Septermber Indicant Weekly Stock Market Reports

September 29, 2002 Indicant.Net Weekly Update

Volume 9, Issue 4 ISSN 1526 6516 © The Indicant Stock Market Report

The Quiet before the Storm

The Indicant Volume Indicator’s recent increase is due to big money selling. Institutions, funds, banks, etc. are getting more into cash. They are confused. Their strategic outlooks are on hold. There are many issues confounding them, but the biggest is the shock to the market when Iraqi air is lighted with missiles, scuds, planes, robots, etc.

Big money is well aware of the mid-term election year phenomenon. They also understand that wars have an initial shock impact of a bearish nature on the markets. The U.S. Markets are not the only ones expressing bearish behavior. Although the market is behaving with normal seasonal patterns, the impending war is the big question mark for big money strategic outlooks.

The big money wants to enjoy a nice ride on the Dow up to 10000 or so. The question they are asking is where does the ride start. Recent market behavior suggests the ride could start at a 5000 Dow. In other words, what will be the shock to the market when the first shots are fired? Will the Dow plummet a couple of a thousand points?

The U.S. military has been neglected for over ten years according to General Schwarkopff. Big money strategic outlooks cannot assume the war with Iraq will be swift, complete, and efficient. Remember that those institutions leading the charge of war are the same ones who were in charge on September 11, 2001 . So, the assumption of competency is not in the cards.

Strategic planning is used as a guide for action. If big money’s strategic planners could easily assume U.S. Military competency in the upcoming war, there were not be as much diversion of capital to cash right now. Earlier this year, many big money strategic planners were advising that 2002 would be a huge bull market because $2 trillion is setting on the sidelines. They were wrong. The buy and hold folks got burned this year.

Do you think the U.S. Military has a plan that shows the day and time the Iraqi people will take to the streets waving the American flag and burning pictures of Saddam? You bet they do. Do you believe the U.S. Military is capable of pulling it off? That is the problem with big money strategic planners. They do not know the answer to that question.

The quiet before the storm is almost deafening. Only five of the twenty-two international markets are bulls. It appears the rest of the world’s big money strategic planners have also been perplexed on how to map out the future. How many times have you heard Louis Rukeyser suggests international markets go up when the U.S. is down? That has not been the case in the past five years. That line of thinking is becoming obsolete. Regardless, the rest of the world seems to be standing on the sidelines due to their uncertainty of the military results. If Saddam pulls the trigger and nukes Israel , which is a route to ultimate martyrdom for that guy, you can expect continuing bearish market behavior for years to come.

The other storm brewing is the impact on the arrest of Andrew Fastow. The former CFO of Enron seems to be the fall guy right now. There are solid rumors that he will be arrested next week. We can’t wait to see his mansions for sale at the police auction. If he, along with the other parasitical elites from Tyco, WorldCom, etc. get light sentences and get to keep their stolen money, you can expect the markets to complete a basis for a long-running secular bear. But that does not mean there will be some nice bull legs under the ceiling of the secular bear.

Boards of directors continue to leech. Those parasitical elites keep dipping into the coffers for their unearned money. Until the system is changed, the market will impose a lid on future bull cycles. At some future point, shareholders will be rightfully placed in a position of influence and dumb directors will evaporate with time.

But there is room for a Mid-term Bull market to have its day. If the economy improves with few threats of inflation/deflation, the Dow can very easily return to the 12000 plateau before plummeting again. It is not likely the NASDAQ will return to its former peak of 5,000 for years to come. It has room to do so, but the economic substance is simply not there right now.

Keep in mind the NASDAQ’s move to 5000 was fake. The internet companies did not deliver any substantive economic wealth. Economic wealth is delivered in only three ways; manufacturing, extraction, and agriculture. Without those three groups, there is no economy.

Divergence versus Convergence

Convergence to the south is the current theme. Big money is not sure how to play their cards right now. So, they are selling every thing in nearly every sector. This is one reason for the recent increase in the Indicant Volume Indicator. Big money wants to be in cash, so they can divert funds to their strategic outlooks in the next few weeks. The issue at hand is the war with Iraq . If it is efficient and effective, then the psychological requirements for a bull market will be in order.

Economic Outlook

Finally, the CRB Bridge Futures paused after rocket-like movement to the north-northeast. One year ago, we were concerned about this index signaling deflation, which would be more devastating to the stock market than inflation. Now the situation is entirely different. Inflation is more of a threat than deflation. The other commodities tracked by the Indicant are favoring a slant toward inflation.

To maintain any sustainability, the next bull market will require these commodity prices to soften and reverse the current trends.

The U.S. Dollar continues its modest rebound. As long as Greenspan does not lower interest rates, it is unlikely the dollar will continue its recent slide. So far that has been the undercurrent to the dollar.

Speaking of interest rates, the Fed Funds Closing Rates moved from bullish to neutral last week. That is the first time interest rates have crossed into the zone of neutrality in over a year. Let’s keep our eye on that. The stock market will not tolerate in official rate hikes in a weak economy. Remember, Fed Chief’s legacies are built on how well they manage inflation, as opposed to the economy.

All interest rates continue to remain at historically low levels. It would not be surprising to see an increase in rates in the near future.

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

Fear Metrics: Economic and Terrorism

The Indicant signaled "buy" for Fidelity American Gold (FSAGX) - #28 on December 7, 2001 . Sixteen weeks ago, it was up 66.1% since the Mid-term Indicant signaled buy. Nine weeks ago, it closed up 12.0% since the buy signal. Last week it closed up 46.8% since the MTI buy signal of December 7, 2001 .

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% sixteen weeks ago since the MTI buy signal in April 2001. Nine weeks ago, it closed up 27.8%. Last week it closed up 38.1%.

As you can see, these two funds are still a little bouncy. You can intuitively see the markets are engaged in a tug of war between fear and confidence in equities.

As stated in the past you can monitor these two funds to help you gauge fear related investments. These two funds will need to have “avoid” signals for the market to embark upon a meaningful and lasting bull leg. Right now, they are still signaling, “hold.”

Quick-term and Short-term Indicant - Markets

You received details about this yesterday. The market is forming a technical base for a bull leg. The late August QT Bull signal never got full support from the other indicators. The Mid-term Indicant signaled bull for a week or two and then signaled bear. The Short-term Indicant never did signal bull.

The Dow is down 27.2% since the Short-term Indicant signaled bear on March 20, 2002 . The NASDAQ Composite is down 71.6% since the Short-term Indicant signaled bear over two years ago on March 30, 2000 .

Additional Quick-term and Short-term Indicant information was in the preliminary report you received earlier this weekend. If you already deleted it from your email inbox, you can find it and all other back issues at the following link.

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

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

The eight major markets are down 11.4% on average since the Mid-term Indicant signaled bear three weeks ago on September 8, 2002 . The NASDAQ100 is the weakest with a drop of 14.9% in the past three weeks. The strongest is the Dow Transports with only a 6.6% drop.

It is still possible for the mid-term election year phenomenon to occur. We have exactly thirteen weeks for this phenomenon to continue its perfect track record since the 1920’s.

For those of you, who have not looked at the mid-term election year phenomenon, please click on the following link. It will take you directly to the charts with market behavior following mid-term election year behavior.

http://www.indicant.net/Members/Updates/History-Seasonal/HS0090.htm

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

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

Mid-term Indicant Positions - International Markets

There were no new bull signals and three new bear signals. The Mid-term Indicant is now signaling "bull" for only five of the twenty-two international markets it tracks.

