October 2006 Indicant Weekly Stock Market Report

Oct 29, 2006 Indicant Weekly Stock Market Report

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

Commodity Prices Are Dampening Bullish Enthusiasm

The Quick-term Indicant shifted to bullish bias on August 15, 2006. At that time commodity prices were continuing to rise. The stock market accurately anticipated the expiration of the commodity’s bullish cycle. Around the middle of September, some commodity prices shifted to the south and others moved into bearish domains. The stock market, as usual, accurately anticipated these shifts with its quick-term shift to bullish bias before the underlying economic shifts.

Unfortunately, the Achilles heel of the underlying bullish bias is commodity prices. Many of them rebounded last week. Although the stock market rarely sustains directional behavior simultaneously from bad news, there is little doubt last Friday’s bearish expression, although mild, was stimulated by weak economic news.

That weak economic news, coupled with rising commodity prices, falls in the face of logic. Light surface thinking challenges the basic law of supply and demand. How can commodity prices rise on a weakening economy? Demand falters during economic weakness, which according to economic law, should influence price reductions. That assumes the supply side does not waver. If supply also shrivels, then prices will either stabilize or increase.

Economic news limited to the U.S. economy is not the only element being calibrated in the stock market. Although a weak U.S. economy certainly should dampen commodity demand, the rest of the world can simultaneously increase demand for commodities.

Rising commodity prices the past few years have been impressive. Their bullish cycle is unprecedented in terms of the absolute dollar prices. Much of this is attributable to rising capitalism and younger economies. Yet, in the face of significant inflationary threats and corresponding rising interest rates, the market stood its ground and did not succumb to bearish dominance.

Even more impressive was the meandering nature of the stock market in the face of record high commodity prices the past three years. The post election year of 2005, where the stock market is historically bearish, was not bearish. The war in Iraq also did not influence a bearish stock market. Although the stock market was not impressively bullish in 2004, 2005, and so far this year, its non-bearish behavior during those years was technically very impressive. The stock market’s meandering nature was impressive.

The current Quick-term Bullish bias originated at the beginning of the historically significant period of deep bearish seasonality. A few weeks after this bias shift in support of the bull, several economic fundamentals shifted in support of the continuation of this bull. Even though the market is enjoying the heart and soul of bullish seasonality, it appears to have little tolerance for economic weakness and a resumption of rising commodity prices. Keep your eye on the Quick-term Indicant, as it will obviate the market’s directional propensity in the event the market’s bullishness indeed has limited tolerance for these concerns.

Weekly Buy/Sell Summary – Stocks and Funds

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

Although there were no sell signals, the Mid-term Indicant is avoiding only 33-stocks and funds of the 345 tracked by the Indicant. The avoided stocks and funds are down an average of 14.8% since the Mid-term Indicant signaled sell an average of 23.1-weeks ago.

There were 102-stocks and funds avoided at this time last year. The avoided stocks and funds one year ago were down an average of 10.7% since their respective sell signals an average of 24.4-weeks earlier. Two years ago, on October 29, 2004, the Mid-term Indicant was avoiding 43-stocks and funds that were down an average of 33.3% since their respective sell signals an average of 53.8-weeks earlier. Three years ago on October 25, 2003, there were only 22-avoided stocks and funds. They were down 23.8% from their respective sell signals an average of 31.6-weeks earlier. On October 25, 2002, the Mid-term Indicant was avoiding 75-stocks and funds out of 295-tracked. They were down by an average of 34.0% since their 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 311 of the 345-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 106.0%. That annualizes to 69.1%. The Mid-term Indicant has been signaling hold for these 311-stocks and funds for an average of 79.7-weeks.

One year ago on October 28, 2005, the Mid-term Indicant was holding 216-stocks and funds out of the 320 tracked at that time for an average of 100.5-weeks. Those 216-stocks and funds were up by an average of 104.2% (annualized at 53.9%). The Mid-term Indicant was signaling hold for 240-stocks and funds of the 296 tracked two years ago on October 29, 2004. They were up by an average of 67.1% (annualized at 64.8%) since their respective buy signals an average of 53.8-weeks earlier. There were 261-stocks and funds with hold signals on October 25, 2003 since their buy signals an average of 29.4-weeks earlier. They were up 50.6% (annualized at 89.5%). The Indicant was only tracking 296 stocks and funds in 2002-2004. On October 25, 2002, the Mid-term Indicant was signaling hold for only 178-stocks and funds out of 295-tracked. They were up by an average of 19.1% (annualized at 65.3%) since their buy signals an average of 15.2-weeks earlier.

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

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

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 updated 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

The Quick/Short-term Indicant Stock Market Report

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

The Daily Indicant Stock Market Report for the last trading day of the current week is near the conclusion of this weekly stock market report.

The Indicant Stock Market Report’s Secular Market Blend

This section is a repeated each week with a few modifications, reflecting recent secular influences and performance data. Although appearing redundant at times, it is important to read this section to keep abreast of secular market shifts. Quantifications and qualifications are updated weekly. Remember, secular shifts can last twenty-five or more years. Fortunately, secular market movements do not deter mid-term, short-term, and quick-term profit opportunities. However, they can wreak havoc to the long-term investors’ plans and those that buy and hold.

The current Mid-term Bull market and buying barrage started in late 2002. The mid-term election year of 2002 conformed perfectly to historical standards with deep bearish expressions. Will it be consistent in 2006? Deep bearish seasonality will not be influential this year during the historical period. Bullish bias at this time is too strong.

Currently, configurations suggest the market is already in the process of honoring the historical normalcy of the heart and soul of bullish seasonality. It appears to be getting an early start this year and showing little respect for the historical standards of deep bearish seasonality.

The market synchronized with near perfection to normal seasonality in 2002. The rolling half of May-October is typically bearish. The 2002 seasonal bear leg was dynamic and configured perfectly to historical standards. The current mid-term election year of 2006, fundamentally, supported historical standards for the first two thirds of this year. As of mid-August 2006, hard economic fundamentals shifted in support of a bullish onslaught for the heart and soul of bullish seasonality and the normally bullish presidential pre-election year of 2007. The Quick-term Indicant has been supporting this bullishness since August 15, 2006.

Ignore recent news about economic lethargy. The stock market may recalibrate expectations six to nine months from now, but it does not care about the current economic situation. It addressed that in the first quarter of this year and pretty much had it figured out. That is why the market was a mildly bearish meanderer from February through mid-August of this year.

The heart and soul of bullish seasonality from mid-October 2005 through January 31, 2006, demonstrated bullish normalcy. The market had been more or less a meanderer since January 31, 2006 until mid-August 2006, when the Quick-term Indicant shifted from bearish to bullish bias.

The last period of the heart and soul of bullish seasonality, ending January 31, 2006 produced gains of 2.8%, 4.2%, and 7.2% for the Dow, S&P500, and NASDAQ, respectively. Expect greater gains than the above in the coming heart and soul of bullish seasonality, which started last weekend.

The Dow30 found bottom in the last presidential mid-term election year on October 9, 2002 at 7,286.27. The NASDAQ found bottom on the same day at 1114.11. Finding cyclical bottoms in mid-term election years is common. Fortunately, the bottom of 2006, so far, was minimal and not sharp when compared to that of 2002. The Dow is up 65.9% from the last mid-term presidential election year bottom. The NASDAQ is up 111.0% since October 9, 2002. The S&P600, small caps, is up even more by 128.8% since October 9, 2002.

The NASDAQ is down 53.4% from its historical high of 5048.62 on March 9, 2000. The Dow is up by 3.1% from its previous week-ending historical high of 11723 on January 13, 2000. It took over five-and-a-half years to establish a new high a few weeks ago. The S&P500 is down 9.8% since its all time high of March 23, 2000. So far, the new century, 2000 inclusive, has not been kind to long-term investors. The NASDAQ needs to climb 114.8% and S&P500 by 10.9% to establish new weekly closing highs.

Historical standards suggest the NASDAQ will not return to historical high until 2025 or so. A 2000 buyer and holder will not be back to break-even until then, assuming zero inflation. Including inflation, a thirty-year-old investor will be in his or her eighties before the NASDAQ profits from early 2000 investment dollars.

Economic or corporate earnings fundamentals did not support the stock market’s meteoric rise in the 1990’s in many sectors. Unprecedented demand for stocks skewed the supply-demand ratio and thus the powerful bull leg of the 1990’s enjoyed sustainability. The simple law of supply and demand propelled stock prices dynamically to the north in the 1990’s. The great bear leg of 2001 and 2002 has depressed those prior sources of demand for at least one generation of investors. The market now has to wait for a new generation of investors to enjoy dynamic secular bullishness. The great bull leg of 2003 was a relatively short bull cycle that has not enjoyed follow-on bullish behavior due to this lack of demand with the exception of normal bullish expressions during the heart and soul of bullish seasonality in 2004 and 2005.

Until the past few weeks, most major market indices have been slightly bullish since late 2003 with pronounced meandering behavior. The only significant bullish expressions, not followed by bearish expressions, occurred in the heart and soul of bullish seasonality (Nov-Jan) in 2003, 2004, and 2005. Other than those “heart and soul” bullish cycles, the market has been relatively flat since early 2004.

For example, the Dow fell 4.4% from January 31, 2004 through October 31, 2004. The NASDAQ fell by the same amount. The Dow fell 0.5% from January 31, 2005 through October 31, 2005, while the NASDAQ was up only 2.8%. Since January 31, 2006, the Dow is up 11.3% and the NASDAQ is up 1.9%. The market was not bullishly expressive after the heart and soul of bullish seasonality in 2004 and 2005. Recent bullish expressions have demonstrated little respect for historical normalcy. The Quick-term Indicant is currently suggesting the mid-term election year bottom is behind us.

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. As many of you noticed, those companies eventually dipped back to the south after the euphoria of new bullishness.

Since August 18, 2006, the Mid-term Indicant generated 140-buy signals and only four sell signals. That is an unusually high number of buy signals when considering historical seasonal market influences. However, all Indicant models supported this recent buying surge just as they did in October 2002 and March 2003.

Some of you recall the Indicant Stock Market Report tracking the Short-term Indicant Bear for the NASDAQ in 2002. It 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 and are always repeated in this report. 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 a bottom in the mid-term election year. That is also why the presidential pre-election year is historically the most bullish on the four-year cycle. If the strength of the current Mid-term Bull can be subjected only to meandering behavior, like 2004 and 2005, then it is possible for the current Mid-term Bull to be a record setting one in terms of duration.

Political institutions reduce 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 politicians and their academic brethren have. The communists tried that, resulting 99% poverty, while the ruling 1% lived like kings. In other words, socialism rewards an ability to intellectualize, while capitalism rewards the results of appealing effort.

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 them endured sell signals for the first time since early 2003 during the mildly bearish meandering behavior in mid-2005. However, recent bullish spurts and the bull’s resiliency have minimized selling activity and resumed buying. As a matter of fact, the Mid-term Indicant is now signaling buy or hold for all mutual funds it tracks with the exception of contrarian funds.

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, but not nearly as dynamic as the 1931 bearish expression. 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/hold during bearish seasonality in 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 with a slight bearish bias during most of 2004 and 2005 and the first two-thirds of 2006.

The Quick-term Indicant’s bearish bias most of this year was replaced with a bullish bias in mid-August. Several buy signals ensued shortly after that bias shift. Do not be surprised at dynamic bullish behavior in the next few weeks/months that should carry on through next year. The various Indicant models, economic fundamentals, and historical standards suggest significant bullishness in the coming months and the next two years.

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

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

Stop Loss Management

The Mid-term Indicant recommends a stop loss of 8% on recent buys because of the Quick-term Indicant’s bullish bias shift and bullishly evolving economic fundamentals.

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

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

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

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.

Stock and Fund Update

Click the following link to see sorted performance of stocks and funds with hold/avoid signals. In the past, they were included 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

Economic Conditions – Inflation, Currency, Interest Rates

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

Some of the commodity prices rose for the second consecutive week, unfavorably to a bullish stock market.

As you can see, Reuter’s Commodity Index shot north last week in what appears to be a bullish spurt from its already bullish position. The BRB Bridge Futures also elevated, unfavorably, from its bearish position. Click the following link for a direct observation.

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

Of course, the market will not react directly to that. The market is gauging their performance and relative position about six months from now. More directly, the stock market is more concerned about the impact to the Consumer Price Index.

So far, the stock market is conveying a bullish view of these values in commodities and related economic dynamics in the next six to nine months.

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% two-hundred and twenty-three weeks ago since the MTI buy signal on April 13, 2001. Last week it closed up 301.8%. The current annualized growth rate since the April 13, 2001 buy signal is 53.7%. After moving south in three of the past six weeks, it moved solidly to the north the past three weeks.

