a robust direction. Much of this robust configuration has been concurrent with bearish expressions. Last week’s increased robustness and the market’s bearish behavior supports an increased probability of dynamic bearishness.

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

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

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

All ten major indices are bulls. They are up by an average of 38.0% since the MTI-RYS signaled bull an average of 105-weeks ago. That annualizes to 18.7%. The strongest bull is the Dow Utilities. It is up 117.5% since the October 25, 2002 bull signal. The utilities fell for the second consecutive week after bounding strongly to the north in the prior three weeks. They will not be as prone to profit taking as other sectors. Your utility hold positions remain safe, but last week’s bearish behavior uncharacteristically paralleled the overall stock market.

The Mid-term Indicant Dow Jones Industrial Average performance is now at $31,177,874. That beats buy and hold performance of $1,575,847 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $159,716. That beats buy and hold’s $117,142 on a December 31, 1971 $10,000 investment. The MTI - NASDAQ is at $174,901. That beats buy and hold’s $72,481 on an October 18, 1985 $10,000 investment. The Mid-term Indicant’s RYS model beats buy and hold by 1,878.8%, 36.3%, and 141.3%, respectively, for these indices as of this past week.

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

Mid-term Indicant Positions - NASDAQ100 Stocks

Click here to see NASDAQ100 report card history.

Click the following link to view this group of stocks:

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

Mid-term Indicant Positions - Dow Jones 30 Industrial Stocks

Click here to see Dow 30 report card history.

Click the following hyperlink to view this group of stocks:

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

Mid-term Indicant Positions - Dow Jones 15 Utility Stocks

Click here to see Dow Utilities Report Card history.

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

Mid-term Indicant Positions - Indicant Selected Stocks

Click here to see Indicant Select Stock Report Card history.

Click the following hyperlink to view this group of stocks:

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

Mid-term Indicant Positions - Mutual Funds

Click here to see Mutual Fund Report Card history.

ProFunds Ultra Short is down 16.9% since the Mid-term Indicant signaled buy on April 15, 2005. Since the Quick-term Indicant continues to signal bear, this fund can still be bought since it is cheaper than the buy signal price. Remember, this fund moves inversely to the market by exponential amounts. If the market turns deeply bearish, this fund will do well. It was up by 5% last week. If the market meanders, this fund will frustrate you. That has been the case for several weeks in addition to the pestering bullish spurts. If you buy this fund, make certain you sell it when the Quick-term Indicant signals bull. This fund has been hurt by recent bullish spurts, but should do well in the next few weeks. Regardless of this fund’s performance in the next few weeks, expect a sell signal in the next few weeks after deep bearish seasonality and the resumption of bullish seasonality.

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

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

Long Term Indicant Positions - Dow Jones Industrial Average

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

The Dow is up 255.6% (annualized at 18.3%) since the Long-term Indicant signaled bull 727-weeks ago. Economic data is the primary influence on the Long-term Indicant. The recession, deflation, and inflation have not been strong enough to signal bear. A link to the Long-term Indicant is below:

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

Indicant Conclusion

As stated in the past several weekly reports, bullish spurts since the beginning of the year have been phony. The July bullish spurt demonstrated some substance, but as stated in the last 22-weekly reports, there is little likelihood of bullish sustainability. The Quick-term Indicant continues signaling bear, although the market has been meandering. Deep bearish seasonality began six weeks ago, based on historical standards. It will last two more weeks this year. The Quick-term Indicant’s attributes have shifted from neutrality to a bearish bias. Read your daily reports as the market is configured for a directional shift one way or the other in the next few weeks. Last week’s performance added some bearish confidence.

As stated in the last 21-weekly reports, the market is now enduring bearish seasonality. That coupled with the bearish tradition of a presidential post election year, suggests bearish expectations. The July-October rolling quarter is historically horrendously bearish. Keep in mind the market has occasionally aborted historical standards. The various Indicant models will keep you posted if historical standards will be honored or if a variance from this standard is underway. Current configurations are favoring historical standards. The Quick-term Indicant’s bias is again favoring bearish expectations.

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

The daily updates are on the following link.

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

Hyperlinks

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

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

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

Happy Investing,

www.indicant.net

10/09/05

Oct 02, 2005 Indicant.Net Weekly Update

Dear Indicant Members:

This Week’s Report

The Meanderer Returns – Even Katrina and Rita Do Not Depress

September did not perform to historical standards. The Dow was up 0.8% in September. That is not bad since September is historically the most bearish month. A $10,000 investment in the 1950 Dow is now down to $5,098, which is up by $32 from September 2004. A 1971 $10,000 investment in the NASDAQ is now worth $6,532 if only invested in September. Interestingly, the NASDAQ was flat in September. It moved up less than a full point in September.