The five bulls are up 49.9% since the Mid-term Indicant signaled bull an average of 52.8 weeks ago for an annualized gain 47.2%.

In addition to the new bear signals, the fourteen bear markets are down by an average of 9.0% since their respect bear signals. Seventeen weeks ago, they were down 1.5%. Those fourteen markets have been bears for an average of 7.8 weeks. Click the following hyperlink to view the status and charts.

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

Mid-term Indicant Positions - Index Options

There were twenty-six new bear signals three weeks ago. That condition has not changed.

Two have been bulls for the past 15.6 weeks (average). They are up an average of 53.9% since their respective bull signals for an annualized growth rate of 179.0%, which is way up from 2.3% four weeks ago when most of the indexes were relatively new bulls. The thirty-six bears are down an average of 11.4% since their respective bear signals. They have been bears for an average of 7.8 weeks with twenty-six of them being only three weeks old.

After only three weeks of being bulls, the Pharmaceutical (DRG #27) and Biotechnology (BTK#28) Indexes received bear signals two weeks ago. These two indexes are up 0.6% and 2.6% respectively since then.

One bull market is the Mid-term Volatility Index. We keep talking about this index, as it is positioned to decline and help support the next bull market.

To view the status and charts of these sectors, please click the following:

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

Mid-term Indicant Positions - Mutual Funds (Timing the Sectors)

There were no buy signals and one sell signal.

The Indicant is now signaling hold for 12 of the 76 mutual funds it tracks.

The twelve funds with hold signals are up by an average of 6.6%, which is down from seven weeks ago at 26.2%. If this had not been a mid-term election year, the many buy signals in August would have been deferred until late October.

In addition to the sell signal, the sixty-three funds being avoided are down 4.6% since the Indicant "sell" signals. The Indicant has been avoiding these bearish funds for an average of 2.7 weeks.

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

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.

Mid-term Indicant Positions - Indicant Selected Stocks

There was one buy signal and five sell signals. You received an email earlier this weekend about that.

In addition to the buy signal, the Mid-term Indicant now recommends holding 18 of the 73 stocks it tracks. These 18 stocks being held are up an average of 33.9% since the Mid-term Indicant signaled buy an average of 19.8 weeks ago. The 33.9% gain annualizes to 89.3%. The Indicant recommends avoiding forty-nine stocks. They are down an average of 33.9%. The Indicant has avoided these stocks for an average of 16.0 weeks.

Always remember never to keep more than 10% of your investment resources into any single stock. You never know when management stupidity will ruin it. The threat is always present. Remember Metro Media, Tyco, Enron, and WorldCom. Often times management makes decisions for self-gain as opposed to what is to the best interest of the shareholder. Until you see many new CEO’s arrive at corporate America , rest assured that many of those who remain are of the same character and moral fiber of those from Enron. There are exceptions here, but at this point, trust none of them.

Click the following hyperlink to view this group of stocks:

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

Mid-term Indicant Positions - Dow Jones 30 Industrial Stocks

There was one buy signal and two "sell" signals. You received an email about the specifics earlier this weekend.

The Indicant is signaling hold for only four of the thirty Dow stocks. These stocks are down an average of 0.2% since their respective buy signals an average of 7.0 weeks ago.

In addition to the sell signals, the twenty-three avoided stocks are down 13.8% since the Mid-term Indicant signaled sell an average of 5.0 weeks ago. Ten weeks ago, the avoided stocks were down 18.1%.

Click the following hyperlink to view this group of stocks:

http://www.indicant.net/Non-Members/Public%20Updates/UD%20MTI-DJIA-STKS.htm

Mid-term Indicant Positions - Dow Jones 15 Utility Stocks

There was one buy signal and no sell signals. You received a report earlier this weekend about the Indicant signals.

In addition to the buy signal, the Indicant recommends holding four of the sixteen utility stocks. They are up an average of 24.2% at an annualized rate of 33.8%. These stocks have been held for an average of 37.3 weeks.

The Indicant recommends avoiding eleven stocks (Enron is still included). They are down an average of 23.0% since their respective sell signals. The eleven stocks have been avoided for an average of 10.8 weeks.

Click the following hyperlink to view the entire group of these stocks:

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

Mid-term Indicant Positions - NASDAQ100 Stocks

There were three buy signals and seven sell signals. You received an email earlier this weekend advising of the details of these buy and sell signals.

In addition to the buy signals, the Mid-term Indicant now recommends holding only twenty-three of the NASDAQ100 stocks. These stocks are up an average of 22.7%, which annualizes to 71.3%. That annualized gain is down from 145.2% thirty weeks ago, which approximates the peaking of the Quick-term Bull of late 2001 and early 2002. The average "holding" period is 16.6 weeks for the twenty-three stocks.

In addition to the sell signals, the sixty-seven stocks being avoided are down an average of 37.9% since the Indicant signaled sell an average of 13.7 weeks ago. Twenty-three weeks ago, the avoided stocks were down 11.2%.

Remember never to hold more than 10% of your investment resources into a single stock. You never know when "management stupidity" will kick in. As you can tell, stocks outperform mutual funds in bull movements, but with greater risks. They decline in price more than good mutual funds during bear markets.

Click the following link to view this group of stocks:

http://www.indicant.net/Non-Members/Public%20Updates/UD%20MTI-NAS100-STKS.htm

Long Term Indicant Positions - Dow Jones Industrial Average

The Long-term Indicant has had you in blue chips since December 1991. The blue-chip long-term "buy" was at 2895 for the DJIA. There is no long-term bear signal anywhere on the horizon. Since the Long-term Indicant's bull signal in December 1991, the Dow is up 166.0% (annualized at 15.3%). The Long-term Indicant is based almost entirely on economic data. The recession, deflation, and inflation have not been strong enough to signal bear. Keep in mind the Long-term Indicant has only had five bull/bear cycles since 1920.

Indicant Conclusion

The Quick-term Indicant has identified a slight shift in support of bearish market behavior. The fact that the Indicant is avoiding 213 of 295 stocks and funds supports the view of expected bearish behavior in the immediate future. The impending war with Iraq is the big question mark right now. Greater clarity will be provided in a few weeks.

This remainder of this paragraph is a repeat from three weeks ago. The second major concern is the Short-term Indicant continues to signal bear. It is nowhere near signaling bull. The Short-term Indicant, alone outperforms buy and hold, but it is used primarily to show support for the Quick-term and Mid-term Indicant models.

Watch your email for the daily reports on the Quick-term Indicant.

See the preliminary report that you received on Saturday for more information.

Hyperlinks

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

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

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

Happy Investing,

www.indicant.net

09-29-02

September 22, 2002 Indicant.Net Weekly Update

Volume 9, Issue 3 ISSN 1526 6516 © The Indicant Stock Market Report

Dear Indicant Members:

This Week’s Report

The Next Bull Market

The most solid argument for the next bull market is the fact this is a mid-term election year. Although history does not repeat itself, this phenomenon has a perfect record since the 1920’s. Technically, the bull market should start on November 1, 2002 . Who knows when it will actually start? The last Quick-term Bull was certainly not the beginning of that bull market.

George W. Bush and friends are having a difficult time getting their war with Iraq . But there is still time to manage that with the ultimate political intention. And that is to gain republican control of the house and senate. To do that the war with Iraq must be occurring during the election, unless there is a tremendous victory without much side effects.