Fidelity Gold, Fund #28, is up 34.2% since the Mid-term Indicant signaled buy on August 26, 2005. That annualizes to 28.8%. This fund moved solidly to the north last week with a general rise in commodity prices.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 257.9% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 60.6%. This fund also moved solidly to the north the past three weeks after demonstrating fits of bearishness several weeks ago.

Vanguard Energy #18, VGENX, is up 171.3% (annualized at 47.4%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 121.6% (annualized at 41.5%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 121.3% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 37.4%. These energy related funds also moved solidly to the north the past three weeks.

Investors in these funds are supporting a 1970’s type of market with high inflation and high oil prices. Energy and gold always do well during such times. Fundamentals appear to be shifting in favor of selling the above funds (09/10/06). Do not sell until the Mid-term Indicant signals sell.

The SQI (Consolidated Short-term and Quick-term Indicant) model signaled buy for the GLD-ETF#11 on August 3, 2005. It is up 36.5% since then. It is annualized at 29.2%.

The SQI signaled buy for ETF#03 – Energy and Natural Resources on March 26, 2003. It is up 160.7% (annualized at 44.1%).

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 24.6% since the Mid-term Indicant signaled bull an average of 81-weeks ago. That annualizes to 15.8%, which is down significantly from the past three years. This is due to the bear signals for the S&P400 and S&P600 Indexes on July 21, 2006, which had been receiving a bull signal since October 25, 2002. Those two indices endured some fluttering after the expiration of the tremendous bull leg that lasted nearly four years. A new bull leg is underway and may proceed just as vigorously for these two indices as the bull leg from October 2002 through July 2006.

The Mid-term Indicant Dow Jones Industrial Average performance is now at $36,624,295. That beats buy and hold performance of $1,849,382 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $177,834. That beats buy and hold’s $134,914 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $196,678 that beats buy and hold’s $81,506 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 1,879.0%, 31.8%, and 141.3%, respectively, for these indices as of this past week.

The Indicant’s percentage advantage over buy and hold does not change during bull signals. The advantage changes only during bear signals. That is because the 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 2,000% over the past 100+ years.

Click here to go to the current Mid-term Indicant assessment of the ten major indices.

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

Divergence versus Convergence

Bullish convergence occurred the past three weeks, but general equities lagged energy and inflation sensitive securities for the second consecutive week. Bullish convergence, if it continues, is exceedingly bullish. If this configuration continues for one more week, expect dynamic bullishness. That will obviate the market’s bullish intentions through the heart and soul of bullish seasonality. If it does not, do not assume bearishness, as bullishness can still occur. Bullish convergence for four consecutive weeks suggests a probability exceeding 98% of solid bullish behavior during the heart and soul of bullish seasonality. There is just one more week to go for this phenomenon to be tested once again.

Mid-term Indicant Positions - NASDAQ100 Stocks

Click here to see NASDAQ100 report card history.

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

Mid-term Indicant Positions - Dow Jones 30 Industrial Stocks

Click here to see Dow 30 report card history.

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

Mid-term Indicant Positions - Dow Jones 15 Utility Stocks

Click here to see Dow Utilities Report Card history.

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

Mid-term Indicant Positions - Indicant Selected Stocks

Click here to see Indicant Select Stock Report Card history.

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

Mid-term Indicant Positions - Mutual Funds

Click here to see Mutual Fund Report Card history.

The Mid-term Indicant is now avoiding ProFunds Ultra Short. It is down 9.0% since the Mid-term Indicant signaled sell on September 15, 2006. Historical norms of market cyclicality suggest the next buying opportunity for this fund may not occur until 2009.

Click here for Mid-term Indicant Table of Mutual Funds.

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

Long Term Indicant Positions - Dow Jones Industrial Average

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

The Dow is up 317.7% (annualized at 21.1%) since the Long-term Indicant signaled bull 782-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

Quick/Short-term Indicant Stock Market Report - Summary

Quick-term Red Bulls: Twenty-six; increasingly solid bullish support.

Short-term/Quick-term Non-Bearishness: Countering “sustainable” deep bearish ambition.

Force Vectors: Solid support for sustainable bullish behavior.

Vector Pressure: Showing significant resistance to bearish influence.

Long-term Hold Positions: Solidly safe.

Current Quick-term Bias: Bullish.

Overall Market Status: Bullish support on a Quick-term basis.

Profit Potential from Naked Options: Should improve for calls now that the heart and soul of bullish seasonality has started.

Volume: Although lacking robustness, configurations support bullish bias.

Special Comments Continued from Tuesday, August 15, 2006 – Bias Shift to Bullish

The Quick-term and Short-term Indicant remain bullishly biased and increasingly so.

Quick-term/Short-term Indicant Stock Market Report Details

Both Indicant Volume Indicator’s are having trouble with a solid configuration of robustness. However, configurations continue to support bullish sustainability. The problem with this bull right now is its lack of ambition. It is a bull, nonetheless.

The Dow is up 5.2% since the Short-term Indicant signaled bull on September 12, 2006 for both the Dow and NASDAQ. The NASDAQ is up 6.1% since the Short-term Indicant signaled bull on the same day. They are annualizing at 41.8% and 49.3%, respectively, on the current short-term bullish cycle. Click here to see the Short-term Indicant’s history.

SQI Report Card (Consolidated Short/Quick), Status, and Charts

There were no buy signals and no sell signals. Although there were no buy signals, the SQI is signaling hold for 30-ETF’s. They are up 53.1% (annualized at 32.0%) since their respective buy signals an average of 85.3-weeks ago. The SQI is not avoiding any of the 30-ETF’s.

The SQI model is the one that most of you will prefer for your trading decisions. It generates fewer signals than the other two models and represents consistencies in the Quick-term and Short-term outlooks for the specific ETF’s. It also beats buy and hold on a regular basis, although there is only seven years of proof. The quality of that proof is high since this period includes a powerful bull and bear. The model sours a little during meandering markets with an excessive number of signals from time to time. Research toward perfecting continues.

Short-term Indicant Report Card, Status, and Charts

There were no buy signals and no sell signals. Although there were no buy signals, the Short-term Indicant is signaling hold for 30-ETF’s. They are up an average of 54.7% (annualized 34.2%) since the STI signaled, buy, an average of 82.3-weeks ago. The STI is not avoiding any of the 30-ETF’s.

Keep in mind, the Short-term Indicant is much more active in buying/selling than the Consolidated model. The Quick-term Indicant, which follows, is even more active.

Quick-term Report Card, Status, and Charts

There were no buy signal and no sell signals. Although there were no buy signals, the Quick-term Indicant is signaling hold for 30-ETF’s. They are up by an average of 9.3% (annualized at 25.2%) since the QTI signaled buy an average of 18.9-weeks ago. The Quick-term Indicant is not avoiding any ETF’s at this time, including the contrarians.

Conflicts Between the Short-term and Quick-term Indicants

Unanimous bullish consensus between the Short-term Indicant and the Quick-term Indicant remains absent. However, a bullish majority prevails, albeit weak. There are no conflicts, where the Short-term Indicant and the Quick-term Indicant are in disagreement between hold and avoid status. The bias shift on August 15, 2006 remains in favor of the bull.

There are ninety hold signals out of a possible 90, while there are no avoid signals. This ratio supports sustainable bullish behavior.

Quick-term Indicant Bull/Bear Health Report

None of the 30-ETF’s are below their bearish yellow curves. The average position of all thirty ETF’s is above bearish yellow by 9.5%. This is increasing the market’s non-bearish posture.

Twenty-six ETF’s are above their respective bullish red curves, which is a healthy bullish attribute. And it is increasingly bullish.

All thirty ETF average positions are 2.8% above their bullish red curves. This attribute is solidly bullish on a Quick-term Indicant basis.

Short-term Indicant Bull/Bear Health Report for ETF’s

The above heading is linked to the Short-term Indicant table. This paragraph is repeated daily as a reminder of accurately interpreting the charts. By clicking the charts on the table you can review potential contact with the breakdown lines (bearish) and potential contact with breakout lines (bullish). It is extremely bearish when several ETF’s are contacting their respective breakdown lines. The breakdown lines are the yellow lines (bearish). The breakout lines are the red ones (bullish). Close proximity to breakout implies an increased probability of an actual breakout occurring. It is certainly bullish and you will want to be in a hold position for those few days a year when the breakout occurs. Conversely, significant contact with yellow (breakdown) suggests “avoid” positions are best.

None of the non-contrarian-ETF’s are contacting their breakout lines. Keep in mind fourteen made contact last Thursday, but Friday’s pullback produced a non-contact result. Thursday’s performance was exceedingly bullish and Friday’s pullback is not substantive.

The average distance from breakout contact is at a miniscule 3.7%, which is not a great distance to take to find an area friendly for bullish exuberance.

The average distance from the price and breakdown is 20.8%. This configuration provides tremendous non-bearish support, which has been the case since March 2003. The probability of immediate contact remains low and thus a non-bearish bias is maintained on a short-term basis.

This attribute remains solidly non-bearish.

ETF Force Vector Configurations

You can scan the Quick-term Indicant for Exchange Traded Funds table and click on the charts to observe Force Vector configurations. Scroll down each of the charts, where a quick link has been added to take you to the next series of Quick-term ETF charts. Use you back arrow on your browser to return to the previous page.

Seventeen of the ETF Force Vectors are in bullish domains. They are holding up well in support of bullish bias.

To understand potential financial opportunities, click here to learn to identify Robust Force Vectors. They are visible on the Quick-term Indicant charts.

ETF Force Vectors/Vector Pressure Crossings/Option Signals

Remember, the links contained herein are more visible when reading this on the website.

Click this sentence for Vector Pressure Option Signals. There were no option buy signals for the seventeenth consecutive trading day. Although the market has been bullish, it is not dynamically so. It is just a simple steady bull, which is not favorable to naked options plays. Time premiums are eaten away in slow moving markets

Twenty-eight ETF Vector Pressures are in bullish domains, which supports a bullish bias. Positive Vector Pressure guards against bearish dominance. Positive Vector Pressure continues to hold and increasing its support of bullish bias. This number has been holding at this level with minimal shifts since mid-August, highlighting its continued support of the underlying Quick-term bullish bias.

Make certain you sell naked options when the Force Vectors shift direction or within two days of the purchase, whichever occurs first. If you are unfamiliar with this, take the options tour.

Remember options trading is risky. Never offer “market prices.” Always bid low in hopes of an intraday contrarian movement to the underlying assumption of directional behavior. Always place day-orders only. That keeps the floor folks out of your pocket book. Do not despair if your order does not take. There are plenty of opportunities throughout the course of the year. Remember, stalking is the key to success here. Although not necessary for stock market success, those of you who have a gambling instinct will enjoy this. For those of you with a longer-term perspective, it does not hurt to see what the short-term folks are thinking. The Indicant indicates both perspectives.

Quick-term and Short-term Indicant Summary

The shift from bearish bias to bullish bias started on Tuesday, August 15, 2006 after maintaining a bearish bias since early February 2006. The Quick-term and Short-term Indicant models are suggesting bullish bias. The weekly stock market report, dated September 10, 2006 illustrated a shift in economic fundamentals from bearish support to bullish support. The economic fundamentals discussed in that weekly report continue to shift in support of stock market bullishness. Ignore daily fluctuations. It is the cycle and trend that are important.

Based on Vector Pressure configurations and increasing bullish bias, do not write covered call options at this time.

The Quick-term Bull remains in tact with an increasing probability of strengthening.

ProFunds Ultra Short mutual fund moves inversely to the QQQQ by exponential amounts. The Consolidated Indicant model is no longer avoiding QQQQ, which no longer supports holding contrarian fund, ProFunds Ultra Short.

To familiarize yourself with viewing the market from an ETF perspective, click the following update links.

Quick-term ETF Options

Quick-term Indicant for ETF’s

Short-term Indicant for ETF’s

Consolidated Quick-term/Short-term Indicant for ETF’s

Click here to the report card, which is updated weekly, to link to related tours.

Links to the Short-term Indicant and Indicant Volume Indicator are below:

Short-term Indicant for DJIA and NASDAQ

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

Short-term Indicant Table for the NASDAQ Composite Index

Indicant Volume Indicator

Indicant Conclusion

The reason for the passive nature of this Quick-term Bull Market is due to a lack of bearish commitment in the commodities market. After appearing to have pinnacled, some commodities zoomed to new heights this past week. The stock market does not care about that, but there is little doubt the stock market is recalibrating its six to nine-month outlook.

The Quick-term Indicant remains solidly in support of the bullish stock market.

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

The daily updates are on the following link.

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

Hyperlinks

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

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

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

Happy Investing,

www.indicant.net

10/29/06

Oct 22, 2006 Indicant Weekly Stock Market Report

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

Dear Indicant Members:

This Week’s Report

The Heart and Soul of Bullish Seasonality Starts

Deep bearish seasonality just ended. It did not conform to historical standards this year. That is the first time in this new century with this aberrant behavior. The Quick-term Indicant spotted this aberration in mid-August with a shift to bullish bias.