What will October be like? Historically, October is the most volatile month, although with a slight bullish bias. Some of you recall the Indicant’s buying spree in October 2002. Nearly all of the stocks and funds tracked by the Indicant received buy signals in October 2002. October is the most common birth month for new Quick-term Bulls. However, it is the month where the market gets spooked in great magnitude from time to time. The crashes of 1929, 1987, and 1998 occurred in October.

The last week of September was bullish and could be an excellent lead to bullish behavior that could lead to the next Quick-term Bull signal. Fundamentally, one can argue that record high oil prices and a defiant Alan Greenspan justify a market drop. However, the market seldom moves on today’s news. Right now, its focus is on the second quarter of 2006. Do not be surprised at bullish behavior if the market senses declining oil prices and a passive uninvolved Greenspan.

The October-December rolling quarter is historically the second most bullish. The November-January rolling quarter is the most bullish. Each of these rolling quarters has consistently provided some bullish flair this century. So, based on historical standards, do not be surprised at increased bullish expressions in the next few weeks.

Next Monday, you will receive daily reports, using the top thirty most volume sensitive Exchange Traded Funds. The Indicant had previously reported the overall market tendencies using ten major indices. The Quick-term Indicant always signaled bull or bear for all ten indices at the same time. The advent of Exchange Traded Funds has distorted this method. Although the overall market has been meandering, some sectors continued with raging bull status. You will now be able to make more money with the daily Indicant reports since the ETF’s (Exchange Traded Funds) can be purchased like a stock. You can also trade options using the Quick-term Model. Some options potential are at this link.

The problem is that the old Quick-term Indicant is still signaling bear, while the various ETF’s are receiving bull (hold) signals. The daily reports will include a late night update on the old Quick-term Indicant until it signals the same as the new ETF-Quick-term Indicant. So, arrange your schedules to be able to read the quick-term updates in the mornings if you one to go to sleep early.

The Consolidated Quick-term/Short-term Indicant signaled sell for ETF#19-XLB on September 2, 2005. This was the first sell signal since the SQI signaled buy in March 2003, which coincides with the second Indicant buying spree in this Mid-term Bull cycle. ETF#29-XLY received a sell signal also for the first time since its March 2003 buy signal. This is a testament to lack of bullish sentiment during this deep bearish seasonal period. However, the QQQQ continues receiving hold (bull) signal. The Short-term QQQQ will highlight the degree of its meandering behavior. You will notice the tight band between its bullish red and bearish yellow curves. It is encouraging, for those of you who desire bullish behavior, that its bearish yellow curve is rising. You will notice QQQQ volume has also been meandering, even though this is the most often traded Exchange Traded Fund.

As you can see, dynamic bullish behavior is not yet apparent. Fortunately, there has been no dynamic bearish behavior. This Mid-term Bull market is indeed very strong, even though meandering since early 2004. The only solid bullish expression since early 2004 occurred about this time last year. Overall, the bias still favors bearishness, but not of a dynamic nature.

Weekly Buy/Sell Summary

The Mid-term Indicant generated two buy signals and three sell signals for stocks and funds. Again, there were no sell signals for mutual funds.

In addition to the sell signals, the Mid-term Indicant is avoiding 93-stocks and funds of the 320 tracked by the Indicant. The avoided stocks and funds are down an average of 9.4% since the Mid-term Indicant signaled sell an average of 23.1-weeks ago.

There were 50-stocks and funds avoided at this time last year. The avoided stocks and funds one year ago were down an average of 32.4% since their respective sell signals an average of 52.4-weeks earlier. Two years ago, on October 4, 2003, the Mid-term Indicant was avoiding only 30-stocks and funds that were down an average of 20.9% since their respective sell signals an average of 29.7-weeks earlier.

In addition to the buy signals, the Mid-term Indicant is signaling hold for 222 of the 320 stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 112.8%. That annualizes to 61.4%. The Mid-term Indicant has been signaling hold for these 222-stocks and funds for an average of 95.5-weeks.

One year ago, the Mid-term Indicant was holding 204-stocks and funds out of the 296 tracked at that time for an average of 52.4-weeks. They were up 73.6% (annualized at 66.6%). The Mid-term Indicant was signaling hold for 219-stocks and funds of the 296 tracked two years ago on October 4, 2003. They were up by an average of 58.5% (annualized at 98.0%) since their respective buy signals an average of 31.0-weeks earlier.

The SQI did not generate any buy or sell signals this past week, although there was some Quick-term and Short-term activity.

Secular Market Blend

The political industry reduces wealth. Politicians continually attempt to redistribute wealth. They promote “middle class” attainment. The larger the middle class, the more power they have. They are threatened by those who attain capitalistic greatness. Many start-ups with tremendous economic opportunities could cross over into profound wealth building, but few can cross that line from so-so to greatness. Many cannot cross that line due to political pressures, ranging from regulatory constraints to direct political intervention. Politicians can serve a good purpose, but the world would be better off if their influence was less than one-tenth of one-percent of today’s levels.