If the president and his pals arrested Saddam Huessein and bin Laden prior to the election, then there would be a greater chance of a republican sweep in the national elections. However, peoples memories run short. Politicians know this and it is better for the war to be occurring during the election. That way the president can say, now is the time to rally around your leader and vote republican. That is the game those guys play. With the economy in the doldrums and knowing Americans vote their pocketbooks, the only solution for a republican sweep is war.

If things get nasty for Saddam, he is off to Russia and Cuba , where he will live his life in a protected and luxurious way. As weird as Middle Eastern behavior is, it would not be surprising if Kuwait provided him refuge. There is no way that snake is about to die. And our political leadership will not be bothered at all about it. Politicians like turmoil. It gives them more camera time and a greater sense of importance. And that is what is all about.

At any rate, we are heading for a mid-term bull market even though we are into a secular bear market. A bounce of 40% -60% would be nice.

At least there will be some excitement this time around. Let’s hope there is no loss of life of the innocents around the world and American GI’s.

Divergence versus Convergence

The sell off is across the board. The only sector holding/increasing in value is precious metals. Even the oil field services are taking a hit, although some are holding up fairly well. The market is mixed right now but definitely slanting toward mid-term bearish behavior. That is the reason for the high number of sell signals this past weekend.

Economic Outlook

The CRB Bridge Futures continues moving to the north with unprecedented speed. Other commodity indexes continue moving in an inflationary direction. This movement if not reversed is a precursor to inflation. When and if it hits the consumer price index, you can bet Greenspan will hike interest rates. The stock market will not like that. Even if he does not hike rates, the stock market will not like inflation. The stock market prefers low interest rates and low inflation.

The U.S. Dollar has rebounded the past few weeks, but remains in the weak domains of most foreign currencies. It is obvious some currency traders are anticipating an increase in interest rates, which will strengthen the greenback.

All interest rates continue to remain at historically low levels. It would not be surprising to see an increase in rates in the near future.

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

Fear Metrics: Economic and Terrorism

The Indicant signaled "buy" for Fidelity American Gold (FSAGX) - #28 on December 7, 2001 . Fifteen weeks ago, it was up 66.1% since the Mid-term Indicant signaled buy. Eight weeks ago, it closed up 12.0% since the buy signal. Last week it closed up 55.4% since the MTI buy signal of December 7, 2001 .

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% fifteen weeks ago since the MTI buy signal in April 2001. Eight weeks ago, it closed up 27.8%. Last week it closed up 46.4%.

Quick-term and Short-term Indicant - Markets

The Dow is down 24.6% since the Short-term Indicant signaled bear on March 20, 2002 . The NASDAQ Composite is down 71.1% since the Short-term Indicant signaled bear over two years ago on March 30, 2000 .

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

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

The eight major markets are down 9.8% on average since the Mid-term Indicant signaled bear two weeks ago on September 8, 2002 . The NASDAQ100 is the weakest with a drop of 13.8% in the past two weeks. The strongest is the Dow Transports with only a 6.6% drop.

It is still possible for the mid-term election year phenomenon to occur. If the military conflict with Saddam Huessein is swift and complete and the Iraqis take to the streets waving the American flag with glee, then the market should shoot to the north.

For those of you who have not looked at the mid-term election year phenomenon, please click on the following link. It will take you directly to the charts with market behavior following mid-term election year behavior.

http://www.indicant.net/Members/Updates/History-Seasonal/HS0090.htm

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

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

Mid-term Indicant Positions - International Markets

There were no new bull signals and three new bear signals. The Mid-term Indicant is now signaling "bull" for eight of the twenty-two international markets it tracks.

The eight bulls are up 25.2% since the Mid-term Indicant signaled bull an average of 34.1 weeks ago for an annualized gain 38.3%.

In addition to the new bear signals, the eleven bear markets are down by an average of 11.1% since their respect bear signals. Sixteen weeks ago, they were down 1.5%. Those eleven markets have been bears for an average of 8.6 weeks. Click the following hyperlink to view the status and charts.

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

Mid-term Indicant Positions - Index Options

There were twenty-six new bear signals two weeks ago. That condition has not changed.

Two have been bulls for the past 14.6 weeks (average). They are up an average of 74.0% since their respective bull signals for an annualized growth rate of 262.9%, which is way up from 2.3% three weeks ago when most of the indexes were relatively new bulls. The thirty-six bears are down an average of 12.4% since their respective bear signals. Seventeen weeks ago, they were down 0.2%. They have been bears for an average of 6.8 weeks with twenty-six of them being only two weeks old.

After only three weeks of being bulls, the Pharmaceutical (DRG #27) and Biotechnology (BTK#28) Indexes received bear signals two weeks ago. These two indexes are down 5.0% and 0.9% respectively since then.

One bull market is the Mid-term Volatility Index. It is the one index we keep talking about. It possessed a configuration a few weeks ago that appeared to have peaked. Its behavior supported a bull market behavior. However, it rebounded with a flurry and shoved the market back to the south. It is now setting on a new peak. This recent behavior suggests we are at least four more weeks away from any meaningful bullish movement by the stock market. It also is positioned to support extreme volatility in the markets with a slight edge toward quick-term bull behavior.

To view the status and charts of these sectors, please click the following:

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

Mid-term Indicant Positions - Mutual Funds (Timing the Sectors)

There was one buy signal and forty six sell signals.

The Indicant is now signaling hold for 17 of the 76 mutual funds it tracks.

The seventeen funds with hold signals are up by an average of 7.7%, which is down from six weeks ago at 26.2%. If this had not been a mid-term election year, the many buy signals in August would have been deferred until late October.

The fund with the buy signal is Profunds Ultra Short. Be cautious here and slant your behavior in buying this fund toward that of the Quick-term Indicant. That fund moves inversely to the market. Last time we made about 25% or so but this time is very close to the next bull market. Make certain you maintain really tight stop losses. If the Quick-term Bear strengthens then loosen your stop loss. If the Quick-term Indicant signals bull, then sell it immediately.

In addition to the sell signals, the seventeen funds with avoid signals are down 11.8% since the Indicant "sell" signals. Seventeen weeks ago the “avoided” funds were down only 0.5%. The Indicant has been avoiding these bearish funds for an average of 6.2 weeks.

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

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.

Mid-term Indicant Positions - Indicant Selected Stocks

There was one buy signal and twenty-three sell signals. You received an email earlier this weekend about that.

In addition to the buy signal, the Mid-term Indicant now recommends holding 22 of the 73 stocks it tracks. These 22 stocks with "hold" recommendations are up an average of 23.3% since the Mid-term Indicant signaled buy an average of 16.5 weeks ago. The 23.2% gain annualizes to 73.5%. The Indicant recommends avoiding twenty-seven stocks. They are down an average of 51.5%. The Indicant has avoided these stocks for an average of 27.3 weeks.

Click the following hyperlink to view this group of stocks:

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

Mid-term Indicant Positions - Dow Jones 30 Industrial Stocks

There were no "buy" signals and seven "sell" signals. You received an email about the specifics earlier this weekend.

The Indicant is signaling hold for six of the thirty Dow stocks. These stocks are up 7.0% since there respective buy signals an average of 5.7 weeks ago.

In addition to the sell signals, the seventeen avoided stocks are down 14.0% since the Mid-term Indicant signaled sell an average of 5.4 weeks ago. Nine weeks ago, the avoided stocks were down 18.1%.