Economic fundamentals shifted a few weeks after the Quick-term Indicant shifted to bullish bias. Oil prices, commodities, and interest rates appear poised for a cyclical shift that favors a bullish stock market. Keep in mind, their current cycle is configured in support of a bearish stock market. However, the stock market does not wait for such cycles to reverse. It anticipates all economic cyclical shifts. The stock market’s recent bullish behavior is anticipating dynamic cyclical shifts in energy, other commodities, and interest rates. It is anticipating the evaporation of inflationary threats.

Bullish convergence the past two weeks is increasing favorability for sustainable bullish behavior. Although some economic fundamentals shifted unfavorably to a bullish stock market last week, configurations suggest that is an aberration.

New trip lines were assigned this weekend at the expiration of deep bearish seasonality and the birth of the heart and soul of bullish seasonality. Those trip lines were raised as most of the deep bearish cycles finished above the bullish red curve. Click the following link to see the Dow’s new trip line.

http://www.indicant.net/Members/Updates/MTIRYS-Mkts-US/MTI-RYS-01-DJIA-Curr.htm

As you can see, it will not take much bearish behavior for the Mid-term Indicant to signal bear. The Mid-term Indicant signals bear when the index falls below both the bullish red curve and the trip line. These new elevated trip lines will identify bear markets quicker. It will be unusual for a bear market to be introduced in the pre-election and election years of 2007 and 2008, respectively.

A review of the stock market’s history with this model, click the following link:

http://www.indicant.net/Non-Members/Tours/MTIRYS-Mkts-US/MTIRYS-0005-01-DJI.htm

The heart and soul of bullish seasonality did not conform to historical expectations in 2002. December 2002 was the most bearish December since 1931. However, many of the October 2002-buy signals for stocks held up through that aberrant behavior. Even with that aberrant behavior in 2002, most mutual fund buy signals occurred in March 2003.

The bull leg, following the Mutual Fund buying spree in March 2003, produced classical bullishness in that pre-election year. Economic fundamentals are shaping up to support bullish behavior in the upcoming 2007 pre-election year.

Keep your eye on the Quick-term Indicant for shifts in bias as the market will not offer a convenient straight line to the north, northeast. If the market’s prior anticipations are determined to be in error, the market will snap quickly to a new course of bearishness. Right, the probability of that is low.

Weekly Buy/Sell Summary – Stocks and Funds

The Mid-term Indicant generated no buy signals and one sell signal.

In addition to the sell signal, the Mid-term Indicant is avoiding only 32-stocks and funds of the 345 tracked by the Indicant. The avoided stocks and funds are down an average of 16.4% since the Mid-term Indicant signaled sell an average of 23.1-weeks ago.

There were 100-stocks and funds avoided at this time last year. The avoided stocks and funds one year ago were down an average of 11.3% since their respective sell signals an average of 24.0-weeks earlier. Two years ago, on October 22, 2004, the Mid-term Indicant was avoiding 49-stocks and funds that were down an average of 33.0% since their respective sell signals an average of 52.3-weeks earlier. Three years ago on October 18, 2003, there were only 19-avoided stocks and funds. They were down 23.3% from their respective sell signals an average of 31.7-weeks earlier. On October 18, 2002, the Mid-term Indicant was avoiding 109-stocks and funds out of 295-tracked. They were down by an average of 31.4% since their sell signals an average of 15.8-weeks earlier.

Although there were no buy signals this weekend, the Mid-term Indicant is signaling hold for 311 of the 345-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 105.3%. That annualizes to 69.6%. The Mid-term Indicant has been signaling hold for these 311-stocks and funds for an average of 78.7-weeks.

One year ago on October 12, 2005, the Mid-term Indicant was holding 218-stocks and funds out of the 320 tracked at that time for an average of 98.9-weeks. Those 218-stocks and funds were up by an average of 103.0% (annualized at 54.1%). The Mid-term Indicant was signaling hold for 240-stocks and funds of the 296 tracked two years ago on October 22, 2004. They were up by an average of 64.7% (annualized at 63.0%) since their respective buy signals an average of 53.4-weeks earlier. There were 266-stocks and funds with hold signals on October 18, 2003 since their buy signals an average of 31.7-weeks earlier. They were up 51.8% (annualized at 95.4%). The Indicant was only tracking 296 stocks and funds in 2002-2004. On October 18, 2002, the Mid-term Indicant was signaling hold for only 76-stocks and funds out of 295-tracked. They were up by an average of 25.8% (annualized at 62.5%) since their buy signals 21.5-weeks earlier.

There were 107-buy signals on this weekend in 2002.

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 updated 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

The Quick/Short-term Indicant Stock Market Report

The Daily Indicant Stock Market Report for the last trading day of the current week is near the conclusion of this weekly stock market report.

The Indicant Stock Market Report’s Secular Market Blend

The market synchronized with near perfection to normal seasonality in 2002. The rolling half of May-October is typically bearish. The 2002 seasonal bear leg was dynamic and configured perfectly to historical standards. The current mid-term election year of 2006, fundamentally, supported historical standards for the first two thirds of this year. As of mid-August 2006, economic fundamentals shifted in support of a bullish onslaught for the heart and soul of bullish seasonality and the normally bullish presidential pre-election year of 2007. The Quick-term Indicant has been supporting this bullishness since August 15, 2006.

The heart and soul of bullish seasonality, ending January 31, 2006, demonstrated bullish normalcy. The market had been more or less a meanderer until mid-August 2006, when the Quick-term Indicant shifted from bearish to bullish bias.

The Dow30 found bottom in the last presidential mid-term election year on October 9, 2002 at 7,286.27. The NASDAQ found bottom on the same day at 1114.11. Finding cyclical bottoms in mid-term election years is common. Fortunately, the bottom of 2006, so far, was minimal and not sharp when compared to that of 2002. The Dow is up 64.7% from the last mid-term presidential election year bottom. The NASDAQ is up 110.2% since October 9, 2002. The S&P600, small caps, is up even more by 127.0% since October 9, 2002.

The NASDAQ is down 53.6% from its historical high of 5048.62 on March 9, 2000. The Dow is up by 2.4% from its previous week-ending historical high of 11723 on January 13, 2000. It took over five-and-a-half years to establish a new high. The S&P500 is down 10.4% since its all time high of March 23, 2000. So far, the new century, 2000 inclusive, has not been kind to long-term investors. The NASDAQ needs to climb 115.5% and S&P500 by 11.6% to establish new weekly closing highs.

Until the past few weeks, the stock market has been slightly bullish since late 2003 with pronounced meandering behavior. The only significant bullish expressions not followed by bearish expressions occurred in the heart and soul of bullish seasonality (Nov-Jan) in 2003, 2004, and 2005. Other than those “heart and soul” bullish cycles, the market has been relatively flat since early 2004.

For example, the Dow fell 4.4% from January 31, 2004 through October 31, 2004. The NASDAQ fell by the same amount. The Dow fell 0.5% from January 31, 2005 through October 31, 2005, while the NASDAQ was up only 2.8%. Since January 31, 2006, the Dow is up 10.5% and the NASDAQ is up 1.6%. The market was not bullishly expressive after the heart and soul of bullish seasonality the past two years. Recent bullish expressions have demonstrated little respect for historical normalcy. The Quick-term Indicant is currently suggesting the mid-term election year bottom is behind us.

The Quick-term Indicant’s bearish bias most of this year was replaced with a bullish bias ten weeks ago. Several buy signals ensued during these past ten weeks. Do not be surprised at dynamic bullish behavior in the next few weeks/months that should carry on through next year. The various Indicant models, economic fundamentals, and historical standards suggest significant bullishness in the coming months and the next two years.

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

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

Stop Loss Management

The Mid-term Indicant recommends a stop loss of 8% on recent buys because of the Quick-term Indicant’s bullish bias shift and bullishly evolving economic fundamentals.

Stock and Fund Update

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

Economic Conditions – Inflation, Currency, Interest Rates

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

Although there was a bullish bounce last week in some interest rates and commodity prices, the configurations suggest this is merely a bounce. Although bullish behavior from these two economic variables was undesired, it is consistent with the underlying cycles underway. In other words their current bullish cycles, which generally influences bearish market behavior, supports current cycles. However, configurations continue to suggest a cyclical shift to a bearish direction and the corresponding support for bullish stock market 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% two-hundred and twenty-two weeks ago since the MTI buy signal on April 13, 2001. Last week it closed up 298.2%. The current annualized growth rate since the April 13, 2001 buy signal is 53.3%. After moving south in three of the past five weeks, it moved solidly to the north the past two weeks.

Fidelity Gold, Fund #28, is up 31.9% since the Mid-term Indicant signaled buy on August 26, 2005. That annualizes to 27.3%. This fund moved slightly to the south last week.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 243.2% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 57.4%. This fund also moved solidly to the north the past two weeks after demonstrating fits of bearishness several weeks ago.

Vanguard Energy #18, VGENX, is up 164.7% (annualized at 45.8%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 114.1% (annualized at 39.2%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 114.1% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 35.6%. These energy related funds also moved solidly to the north the past two weeks.

The SQI (Consolidated Short-term and Quick-term Indicant) model signaled buy for the GLD-ETF#11 on August 3, 2005. It is up 34.9% since then. It is annualized at 28.4%.

The SQI signaled buy for ETF#03 – Energy and Natural Resources on March 26, 2003. It is up 154.4% (annualized at 42.6%).

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 23.9% since the Mid-term Indicant signaled bull an average of 79-weeks ago. That annualizes to 15.5%, which is down significantly from the past three years. This is due to the bear signals for the S&P400 and S&P600 Indexes on July 21, 2006, which had been receiving a bull signal since October 25, 2002. Those two indices endured some fluttering after the expiration of the tremendous bull leg that lasted nearly four years. A new bull leg is underway and may proceed just as vigorously as the bull leg from October 2002 through July 2006.

The Mid-term Indicant Dow Jones Industrial Average performance is now at $36,358,055. That beats buy and hold performance of $1,836,011 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $176,706. That beats buy and hold’s $134,058 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $195,982 that beats buy and hold’s $81,217 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 1,879.0%, 31.8%, and 141.3%, respectively, for these indices as of this past week.

Click here to go to the current Mid-term Indicant assessment of the ten major indices.

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

Divergence versus Convergence

Bullish convergence occurred the past two weeks, but general equities lagged energy and inflation sensitive securities. Bullish convergence, if it continues, is exceedingly bullish. If this configuration continues for two more weeks, expect dynamic bullishness. That will obviate the market’s bullish intentions through the heart and soul of bullish seasonality. If it does not, do not assume bearishness, as bullishness can still occur. Bullish convergence for four consecutive weeks suggests a probability exceeding 98% of solid bullish behavior during the heart and soul of bullish seasonality.

Mid-term Indicant Positions - NASDAQ100 Stocks

Click here to see NASDAQ100 report card history.

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

Mid-term Indicant Positions - Dow Jones 30 Industrial Stocks

Click here to see Dow 30 report card history.

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

Mid-term Indicant Positions - Dow Jones 15 Utility Stocks

Click here to see Dow Utilities Report Card history.

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

Mid-term Indicant Positions - Indicant Selected Stocks

Click here to see Indicant Select Stock Report Card history.

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

Mid-term Indicant Positions - Mutual Funds

Click here to see Mutual Fund Report Card history.

The Mid-term Indicant is now avoiding ProFunds Ultra Short. It is down 10.3% since the Mid-term Indicant signaled sell on September 15, 2006. Historical norms of market cyclicality suggests the next buying opportunity for this fund may not occur until 2009.

Click here for Mid-term Indicant Table of Mutual Funds.

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

Long Term Indicant Positions - Dow Jones Industrial Average

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

The Dow is up 314.6% (annualized at 20.9%) since the Long-term Indicant signaled bull 781-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

Quick/Short-term Indicant Stock Market Report - Summary

Quick-term Red Bulls: Twenty-five; increasingly solid bullish support.

Short-term/Quick-term Non-Bearishness: Countering “sustainable” deep bearish ambition.

Force Vectors: Solid support for sustainable bullish behavior.

Vector Pressure: Showing significant resistance to bearish dominance.

Long-term Hold Positions: Solidly safe.

Current Quick-term Bias: Bullish.

Overall Market Status: Bullish support on a Quick-term basis.

Profit Potential from Naked Options: Should improve for calls with the approaching heart and soul of bullish seasonality.

Volume: Although lacking robustness, configurations support bullish bias.

Special Comments Continued from Tuesday, August 15, 2006 – Bias Shift to Bullish

The Quick-term and Short-term Indicant remain bullishly biased and increasingly so.

Quick-term/Short-term Indicant Stock Market Report Details

The NASDAQ Indicant Volume Indicator is forming a robust configuration in full support of continuing bullish behavior. The NYSE is lateral, but not lethargic. The underlying bullish bias continues to receive support from these configurations.

