Sep 26, 2004 Indicant.Net Weekly Update

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

Conflicts-IV

The recent Quick-term bullish rally helped avoid the potential depths of deep bearish seasonality so far this year. When using historical standards, this year has been a variance to historical standards so far. The Dow is down 3.9% on the year. That compares unfavorably to the average 7.3% rise enjoyed in presidential election years, which is the second most bullish year on the presidential election cycle.

Even though the Dow Jones Industrial Average is down on the year, the Dow Composite of Sixty-Five Stocks is up 1.2%. That is because the Dow Utilities and Transports have been bullish. During the earlier stages of the current Mid-term Bull market, the Dow Utilities was the highest performing index. Even in the face of historically high fuel costs, the Dow Transports has been bullish on the year, even though their depressed profit margins are obvious. As you can see the market does not treat specific sectors in a manner consistent with current performance. The high cost of fuel is a definite threat to the Transportation Sector’s profit and cash flow performance. The Transports have risen steadily in the face of this negative impact. The market seldom responds to currently obvious. It is forever attempting to anticipate the currently unknown.

Of the eight major indices tracked by the Quick-term Indicant, all are down on the year except the Dow Composites, the S&P400, and the S&P600. The S&P600 is the most bullish this year with a 6.5% increase. It is not surprising the small caps performance has been the most bullish.

Money people are increasingly managing big companies. Passionate people more likely manage the smaller companies, such as those comprising the S&P600. The passionate manager is one who loves the business. That contrasts with big company managers who only love the money. The passionate manager will consistently outperform the money manager in the long haul. So, the next time you see an ex-Wall Street investment banker or money sort of person take over a company, sell the stock with the long-term perspective, it will perform poorly.

In this variance year, the market is mixed with some indices down and others up. The NASDAQ is down 6.2% on the year. It is the most bearish of the eight indices tracked by the Indicant. The NASDAQ100 is down 4.7%. It is the second most bearish. The money-only driven S&P100 is down 3.0%, which is significantly unfavorable to the higher performing S&P600 (small caps) by a differential of nearly ten percent.

The big money, big business folks typically eat at the nice restaurants when traveling. They order fancy wine and quite often exceed $100 per person at dinner. They spend hours at those fancy restaurants where there is more pandering and less eating. The smaller company folks do not take precious time from getting work done. Investors in small companies not only benefit from the avoided excessive travel expenses, they also enjoy the continued hard-working performance well into the evening by the passionate manager at the smaller businesses.

Any business requires three pillars of performance driven criteria; 1) principles, 2) understanding the value, and 3) understanding the numbers. The larger companies tend to employ more principle-less managers; in other words the money managers. That ties to the expensive dinners and two-hundred bottles of wine.

There is only one way to understand the value of an enterprise. That is the work itself. A company led by a CEO who has never done the work he or she leads will not be nearly as effective as one who actually does the work. Henry Ford, Thomas Edison, Bill Gates, Earle P. Halliburton, etc. are the more famous examples of this. But there are thousands of them you have never heard of. More small cap companies have this sort of manager than the larger caps.

Many small cap managers do not really understand the numbers as well as their large cap counterparts. Ex-Wall Street analyst, who really understands the numbers, leads many large cap companies. That is their specialty. The money sort of manager knows what costs are. They are expert in understanding cash flow. They can pour over financial reports and if not fiction, they can tell you an awful lot about the enterprise. They even know how to cut cost. Anyone can do that, but the press touts them as heroic. All you have to do is quit spending and fire people. That is a very easy thing to do. Being destructive to what is in front you requires zero talent. 

The small cap manager has a tendency, although oftentimes unconscious, to improve cost. In other words, they know how to squeeze more out of less. That fuels higher growth rates on the bottom line regardless of what the revenue is. One cannot “improve costs” if they have little understanding of the values they provide for in their products and services.

Many large cap managers work hard. They work long hours for the most part, just as their small cap counterparts. However, the large cap folks work on the wrong things. They look at financial reports and have meetings with their employees. In those meetings, they direct specific activities they had never done themselves. That direction is typically inferior because without having ever done it themselves. They seldom direct the right timing or understand the details of their direction.

Of all the indices, only the S&P600 is tracking closely to historical standards in an otherwise bearish year. The historical standard is based on the Dow and earlier indices containing long-term data reliability. The small cap indices are newer and do not have hundreds of years of historical data to base a historical standard. However, using the older indices for establishing historical standards, it is okay to evaluate the newer indices against standards established by more mature indices, such as the Dow Jones Industrial Average.