Click the following hyperlink to view this group of stocks:

http://www.indicant.net/Non-Members/Public%20Updates/UD%20MTI-DJIA-STKS.htm

Mid-term Indicant Positions - Dow Jones 15 Utility Stocks

There were no buy signals and five sell signals. You received a report earlier this weekend about the Indicant signals.

The Indicant recommends holding four of the sixteen utility stocks. They are up an average of 23.8% at an annualized rate of 34.2%. These stocks have been held for an average of 36.3 weeks.

In addition to the sell signals, the Indicant recommends avoiding seven stocks (Enron is still included). They are down an average of 27.8% since their respective sell signals. Seventeen weeks ago, they were down 20.7% when several of the stocks were being avoided. The seven stocks have been avoided for an average of 15.9 weeks.

Click the following hyperlink to view the entire group of these stocks:

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

Mid-term Indicant Positions - NASDAQ100 Stocks

There were no buy signals and nineteen sell signals. You received an email earlier this weekend advising of the details of these buy and sell signals.

In addition to the buy signals, the Mid-term Indicant now recommends holding only thirty of the NASDAQ100 stocks. These stocks are up an average of 14.0%, which annualizes to 55.4%. That annualized gain is down from 145.2% twenty-nine weeks ago, which approximates the peaking of the Quick-term Bull of late 2001 and early 2002. The average "holding" period is 13.2 weeks for the thirty stocks.

In addition to the sell signals, the fifty-one stocks being avoided are down an average of 47.0% since the Indicant signaled sell an average of 16.8 weeks ago. Twenty-two weeks ago, the avoided stocks were down 11.2%.

Click the following link to view this group of stocks:

http://www.indicant.net/Non-Members/Public%20Updates/UD%20MTI-NAS100-STKS.htm

Long Term Indicant Positions - Dow Jones Industrial Average

The Long-term Indicant has had you in blue chips since December 1991. The blue-chip long-term "buy" was at 2895 for the DJIA. There is no long-term bear signal anywhere on the horizon. Since the Long-term Indicant's bull signal in December 1991, the Dow is up 175.9% (annualized at 16.2%). The Long-term Indicant is based almost entirely on economic data. The recession, deflation, and inflation have not been strong enough to signal bear. Keep in mind the Long-term Indicant has only had five bull/bear cycles since 1920.

Indicant Conclusion

There is no strong support for bearish market behavior. Equally, there is no strong support for bullish market behavior. The Quick-term Indicant’s bear signal on increasing volume was not good for those of us who desire bull markets. The market is engaged in an unfavorable seasonal period. The remainder of this paragraph is a repeat from two weeks ago as little has changed “It would not be surprising to see the market drift lateral to down for the next few weeks”

The major attribute we are looking for is a clearer signal from the Indicant Volume Indicator. We got it last week with an upsurge in the indicator on bearish behavior. This is not favorable for an immediate bullish outlook.

This remainder of this paragraph is a repeat from two weeks ago. The second major concern is the Short-term Indicant continues to signal bear. It is nowhere near signaling bull. The Short-term Indicant, alone outperforms buy and hold, but it is used primarily to show support for the Quick-term and Mid-term Indicant models.

Watch your email for the daily reports on the Quick-term Indicant.

See the preliminary report that you received on Saturday for more information.

Hyperlinks

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

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

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

Happy Investing,

www.indicant.net

09-22-02

September 8, 2002 Indicant.Net Weekly Update

Volume 9, Issue 2 ISSN 1526 6516 © The Indicant Stock Market Report

Dear Member:

This Week’s Report

The Stock Market Wants to go Up.

Last week many of the Quick-term and Mid-term indicators were forming attributes that favored a bullish move by the stock market. This past week, many of them began a slow reversal. Technically, the stock market wants to go up. Fundamentally, it is having some difficulty doing so.

The impending military conflict is acting as a depressant. The market does not care if we engage in war, but the initial shock of war typically depresses the market for a short period.

It is interesting that a high percentage of callers to financial talk shows on radio and television are discussing real estate. Many people are moving their money from the stock market into real estate. That tells me that real estate’s bubble will soon burst. Fundamentally, it makes sense with low interest rates. Although it increases the demand of real estate, it also increases the supply of real estate. If the economy worsens, demand will drop causing the real estate bubble to pop. Also, an increase in the supply of speculative real estate will also wreak havoc in the real estate market.

There is only one way for interest rates to go in the long-term. Since they are near zero, they can only go up. As they increase, the real estate portfolios will head south. Of course, it is not likely the stock market would do much better.

Yes, the market wants to go up right now. It must see the continuation of profound gains in productivity by mid next year. Productivity growth is the sole provider for increases in the quality of life. This phenomenon in the 1980’s and 1990’s helped stimulate reduced rates of inflation, allowing Greenspan to reduce interest rates. This generated unheralded economic growth.

But politicians and others who do not compete in the hard-driving capital markets tend to screw things up all for the sake of gaining or maintaining political power.

Democrats favored war in Haiti in the mid-term election year of 1994. They favored military build-up in the Middle East in 1998. Now that a different party is in the Whitehouse, they are against military conflict in Iraq . The use of human life and military conflict just to stay in power by your politicians tells you something about the character of those who enter the field of politics.

The incumbent must attempt to develop military conflict in mid-term election years to create an image of needing your support.

At any rate, the market wants to go up, but it also wants to see what happens to the supply of oil and the subsequent impact to oil prices and inflation with the impending military conflict. If the impact is mild, then favorable conditions will exist for at least two years for a bull market. If the impact is significant, then you can expect the mid-term election year phenomenon of bull markets will not occur. History has a history of not always repeating itself.

The stock market is now confused. It sees the power of productivity growth. It sees the economy shaping up next year. But, it also sees the political leadership around the world jockeying for position to maintain or increase their political power. The only reason international politics are required is because there is always an evil one around causing bad things to happen.

However, the market fears an increase in oil prices because of the typical mid-term election year war. This leads us to the next section.

Divergence versus Convergence

This did not change much from last week. Therefore, we will repeat it again this week. “There was a slight hint of divergence this past week. The tech stocks, including biotech and pharmaceuticals fell. The oil field service stocks maintained or moved up. This is an obvious reflection of the anticipated turmoil in the Middle East . Precious metals also moved north reflecting the corresponding fear component.…… It is somewhat bearish that divergence patterns are expressed so early into a QT Bull cycle. As previously stated, this QT Bull could be short-lived.”

Gold funds were about the only investment that moved up last week. Some of the energy related issues moved south. However, they did not receive sell signals, as those stocks will propel to the north with the shock of military conflict with Iraq .

Economic Outlook

What is amazing is the rate of the increasing CRB Bridge Futures. About this time a year ago, the CRB Bridge Futures were crashing to the point of concerns about deflation. Deflation can rip up a stock market just as much as inflation. Now, the CRB Bridge Futures are galloping to the northeast along a slope of about sixty degrees. If it reaches its prior peak, then this will be a major concern.

The Dow Futures fell back into neutral territory while the Reuter’s UK commodities index moved back into inflationary domains. Most of the commodities are tending north now after several years of trending to the south. However, their movement has yet to impregnate the consumer price index. Also, many were severely depressed and they could be simply finding their proper values.