The Dow is up 4.4% since the Short-term Indicant signaled bull on September 12, 2006 for both the Dow and NASDAQ. The NASDAQ is up 5.7% since the Short-term Indicant signaled bull on the same day. They are annualizing at 42.1% and 54.8%, respectively, on the current short-term bullish cycle. Click here to see the Short-term Indicant’s history.

Nothing has changed the past few days. Configurations continue to suggest the historical standard of deep bearish seasonality is irrelevant at this time, but its influence remains possible. However, current configurations also suggest deep bearish seasonality’s dominance would be shallow.

SQI Report Card (Consolidated Short/Quick), Status, and Charts

There were no buy signals and no sell signals. Although there were no buy signals, the SQI is signaling hold for 30-ETF’s. They are up 51.7% (annualized at 31.5%) since their respective buy signals an average of 84.3-weeks ago. The SQI is not avoiding any of the 30-ETF’s.

Short-term Indicant Report Card, Status, and Charts

There were no buy signals and no sell signals. Although there were no buy signals, the Short-term Indicant is signaling hold for 30-ETF’s. They are up an average of 53.3% (annualized 33.7%) since the STI signaled, buy, an average of 81.3-weeks ago. The STI is not avoiding any of the 30-ETF’s.

Keep in mind, the Short-term Indicant is much more active in buying/selling than the Consolidated model. The Quick-term Indicant, which follows, is even more active.

Quick-term Report Card, Status, and Charts

There were no buy signals and no sell signals. Although there were no buy signals, the Quick-term Indicant is signaling hold for 29-ETF’s. They are up by an average of 8.7% (annualized at 24.2%) since the QTI signaled buy an average of 18.5-weeks ago. Although there were no sell signals, the Quick-term Indicant is avoiding one contrarian ETF at this time. It is up 4.9% since its sell signal 4.4-weeks ago.

Conflicts Between the Short-term and Quick-term Indicants

Unanimous bullish consensus between the Short-term Indicant and the Quick-term Indicant remains absent. However, a bullish majority prevails, albeit weak. There is only one conflict, where the Short-term Indicant and the Quick-term Indicant are in disagreement between hold and avoid status. The bias shift on August 15, 2006 remains in favor of the bull.

There are eighty-nine hold signals out of a possible 90, while there is only one avoid signal. This ratio supports the life of the bull. The bearish bias that pervaded the market most of the year is no longer present. It is becoming apparent that the historical standard of deep bearish seasonality will not exert its influence on the market this year.

Quick-term Indicant Bull/Bear Health Report

None of the 30-ETF’s are below their bearish yellow curves. The average position of all thirty ETF’s is above bearish yellow by 8.9%. This is increasing the market’s non-bearish posture.

Twenty-five ETF’s are above their respective bullish red curves, which is a healthy bullish attribute. And it is increasingly bullish.

All thirty ETF average positions are 2.4% above their bullish red curves. This attribute is solidly bullish on a Quick-term Indicant basis.

Short-term Indicant Bull/Bear Health Report for ETF’s

Four non-contrarian-ETF’s are contacting their breakout lines. This remains a solid bullish attribute. Making contact with even a small number of ETF’s is solidly bullish.

The average distance from breakout contact is at a miniscule 4.0%, which is not a great distance to take to find an area friendly for bullish exuberance.

The average distance from the price and breakdown is 20.6%. This configuration provides tremendous non-bearish support, which has been the case since March 2003. The probability of immediate contact remains low and thus a non-bearish bias is maintained on a short-term basis.

This attribute remains solidly non-bearish.

ETF Force Vector Configurations

Eight of the ETF Force Vectors are in bullish domains, which is a decrease of eleven since last Thursday’s close. They are holding up well in support of bullish bias. Some Force Vectors are shifting south, but the configuration remains bullish.

To understand potential financial opportunities, click here to learn to identify Robust Force Vectors. They are visible on the Quick-term Indicant charts.

ETF Force Vectors/Vector Pressure Crossings/Option Signals

Remember, the links contained herein are more visible when reading this on the website.

Click this sentence for Vector Pressure Option Signals. There were no option buy signals for the twelfth consecutive trading day.

Make certain you sell naked options when the Force Vectors shift direction or within two days of the purchase, whichever occurs first. If you are unfamiliar with this, take the options tour.

Remember, options trading is risky. Never offer “market prices.” Always bid low in hopes of an intraday contrarian movement to the underlying assumption of directional behavior. Always place day-orders only. That keeps the floor folks out of your pocket book. Do not despair if your order does not take. There are plenty of opportunities throughout the course of the year. Remember, stalking is the key to success here. Although not necessary for stock market success, those of you who have a gambling instinct will enjoy this. For those of you with a longer-term perspective, it does not hurt to see what the short-term folks are thinking. The Indicant indicates both perspectives.

Quick-term and Short-term Indicant Summary

Based on Vector Pressure configurations and increasing bullish bias, do not write covered call options at this time.

The Quick-term Bull remains in tact with an increasing probability of strengthening.

To familiarize yourself with viewing the market from an ETF perspective, click the following update links.

Quick-term ETF Options

Quick-term Indicant for ETF’s

Short-term Indicant for ETF’s

Consolidated Quick-term/Short-term Indicant for ETF’s

Click here to the report card, which is updated weekly, to link to related tours.

Links to the Short-term Indicant and Indicant Volume Indicator are below:

Short-term Indicant for DJIA and NASDAQ

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

Short-term Indicant Table for the NASDAQ Composite Index

Indicant Volume Indicator

Indicant Conclusion

Deep bearish seasonality exerted little influence on the stock market. Its non-bearish behavior converted to outright bullishness in the middle of August. The heart and soul of bullish seasonality starts this coming week. That, coupled with two consecutive weeks of bullish convergence supports continued bullishness in the upcoming weeks/months.

The bullish behavior since mid-August has not been dynamic. It can lull one to sleep. However, a bull is a bull regardless of magnitude.

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

The daily updates are on the following link.

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

Hyperlinks

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

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

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

Happy Investing,

www.indicant.net

10/22/06

Oct 15, 2006 Indicant Weekly Stock Market Report

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

Dear Indicant Members:

You can read this report in html format on the Website. This email is in plain text to ensure everyone receives it. If you wish to read this report on the web site, please click the link here. This report contains several links to charts and additional information. Those links are not visible in many email programs. However, they are clearly visible when reading on the website. The current weekly stock market report is in the member’s only section.

Click the below link to view the current weekly report on the website. The links to charts and critical information are more visible there.

http://www.indicant.net/Members/Updates/Current%20Issues/WKCI.htm

The public can review prior weekly reports. Click the below link to view them. However, recent buy, sell, hold, avoid, bull, and bear signals are limited to members only.

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

This Week’s Report

Bullish Convergence Last Week

Last week’s bullishness, although mild, was consistent in all sectors. This configuration of bullish convergence was the first in quite some time with such powerful dynamics. This is a common attribute ahead of sustainable bullish behavior.

As many of you know, the stock market is always attempting to anticipate economic behavior and the resultant corporate earnings. The current Quick-term Indicant bullish cycle is not as dynamic as the typical bullishness during the heart and soul of bullish seasonality. That suggests a small degree of economic and earnings uncertainty for early 2007. Also, the heart and soul of bullish seasonality has not yet officially begun, although the market is behaving in this manner.

A bullish stock market is more likely during periods of declining interest rates and declining inflation. Notice the small up tick in the 3-Month T-Bill in the below link.

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

Few phenomena move in a straight line or perfectly smooth cycle. That little up tick in short-term interest rates can divert money from equities to safer investments. That results in reduced equity demand and thus acts as a depressant to stock prices. The stock market likes to see more cyclical commitment in underlying data before engaging in its own momentous directional movements.

Pre-election years are the most bullish in the four-year presidential election cycle. The theory supporting that phenomenon is economic support from the political institutions ahead of elections. The post election year is typically the most bearish. The theory holds that once elected, politicians are secure in their employment and are not sensitive to economic health.

Most politicians support social programs because that elevates their power just after the elections. A politician is not as important or powerful as business leaders in purely capitalistic societies. Thus the reason for social programs from political circles. Everyone needs to feel important; even politicians. The stock market does not like socialism. It only likes earnings and building wealth. Social programs do not do that.

As you can see from the aforementioned 3-Month T-Bill, it appears to be peaking just ahead of the upcoming normally bullish pre-election year. The political institutions, although not directly through some conspiracy, tend to produce controllable economic variables along the empirical observation of bullishness and bearishness on the four-year presidential election cycle.

The stock market has already biased in favor of the bull in anticipation of the 3-Month T-Bill turning south and setting up favorable economic conditions for higher corporate earnings. The stock market wants to see a little more commitment in perceived decline in short-term interest rates, as well as other related securities, before producing dynamic bullishness. The stock market did not wait to see interest rates pinnacle. It turned bullish ahead of the interest rate peak, which is typical of its anticipatory abilities. However, that little up tick last week is just enough for a pause in stock market bullishness.

Dynamic bearishness occurs when prior stock market anticipations contain error. The stock market, like business, does not like surprises. This is especially true when the surprise is unfavorable. The interest rate cycle is a by-product of the inflationary cycle. Keep in mind the stock market does not excessive inflation or deflation. The bear takes over when either one of them occur.

As you can see from the following link, the great bull leg in the 1990’s paralleled a declining producer price index. You will notice the stock market did not like it when the PPI exceeded 6.0%. You will also notice the market was not impressed with the rapid decline in the PPI following that unfavorable rise.

http://www.indicant.net/Members/Updates/Economic/E-PPI.htm

The Dow pinnacled as the PPI started rising to potential inflationary threats. The market continued to fall when the PPI reversed course and threatened with potential deflation with the recession at the turn of the last century. The rapid decline in the PPI following that rise did not provide the stock market enough comfort to abandon its gentle bearish slide. The PPI’s rise in late 2002 and 2003 was enough to stimulate bullish market behavior. The market’s meandering behavior in 2004 and 2005 was impressive in the face of inflationary threats from the PPI. It is as if the market ignored those inflationary threats.

The following link will illustrate a more stable Consumer Price Index, which is what influences interest rates.

http://www.indicant.net/Members/Updates/Economic/E-CPI.htm

You can see that each movement above 3.0% was met with stock market bearishness or meandering behavior.

The stock market does not anticipate the PPI or CPI. It only cares about economic conditions and earnings. That is what it anticipates. To do a good job of anticipating earnings and economic conditions, it keeps an eye on several economic data. These are just two of them. However, these two are foremost in their influence on interest rates. High interest rates depress the demand for stocks and thus depress the price of stocks. Low interest rates elevate the demand for stocks and thus increase stock prices.

Conditions are ripe for this supply/demand influence on stock prices. The Producer Price Index will continue to decline with falling oil prices, even though oil prices are expected to remain at relatively high levels. That expectation is what helped facilitate last week’s bullish convergence. The market is anticipating economic growth and corresponding higher corporate earnings, which require fuel. The supply of that fuel is sufficient to stifle and correct the meteoric rise in oil prices in 2004 and 2005. That dynamic should lead to a reducing Consumer Price Index, which should propel interest rates to the south.

These dynamics are setting up for a classically bullish pre-election year in 2007.

Weekly Buy/Sell Summary – Stocks and Funds

The Mid-term Indicant generated one buy signal and one sell signal.

In addition to the sell signal, the Mid-term Indicant is avoiding only 32-stocks and funds of the 345 tracked by the Indicant. The avoided stocks and funds are down an average of 16.1% since the Mid-term Indicant signaled sell an average of 22.3-weeks ago.

There were 97-stocks and funds avoided at this time last year. The avoided stocks and funds one year ago were down an average of 12.0% since their respective sell signals an average of 24.0-weeks earlier. Two years ago, on October 15, 2004, the Mid-term Indicant was avoiding 52-stocks and funds that were down an average of 33.1% since their respective sell signals an average of 51.5-weeks earlier. Three years ago on October 11, 2003, there were only 24-avoided stocks and funds. They were down 22.5% from their respective sell signals an average of 27.9-weeks earlier. On October 11, 2002, the Mid-term Indicant was avoiding 212-stocks and funds out of 295-tracked. They were down by an average of 25.6% since their sell signals an average of 11.3-weeks earlier.

In addition to the buy signal this weekend, the Mid-term Indicant is signaling hold for 311 of the 345-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 106.2%. That annualizes to 71.0%. The Mid-term Indicant has been signaling hold for these 311-stocks and funds for an average of 77.7-weeks.