The stock market bubble in the late 1990’s brought on a wave of increased consciousness about one’s stock prices. That led to an increased focus on the numbers; the money. What you have right now running corporate America are money folks; not the value folks. That is one likely big reason for the meandering bearish market this year that conflicts with historical standards.

Even with all that, the market should enjoy normal bullish seasonality at the end of this year. The recent technical quick-term bullish rally elevated the market to a higher plane than it would have found if deep bearish seasonality had been allowed to exert its influence without the checks and balances of a quick-term rally. Unfortunately, it appears the quick-term bullish rally is over. If a bull cycle cannot be configured in the immediate time, then a meandering market with mild bearish expressions is the next best thing. Although boring and disappointing, a meandering market is much better than an outright bearish market for your hold positions.

Expect continued erosion in your net worth over the next few days. However, there is a good chance sell signals will be held to a minimum if the meandering behavior, even with a mild bearish drift, can continue.

Keep in mind there are exceptions to nearly every rule of thumb. There are several large cap managers who are good people. Many of them recognize they do not understand the details of the value adding process. That recognition on their part is helpful to the company’s bottom line. Those who do not know what they do not know are the dangerous ones. Watch for false ego’s; those hirlings who think they are great. Fundamentally, you will not want to hold shares in their companies for the long haul. Being led by the blind quickens the pace to extinction.

Weekly Buy/Sell Summary

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

In addition to the sell signal, the Mid-term Indicant is avoiding ninety stocks and funds of the 296 tracked by the Indicant. The avoided stocks and funds are down an average of 28.2% since the Mid-term Indicant signaled sell an average of 47.0 weeks ago.

There were only sixteen stocks and funds avoided at this time last year in addition to three sell signals. The avoided stocks and funds one year ago were down an average of 25.0% since their respective sell signals an average of 30.4 weeks earlier. This contrasts strongly with the avoided stocks and funds two years ago. On September 27, 2002, the Mid-term Indicant was avoiding 213 stocks and funds that were down an average of 22.6% since their respective sell signals an average of 9.6 weeks earlier.

Although there were no buy signals this weekend, the Mid-term Indicant is currently signaling hold for 205 of the 296 stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 69.3%. That annualizes to 64.1%, which is down from 124.1% reported on June 7, 2003, but up from 50.2% reported over a year ago on February 15, 2003. The Mid-term Indicant has been signaling hold for these 205 stocks and funds for an average of 56.3 weeks.

One year ago, the Mid-term Indicant was holding 219 stocks and funds for an average of 30.0 weeks. They were up 51.8% (annualized at 89.6%). The Mid-term Indicant was signaling hold for only 15 stocks and funds two years ago on September 27, 2002. They were up by an average of 17.4% (annualized at 45.3%) since their respective buy signals an average of 20.0 weeks earlier.

This paragraph is a repeat from the last several weeks with a few modifications. The current bull market and buying barrage in late 2002 followed the predicted market bottom in 2002. The mid-term presidential election year phenomenon was consistent with history. Even more impressive was how the market synchronized with near perfection with normal seasonality in 2002. The Dow30 found bottom on October 9, 2002 at 7286.27. The NASDAQ found bottom on the same day at 1114.11. As earlier stated, the Indicant began its buying barrage in October – November 2002 just after the market bottomed from the severe 2000-2002 Bear Market. Some of you recall the Short-term Indicant Bear for the NASDAQ was the longest in history. It even exceeded the Dow’s 1929-1932 Short-term Indicant Bear in breadth. The good news is that the NASDAQ’s decline did not lead to a depression, which is a clear indication of how little influence the tech stocks have on the economy. Remember, real economic wealth is delivered in only three ways; manufacturing, agriculture, and extraction. All other industries are merely transfer agents of wealth.

This paragraph is repeated from the past several weeks, but it does not hurt to reread it each week during bearish seasonality. You will notice many of the mutual fund buy signals occurred in March 2003. Many of you recall how the market did not synchronize very well with the heart and soul of bullish seasonality from November 2002 through February 2003. After that asynchronous behavior in November 2002 rolling third of the year, the market turned bullish in March 2003 and again did not synchronize with normal seasonality. The Mid-term Indicant continued signaling bull during bearish seasonality during most of 2003. It is unlikely we will enjoy back-to-back asynchronous market behavior with seasonal normalcy in 2004. Bearish expressions on a Mid-term basis in 2004 between May and October should not be surprising. So far, this year has been consistent with normal bearish seasonality. Unfortunately, bearish expressions started ahead of schedule this year.

The second most bullish year along the presidential election cycle is the election year, which is underway in 2004. We are anticipating enjoyment of that as well, but its bullish fervor may not unfold until just before the election this year. The following link will take you to charts that explain this phenomenon, which is currently underway. It is in a “members only” section. This paragraph will repeat throughout this year.