It is good that commodity prices have moved back to the north somewhat. That will help bolster capital investments to maintain appropriate supplies of basic raw materials and mitigate long-term inflationary trends. However, there is some concern about the current short-term impact of their northward movements. The problem with political meddling with the price of steel is unfavorable to the long-term growth of U.S. and International markets.

The dollar continues to weaken against major world currencies. Increasing commodity prices and a weakening dollar no doubt has the attention of Alan Greenspan. He will be forced at some future point to jack the rates up if natural economic behavior does not correct the current trends he helped establish. He will not dare do that until after the upcoming elections. Remember, the legacy of Fed Chief’s is based on how well they fight inflation. Those guys are seldom concerned about high unemployment rates. Remember Volker’s 21% prime interest rates and near double digit unemployment rates.

On the other hand, there is a valid argument that the dollar was too strong in the late 1990’s and it is simply finding a more logical relationship with other currencies. The same could be said for commodity prices. Remember that gold sold for over $800 an ounce in the late 1970’s. After crashing, it has languished between $250 and $400 for the past five years or so.

Although gold prices have been softening the past few weeks, the recent trend is to the north. All commodities tend to stay on the same trend except those regulated by governments.

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

Fear Metrics: Economic and Terrorism

The Indicant signaled "buy" for Fidelity American Gold (FSAGX) - #28 on December 7, 2001 . Fourteen weeks ago, it was up 66.1% since the Mid-term Indicant signaled buy. Seven weeks ago, it closed up 12.0% since the buy signal. Last week it closed up 44.0% since the MTI buy signal of December 7, 2001 .

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% fourteen weeks ago since the MTI buy signal in April 2001. Seven weeks ago, it closed up 27.8%. Last week it closed up 50.2%. This particular fund moved up by six percentage points last week while the Fidelity fund remained relatively flat.

As you can see, they are rebounding, but vacillating within the MTI hold cycle. This typically indicates they have topped out.

Quick-term and Short-term Indicant - Markets

The Quick-term Indicant signaled Bull two weeks ahead of the seasonal schedule. It was believed one of the longest QT Bear cycles would last until late October. However, the surge in the market in August was not as obviously fake like other surges north during the QT Bear between April 2002 and August 2002.

However, the market did not take off after crossing the bullish red curve like it would have in normal bull markets. The market demonstrated comfort near the bullish red curve, but it did not express the same degree of comfort above the bullish red curve. All the indexes are down slightly since the QT Bull signal.

The Dow is down 20.4% since the Short-term Indicant signaled bear on March 20, 2002 . The NASDAQ Composite is down 69.3% since the Short-term Indicant signaled bear over two years ago on March 30, 2000 .

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

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

The Mid-term Indicant signaled bear for the eight major indexes. Their movement to the south was clipping along a negatively sloping line that express ominous behavior. The market cycles are much shorter than the past several years. Although this Mid-term Bear market may last only a few weeks, it could produce a drop of another thirty to fifty percent. Watch the Quick-term Indicant for further clues of this mischievous behavior.

http://www.indicant.net/Members/Updates/History-Seasonal/HS0090.htm

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

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

Mid-term Indicant Positions - International Markets

There were no new bull signals and five new bear signals. The Mid-term Indicant is now signaling "bull" for eleven of the twenty-two international markets it tracks.

The eleven bulls are up 18.6% since the Mid-term Indicant signaled bull an average of 24.0 weeks ago for an annualized gain 40.3%.

In addition to the new bear signals, the six bear markets are down by an average of 12.5% since their respect bear signals. Fourteen weeks ago, they were down 1.5%. Those six markets have been bears for an average of 12.1 weeks. Click the following hyperlink to view the status and charts.

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

Mid-term Indicant Positions - Index Options

There were twenty-six new bear signals and no new bull signals.

Two have been bulls for the past 12.5 weeks (average). They are up an average of 61.4% since their respective bull signals for an annualized growth rate of 252.5%, which is way up from 2.3% last week when most of the indexes were relatively new bulls. In addition to the new bear signals, ten bears are down an average of 30.3% since their respective bear signals. Fifteen weeks ago, they were down 0.2%. They have been bears for an average of 17.3 weeks. These statistics will change dramatically next week if the bears remain bears and they will be one week old.

After only three weeks of being bulls, the Pharmaceutical (DRG #27) and Biotechnology (BTK#28) Indexes received bear signals.

One bull market is the Mid-term Volatility Index. It rebounded quite a bit in last week’s bear market behavior. But it stopped short of the prior two peaks. This supports a reversal of the bearish market behavior.

To view the status and charts of these sectors, please click the following:

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

Mid-term Indicant Positions - Mutual Funds (Timing the Sectors)

There were no buy signals and seven sell signals.

The Indicant is signaling hold for 64 of the 76 mutual funds it tracks.

The sixty-four funds with hold signals are down an average of 0.1%, which is down from four weeks ago at 26.2%. Remember there were thirty-four buy signals four weeks ago and twenty-one buy signals three weeks ago. Consequently, the hold signals are only three to four weeks old. That is the reason for the decline in the average growth rate. The average period with Indicant hold signals is 5.9 weeks, which is down from 34.0 weeks four weeks ago. The 0.1% average gain annualizes to -0.7%, which is down from 40.0% three weeks ago.

In addition to the sell signals, the five funds with avoid signals are down 22.8% since the Indicant "sell" signals. Fifteen weeks ago the “avoided” funds were down only 0.5%. The Indicant has been avoiding these bearish funds for an average of 15.8 weeks.

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

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.

Mid-term Indicant Positions - Indicant Selected Stocks

There were one buy signal and three sell signals. You received an email earlier this weekend about that.

In addition to the buy signal, the Mid-term Indicant now recommends holding 47 of the 73 stocks it tracks. These 47 stocks with "hold" recommendations are up an average of 15.1% since the Mid-term Indicant signaled buy an average of 11.6 weeks ago. The 15.1% gain annualizes to 67.4%. This is due to many of the stocks with hold periods of four weeks or less. The Indicant recommends avoiding twenty-two stocks. They are down an average of 56.7%. The Indicant has avoided these stocks for an average of 31.2 weeks.

Click the following hyperlink to view this group of stocks:

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

Mid-term Indicant Positions - Dow Jones 30 Industrial Stocks

There were no "buy" signals and four "sell" signals. You received an email about the specifics earlier this weekend.

The Indicant is signaling hold for seventeen of the thirty Dow stocks. These stocks are down 2.1%. Keep in mind many of the held stocks are recent buy signals.

In addition to the sell signals, the nine avoided stocks are down 13.7% since the Mid-term Indicant signaled sell an average of 3.6 weeks ago. Seven weeks ago, the avoided stocks were down 18.1%.

Click the following hyperlink to view this group of stocks:

http://www.indicant.net/Non-Members/Public%20Updates/UD%20MTI-DJIA-STKS.htm

Mid-term Indicant Positions - Dow Jones 15 Utility Stocks

There were no buy signals and one sell signal. You received a report earlier this weekend about the Indicant signals.

The Indicant recommends holding twelve of the sixteen utility stocks. They are up an average of 9.9% at an annualized rate of 37.3%. These stocks have been held for an average of 13.8 weeks with several less than four weeks being held.

In addition to the sell signals, the Indicant recommends avoiding three stocks (Enron is still included). They are down an average of 56.2% since their respective sell signals. Fifteen weeks ago, they were down 20.7% when several more of the stocks were being avoided. The two stocks have been avoided for an average of 33.3 weeks.