One year ago on October 14, 2005, the Mid-term Indicant was holding 218-stocks and funds out of the 320 tracked at that time for an average of 97.9-weeks. Those 218-stocks and funds were up by an average of 103.2% (annualized at 54.8%). The Mid-term Indicant was signaling hold for 240-stocks and funds of the 296 tracked two years ago on October 15, 2004. They were up by an average of 63.7% (annualized at 63.5%) since their respective buy signals an average of 52.2-weeks earlier. There were 263-stocks and funds with hold signals on October 11, 2003 since their buy signals an average of 31.0-weeks earlier. They were up 52.9% (annualized at 98.7%). The Indicant was only tracking 296 stocks and funds in 2002-2004. On October 11, 2002, the Mid-term Indicant was signaling hold for only 52-stocks and funds out of 295-tracked. They were up by an average of 25.2% (annualized at 52.8%) since their buy signals 24.8-weeks earlier.

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

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

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

All updated 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

The Quick/Short-term Indicant Stock Market Report

The Daily Indicant Stock Market Report for the last trading day of the current week is near the conclusion of this weekly stock market report.

The Indicant Stock Market Report’s Secular Market Blend

The market synchronized with near perfection to normal seasonality in 2002. The rolling half of May-October is typically bearish. The 2002 seasonal bear leg was dynamic and configured perfectly to historical standards. The current mid-term election year of 2006, fundamentally, supported historical standards for the first two thirds of this year. As of mid-August 2006, economic fundamentals shifted in support of a bullish onslaught for the heart and soul of bullish seasonality and the normally bullish presidential pre-election year of 2007. The Quick-term Indicant has been supporting this bullishness since August 15, 2006.

The Dow30 found bottom in the last presidential mid-term election year on October 9, 2002 at 7,286.27. The NASDAQ found bottom on the same day at 1114.11. Finding cyclical bottoms in mid-term election years is common. Fortunately, the bottom of 2006, so far, was minimal and not sharp when compared to that of 2002. The Dow is up 64.2% from the last mid-term presidential election year bottom. The NASDAQ is up 111.6% since October 9, 2002. The S&P600, small caps, is up even more by 127.7% since October 9, 2002.

The NASDAQ is down 53.3% from its historical high of 5048.62 on March 9, 2000. The Dow is now up by 2.0% from its previous week-ending historical high of 11723 on January 13, 2000. It took over five-and-a-half years to establish a new high. The S&P500 is down 10.6% since its all time high of March 23, 2000. So far, the new century, 2000 inclusive, has not been kind to long-term investors. The NASDAQ needs to climb 114.2% and S&P500 by 11.9% to establish new weekly closing highs.

For example, the Dow fell 4.4% from January 31, 2004 through October 31, 2004. The NASDAQ fell by the same amount. The Dow fell 0.5% from January 31, 2005 through October 31, 2005, while the NASDAQ was up only 2.8%. Since January 31, 2006, the Dow is up 10.1% and the NASDAQ is up 2.2%. The market was not bullishly expressive after the heart and soul of bullish seasonality the past two years. Recent bullish expressions have demonstrated little respect for historical normalcy. The Quick-term Indicant is currently suggesting the mid-term election year bottom is behind us.

Since August 18, 2006, the Mid-term Indicant generated 140-buy signals and only three sell signals. That is an unusually high number of buy signals when considering seasonal market influences. However, all Indicant models supported this recent buying surge just as they did in October 2002 and March 2003.

The Quick-term Indicant’s bearish bias most of this year was replaced with a bullish bias nine weeks ago. Several buy signals ensued during these past nine weeks. Do not be surprised at dynamic bullish behavior in the next few weeks/months that should carry on through next year. The various Indicant models, economic fundamentals, and historical standards suggest significant bullishness in the coming months and the next two years.

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

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

Stop Loss Management

The Mid-term Indicant recommends a stop loss of 8% on recent buys because of the Quick-term Indicant’s bullish bias shift and bullishly evolving economic fundamentals.

Stock and Fund Update

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

Economic Conditions – Inflation, Currency, Interest Rates

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

There is nothing different from the past few weeks. Fundamentals continue favorable to a bullish bias. Interest rates continue to flatten and are currently configured past their recent cyclical peaks. Commodities are diving sharply to the south, which also favors a bullish stock market bias. The U.S. Dollar is sufficiently weakened leaving room for the Federal Reserve Board to continue relaxing 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% two-hundred and twenty-two weeks ago since the MTI buy signal on April 13, 2001. Last week it closed up 287.7%. The current annualized growth rate since the April 13, 2001 buy signal is 48.7%. After moving south in three of the past four weeks, it moved solidly to the north last week.

Fidelity Gold, Fund #28, is up 32.5% since the Mid-term Indicant signaled buy on August 26, 2005. That annualizes to 28.4%. This fund also moved north last week.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 224.2% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 55.5%. This fund also moved solidly to the north last week after demonstrating fits of bearishness in the past few weeks.

Vanguard Energy #18, VGENX, is up 151.1% (annualized at 41.9%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 108.9% (annualized at 37.6%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 110.3% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 34.4%. These energy related funds also moved solidly to the north last week.

The SQI (Consolidated Short-term and Quick-term Indicant) model signaled buy for the GLD-ETF#11 on August 3, 2005. It is up 34.5% since then. It is annualized at 28.5%.

The SQI signaled buy for ETF#03 – Energy and Natural Resources on March 26, 2003. It is up 151.1% (annualized at 41.9%).

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 23.4% since the Mid-term Indicant signaled bull an average of 79-weeks ago. That annualizes to 15.4%, which is down significantly from the past three years. This is due to the bear signals for the S&P400 and S&P600 Indexes on July 21, 2006, which had been receiving a bull signal since October 25, 2002. Those two indices endured some fluttering after the expiration of the tremendous bull leg that lasted nearly four years. A new bull leg is underway and may proceed just as vigorously as the bull leg from October 2002 through July 2006.

The Mid-term Indicant Dow Jones Industrial Average performance is now at $36,231,251. That beats buy and hold performance of $1,829,642 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $176,321. That beats buy and hold’s $133,766 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $197,236 that beats buy and hold’s $81,236 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 1,879.0%, 31.8%, and 141.3%, respectively, for these indices as of this past week.

Click here to go to the current Mid-term Indicant assessment of the ten major indices.

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

Divergence versus Convergence

There was solid bullish convergence last week with general equities moving north along with contrarian sectors, such as energy and commodity related securities. Bullish convergence, if it continues, is exceedingly bullish.

Mid-term Indicant Positions - NASDAQ100 Stocks

Click here to see NASDAQ100 report card history.

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

Mid-term Indicant Positions - Dow Jones 30 Industrial Stocks

Click here to see Dow 30 report card history.

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

Mid-term Indicant Positions - Dow Jones 15 Utility Stocks

Click here to see Dow Utilities Report Card history.

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

Mid-term Indicant Positions - Indicant Selected Stocks

Click here to see Indicant Select Stock Report Card history.

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

Mid-term Indicant Positions - Mutual Funds

Click here to see Mutual Fund Report Card history.

Click here for Mid-term Indicant Table of Mutual Funds.

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

Long Term Indicant Positions - Dow Jones Industrial Average

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

The Dow is up 313.2% (annualized at 20.9%) since the Long-term Indicant signaled bull 780-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

Quick/Short-term Indicant Stock Market Report - Summary

Quick-term Red Bulls: Twenty-six; increasingly solid bullish support.

Short-term/Quick-term Non-Bearishness: Countering “sustainable” deep bearish ambition.

Force Vectors: Solid support for sustainable bullish behavior.

Vector Pressure: Showing significant resistance to bearish dominance.

Long-term Hold Positions: Solidly safe.

Current Quick-term Bias: Bullish.

Overall Market Status: Bullish support on a Quick-term basis.

Profit Potential from Naked Options: Should improve for calls with the approaching heart and soul of bullish seasonality.

Special Comments Continued from Tuesday, August 15, 2006 – Bias Shift to Bullish

As stated the past few days, the Quick-term and Short-term Indicant remain bullishly biased and increasingly so.

Quick-term/Short-term Indicant Stock Market Report Details

The Indicant Volume Indicators continue moving lazily, but not yet lethargically. The omission of robustness is not threatening to the bullish cycle underway. Volume related configurations continue to support for the bullish bias.

The Dow is up 4.0% since the Short-term Indicant signaled bull on September 12, 2006 for both the Dow and NASDAQ. The NASDAQ is up 6.4% since the Short-term Indicant signaled bull on the same day. They are annualizing at 47.4% and 75.2%, respectively, on the current short-term bullish cycle. Click here to see the Short-term Indicant’s history.

SQI Report Card (Consolidated Short/Quick), Status, and Charts

There were no buy signals and no sell signals. Although there were no buy signals, the SQI is signaling hold for 30-ETF’s. They are up 51.6% (annualized at 31.8%) since their respective buy signals an average of 83.3-weeks ago. The SQI is not avoiding any of the 30-ETF’s.

Short-term Indicant Report Card, Status, and Charts

There were no buy signals and no sell signals. Although there were no buy signals, the Short-term Indicant is signaling hold for 30-ETF’s. They are up an average of 53.1% (annualized 34.0%) since the STI signaled, buy, an average of 80.3-weeks ago. The STI is not avoiding any of the 30-ETF’s.

Keep in mind, the Short-term Indicant is much more active in buying/selling than the Consolidated model. The Quick-term Indicant, which follows, is even more active.

Quick-term Report Card, Status, and Charts

There were no buy signals and no sell signals. Although there were no buy signals, the Quick-term Indicant is signaling hold for 29-ETF’s. They are up by an average of 8.7% (annualized at 25.5%) since the QTI signaled buy an average of 17.5-weeks ago. Although there were no sell signals, the Quick-term Indicant is avoiding one contrarian ETF at this time. It is up 3.5% since its sell signal 3.4-weeks ago.

Conflicts Between the Short-term and Quick-term Indicants

Quick-term Indicant Bull/Bear Health Report

None of the 30-ETF’s are below their bearish yellow curves. The average position of all thirty ETF’s is above bearish yellow by 9.1%. This is increasing the market’s non-bearish posture.

Twenty-six ETF’s are above their respective bullish red curves, which is a healthy bullish attribute. And it is increasingly bullish.

All thirty ETF average positions are 2.7% above their bullish red curves. This attribute is solidly bullish on a Quick-term Indicant basis.

Short-term Indicant Bull/Bear Health Report for ETF’s

A whopping ten non-contrarian-ETF’s are contacting their respective breakout lines. This is again bullish and increasingly so. Making contact with even a small number of ETF’s is solidly bullish. Ten making contact is exceedingly bullish.

The average distance from breakout contact is at a miniscule 3.9%, which is not a great distance to take to find an area friendly for bullish exuberance.

The average distance from the price and breakdown is 20.9%. This configuration provides tremendous non-bearish support, which has been the case since March 2003. The probability of immediate contact remains low and thus a non-bearish bias is maintained on a short-term basis.

This attribute remains solidly non-bearish.

ETF Force Vector Configurations

Twenty-one of the ETF Force Vectors are in bullish domains. They are holding up well in support of bullish bias.

To understand potential financial opportunities, click here to learn to identify Robust Force Vectors. They are visible on the Quick-term Indicant charts.

ETF Force Vectors/Vector Pressure Crossings/Option Signals

Remember, the links contained herein are more visible when reading this on the website.

Click this sentence for Vector Pressure Option Signals. There were no option buy signals for the seventh consecutive trading day.

Twenty-eight ETF Vector Pressures are in bullish domains, which supports a bullish bias. That is an increase by five from last Wednesday. Positive Vector Pressure guards against bearish dominance. Positive Vector Pressure continues to hold and increasing its support of bullish bias.

Make certain you sell naked options when the Force Vectors shift direction or within two days of the purchase, whichever occurs first. If you are unfamiliar with this, take the options tour.

Quick-term and Short-term Indicant Summary

The shift from bearish bias to bullish bias started on Tuesday, August 15, 2006 after maintaining a bearish bias since early February 2006. Although historical standards and the political election cycle favor a bearish dip before November, the Quick-term and Short-term Indicant models are suggesting bullish bias. The weekly stock market report, dated September 10, 2006 illustrated a shift in economic fundamentals from bearish support to bullish support. The economic fundamentals discussed in that weekly report continue to shift in support of stock market bullishness. Ignore daily fluctuations. It is the cycle and trend that are important.

Based on Vector Pressure configurations and increasing bullish bias, do not write covered call options at this time.

The Quick-term Bull remains in tact with an increasing probability of strengthening.

To familiarize yourself with viewing the market from an ETF perspective, click the following update links.

Quick-term ETF Options

Quick-term Indicant for ETF’s

Short-term Indicant for ETF’s

Consolidated Quick-term/Short-term Indicant for ETF’s

Click here to the report card, which is updated weekly, to link to related tours.

Links to the Short-term Indicant and Indicant Volume Indicator are below:

Short-term Indicant for DJIA and NASDAQ

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

Short-term Indicant Table for the NASDAQ Composite Index

Indicant Volume Indicator

Indicant Conclusion

There is little new from the past five weekly stock market reports. Deep bearish seasonality is becoming increasingly irrelevant in this mid-term election year. Economic fundamentals continue to support dynamic bullish behavior. The Quick-term Indicant shifted from bearish to bullish bias in mid-August 2006. Although that bias is not supported by volume and is relatively weak, it is a bullish bias nonetheless. It seldom pays to be argumentative with the Quick-term Indicant’s bias. Basic fundamentals are shaping up for dynamic bullishness over the next few weeks, months, and years.