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. So far, we do not expect 2004 to be an exception. If it becomes an exception, the Quick-term Indicant and the other Indicant models will let you know.

Right now, the Mid-term Indicant continues to signal bull. There is more about that later in this report.

Stop Loss Management

The Mid-term Indicant continues recommending a stop loss of 5% because of bearish seasonality. If you are up by 50% or more you may find it advantageous to set your stop-loss at 10% from your current hold position. If you sold a stock on the stop loss and the Indicant continues to signal hold, do not buy the stock unless the Quick-term Indicant is signaling bull.

Use either a 5% (or 10%) trailing stop loss or the yellow or green values you will find on the tables. If your stock or fund is above the bearish yellow curve and below the green curve, set your stop loss equal to the greater of the yellow curve and the trailing stop loss. If your stock or fund is above the green curve, set your stop loss at no less the value of the green curve or 8% 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 8% trailing stop loss. If you are up by triple digit amounts and enjoy your ownership of the stock or fund, then use a 15% trailing stop loss or the slow moving blue curve price. If you really enjoy holding the stock, keep a close eye on the management. Dilettante managers have a way of worming into the business. Watch closely for cronyism and lazy-hazy management dialog. Keep your eye on lavish spending and excessive concerns about social issues. Those types are more interested in burning your money for their pleasures, as opposed to making you money. High performing companies remain focused on honoring the investments made by their shareholders.

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

There have been quite a few buy signals the past few weeks that were driven by the technical rally. Be conservative with these buys and do not be surprised if sell signals for some them reverse.

Stock and Fund Update

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

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

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

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

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

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

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

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

Divergence versus Convergence

The last two weeks revealed increased divergent behavior. This is not bullish. Blue chips moved south in addition to other large caps and mid caps. It appears inflationary related indices are holding ground while general equities are expressing more bearish configurations. This divergent pattern suggests an increased bearish bias for the overall stock market.

Economic Conditions – Inflation, Currency, Interest Rates

This elemental contribution to the stock market’s behavior remains static. The only non-bullish cyclical direction remains rising interest rates. As repeatedly stated the market has little experience with rising interest rates from historically low levels. It does not like rates rising, while at the same time the market is saying, “hey, they are still cheap.” The market talks, quite often. The key is to be a good listner.

The market attempts to reason that profits should not be adversely impacted with current rates. The market will also attempt to project when rising interest rates will adversely impact profits. However, the market, although not an accurate forecaster of economic events, will attempt to forecast only six to nine months into the future. Sometime the market is accurate in its assessment and other times wrong. However, regardless of all that the market is always where it should be – that is where traders agree on a price that one is selling stock for and the other buying it.

Although interest rates are rising, commodity prices are remaining stable with some attributes suggesting impending shifts to a southerly direction. The stock market does not mind if commodities or interest get a little out of kilter. It does not like it when both are out of kilter. If interest rates continue to rise and commodity prices start to fall, the market may indeed find that reason enough to express bullish behavior. The combined values of interest rates and inflation is what the market finds important. Do not try to simplify this with a two-dimensional “if-then” conclusion. It is the absolute value of both. For example, the market disdains deflationary cycles.

The U.S. dollar continues to shift to strengthening against world currencies. The Canadian dollar continues to march to its own drum beat. This could be a long term move that is tied to more oil being delivered from the tar sands in Canada in the next few years. Canada has more oil in those reserves that the Middle East. The high price of oil supports tar sand extraction, which has a tremendously higher extraction cost than Middle Eastern oil. However, with today’s higher oil prices, investment in tar sand extraction will be much easier to capitalize for investors.

The Saudis understand this. If they do not lower their oil prices, more investments will be made in hard to get oil. That reduced dependency on their oil will no doubt hurt the Kingdom’s allowance and “giving the paupers their fair share.” In other words, the royal family will not be able to dole out funds to retain their power. That will open the door to civil war in Saudi Arabia and other Middle Eastern countries.

The extremely rich never get hurt. With the threat of lost power and even their lives, they exile to foreign lands and work on other things, such as their golf games, etc. However, relinquishing power to those genetically inclined to possess it is a difficult thing to do.

This scenario is possibly unfolding now, although it could take years or even decades to produce an entirely different social, economic, and political conclusion in the Middle East. With civil war unfolding in Iraq and it is obvious there will be one; regardless of national elections, the beginnings of such events are being born.