You will notice many of the mutual fund buy signals occurred in March 2003. Many of you recall how the market did not synchronize with the heart and soul of bullish seasonality from November 2002 through February 2003. After the asynchronous behavior in the November 2002 rolling third of the year, the market turned bullish in March 2003 and again did not synchronize with normal seasonality. The Mid-term Indicant continued signaling bull during bearish seasonality during most of 2003. The market continued moving north during that time, contrary to historical standards. As stated in most of 2004, bearish expressions on a Mid-term basis between May and October 2004 should not be surprising. That is exactly what occurred.

Bullish seasonality ended on April 30, 2005. The market remains firmly situated into bearish seasonality. The market continues to configure itself to support historical standards by expressing bearish behavior, although mildly. However, recent bullish spurts have pushed some indices up during this bearish seasonal period. That is expected to change in the upcoming weeks and reinforce the standards of bearish seasonality. Last week’s mild bullish response to the preceding two weeks of bearish behavior is challenging this scenario.

Although not surprising, 2005 began with unfavorable performance to bullish seasonality standards. The Quick-term Indicant signaled bear in early January 2005. Bearish expressions followed. At first, these bearish expressions were mild, but 34-weeks ago, bearish behavior revealed greater aggression. However, that aggression was muted with several bullish spurts. Those bullish spurts were weak but possessed enough bullish steam to thwart dynamic bearish behavior. The residual components of the prior Quick-term Bull and the constitution of the current Mid-term Bull are exhausted from having to thwart bearish ambition.

The July bullish spurt propelled many stocks to catapult their bullish red curves. That is indeed non-bearish. On the contrary, this is not necessarily bullish. The bullish spurts have provided a forum for a relaxed view of your hold positions. Stocks and funds seldom endure deep bearish behavior while they reside above their respective bullish red curves. The most recent bullish spurt shifted the Quick-term Indicant from a bearish bias to nearly neutral. Although, the Quick-term attributes still did not signal bull, the mild bearish bias is reason for continued relaxation with respect to your longer-term hold positions. However, the past six weeks have increased many of the Quick-term attributes to expand support for bearish influences.

The presidential post election year is, historically, the most bearish year on the four-year presidential election cycle. Like all things, there are exceptions to historical normalcy. As this year progresses, the various Indicant models will advise if 2005 is an exception or normal. So far, this year appears normal; that is bearish. The Quick-term and Short-term Indicant continue signaling bear, as they have been doing since early January 2005. The Mid-term and Long-term Indicant models continue to signal bull. The mid-term and long-term trends exerted their authority over the shorter cycles in the last three weeks of July. Bearish behavior followed in August 2005. Mixed behavior followed in September, which is the most bearish month, based on historical standards.

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

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

Stop Loss Management

Stock and Fund Update

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

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

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

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

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

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

Divergence versus Convergence

The mild bearish convergence that occurred in the previous two weeks was reversed last week with mild bullish convergence. This flip-flopping between bullish and bearish convergence is consistent with meandering market behavior.

As stated the past 20-weeks, the Mid-term Bull still has some fight in it. However, it continues expending too much energy in a defensive posture. There is not enough bullish convergence to ignite strong bullish behavior by the major indices.

Economic Conditions – Inflation, Currency, Interest Rates

The only exception to this is the Canadian Dollar. The Canadian Dollar strengthened considerably last week. It has not yet made this cyclical mid-term commitment to weaken against the greenback. As stated last week, the Athabasca Tar Sand Oil potential continues to threaten the Canadian cost advantage. The perception of huge imports to the U.S. will provide increased difficulty for the Canadian Dollar to continue weakening. This should hurt Canadian manufacturing.

There is nothing new to report on commodity prices, even though several expressed bearish behavior last week. Commodity prices continue their bullish commitment from already stratospheric levels. This recent movement is dynamic. As stated the last several weeks, the trend in commodity prices will continue north as long as oil prices continue in that direction. The Mid-term Indicant Bull’s resilience in the face of this inflationary threat is indeed impressive. It is only a matter of time before this unrelenting pricing pressure on commodities produces unacceptable inflationary behavior.

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

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% one-hundred and seventy-one weeks ago since the MTI buy signal in April 2001. One-hundred and sixty-four weeks ago, it closed up 30.1%. Last week it closed up 207/8%. The current annualized growth rate since the April 13, 2001 buy signal is 45.9%. After falling sharply 15-weeks ago, it bounced north in 13-weeks of the past 15-weeks. It was up strongly last week.