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

The daily updates are on the following link.

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

Hyperlinks

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

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

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

Happy Investing,

www.indicant.net

10/15/06

Oct 08, 2006 Indicant Weekly Stock Market Report

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

This Week’s Report

Bullish Sustainability Becoming More Obvious

Several weeks ago, the Indicant Weekly Stock Market Report suggested hard economic fundamentals are shaping up to fuel significant stock market bullishness. Most notably is the sharp decline in the Producer Price Index. Please click the following link.

http://www.indicant.net/Members/Updates/Economic/E-PPI.htm

You will notice the trend line (green) is shifting slightly to the south. You should also notice the great bull leg of 2003 was coupled to a similarly declining PPI. Scroll down on the above link to see a historical perspective of the PPI impact to stock market behavior.

Although not as dramatic or aggressive, the Consumer Price Index is showing some early indications of bullish support. Click the following link.

http://www.indicant.net/Members/Updates/Economic/E-CPI.htm

What follows are additional hard economic fundamentals. There are not yet cyclical shifts in these other variables configured to support stock market bullishness. However, recent data points are suggesting a high probability of the desired cyclical shifts. The market never waits for the cyclical shifts to confirm its sustainable trend. The stock market anticipates those shifts in trend. A trend cannot shift until there is a cyclical shift. The stock market typically anticipates economic trend shifts by six to nine months.

Short-term interest rates continue to indicate a southerly trek, which supports stock market bullishness.

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

The same is true for long-term interest rates.

http://www.indicant.net/Members/Updates/Economic/E08.htm

High profile commodities appear to have pinnacled and starting a cyclical shift favorable to a cyclical shift and possibly a trend shift.

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

Recent stock market bullishness has already anticipated fundamental economic shifts favoring reduced costs, higher profits, and reducing inflationary threats. You will know that the stock market has anticipated a shift in trend on the same parameters with explosive bullish expressions.

The stock market does not always accurately anticipate trend shifts or even cyclical shifts. Great bearish expressions occur when the stock market’s desired anticipation does not manifest. The Quick-term and Short-term Indicant models will help you avoid those disappointments.

Weekly Buy/Sell Summary – Stocks and Funds

The Mid-term Indicant generated two buy signals and no sell signals.

Although there were no sell signals, the Mid-term Indicant is avoiding only 33-stocks and funds of the 345 tracked by the Indicant. The avoided stocks and funds are down an average of 16.5% since the Mid-term Indicant signaled sell an average of 21.2-weeks ago.

There were 96-stocks and funds avoided at this time last year. The avoided stocks and funds one year ago were down an average of 10.8% since their respective sell signals an average of 23.2-weeks earlier. Two years ago, on October 8, 2004, the Mid-term Indicant was avoiding 50-stocks and funds that were down an average of 32.6% since their respective sell signals an average of 51.1-weeks earlier. Three years ago on October 4, 2003, there were only 30-avoided stocks and funds. They were down 20.9% from their respective sell signals an average of 29.7-weeks earlier. On October 5, 2002, the Mid-term Indicant was avoiding 226-stocks and funds out of 295-tracked. They were down by an average of 24.7% since their sell signals an average of 10.1-weeks earlier.

In addition to the buy signals this weekend, the Mid-term Indicant is signaling hold for 310 of the 345-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 100.5%. That annualizes to 68.0%. The Mid-term Indicant has been signaling hold for these 310-stocks and funds for an average of 76.9-weeks.

One year ago on October 7, 2005, the Mid-term Indicant was holding 221-stocks and funds out of the 320 tracked at that time for an average of 96.8-weeks. Those 221-stocks and funds were up by an average of 105.8% (annualized at 56.8%). The Mid-term Indicant was signaling hold for 240-stocks and funds of the 296 tracked two years ago on October 8, 2004. They were up by an average of 64.3% (annualized at 65.3%) since their respective buy signals an average of 51.2-weeks earlier. There were 219-stocks and funds with hold signals on October 4, 2003 since their buy signals an average of 31.0-weeks earlier. They were up 58.5% (annualized at 98.0%). The Indicant was only tracking 296 stocks and funds in 2002-2004. On October 5, 2002, the Mid-term Indicant was signaling hold for only 54-stocks and funds out of 295-tracked. They were up by an average of 20.2% (annualized at 48.6%) since their buy signals 21.6-weeks earlier.

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

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

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

All updated 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

The Quick/Short-term Indicant Stock Market Report

The Daily Indicant Stock Market Report for the last trading day of the current week is near the conclusion of this weekly stock market report.

The Indicant Stock Market Report’s Secular Market Blend

The market synchronized with near perfection to normal seasonality in 2002. The rolling half of May-October is typically bearish. The 2002 seasonal bear leg was dynamic and configured perfectly to historical standards. The current mid-term election year of 2006, fundamentally, supported historical standards for the first two thirds of this year. As of mid-August 2006, economic fundamentals appear to be shifting support for a bullish onslaught for the heart and soul of bullish seasonality and the normally bullish presidential pre-election year of 2007. The Quick-term Indicant supports this bullishness right now.

The heart and soul of bullish seasonality, which ended on January 31, 2006 produced gains of 2.8%, 4.2%, and 7.2% for the Dow, S&P500, and NASDAQ, respectively. Expect greater gains than the above in the coming heart and soul of bullish seasonality, which is due in a few weeks. Some of that bullish behavior has already started, but somewhat muted by seasonal pressures.

The Dow30 found bottom in the last presidential mid-term election year on October 9, 2002 at 7,286.27. The NASDAQ found bottom on the same day at 1114.11. Finding cyclical bottoms in mid-term election years is common. Fortunately, the bottom of 2006, so far, was minimal and not sharp when compared to that of 2002. The Dow is up 62.6% from the last mid-term presidential election year bottom. The NASDAQ is up 106.4% since October 9, 2002. The S&P600, small caps, is up even more by 121.4% since October 9, 2002.

The NASDAQ is down 54.4% from its historical high of 5048.62 on March 9, 2000. The Dow is down 0.1% from its week-ending historical high of 11723 on January 13, 2000. The S&P500 is down 11.6% since its all time high of March 23, 2000. So far, the new century, 2000 inclusive, has not been kind to long-term investors. The NASDAQ needs to climb 119.5% and S&P500 by 13.2% to achieve their all-time weekly closing highs.

Economic or corporate earnings fundamentals did not support the stock market’s meteoric rise since 1990. Unprecedented demand for stocks skewed the supply-demand ratio and thus the powerful bull leg of the 1990’s enjoyed sustainability. The simple law of supply and demand propelled stock prices dynamically to the north in the 1990’s. The great bear leg of 2001 and 2002 has depressed those prior sources of demand for at least one generation of investors. The market now has to wait for a new generation of investors to enjoy dynamic secular bullishness. The great bull leg of 2003 was a relatively short bull cycle that has not enjoyed follow-on bullish behavior due to this lack of demand with the exception of normal bullish expressions during the heart and soul of bullish seasonality in 2004 and 2005.

For example, the Dow fell 4.4% from January 31, 2004 through October 31, 2004. The NASDAQ fell by the same amount. The Dow fell 0.5% from January 31, 2005 through October 31, 2005, while the NASDAQ was up only 2.8%. Since January 31, 2006, the Dow is up 9.1% and the NASDAQ is down 0.3%. The market was not bullishly expressive after the heart and soul of bullish seasonality the past two years. Recent bullish expressions have demonstrated little respect for historical normalcy. The Quick-term Indicant is currently suggesting the mid-term election year bottom is behind us.

Since August 18, 2006, the Mid-term Indicant generated 139-buy signals and only two sell signals. That is an unusually high number of buy signals when considering seasonal market influences. However, all Indicant models supported this buying surge.

The Quick-term Indicant’s bearish bias most of this year was replaced with a bullish bias eight weeks ago. Several buy signals ensued during these past eight weeks. Do not be surprised at dynamic bullish behavior in the next few weeks/months that should carry on through next year. The various Indicant models, economic fundamentals, and historical standards suggest significant bullishness in the coming months and the next two years.

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

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

Stop Loss Management

The Mid-term Indicant recommends a stop loss of 8% on recent buys because of the Quick-term Indicant’s bullish bias shift and bullishly evolving economic fundamentals.

Stock and Fund Update

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

Economic Conditions – Inflation, Currency, Interest Rates

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

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% two-hundred and twenty-two weeks ago since the MTI buy signal on April 13, 2001. Last week it closed up 271.1%. The current annualized growth rate since the April 13, 2001 buy signal is 48.7%. The fund has moved south in three of the last four weeks. It was mildly bearish last week.

Fidelity Gold, Fund #28, is up 27.8% since the Mid-term Indicant signaled buy on August 26, 2005. That annualizes to 24.7%. This fund also moved south last week, but its bearishness was deep.

As stated on the September 10, 2006 Indicant Weekly Stock Market Report, do not be surprised at continuing bearishness of the above two funds in the weeks/months ahead.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 220.9% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 52.6%. This fund also moved significantly to the south last week and has moved bearishly in three of the past four weeks.

Vanguard Energy #18, VGENX, is up 151.5% (annualized at 42.6%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 104.7% (annualized at 36.4%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 104.9% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 32.9%. These energy related funds also moved south last week.

The SQI (Consolidated Short-term and Quick-term Indicant) model signaled buy for the GLD-ETF#11 on August 3, 2005. It is up 30.9% since then. It is annualized at 25.9%.

The SQI signaled buy for ETF#03 – Energy and Natural Resources on March 26, 2003. It is up 144.9% (annualized at 40.4%).

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 21.4% since the Mid-term Indicant signaled bull an average of 78-weeks ago. That annualizes to 14.1%, which is down significantly from the past three years. This is due to the bear signals for the S&P400 and S&P600 Indexes on July 21, 2006, which had been receiving a bull signal since October 25, 2002. Those two indices endured some fluttering after the expiration of the tremendous bull leg that lasted nearly four years. A new bull leg is underway and may proceed just as vigorously as the bull leg from October 2002 through July 2006.

The Mid-term Indicant Dow Jones Industrial Average performance is now at $35,897,126. That beats buy and hold performance of $1,812,862 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $174,250. That beats buy and hold’s $132,195 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $192,442 that beats buy and hold’s $79,750 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 1,879.0%, 31.8%, and 141.3%, respectively, for these indices as of this past week.

Click here to go to the current Mid-term Indicant assessment of the ten major indices.

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

Divergence versus Convergence

There was mild bullish divergence last week with general equities moving north and contrarian sectors, such as energy and commodity related securities moving south. Economic fundamentals are driving contrarian securities and commodities to the south.

Mid-term Indicant Positions - NASDAQ100 Stocks

Click here to see NASDAQ100 report card history.

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

Mid-term Indicant Positions - Dow Jones 30 Industrial Stocks

Click here to see Dow 30 report card history.

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

Mid-term Indicant Positions - Dow Jones 15 Utility Stocks

Click here to see Dow Utilities Report Card history.

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

Mid-term Indicant Positions - Indicant Selected Stocks

Click here to see Indicant Select Stock Report Card history.

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

Mid-term Indicant Positions - Mutual Funds

Click here to see Mutual Fund Report Card history.

The Mid-term Indicant is now avoiding ProFunds Ultra Short. Historical norms of market cyclicality suggests the next buying opportunity for this fund may not occur until 2009.

Click here for Mid-term Indicant Table of Mutual Funds.

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

Long Term Indicant Positions - Dow Jones Industrial Average

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

The Dow is up 309.4% (annualized at 20.7%) since the Long-term Indicant signaled bull 779-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

Quick/Short-term Indicant Stock Market Report - Summary

Quick-term Red Bulls: Twenty-four; solid bullish support.

Short-term/Quick-term Non-Bearishness: Countering “sustainable” deep bearish ambition.

Force Vectors: Solid support for sustainable bullish behavior.

Vector Pressure: Showing significant resistance to bearish dominance.

Long-term Hold Positions: Solidly safe.

Current Quick-term Bias: Bullish.

Overall Market Status: Bullish support on a Quick-term basis.

Profit Potential from Naked Options: Should improve for calls with the approaching heart and soul of bullish seasonality.

Special Comments Continued from Tuesday, August 15, 2006 – Bias Shift to Bullish

As stated the past few days, the Quick-term and Short-term Indicant remain bullishly biased.

Quick-term/Short-term Indicant Stock Market Report Details

Volume was light on Friday’s mild bearish expression. That suggests the bearishness was fake with respect to sustainability. As stated the past few days, neither of the Indicant Volume Indicators are expressing dynamic robustness. However, volume related configurations continue to support for the bullish bias.