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

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% one-hundred and eighteen weeks ago since the MTI buy signal in April 2001. One-hundred and eleven weeks ago, it closed up 30.1%. Last week it closed up 110.1%, which is higher than the 75.9% reported sixty-two weeks ago. The current annualized growth rate since the April 13, 2001 buy signal is 29.6%, which is slightly higher than 23.1% reported sixty-two weeks ago. This fund is also down from its most recent peak on December 5, 2003 when it was up 117.3%. This fund has moved up nicely the past two weeks.

The Fidelity Gold Fund #28 is up 1.1% since the Mid-term Indicant signaled buy on August 20, 2004. The last buy/sell cycle was from December 7, 2001 to April 30, 2004 resulted in a 52.7% profit. If Greenspan gets aggressive in his fight against inflation, this fund will most likely not provide the nice profit it did on the last buy/sell cycle.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 121.6% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 56.8%. Vanguard Energy #18, VGENX, is up 58.0% (annualized at 38.8%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 34.2% (annualized at 42.0%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 38.7% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 34.4%. All of these energy-related funds rose nicely the past five weeks in the face of vacillating oil prices but with recent record highs.

There is more about mutual funds, including contrarian ProFunds Ultra Short, later in this report and the links to the mutual fund tables can be found there.

The Gold Index is up 4.8% since the Mid-term Indicant signaled bull on July 9, 2004. As repeatedly asked, is this the 1970’s all over again? So far, it does not look that way, but increasing bullish expressions in the energy sector will lead to more bearish equity expressions

As repeatedly stated in this weekly report, gold prices will tumble if terrorism and inflationary threats subside.

These funds and the gold and silver index should convey the market’s perception of terrorism, inflation, and the economy. As long as they are in solid hold positions, there remains some pessimism regarding the future of the economy.

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

Quick-term and Short-term Indicant Update

The eight major indices are up 1.2% since the Quick-term Indicant signaled bear on July 21, 2004. The most bearish is the DJIA. It is flat since then. The second most bearish is the S&P200, which is up 0.2% since July 21, 2004.

As stated the past thirteen weeks, there is little chance of robust bullish expressions on a Quick-term basis. The Quick-term bias remains in favor of the bear, although the anticipated technical rally did in fact occur, providing additional support for your hold positions. The question now is, how much influence will deep bearish seasonality exert on these hold positions.

All eight indices are still above the bearish yellow curve, which contrasts with six weeks ago when all eight were below it. That was when the predicted rally originated, but the Quick-term Indicant expressed no respect for it, as it was merely a technical rally and nothing substantive.

None of the eight indices are above their respective Quick-term Red curves. The market has slipped with bearish responses to this configuration since last March. As stated the past few weeks, do not be surprised if the market recedes below bullish red in the next few weeks. That, in fact, happened last week.

This paragraph is unchanged since last week. Force Vector direction continues moving south, which supports bearish expressions. That southerly direction is not robust, which supports your hold positions, but taking additional hits to your net worth should not be surprising in the next few weeks. The recent rally was not supported with dynamic robustness. The market is still indecisive with its meandering behavior.

All eight Vector Pressures remain in bullish domains, but still remain close to bearish domains. As long as the Mid-term Indicant continues signaling bull, the depth of any bearish expressions will be shallow. If the Mid-term Indicant signals bear, there will be a much higher probability of a deep bearish expression. However, that would be preceded with a high sell signal volume to protect net worth. All eight Force Vectors are moving south. If they dip into bearish domains, the most of the recent buy signals generated because of the predicted technical rally may revert to sell signals in the next few weeks.

Keep in mind Force Vectors and Vector Pressure are eight dimensional and cannot be plotted. We continue to research methods to convert to two-dimensional arrays so you can see them. About a year and a half ago, one of our members, a Mechanical Engineer, made some suggestions that appear to be promising for plotting. We have recently been experimenting with these plots and his idea is showing promise. The problem is the plots do not yet accurately show position and the trends are not clear. Sudden drops in Force Vectors show non-linear drops in Vector Pressure, which is not yet plottable on a two dimensional plane. However, we are making progress in this area. Once perfected, options trading can be better planned. Until then, we will continue to use words to describe them.

Please review the daily reports for more details regarding the Quick-term Indicant.

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

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

The DJIA has fallen about 250 points or so in the past few days. The concern is that the Indicant Volume Indicator has risen in that same period. That combination of cyclical direction is typically bearish. Although not as ominous or obvious as the 2002 Quick-term Bear cycles, it is worth keeping an eye on. If the NYSE Indicant Volume Indicator continues to rise with the Dow’s drop, the Mid-term Indicant Bull may expire. The NASDAQ Indicant Volume Indicator continues its modest rise. This increase in volume, although mild, has accompanied both bullish and bearish expressions. The market is still not showing its hand. Keep your eye on the daily reports.