Click the following hyperlink to view the entire group of these stocks:

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

Mid-term Indicant Positions - NASDAQ100 Stocks

There were two buy signals and fourteen sell signals. You received an email earlier this weekend advising of the details of these buy and sell signals.

In addition to the buy signals, the Mid-term Indicant now recommends holding forty-eight of the NASDAQ100 stocks. These stocks are up an average of 6.4%, which annualizes to 39.5%. That annualized gain is down from 145.2% twenty-seven weeks ago, which approximates the peaking of the Quick-term Bull of late 2001 and early 2002. The average "holding" period is 8.4 weeks for the forty-eight stocks.

In addition to the sell signals, the thirty-six stocks being avoided are down an average of 58.3% since the Indicant signaled sell an average of 21.4 weeks ago. Twenty weeks ago, the avoided stocks were down 11.2%.

Click the following link to view this group of stocks:

http://www.indicant.net/Non-Members/Public%20Updates/UD%20MTI-NAS100-STKS.htm

Long Term Indicant Positions - Dow Jones Industrial Average

The Long-term Indicant has had you in blue chips since December 1991. The blue-chip long-term "buy" was at 2895 for the DJIA. There is no long-term bear signal anywhere on the horizon. Since the Long-term Indicant's bull signal in December 1991, the Dow is up 191.1% (annualized at 17.7%). The Long-term Indicant is based almost entirely on economic data. The recession, deflation, and inflation have not been strong enough to signal bear. Keep in mind the Long-term Indicant has only had five bull/bear cycles since 1920.

Indicant Conclusion

There is no strong support for bearish market behavior. The market is engaged in an unfavorable seasonal period. It would not be surprising to see the market drift lateral to down for the next few weeks. We major attribute we are looking for is a clearer signal from the Indicant Volume Indicator. It continues to drift with increasing apathy.

The second major concern is the Short-term Indicant continues to signal bear. And it is nowhere near signaling bull. The Short-term Indicant, alone outperforms buy and hold, but it is used primarily to show support for the Quick-term and Mid-term Indicant models.

Watch your email for the daily reports on the Quick-term Indicant.

See the preliminary report that you received on Saturday for more information.

Hyperlinks

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

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

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

Happy Investing,

www.indicant.net

09-08-02

September 1, 2002 Indicant.Net Weekly Update

Dear Indicant Members:

This Week’s Report

War and the Stock Market

How do wars affect the stock market? Initially, there is always a shock to the market with the first gunshots or bombs. After the shock, the normal fundamentals of greed and economic activity kick in.

As stated in prior messages, we are nearing the November elections and the usual accompanying war. Incumbent politicians manipulate as many elements as possible to “schedule” military conflict around the national elections. The most recent example of this was Bill Clinton’s 1994 foray into Haiti to help reinstate their ousted president. Bill knew he was in trouble and sent troops to the Persian Gulf . It did not help as the Republicans swept control of the Congress. Newt Gingrich took control of the House and we had four great years of a “do-nothing” government and the corresponding booming stock market.

It was obvious, as always, military conflict provides free camera time for the incumbent. The theory is that the American people will rally behind the leader and do what he says do. Subliminally, George Bush will be advising, “give me control of both houses so we can defeat the enemy.” It must work somewhat, as they keep doing it. One of these days some mothers are going to figure out their sons and daughters died in military conflict so some buffoons can stay in power. Military engagement, quite often, is justified, but it is amazing how much the timing and strategy is for political gain as opposed to being efficient with the process and optimum with the time. Saddam Hussein knows this and he will not be riding a camel in the dessert for easy target practice.

The likelihood of war increases, as we near the election. The market will react at first and then return to its snaky normalcy.

Once the conflict starts, watch the price of oil. If the Arabs get mad and cut off the supply chain, the price of oil could erupt to the north. The possible ace in the hole is the Russians. If they open the valves, full out, then the impending oil price increases will be dampened. It will depend on the Russian’s capacity to produce versus the Arabs willingness to cut back.

Dick Cheney and George W. Bush both have backgrounds in the petro-world. They have thought this out. They have dialogued with kings, sheiks, and Russian bosses. The strategy is clear.

The stock market will notice oil prices and threats of inflation first. If oil prices go up, the stock market will go down. Some stocks will zoom north, such as the energy services stocks in the Indicant Select Stocks. Many of those stocks received Mid-term Buy signals in the last two weeks. The reason for that bullish behavior is due to the “scheduled” upcoming war. Smart money is “speculating” on increased oil prices.

After Saddam Hussein is ousted and the region stabilizes, Dick Cheney and George W. Bush have their work cut out for them. Their close friends in Texas would get very rich if oil prices remained high. However, that would cost them in their reelection bid in 2004. The rising inflation and interest rates would introduce Hillary Clinton to the Whitehouse. George W. Bush would be the only president to lose to the wife of the president his father lost to. Yeah, you can read that again. Just going for a little humor here.

Secular Bear or Secular Bull

Are we in a secular bull market or a secular bear market? The answer depends on your frame of reference. Between 1990 and August 2002, the Dow is up 235%. The S&P500 and the NASDAQ are up 178% and 216% respectively. If your investment perspective originates in 1990 or earlier, you would argue we continue to enjoy a secular bull market.

The Dow is down 25% from its monthly closing peak of 11497 in December 1999. The S&P500 is down 40% since its August 2000 peak at 1518. The NASDAQ peaked at 4697 in February 2000 and is down 72% since then. If you, like so many, invested the majority of your funds in or around these peaks, then you have an excellent argument for this being a secular bear market.

Some of you have money and want to invest it. Investing in the stock market offers tremendous reward potential, but as always, it has the required attachment of risks. Stock market investing is competitive. The success of one investor must come from the failure of another investor on a Quick-term, Short-term, and Mid-term basis. That is why long-term investors typically enjoy the greater rewards, except from 1929 through the early 1950’s. That generation of long-term investors did not make money. Most lost money as socialistic programs depressed the humankind’s spirit. The political establishment caused the Great Depression. Cronyism and a slant against the highly productive, such as James J. Hill, to the modern day Bill Gates, was common with the rise of the FBI and other police-state entities. The leeches simply will not stay out of the way of the productive.

Do we have history repeating itself? The destruction of James J. Hill by the U.S. Congress led to international economic decline, which led to World Wars. The cause of all this tragedy was originated in the U.S. House of Representatives, the U.S. Senate, and the Whitehouse. If you are not competing, then you are not performing.

A Historical Perspective of the Stock Market

Why did the S&P500 move up the least in the secular bull market? The management will tell you that their companies are large and there is little growth potential. The fact is that the senior managers at many of those companies are dilettantes. The formation at the top of those companies is a pure by-product of corporate cronyism and academic credentialism. As you study the fundamentals, do not buy the stock if the officers are paid excessive salaries and other benefits. They are stealing. They are not worth it, if they are hirelings. Ninety-nine percent of the people employed at Fortune 500 companies are good people.

But the people who get promoted and advance to the very top echelons of the Fortune 500 companies get there through self-serving behavior and quite often at the expense of the performance of the company. That is natural and there is no solution. Just quit paying them so much money. Not one hireling at the top is worth more that $100,000 per year.

It is interesting that the NASDAQ is up 216% since 1990. That performance exceeds the S&P500 but is not quite a good as the Dow’s. However, the NASDAQ is down 72% from its peak. The peak was obviously fake. That final bullish leg in late 1998 - 1999 was nothing more than frenzied speculation.