The Dow is up 3.1% since the Short-term Indicant signaled bull on September 12, 2006 for both the Dow and NASDAQ. The NASDAQ is up 3.8% since the Short-term Indicant signaled bull on the same day. Click here to see the Short-term Indicant’s history.

SQI Report Card (Consolidated Short/Quick), Status, and Charts

There were no buy signals and no sell signals. Although there were no buy signals, the SQI is signaling hold for 30-ETF’s. They are up 48.6% (annualized at 30.4%) since their respective buy signals an average of 82.3-weeks ago. The SQI is not avoiding any of the 30-ETF’s.

Short-term Indicant Report Card, Status, and Charts

There were no buy signals and no sell signals. Although there were no buy signals, the Short-term Indicant is signaling hold for 30-ETF’s. They are up an average of 50.1% (annualized 32.5%) since the STI signaled, buy, an average of 79.3-weeks ago. The STI is not avoiding any of the 30-ETF’s.

Keep in mind, the Short-term Indicant is much more active in buying/selling than the Consolidated model. The Quick-term Indicant, which follows, is even more active.

Quick-term Report Card, Status, and Charts

There were no buy signals and no sell signals. Although there were no buy signals, the Quick-term Indicant is signaling hold for 29-ETF’s. They are up by an average of 6.8% (annualized at 21.2%) since the QTI signaled buy an average of 16.5-weeks ago. Although there were no sell signals, the Quick-term Indicant is avoiding one contrarian ETF at this time. It is up 1.0% since its sell signal 2.4-weeks ago.

Conflicts Between the Short-term and Quick-term Indicants

Quick-term Indicant Bull/Bear Health Report

None of the 30-ETF’s are below their bearish yellow curves. The average position of all thirty ETF’s is above bearish yellow by 7.4%. This is increasing the market’s non-bearish posture.

Twenty-four ETF’s are above their respective bullish red curves, which is a bullish attribute of increasingly healthy proportions.

All thirty ETF average positions are 1.2% above their bullish red curves. This attribute is bullish on a Quick-term Indicant basis.

Short-term Indicant Bull/Bear Health Report for ETF’s

None of the non-contrarian-ETF’s are contacting their breakout lines. This attribute is accelerating its support of sustainable bullish behavior on the basis that nine made contact last Thursday. Friday’s mild bearishness pulled them down. The next bullish expression will resume contact. If the population of those making contact increase, enjoy the bullish ride that will follow.

The average distance from breakout contact is 5.2%, which is not a great distance to take to find an area friendly for bullish exuberance.

The average distance from the price and breakdown is 18.8%. This configuration provides tremendous non-bearish support, which has been the case since March 2003. The probability of immediate contact remains low and thus a non-bearish bias is maintained on a short-term basis.

This attribute remains solidly non-bearish.

ETF Force Vector Configurations

Nineteen of the ETF Force Vectors are in bullish domains, which is down from twenty-five on September 15. However, that is up by two from yesterday. Force Vectors are now shifting back to the north and with the majority in bullish domains. That is solidly bullish.

To understand potential financial opportunities, click here to learn to identify Robust Force Vectors. They are visible on the Quick-term Indicant charts.

ETF Force Vectors/Vector Pressure Crossings/Option Signals

Remember, the links contained herein are more visible when reading this on the website.

Click this sentence for Vector Pressure Option Signals. There were no option buy signals for the second consecutive day.

Twenty-eight ETF Vector Pressures are in bullish domains, which supports a bullish bias. Positive Vector Pressure helps guard against bearish dominance. Positive Vector Pressure continues to hold positive and increasing its support of bullish bias.

Make certain you sell naked options when the Force Vectors shift direction or within two days of the purchase, whichever occurs first. If you are unfamiliar with this, take the options tour.

Quick-term and Short-term Indicant Summary

Based on Vector Pressure configurations and increasing bullish bias, do not write covered call options at this time.

The Quick-term Bull remains in tact with an increasing probability of strengthening.

To familiarize yourself with viewing the market from an ETF perspective, click the following update links.

Quick-term ETF Options

Quick-term Indicant for ETF’s

Short-term Indicant for ETF’s

Consolidated Quick-term/Short-term Indicant for ETF’s

Click here to the report card, which is updated weekly, to link to related tours.

Links to the Short-term Indicant and Indicant Volume Indicator are below:

Short-term Indicant for DJIA and NASDAQ

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

Short-term Indicant Table for the NASDAQ Composite Index

Indicant Volume Indicator

Indicant Conclusion

There is little new from the past four weekly stock market reports. Deep bearish seasonality is becoming increasingly irrelevant in this mid-term election year. Economic fundamentals continue to appear to be adjusting in favor of dynamic bullishness. The Quick-term Indicant shifted from bearish to bullish bias in mid-August 2006. Although that bias is not supported by volume and is relatively weak, it is a bullish bias nonetheless. It seldom pays to be argumentative with the Quick-term Indicant’s bias. Basic fundamentals are shaping up for dynamic bullishness over the next few weeks, months, and years.

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

The daily updates are on the following link.

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

Hyperlinks

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

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

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

Happy Investing,

www.indicant.net

10/08/06

Oct 01, 2006 Indicant Weekly Stock Market Report

Dear Indicant Members:

This Week’s Report

Seasonal Exceptions

The month of September is historically the most bearish. Since 1950, its average performance for the Dow is down 1.0%. Even the NASDAQ’s September average performance since 1971 is down an average of 0.9%. A 1950 $10,000 investment in the Dow only during the month of September would now be worth $5,232. A similar investment in the NASDAQ since 1971 would now be worth $6,755. September is in a league by itself.

However, the September just ending finished up. The Dow was up 2.6%, which is the most bullish month so far in 2006. The NASDAQ finished up by 3.4%, which is the third best month of this year.

Recent bullishness, although tame, has been impressive when compared to historical standards. The only two rolling quarters with bearish results are July-September and August-October. For example, a 1950 $10,000 Dow investment only in the July-September rolling quarter would now be worth $8,000. The August-October investment would be $5,557 as of 2005. All other rolling quarters produce gains on average.

The Dow was up 4.7% in the July-September rolling quarter. The NASDAQ was up 4.0%. The normally staid S&P500 was up a whopping 5.2% in this normally bearish rolling quarter. As you can see, historical standards were ignored this year. There are always exceptions to any fixed pattern.

The most bullish rolling quarter is November-January. It is in a league by itself in terms of bullish expressions. A 1950 $10,000 Dow investment only during the months of November, December, and January has grown to $112,101, as of January 2006. This particular rolling quarter has been the only source of market growth since late 2003. The market has been a meander in the other nine months of the year since the great bull leg of 2003.

This meandering behavior is indeed impressive. It occurred during rising energy costs and rising interest rates. These two bearish elements did not produce a 1970’s type of market, where there were two pronounced bear legs. The interest rates were not as bad as in the 1970’s while energy cost increases the past few years were more pronounced than the increases in the 1970’s.

The Dow is within 0.4% of hitting its all time weekly closing high, which was set on January 13, 2000. One could argue the Dow has been meandering since then although there was pronounced bearish behavior in 2002. That meandering behavior is impressive in the since it encompassed 911, voodoo bookkeeping (Enron plus others), war, rising interest rates, and rising energy costs. Those elements have historically produced outrageous bearishness. A meanderer during sour fundamentals is very impressive.

You recall the Quick-term Indicant shifted from bearish to bullish bias on August 15, 2006. The shift to bullishness has not produced dynamic results. The bullish behavior has been somewhat tame, but a bull nonetheless. There has been little volatility for several weeks, but there is an increasing probability of more in the near future. The absence of volatility has induced this tameness.

So, what should one expect in the upcoming months? As earlier stated, the rolling quarter of November through January is historically the most bullish. The Quick-term Indicant is bullishly biased and October poses no threat at this time. All indicators suggest the market is going to be bullish during the historically significant heart and soul of bullish seasonality. That begins in a few more weeks. Of course, there are exceptions to any fixed pattern. Keep your eye on the Quick-term Indicant.

Weekly Buy/Sell Summary – Stocks and Funds

The Mid-term Indicant generated two buy signals and no sell signals.

Although there were no sell signals, the Mid-term Indicant is avoiding only 35-stocks and funds of the 345 tracked by the Indicant. The avoided stocks and funds are down an average of 15.5% since the Mid-term Indicant signaled sell an average of 20.1-weeks ago.

There were 93-stocks and funds avoided at this time last year. The avoided stocks and funds one year ago were down an average of 9.4% since their respective sell signals an average of 23.1-weeks earlier. Two years ago, on October 1, 2004, the Mid-term Indicant was avoiding 50-stocks and funds that were down an average of 32.4% since their respective sell signals an average of 52.4-weeks earlier. Three years ago on September 27, 2003, there were only 19-avoided stocks and funds. They were down 25.0% from their respective sell signals an average of 30.4-weeks earlier. On September 27, 2002, the Mid-term Indicant was avoiding 213-stocks and funds out of 295-tracked. They were down by an average of 22.6% since their sell signals an average of 9.6-weeks earlier.

In addition to the buy signals this weekend, the Mid-term Indicant is signaling hold for 308 of the 345-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 105.1%. That annualizes to 71.8%. The Mid-term Indicant has been signaling hold for these 308-stocks and funds for an average of 76.1-weeks.

One year ago on September 30, 2005, the Mid-term Indicant was holding 222-stocks and funds out of the 320 tracked at that time for an average of 95.5-weeks. Those 222-stocks and funds were up by an average of 112.8% (annualized at 61.4%). The Mid-term Indicant was signaling hold for 204-stocks and funds of the 296 tracked two years ago on October 1, 2004. They were up by an average of 73.6% (annualized at 66.6%) since their respective buy signals an average of 57.4-weeks earlier. There were 219-stocks and funds with hold signals on September 27, 2003 since their buy signals an average of 30.0-weeks earlier. They were up 51.8% (annualized at 89.6%). The Indicant was only tracking 296 stocks and funds in 2002-2004. On September 27, 2002, the Mid-term Indicant was signaling hold for only 61-stocks and funds out of 295-tracked. They were up by an average of 17.4% (annualized at 45.3%) since their buy signals 20.0-weeks earlier.

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

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

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

All updated 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

The Quick/Short-term Indicant Stock Market Report

The Daily Indicant Stock Market Report for the last trading day of the current week is near the conclusion of this weekly stock market report.

The Indicant Stock Market Report’s Secular Market Blend

The current Mid-term Bull market and buying barrage started nearly in late 2002. The mid-term election year of 2002 conformed perfectly to historical standards with deep bearish expressions. Will it be consistent in 2006? Bearish behavior before October 2006 will be required for historical conformance. Until the past seven weeks, the market appeared to be positioning itself for this bearish compliance. Bearish expressions in six of the past thirteen weeks demonstrated this historical conformance. However, bullish expressions seven weeks ago were preceded by a Quick-term shift from bearish to bullish bias. It is possible the historical conformance of mid-term election year bearishness has already occurred. On the other hand, there is plenty of time for deep bearish seasonality to configure a more pronounced market low ahead of the heart and soul of bullish seasonality, which is due in a few more weeks.

Currently, configurations suggest the market is already in the process of honoring the normalcy of the heart and soul of bullish seasonality. It appears to be getting an early start this year and showing little respect for the historical standards of deep bearish seasonality.

The market synchronized with near perfection to normal seasonality in 2002. The rolling half of May-October is typically bearish. The 2002 seasonal bear leg was dynamic and configured perfectly to historical standards. The current mid-term election year of 2006, fundamentally, supported historical standards for the first two thirds of this year. As of mid-August 2006, economic fundamentals appear to be shifting support for a bullish onslaught for the heart and soul of bullish seasonality and the normally bullish presidential pre-election year of 2007. The Quick-term Indicant supports this bullishness right now.

The heart and soul of bullish seasonality, which ended on January 31, 2006 produced gains of 2.8%, 4.2%, and 7.2% for the Dow, S&P500, and NASDAQ, respectively. Expect significantly greater gains than the above in the coming heart and soul of bullish seasonality, which is due in the next few weeks. Some of that bullish behavior has already started, but somewhat muted by seasonal pressures.

The Dow30 found bottom in the last presidential mid-term election year on October 9, 2002 at 7,286.27. The NASDAQ found bottom on the same day at 1114.11. Finding cyclical bottoms in mid-term election years is common. Fortunately, the bottom of 2006, so far, was minimal and not sharp when compared to that of 2002. The Dow is up 60.3% from the last mid-term presidential election year bottom. The NASDAQ is up 102.7% since October 9, 2002. The S&P600, small caps, is up even more by 117.8% since October 9, 2002.

The NASDAQ is down 55.3% from its historical high of 5048.62 on March 9, 2000. The Dow is down 0.4% from its week-ending historical high of 11723 on January 13, 2000. The S&P500 is down 12.5% since its all time high of March 23, 2000. So far, the new century, 2000 inclusive, has not been kind to long-term investors. The NASDAQ needs to climb 123.5% and S&P500 by 14.3%.