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

The Dow Jones Industrial Index is down 1.2% since the Short-term Indicant signaled bear on July 8, 2004. The NASDAQ is down 2.9% since the Short-term Indicant signaled bear on July 8, 2004. The recent Quick-term technical rally helped reduce the depth of this Short-term Bear. The seasonal influences continue preventing a signal shift from bear to bull as this time. Other Quick-term Indicant attributes are not supporting a signal shift as well.

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

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

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

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

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

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

Perspectives

As stated the past few weeks, after racing to their respective breakdown lines, the NASDAQ100 Index and NASDAQ expressed resistance to contacting them. They are now above their respective breakdown lines by over 7.0%. The market can easily fall this amount at this time of year, while this separation is non-bearish with respect to your hold positions. Read your daily emails. It will be interesting to see what behavior transpires upon contact. This time of year offers the greatest opportunity for making contact. Last year there was no threat as the bull continued to rage northward. This year is a different manner with obvious seasonal influences preventing bullish dominance. In strong bear markets, the market typically plummets on contact. We will monitor this closely in the daily reports.

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

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

Refer to the daily reports for more information about the Quick-term Indicant.

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

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

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

Six of the eight major indices remain as bulls. They are up an average of 20.1% since the Mid-term Indicant signaled bull an average of 65.4 weeks ago. The Dow Transports is the strongest bull. It is up 41.5% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Jones Industrial Average is up 17.9% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Composite is up 27.5% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Utilities, Dow Transports, and Dow Composite of Sixty-Five stocks continue as Mid-term Indicant Red Bulls. That provides some comfort against any nasty crashes. The market seldom crashes when any index is a Red Bull. However, all the major indices are in jeopardy of losing their bull status.

The Mid-term Indicant signaled Bear for the NASDAQ and NASDAQ100 on July 23, 2004. They are up 1.6% and 1.7%, respectively, since that Mid-term Bear signal. That is favorable from six weeks ago when they were down about 5.0%, but unfavorable by an equal amount the past two weeks. The Mid-term Indicant is also influenced by deep bearish seasonality in disallowing a new bull signal.

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

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

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

The MTI-RYS performance is at $32,399,683 against buy and hold performance of $1,528,562 on a 1900 $10,000 investment. The MTI-RYS S&P500 is at $152,921 against buy and hold’s $108,738 on December 31, 1971 $10,000 investment. The MTI-RYS NASDAQ is at $162,506 against buy and hold’s $65,296 on an October 18, 1985 $10,000 investment. The Mid-term Indicant’s RYS model is outperforming buy and hold by 2,019.6%, 40.6%, and 148.9%, respectively, as of this past weekend.

Again, the charts and tables will be available on the website in a few days.

Mid-term Indicant Positions - International Markets

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

Twenty-one of the twenty-two foreign indexes tracked by the Indicant are Mid-term Bulls. They are up an average of 90.1% since the Mid-term Indicant signaled bull an average of 79.7 weeks ago for an annualized gain of 58.7%, which is less than the 72.9% reported sixty-eight weeks ago. As you can see, although not down as much as the U.S. indices, they have been subjected to a slight bearish bias as well.

One index has been a bear for 15.0 weeks. It is down by 2.5% since then.

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

Sep 19, 2004 Indicant.Net Weekly Update

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

Dear Indicant Members:

This Week’s Report

Conflicts-III

The recent bullish rally generated sixty-one buy signals for funds and stocks since August 6 of this year. That contrast with the Mid-term Indicant’s twenty sell signals during the same period. Some of you recall that the Indicant suggested the market was poised for a technical rally in late July before the end of August. That rally did indeed occur. It triggered these buy signals.

Meandering markets go through fits of quick up and down cycles, which in some ways conflicts with the term, meandering. However, when the market is at the same level it was several weeks ago, one would have a solid argument convincing others the market is meandering. Along that meandering path, though, the market can move up and down by double-digit amounts. These are quick-term cycles. The Quick-term Indicant tracks those cycles, but during bearish seasonality, the Quick-term Indicant is more passive in signaling bull.

Most investors do not know if one of those quick cycles will continue onward for years as a deep bear or a long-lasting bull market. That is one reason why the Indicant exists. It helps you determine if the current quick cycle will be abbreviated or a long-term continuation of its current direction.