There are a couple of splintered thoughts here. The first one deals with dilettante management. Dilettante managers did not lead the majority of the NASDAQ companies. Founders led many of those companies to greatness. Some of these founders took the money and ran. This is not being critical. Some have stayed and are still producing. Others are sailing the high seas or becoming scratch golfers. Again, there is nothing wrong with that. The only issue is that the NASDAQ’s bull surge in 1998-early 2000 was completely fake and without merit. The markets have since put the NASDAQ back into proper perspective. Its performance since 1990 is now centered between the low performing S&P500 and the blue chip Dow stocks.

The second reason for the NASDAQ bubble burst is that few of those companies directly contributed to wealth creation. Remember economic wealth is delivered in only three ways; manufacturing, extraction, and agriculture.

If Oracle sells its fine software to say, John Deere, then Oracle potentially contributed to real economic wealth. If John Deere increases productivity by more than what the software and related installation costs were, then Oracle contributed to real economic wealth. If Oracle sold its find software to an Internet business, such as Travelocity, there is no real economic wealth added.

The entire internet craze of the 1990’s helped propel the NASDAQ higher. The internet has enhanced the quality of life and contributed somewhat to productivity growth. But most of the internet businesses contributed nothing to real economic wealth. Thus, the bubble was entirely speculative and the burst was the required dose of reality that always exerts itself.

The annual rate of return for the Dow, S&P500, and NASDAQ since 1990 now amounts to 12.8%, 10.8%, and 12.2% respectively. Prior to the great bull market since 1980, the average annual rate of return amounted to around 8%. By 1998, it increased to around 12%. If the market recognizes the tremendous productivity growth since the 1980’s, then the markets are now at normal growth rates.

The next bull leg would be more powerful, if we endure another Quick-term Bear leg prior to the end of this year. If the bottom is behind us, then the next Mid-term Bull leg will clip along a lazily sloping curve to the northeast. If one more Quick-term Bear occurs before year end, then the next Mid-term Bull leg has a greater chance of zoom closer to due north before the next stock market crash. In the long run, the annual rate of return should be somewhere between 8% and 12%. Right now, the market is on the high end of that range. If you invested in 1990 or earlier and a long-term holder, you are enjoying a slightly better than average return on your investment. If you invested in 1998 and still holding, you could be waiting another twenty years before you see any return on your investment.

Mid-term Election Year

Now that the markets are re-centered and at about where they make sense relative to one another, one can expect the mid-term election phenomenon to kick in. There are a couple of problems here.

The Dow Jones Industrial Average seems to be voodoo free. The NASDAQ is mostly voodoo free. The majority of voodoo bookkeeping is within the Fortune 500 family. It will be the worse performer as it is the playground of the parasitical elites.

The Indicant technical indicators are favoring a bullish stance for the stock market.

1. The Mid-term Volatility Index has clearly peaked and will move to the south. As we learned last week, it will not move south in a straight line. But the general direction favors southerly movements, which leads the stock market to the north.

2. Last week, we stated, “the Quick-term Volatility Index may have bottomed. If it has, the market will move to the south as the Quick-term Volatility Index adjusts to the north.” The stock market indeed moved to the south as the QT Volatility Index adjusted. It has some additional upward bias in the next few days, but its trend is favorable for a generally sloping bull market.

3. Also, as stated last week, “the force vectors are maturing in deep bullish domains. That increases the likelihood of some near term corrections to the south.” That is what occurred this past week. The Indicant still identifies those southerly movements as corrections and not a return of a Quick-term Bear. The vector pressures are now solidly in bullish territory. This indicates the market is comfortable in its transformation to bullish status, but is primed for a few days of up and down volatility with a bias toward cyclical bullish behavior.

4. Last week, we stated, “As the indexes retreated from the bullish domain of the red curve, they did not express discomfort in that lofty position.” The indexes did express some mild discomfort near the bullish red curve this past week and retreated somewhat. However, the retreating patterns were not tumultuous. As long as the market feels comfortable in or around bullish domains, then the bull is winning the battle. The bear is not dead yet. It apparently did some clawing from down under. The QT Bull is wounded, but still kicking.

5. The Indicant Volume Indicator remains as the major uncooperative attribute to support any dynamic bullish behavior. It continues moving to the south. Although, it is possible to enjoy the fruits of a bull market with decreasing volume, this illustrates a lack of certainty and apathy in the new bull.

7. This is a mid-term election year and the market always finds a bottom in such years. The current configurations of the Indicant attributes suggest the bottom has already passed. However, the Indicant does not officially forecast. If the Quick-term Indicant signals another QT Bear, slant your decisions to sell and avoid for those borderline cases in stocks and funds.

Divergence versus Convergence

There was a slight hint of divergence this past week. The tech stocks, including biotech and pharmaceuticals fell. The oil field service stocks maintained or moved up. This is an obvious reflection of the anticipated turmoil in the Middle East . Precious metals also moved north reflecting the corresponding “fear” component.

It is somewhat bearish that divergence patterns would be expressed so early into a QT Bull cycle. As previously stated, this QT Bull could be short-lived.

Economic Outlook

The Dow Jones Futures moved into the inflationary domain last week. Gold, oil, wheat, Dow Jones Spot, and CRB Bridge Futures remain in inflationary domains. Oil is surging aggressively to the north with what appears to be a shift from cyclical behavior to a well entrenched trend. If this pattern continues, the newly blessed Quick-term Bull will be short-lived.

Most of the commodities moved to the north. Interestingly, several interest rates moved to the north but are still very low. If commodity prices continue to increase, then interest rates will parallel that behavior. The parasitical elite believe more in economic manipulations than the irrevocable laws of supply and demand.

Many investors continue to pour money into bonds. Once a critical mass of investors has their money tied up in bonds, interest rates will rise and reduce the value of their holdings. That should bode well for the stock market, as they will scramble to reposition their investments toward the tail end of the next Mid-term Bull leg.

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

Fear Metrics: Economic and Terrorism

The Indicant signaled "buy" for Fidelity American Gold (FSAGX) - #28 on December 7, 2001 . Thirteen weeks ago, it was up 66.1% since the Mid-term Indicant signaled buy. Six weeks ago, it closed up 12.0% since the buy signal. Last week it closed up 45.1% since the MTI buy signal of December 7, 2001 .

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% thirteen weeks ago since the MTI buy signal in April 2001. Six weeks ago, it closed up 27.8%. Last week it closed up 42.2%.

As you can see, they are rebounding, but vacillating within the MTI hold cycle. This typically indicates they have topped out.

Quick-term and Short-term Indicant - Markets

The Quick-term Indicant signaled Bull last week a little ahead of the seasonal schedule. The stock market had demonstrated significant comfort near the bullish red curve, but expressed increasing timidity last week at that level. Four weeks ago, all eight indexes were down an average of 31.0% since the QT Bear signal of April 23, 2002 .

The Dow is down 18.2% since the Short-term Indicant signaled bear on March 20, 2002 . The NASDAQ Composite is down 68.9% since the Short-term Indicant signaled bear over two years ago on March 30, 2000 .

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

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

Twenty-five weeks ago, all eight indexes were bulls with an annualized growth of 48.2%. After a period of over three months in a Mid-term Bear mode, all eight indexes are now Mid-term Bulls. They down an average of 2.9% with most of the bearish behavior last week. The eight bulls are an average of 1.2 weeks old.