The market has been slightly bullish since late 2003 with pronounced meandering behavior. The only significant bullish expressions not followed by bearish expressions occurred in the heart and soul of bullish seasonality (Nov-Jan) in 2003, 2004, and 2005. Other than those “heart and soul” bullish cycles, the market has been relatively flat since early 2004.

For example, the Dow fell 4.4% from January 31, 2004 through October 31, 2004. The NASDAQ fell by the same amount. The Dow fell 0.5% from January 31, 2005 through October 31, 2005, while the NASDAQ was up only 2.8%. Since January 31, 2006, the Dow is up 5.9% and the NASDAQ is down 3.8%. The market was not bullishly expressive after the heart and soul of bullish seasonality the past two years. Recent bullish expressions have demonstrated little respect for historical normalcy. The Quick-term Indicant is currently suggesting the mid-term election year bottom may be behind us.

Since August 18, 2006, the Mid-term Indicant generated 137-buy signals and only two sell signals. That is an unusually high number of buy signals when considering seasonal market influences. However, all Indicant models supported this buying surge.

The Quick-term Indicant’s bearish bias most of this year was replaced with a bullish bias seven weeks ago. Several buy signals ensued during these past seven weeks. Do not be surprised at dynamic bullish behavior in the next few weeks/months that should carry on through next year. The various Indicant models, economic fundamentals, and historical standards suggest significant bullishness in the coming months and the next two years.

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

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

Stop Loss Management

The Mid-term Indicant recommends a stop loss of 8% on recent buys because of the Quick-term Indicant’s bullish bias shift and bullishly evolving economic fundamentals.

Stock and Fund Update

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

Economic Conditions – Inflation, Currency, Interest Rates

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

Fundamentals continue favorable to a bullish bias. Interest rates continue to flatten and are currently configured past their recent cyclical peaks. Commodities are diving sharply to the south, which also favors a bullish stock market bias. The U.S. Dollar is sufficiently weakened leaving room for the Federal Reserve Board to continue relaxing 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% two-hundred and twenty-one weeks ago since the MTI buy signal on April 13, 2001. Last week it closed up 272.7%. The current annualized growth rate since the April 13, 2001 buy signal is 49.2%. After falling sharply 67-weeks ago, it bounced north in 47-weeks of the past 67-weeks. This fund bounced slightly to the north last week after falling sharply in the previous three weeks, paralleling falling oil prices.

Fidelity Gold, Fund #28, is up 32.5% since the Mid-term Indicant signaled buy on August 26, 2005. That annualizes to 29.3%. This fund also moved north last week.

As stated on the September 10, 2006 Indicant Weekly Stock Market Report, do not be surprised at continuing bearishness of the above two funds in the weeks/months ahead.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 230.5% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 55.1%. This fund also moved slightly north last week, after falling sharply in the prior three weeks.

Vanguard Energy #18, VGENX, is up 152.6% (annualized at 44.2%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 113.0% (annualized at 39.6%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 110.8% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 35.0%. These energy related funds also bounced north last week, after moving aggressively to the south the previous three weeks due to economic fundamentals, as opposed to 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 36.6% since then. It is annualized at 31.2%.

The SQI signaled buy for ETF#03 – Energy and Natural Resources on March 26, 2003. It is up 148.6% (annualized at 41.7%).

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 19.4% since the Mid-term Indicant signaled bull an average of 77-weeks ago. That annualizes to 13.1%, which is down significantly from the past three years. This is due to the bear signals for the S&P400 and S&P600 Indexes on July 21, 2006, which had been receiving a bull signal since October 25, 2002. Those two indices endured some fluttering after the expiration of the tremendous bull leg that lasted nearly four years. A new bull leg is underway and may proceed just as vigorously as the bull leg from October 2002 through July 2006.

The Mid-term Indicant Dow Jones Industrial Average performance is now at $35,378,702. That beats buy and hold performance of $1,786,825 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $172,477. That beats buy and hold’s $130,850 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $188,965 that beats buy and hold’s $78,309 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 1,879.0%, 31.8%, and 141.3%, respectively, for these indices as of this past week.

Click here to go to the current Mid-term Indicant assessment of the ten major indices.

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

Divergence versus Convergence

There was mild bullish convergence last week after the two previous weeks expressed mild bearish convergence. As predicted, the bearish convergence was non-threatening. Economic fundamentals are driving contrarian securities and commodities to the south. The latter typically induces bullish behavior.

Mid-term Indicant Positions - NASDAQ100 Stocks

Click here to see NASDAQ100 report card history.

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

Mid-term Indicant Positions - Dow Jones 30 Industrial Stocks

Click here to see Dow 30 report card history.

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

Mid-term Indicant Positions - Dow Jones 15 Utility Stocks

Click here to see Dow Utilities Report Card history.

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

Mid-term Indicant Positions - Indicant Selected Stocks

Click here to see Indicant Select Stock Report Card history.

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

Mid-term Indicant Positions - Mutual Funds

Click here to see Mutual Fund Report Card history.

The Mid-term Indicant is now avoiding ProFunds Ultra Short. Historical norms of market cyclicality suggests the next buying opportunity for this fund may not occur until 2009.

Click here for Mid-term Indicant Table of Mutual Funds.

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

Long Term Indicant Positions - Dow Jones Industrial Average

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

The Dow is up 303.5% (annualized at 20.3%) since the Long-term Indicant signaled bull 778-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

Quick/Short-term Indicant Stock Market Report - Summary

Quick-term Red Bulls: Seventeen; supporting bullish bias.

Short-term/Quick-term Non-Bearishness: Countering “sustainable” deep bearish ambition.

Force Vectors: Moving north, which is bullishly biased.

Vector Pressure: Showing significant resistance to bearish dominance.

Long-term Hold Positions: Solidly safe.

Current Quick-term Bias: Bullish.

Overall Market Status: Bullish support on a Quick-term basis.

Profit Potential from Naked Options: Declining volatility minimizes profit potential

Special Comments Continued from Tuesday, August 15, 2006 – Bias Shift to Bullish

Quick-term and Short-term Indicant remains bullishly biased.

Quick-term/Short-term Indicant Stock Market Report Details

As stated the past few days, both Indicant Volume Indicator’s are not expressing dynamic robustness, but they have not reverted to lethargy. This remains in support of bullish bias.

The Dow is up 1.6% since the Short-term Indicant signaled bull on September 12, 2006 for both the Dow and NASDAQ. The NASDAQ is up 1.9% since the Short-term Indicant signaled bull on the same day. Click here to see the Short-term Indicant’s history.

SQI Report Card (Consolidated Short/Quick), Status, and Charts

There were no buy signals and no sell signals. Although there were no buy signals, the SQI is signaling hold for 30-ETF’s. They are up 46.6% (annualized at 29.5%) since their respective buy signals an average of 81.3-weeks ago. The SQI is not avoiding any of the 30-ETF’s.

Short-term Indicant Report Card, Status, and Charts

There were no buy signals and no sell signals. Although there were no buy signals, the Short-term Indicant is signaling hold for 30-ETF’s. They are up an average of 48.1% (annualized 32.6%) since the STI signaled, buy, an average of 78.3-weeks ago. The STI is not avoiding any of the 30-ETF’s.

Keep in mind, the Short-term Indicant is much more active in buying/selling than the Consolidated model. The Quick-term Indicant, which follows, is even more active.

Quick-term Report Card, Status, and Charts

There were no buy signals and no sell signals. Although there were no buy signals, the Quick-term Indicant is signaling hold for 29-ETF’s. They are up by an average of 5.4% (annualized at 18.0%) since the QTI signaled buy an average of 15.5-weeks ago. Although there were no sell signals, the Quick-term Indicant is avoiding one contrarian ETF at this time. It is up 2.5% since its sell signal 1.4-weeks ago.

Conflicts Between the Short-term and Quick-term Indicants

There are eighty-nine hold signals out of a possible 90, while there is only one avoid signal. This ratio supports the life of the bull. The bearish bias that pervaded the market most of the year is no longer present. Although there is considerable time remaining for deep bearish seasonality to exert its influence on the market, the probability of that occurring is minimal. Even if it does exert influence, the impact will be minimal based on current configurations.

Quick-term Indicant Bull/Bear Health Report

None of the 30-ETF’s are below their bearish yellow curves. The average position of all thirty ETF’s is above bearish yellow by 6.2%. This remains non-bearish.

Seventeen ETF’s are above their respective bullish red curves, which is a bullish attribute of healthy proportions.

All thirty ETF average positions are 0.1% above their bullish red curves. This attribute is bullish on a Quick-term Indicant basis.

Short-term Indicant Bull/Bear Health Report for ETF’s

No non-contrarian-ETF are contacting their breakout lines. The lack of contact is not a concern at this time. This attribute remains bullish, although not supporting dynamic bullishness.

The average distance from breakout contact is 6.1%, which is not a great distance to take to find an area friendly for bullish exuberance.

The average distance from the price and breakdown is 17.2%. Although down significantly the past several months, this configuration still provides non-bearish support. The probability of immediate contact remains low and thus a non-bearish bias is maintained on a short-term basis.

Although the non-bearish baseline (yellow) can rise in a declining market, keep in mind that a 17.2% drop would leave early 2003 buyers in healthy hold positions, while new in-the-market-money would be painful to hold. This is non-threatening at this time.

None of the ETF’s are contacting their bearish breakdown lines, which offers zero probability of immediate dynamic bearish behavior . Overall, there remains a strong bottom point, but new-in-the-market money would not delight in finding that. Early 2003 investment money is still in good shape with solid earnings and can tolerate bearish behavior without nervously dumping their holdings during such a decline. However, if contact with the breakdown becomes dominant, expect an increased threat of dynamic bearishness and be prepared to sell.

Prices remain higher than the breakdown lines. Severe and sustainable bearish drops occur when contact with bearish yellow occurs. There is no threat of that at this time.

ETF Force Vector Configurations

Twenty-two of the ETF Force Vectors are in bullish domains, which is up from sixteen on September 8. Force Vectors are now trekking to the north, which is bullishly biased.

To understand potential financial opportunities, click here to learn to identify Robust Force Vectors. They are visible on the Quick-term Indicant charts.

ETF Force Vectors/Vector Pressure Crossings/Option Signals

Remember, the links contained herein are more visible when reading this on the website.

Click this sentence for Vector Pressure Option Signals. There were no option buy signals for the fifth consecutive day.

Twenty-six ETF Vector Pressures are in bullish domains, which supports a bullish bias. Positive Vector Pressure helps guard against bearish dominance. If Vector Pressure holds positive, then bullish to non-bearish support remains.

This market remains a bull due to the majority of ETF’s with hold positions from the consolidated Short-term and Quick-term model. This bull/hold dominance minimizes the probability of profit potential from aggressive put option plays for non-contrarian ETF’s.

Make certain you sell naked options when the Force Vectors shift direction or within two days of the purchase, whichever occurs first. If you are unfamiliar with this, take the options tour.

Quick-term and Short-term Indicant Summary

The shift from bearish bias to bullish bias started on Tuesday, August 15, 2006 after maintaining a bearish bias since early February 2006. Although historical standards and the political election cycle favor a bearish dip before November, the Quick-term and Short-term Indicant models are suggesting bullish bias. The weekly stock market report, dated September 10, 2006 illustrated a shift in economic fundamentals from bearish support to bullish support. Volume appears readied to support bullish expressions.

Based on Vector Pressure configurations and increasing bullish bias, do not write covered call options at this time.

The Quick-term Bull remains in tact with an increasing probability of strengthening.

To familiarize yourself with viewing the market from an ETF perspective, click the following update links.

Quick-term ETF Options

Quick-term Indicant for ETF’s

Short-term Indicant for ETF’s

Consolidated Quick-term/Short-term Indicant for ETF’s

Click here to the report card, which is updated weekly, to link to related tours.

Links to the Short-term Indicant and Indicant Volume Indicator are below:

Short-term Indicant for DJIA and NASDAQ

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

Short-term Indicant Table for the NASDAQ Composite Index

Indicant Volume Indicator

Indicant Conclusion

There is little new from the past three weekly stock market reports. Deep bearish seasonality is becoming increasingly irrelevant in this mid-term election year. Economic fundamentals continue to appear to be adjusting in favor of dynamic bullishness. The Quick-term Indicant shifted from bearish to bullish bias in mid-August 2006. Although that bias is not supported by volume and is relatively weak, it is a bullish bias nonetheless. It seldom pays to be argumentative with the Quick-term Indicant’s bias. Basic fundamentals are shaping up for dynamic bullishness over the next few weeks, months, and years.

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

The daily updates are on the following link.

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

Hyperlinks

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

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

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

Happy Investing,

www.indicant.net

10/01/06