This year is a presidential election year, which is the second most bullish year along the presidential election cycle. At least that has been the case since the 1840’s. Of course, there are exceptions to this phenomenon, as the economy and investor emotion are the ultimate influence on the market’s direction. So far, this presidential election year has not been bullish. The market behaved nicely with historical and seasonal standards until early this year. It uncharacteristically dipped into a bearish cycle in the first quarter. Since then the market has been meandering along with several quick-term bull and bear cycles with a gentle drift to the southeast.

What can one expect with this variance from historical and seasonal standards? The Indicant does not officially forecast the market. It looks at Quick-term attributes, Short-term attributes, Mid-term attributes, and Long-term attributes. It monitors the condition of the market and determines if it is a bear or a bull on those four scales. The Indicant only cares about market direction; a bull is a bull and a bear is a bear, regardless of magnitude.

The Mid-term Indicant bull market continues even though some of the indices have intermittently received bear signals since late last year. The recent rally has been strong. Although there is no evidence it will continue to another dynamic long lasting Mid-term Bull leg, it has repositioned the market in a manner that protects many of the hold positions that originated as buy signals as long as two years ago. Some of the current hold positions for stocks and funds date back to August 2002.

Meandering markets generate buy and sell signals with each quick-term cycle. This recent rally has induced a unusually high number of buy signals. The most dangerous time to own a stock or fund is right after you bought it. Likewise, the moat dangerous time to avoid a stock or fund is right after you sold it. The Indicant will signal buy or sell for stocks and funds when the configurations suggest the current direction will continue. However, stocks and funds, but mostly stocks, will vacillate shortly after a buy or sell signal during meandering markets. Some stocks will continue to move in their current direction, regardless of which way the market moves. Most will parallel the market. Of the sixty-one recent buy signals, about five to ten stocks will continue moving north even if the market turns south. Similarly, several stocks recently receiving sell signals will continue to plummet even if the market continues expressing mild bullish behavior. During dynamic bull legs, 90% plus stocks and funds parallel the market with several stocks significantly out-performing the market.

For example, there were 209 buy signals in August 2002, followed by 164 sell signals in September 2002. Some of those August buy signals are still enjoying hold positions and triple digit gains. Others were sold later on at a nice profit, while some of the other sell signals at that time endured trading losses. Notice that the number of buy signals exceeded the number of sell signals in this two-month comparison. This is why the Indicant recommends not investing more than 10% of your investment resources in a single stock. Trying to pick the “great one” is like rolling the dice. Financial performance is only part of the reason for a stock’s growth. Wall Street hype is oftentimes more influential.

The October-November 2002 buying spree was the obvious beginning of this current cyclical bull market with 260 buy signals. All the Indicant models spotted the beginnings of that bull leg with robust behavior. Many of those stocks were up by double-digit amounts by the first quarter of 2003, even though December 2002 was the most bearish December since 1931. That nasty December carried over to an unseasonable bearish period in January-February 2003. That triggered sell signals for nearly all of the mutual funds the Indicant tracks, even though several of the August 2002 and October-November 2002 stock buys continued to skyrocket.

The unseasonable bearish cycle in early 2003 caused 198 sell signals in January-February. Most of those sell signals were for mutual funds. However, in March 2003 the Mid-term Indicant signaled buy for nearly all of the mutual funds without yet another clear pattern of robust configurations. You will notice most of the mutual funds have been receiving a hold signal since March and April 2003. Many of those funds are up by double-digit amounts since that March-April 2003 buying spree for funds. Some of those funds have since received sell signals and some continue to receive “avoid” signals. That is why the Indicant recommends you do not invest more that 20% of your investment resources in a signal mutual fund.

This time of year can be frustrating. A meandering market perpetuates those feelings of frustration for most investors; especially with respect to newly invested money. There is little frustration with respect to the late 2002 money invested in the market. The 2004 newly invested money is causing concern. Those quick-term cycles generate periods of stock market optimism and pessimism within a few days and weeks. The recent quick-term bullish rally has stimulated some emotional optimism, which could carry forward for several months. However, if deep bearish seasonality exerts itself, many of the recent buy signals will be followed by sell signals. But not all stocks will receive sell signals, while most funds would. Funds typically have a high beta value to the market, whereas some stocks march to their own drum beat.

When the Quick-term Indicant generates robust bullish expressions, many of the currently avoided stocks will receive buy signals, while some of the recent buys will skyrocket. So, be conservative in your trading and for those of you who are more of the investor type, continue holding as long as some of the Indicant models are signaling bull, which was the case during most of 2003.

Do not formulate a long-term opinion of the market on these quick-term cycles. Currently, the various Indicant models are mixed with some signaling bear and others receiving a bull signal. That is the case with meandering markets.

Weekly Buy/Sell Summary

The Mid-term Indicant generated twenty buy signals and six sell signals for stocks and funds.