Fidelity Gold, Fund #28, is up 20.6% since the Mid-term Indicant signaled buy on August 26, 2005. That annualizes to 212.2%, which is not an impossible performance level if oil prices continue to mount. This fund should do well in the event this market turns into a 1970’s type of market. If oil reaches $100 per barrel, do not be surprised at gold moving up by these amounts. This fund was also up last week.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 287.1% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 90.6%. Vanguard Energy #18, VGENX, is up 153.3% (annualized at 60.7%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 111.8% (annualized at 60.6%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 125.6% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 58.3%. These energy related funds were up solidly last week, due in part, to Hurricane Rita.

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

The SQI (Consolidated Short-term and Quick-term Indicant) model signaled buy for the GLD-ETF on August 3, 2005. It is up 7.3% since then. It is annualized at 45.2%.

Quick-term and Short-term Indicant Update

Read your daily reports. This section will be replaced by daily reports on Exchange Traded Funds next week.

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

The Indicant Volume Indicator continues moving in a robust direction. Much of this robust configuration has been concurrent to bearish expressions. However, it has been sprinkled from time to time with bullish behavior. This has shifted slightly from bearish support to meandering support. However, the bias still favors bearish expressions but not supportive of dynamic bearishness.

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

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

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

All ten major indices are bulls. They are up by an average of 39.3% since the MTI-RYS signaled bull an average of 104-weeks ago. That annualizes to 19.8%. The strongest bull is the Dow Utilities. It is up 120.3% since the October 25, 2002 bull signal. The utilities fell slightly after bounding strongly to the north in the prior three weeks. They will not be as prone to profit taking as other sectors. Your utility hold positions are exceedingly safe.

The Mid-term Indicant Dow Jones Industrial Average performance is now at $32,015,125. That beats buy and hold performance of $1,617,896 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $164,111. That beats buy and hold’s $120,365 on a December 31, 1971 $10,000 investment. The MTI - NASDAQ is at $180,034. That beats buy and hold’s $74,608 on an October 18, 1985 $10,000 investment. The Mid-term Indicant’s RYS model beats buy and hold by 1,878.8%, 36.3%, and 141.3%, respectively, for these indices as of this past week.

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

Mid-term Indicant Positions - NASDAQ100 Stocks

Click here to see NASDAQ100 report card history.

Click the following link to view this group of stocks:

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

Mid-term Indicant Positions - Dow Jones 30 Industrial Stocks

Click here to see Dow 30 report card history.

Click the following hyperlink to view this group of stocks:

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

Mid-term Indicant Positions - Dow Jones 15 Utility Stocks

Click here to see Dow Utilities Report Card history.

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

Mid-term Indicant Positions - Indicant Selected Stocks

Click here to see Indicant Select Stock Report Card history.

Click the following hyperlink to view this group of stocks:

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

Mid-term Indicant Positions - Mutual Funds

Click here to see Mutual Fund Report Card history.

ProFunds Ultra Short is down 21.7% since the Mid-term Indicant signaled buy on April 15, 2005. Since the Quick-term Indicant continues to signal bear, this fund can still be bought since it is cheaper than the buy signal price. Remember, this fund moves inversely to the market by exponential amounts. If the market turns deeply bearish, this fund will do well. If the market meanders, this fund will frustrate you. That has been the case for several weeks in addition to the pestering bullish spurts. If you buy this fund, make certain you sell it when the Quick-term Indicant signals bull. This fund has been hurt by recent bullish spurts, but should do well in the next few weeks. Regardless of this fund’s performance in the next few weeks, expect a sell signal in the next few weeks after deep bearish seasonality and the resumption of bullish seasonality.

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

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

Long Term Indicant Positions - Dow Jones Industrial Average

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

The Dow is up 265.1% (annualized at 19.0%) since the Long-term Indicant signaled bull 726-weeks ago. Economic data is the primary influence on the Long-term Indicant. The recession, deflation, and inflation have not been strong enough to signal bear. A link to the Long-term Indicant is below:

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

Indicant Conclusion

As stated in the past several weekly reports, bullish spurts since the beginning of the year have been phony. The July bullish spurt demonstrated some substance, but as stated in the last 21-weekly reports, there is little likelihood of bullish sustainability. The Quick-term Indicant continues signaling bear, although the market has been meandering. Deep bearish seasonality began five weeks ago, based on historical standards. It will last about three more weeks this year. The Quick-term Indicant’s attributes have shifted from neutrality to a bearish bias. Read your daily reports as the market is configured for a directional shift one way or the other in the next few weeks.

As stated in the last 20-weekly reports, the market is now enduring bearish seasonality. That coupled with the bearish tradition of a presidential post election year, suggests bearish expectations. The July-October rolling quarter is historically horrendously bearish. Keep in mind the market has occasionally aborted historical standards. The various Indicant models will keep you posted if historical standards will be honored or if a variance from this standard is underway. Current configurations are again favoring historical standards. The Quick-term Indicant’s bias is again favoring bearish expectations.

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

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Happy Investing,

www.indicant.net

10/02/05