None of the indexes touched their respective bearish yellow curves in last weeks correction. The markets have been toying around their bearish yellow curves for most of this year.

If the Quick-term Indicant maintains bullish position, then the market’s low point is behind us and the phenomenon of mid-term election year’s bottoming may be taking form.

http://www.indicant.net/Members/Updates/History-Seasonal/HS0090.htm

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

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

Mid-term Indicant Positions - International Markets

There were two new bull signals and no new bear signals. In addition to the new bull signals, the Mid-term Indicant is now signaling "bull" for fourteen of the twenty-two international markets it tracks.

The fourteen bulls are up 15.5% since the Mid-term Indicant signaled bull an average of 19.3 weeks ago for an annualized gain 41.7%.

The six bear markets are down by an average of 8.4% since their respect bear signals. Thirteen weeks ago, they were down 1.5%. Those eight markets have been bears for an average of 11.1 weeks. Click the following hyperlink to view the status and charts.

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

Mid-term Indicant Positions - Index Options

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

Of the thirty-eight index options the Indicant tracks, twenty-eight have been bulls for the past 2.7 weeks (average). They are up an average of 2.0% since their respective bull signals for an annualized growth rate of 38.1%, which is down from 62.7% twenty-three weeks ago when most of the indexes were Mid-term bulls. The Volatility Index continues to position itself for a decline and the markets should move bullishly when that occurs. The fifteen bears are down an average of 25.6% since their respective bear signals. Fourteen weeks ago, they were down 0.2%. They have been bears for an average of 16.3 weeks.

The Pharmaceutical (DRG #27) and Biotechnology (BTK#28) Indexes received bull signals two weeks ago from the Mid-term Indicant. Last week, they were up 3.0% and 4.8%, respectively since last week’s bull signal. Now they are down 2.3% and 4.8%, respectively. These two sectors have profound fundamental bullish themes for the next twenty years. Just make certain that your investments avoid those who would practice voodoo bookkeeping

To view the status and charts of these sectors, please click the following:

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

Mid-term Indicant Positions - Mutual Funds (Timing the Sectors)

There were no buy signals and no sell signals.

The Indicant is signaling hold for 71 of the 76 mutual funds it tracks.

The fifty-nine funds with hold signals are up an average of 1.2%, which is down from three weeks ago at 26.2%. Remember there were thirty-four buy signals three weeks ago and twenty-one buy signals two weeks ago. Consequently, the hold signals are only two to three weeks old. That is the reason for the decline in the average growth rate. The average period with Indicant hold signals is 4.5 weeks, which is down from 34.0 weeks three weeks ago. The 1.2% average gain annualizes to 13.2%, which is down from 40.0% three weeks ago.

The five funds the Indicant recommends avoiding are down 22.4% since the Indicant "sell" signals. Fourteen weeks ago the “avoided” funds were down only 0.5%. The Indicant has been avoiding these bearish funds for an average of 14.8 weeks.

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

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.

Mid-term Indicant Positions - Indicant Selected Stocks

There were no "buy" signals and one “sell” signal. You received an email earlier this weekend about that.

In addition to the buy signals, the Mid-term Indicant now recommends holding 50 of the 73 stocks it tracks. These 50 stocks with "hold" recommendations are up an average of 16.1% since the Mid-term Indicant signaled "buy" an average of 31.1 weeks ago. The 16.1% gain annualizes to 82.6%. This is due to many of the stocks with hold periods of three weeks or less. The Indicant recommends avoiding twenty-two stocks. They are down an average of 58.9%. The Indicant has avoided these stocks for an average of 31.1 weeks.

Click the following hyperlink to view this group of stocks:

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

Mid-term Indicant Positions - Dow Jones 30 Industrial Stocks

There were no "buy" signals and three "sell" signals. You received an email about the specifics earlier this weekend.

The Indicant is signaling hold for twenty-one of the thirty Dow stocks. These twenty-one stocks are down 0.1%. Keep in mind many of the held stocks are recent buy signals.

In addition to the sell signals, the six avoided stocks are down 17.0% since the Mid-term Indicant signaled sell an average of 2.6 weeks ago. Six weeks ago, the avoided stocks were down 18.1%.

Click the following hyperlink to view this group of stocks:

http://www.indicant.net/Non-Members/Public%20Updates/UD%20MTI-DJIA-STKS.htm

Mid-term Indicant Positions - Dow Jones 15 Utility Stocks

There were no buy signals and one sell signal. You received a report earlier this weekend about the Indicant signals.

The Indicant recommends holding thirteen of the sixteen utility stocks. They are up an average of 10.8% at an annualized rate of 47.2%. These stocks have been held for an average of 11.9 weeks with several less than three weeks being held.

In addition to the sell signals, the Indicant recommends avoiding two stocks (Enron is still included). They are down an average of 80.0% since their respective sell signals. Fourteen weeks ago, they were down 20.7% when several more of the stocks were being avoided. The two stocks have been avoided for an average of 48.5 weeks.

Click the following hyperlink to view the entire group of these stocks:

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

Mid-term Indicant Positions - NASDAQ100 Stocks

There were two buy signals and four sell signals. You received an email earlier this weekend advising of the details of these buy and sell signals.

In addition to the buy signals, the Mid-term Indicant now recommends holding sixty of the NASDAQ100 stocks. These stocks are up an average of 3.0%, which annualizes to 26.2%. That annualized gain is down from 145.2% twenty-six weeks ago, which approximates the peaking of the Quick-term Bull of late 2001 and early 2002. The average "holding" period is 6.5 weeks for the sixty stocks.

The thirty-four stocks being avoided are down an average of 61.0% since the Indicant signaled "sell" an average of 21.6 weeks ago. Nineteen weeks ago, the avoided stocks were down 11.2%.

Click the following link to view this group of stocks:

http://www.indicant.net/Non-Members/Public%20Updates/UD%20MTI-NAS100-STKS.htm

Long Term Indicant Positions - Dow Jones Industrial Average

The Long-term Indicant has had you in blue chips since December 1991. The blue-chip long-term "buy" was at 2895 for the DJIA. There is no long-term bear signal anywhere on the horizon. Since the Long-term Indicant's bull signal in December 1991, the Dow is up 199.3% (annualized at 18.5%). The Long-term Indicant is based almost entirely on economic data. The recession, deflation, and inflation have not been strong enough to signal bear. Keep in mind the Long-term Indicant has only had five bull/bear cycles since 1920.

Indicant Conclusion

After being down nearly 50% in the last Quick-term Bear market from April 23, 2002 through most of August, the new QT Bull is getting off to a rough start. The Quick-term attributes are configured in support that week’s bearish behavior was primarily due to profit taking as opposed to energized bearish directional behavior.

This new Quick-term Bull market supports the recent Mid-term Bull and Buy signals. There are two major areas of concern here. The Quick-term Indicant does not yet have the support from the Indicant Volume Indicator. Although a market can move north on light volume, it cannot move north very aggressively. We want to see the Indicant Volume Indicator shift back to the north with a rising market.

The average investor has given up on the market. The “Johnny-come-lates” in the last Mid-term Bull/Bear cycle are all out of the market. This is typically a very early sign for increasing bullish sentiment.

Watch your email daily.

See the preliminary report that you received on Saturday for more information.

Hyperlinks

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

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

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

Happy Investing,

www.indicant.net

09-01-02