In addition to the sell signals, the Mid-term Indicant is avoiding eighty-four stocks and funds of the 296 tracked by the Indicant. The avoided stocks and funds are down an average of 27.3% since the Mid-term Indicant signaled sell an average of 46.9 weeks ago.

There were only sixteen stocks and funds avoided at this time last year in addition to three sell signals. The avoided stocks and funds one year ago were down an average of 23.2% since their respective sell signals an average of 31.4 weeks earlier. This contrasts strongly with the avoided stocks and funds two years ago. On September 20, 2002, the Mid-term Indicant was avoiding 119 stocks and funds that were down an average of 30.4% since their respective sell signals an average of 14.3 weeks earlier.

In addition to the buy signals this weekend, the Mid-term Indicant is currently signaling hold for 186 of the 296 stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 78.2%. That annualizes to 68.2%, which is down from 124.1% reported on June 7, 2003, but up from 50.2% reported over a year ago on February 15, 2003. The Mid-term Indicant has been signaling hold for these 186 stocks and funds for an average of 59.6 weeks.

One year ago, the Mid-term Indicant was holding 271 stocks and funds for an average of 31.4 weeks. They were up 53.8% (annualized at 101.7%). The Mid-term Indicant was signaling hold for only 74 stocks and funds two years ago on September 20, 2002. They were up by an average of 13.9% (annualized at 40.0%) since their respective buy signals an average of 18.1 weeks earlier.

This paragraph is a repeat from the last several weeks with a few modifications. The current bull market and buying barrage in late 2002 followed the predicted market bottom in 2002. The mid-term presidential election year phenomenon was consistent with history. Even more impressive was how the market synchronized with near perfection with normal seasonality in 2002. The Dow30 found bottom on October 9, 2002 at 7286.27. The NASDAQ found bottom on the same day at 1114.11. As earlier stated, the Indicant began its buying barrage in October – November 2002 just after the market bottomed from the severe 2000-2002 Bear Market. Some of you recall the Short-term Indicant Bear for the NASDAQ was the longest in history. It even exceeded the Dow’s 1929-1932 Short-term Indicant Bear in breadth. The good news is that the NASDAQ’s decline did not lead to a depression, which is a clear indication of how little influence the tech stocks have on the economy. Remember, real economic wealth is delivered in only three ways; manufacturing, agriculture, and extraction. All other industries are merely transfer agents of wealth.

This paragraph is repeated from the past several weeks, but it does not hurt to reread it each week during bearish seasonality. You will notice many of the mutual fund buy signals occurred in March 2003. Many of you recall how the market did not synchronize very well with the heart and soul of bullish seasonality from November 2002 through February 2003. After that asynchronous behavior in November 2002 rolling third of the year, the market turned bullish in March 2003 and again did not synchronize with normal seasonality. The Mid-term Indicant continued signaling bull during bearish seasonality during most of 2003. It is unlikely we will enjoy back-to-back asynchronous market behavior with seasonal normalcy in 2004. Bearish expressions on a Mid-term basis in 2004 between May and October should not be surprising. So far, this year has been consistent with normal bearish seasonality. Unfortunately, bearish expressions started ahead of schedule this year.

The second most bullish year along the presidential election cycle is the election year, which is underway in 2004. We are anticipating enjoyment of that as well, but its bullish fervor may not unfold until just before the election this year. The following link will take you to charts that explain this phenomenon, which is currently underway. It is in a “members only” section. This paragraph will repeat throughout this year.

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. So far, we do not expect 2004 to be an exception. If it becomes an exception, the Quick-term Indicant and the other Indicant models will let you know.

Right now, the Mid-term Indicant continues to signal bull. There is more about that later in this report.

Stop Loss Management

The Mid-term Indicant continues recommending a stop loss of 5% because of bearish seasonality. If you are up by 50% or more you may find it advantageous to set your stop-loss at 10% from your current hold position. If you sold a stock on the stop loss and the Indicant continues to signal hold, do not buy the stock unless the Quick-term Indicant is signaling bull.

Use either a 5% (or 10%) trailing stop loss or the yellow or green values you will find on the tables. If your stock or fund is above the bearish yellow curve and below the green curve, set your stop loss equal to the greater of the yellow curve and the trailing stop loss. If your stock or fund is above the green curve, set your stop loss at no less the value of the green curve or 8% 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 8% trailing stop loss. If you are up by triple digit amounts and enjoy your ownership of the stock or fund, then use a 15% trailing stop loss or the slow moving blue curve price. If you really enjoy holding the stock, keep a close eye on the management. Dilettante managers have a way of worming into the business. Watch closely for cronyism and lazy-hazy management dialog. Keep your eye on lavish spending and excessive concerns about social issues. Those types are more interested in burning your money for their pleasures, as opposed to making you money. High performing companies remain focused on honoring the investments made by their shareholders.

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

There have been quite a few buy signals the past few weeks that were driven by the technical rally. Be conservative with these buys and do not be surprised if sell signals for some them reverse.

Stock and Fund Update

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

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

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

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

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

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

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

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

Divergence versus Convergence

Last week revealed an increase in divergent behavior. This is not bullish. Several blue chips moved south, while tech stocks continued to emulate the current bullish rally. The current quick-term rally continues to be merely technical.

Economic Conditions – Inflation, Currency, Interest Rates

Interest rates continue to move north-northeast. Their incline is steady. That direction does not bode well for bullish enthusiasts, but their current level continues to be historically low. Keep in mind the market does not have much experience with rising rates from historically low levels.

As stated last week, the Canadian dollar continues to strengthen, while most other currencies appear to have passed their recent cyclical peaks against the U.S. Dollar. The rising interest rates should continue to support a strengthening U.S. dollar.

Commodities continue showing resiliency in maintaining their high prices in the face of Greenspan’s anti-inflation rhetoric. The charts are telling Greenspan that his small rate hikes are not scaring their bullish position. It appears Greenspan will have to continue moving rates higher to have an impact on commodities. One can expect aggressive tightening behavior in the post election year, which is historically, the most bearish year on the presidential election cycle.

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

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% one-hundred and seventeen weeks ago since the MTI buy signal in April 2001. One-hundred and ten weeks ago, it closed up 30.1%. Last week it closed up 103.0%, which is higher than the 75.9% reported sixty-one weeks ago. The current annualized growth rate since the April 13, 2001 buy signal is 29.6%, which is slightly higher than 23.1% reported sixty-one weeks ago. This fund is also down considerably since its most recent peak on December 5, 2003 when it was up 117.3%. This fund moved up nicely last week.

The Fidelity Gold Fund #28 is down 2.5% since the Mid-term Indicant signaled buy on August 20, 2004. This fund is reflecting the recent declining price of gold and other commodities. A sell signal in the near future should not be surprising. The last buy/sell cycle was from December 7, 2001 to April 30, 2004 resulted in a 52.7% profit. If Greenspan gets aggressive in his fight against inflation, this fund will most likely not provide the nice profit it did on the last buy/sell cycle.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 113.4% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 53.4%. Vanguard Energy #18, VGENX, is up 54.0% (annualized at 36.6%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 30.1% (annualized at 37.9%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 35.1% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 31.8%. All of these energy-related funds rose nicely the past four weeks in the face of vacillating oil prices.

There is more about mutual funds, including contrarian ProFunds Ultra Short, later in this report and the links to the mutual fund tables can be found there.

The Gold Index is up 0.5% since the Mid-term Indicant signaled bull on July 9, 2004. Is this the 1970’s all over again? So far, it does not look that way, but increasing bullish expressions in the energy sector will lead to more bearish equity expressions

As repeatedly stated in this weekly report, gold prices will tumble if terrorism and inflationary threats subside.

These funds and the gold and silver index should convey the market’s perception of terrorism, inflation, and the economy. As long as they are in solid hold positions, there remains some pessimism regarding the future of the economy.

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

Quick-term and Short-term Indicant Update

The eight major indices are up 2.9% since the Quick-term Indicant signaled bear on July 21, 2004. The most bearish is the NASDAQ. It is up 1.9%. The second most bearish is the S&P400, which is up 2.2% since July 21, 2004.

As stated the past twelve weeks, there is little chance of robust bullish expressions on a Quick-term basis. The Quick-term bias remains in favor of the bear, although the anticipated technical rally did in fact occur, providing additional support for your hold positions.

All eight indices are above the bearish yellow curve, which contrasts with five weeks ago when all eight were below it. Seven of the eight indices are now above their respective Quick-term Red curves. They are Quick-term Red Bulls. The market has slipped with bearish responses to this configuration since last March. Do not be surprised if the market recedes below bullish red in the next few weeks. The cyclical configurations and deep bearish seasonality favor that. However, the current configuration of red bull status provides an assurance against impending deep crashes.

Force Vector direction continues moving south, which supports bearish expressions. That southerly direction is not robust, which supports your hold positions, but taking additional hits to your net worth should not be surprising in the next few weeks. The recent rally was not supported with dynamic robustness. The market is still indecisive with its meandering behavior.

All eight Vector Pressures remain in bullish domains, but still remain close to bearish domains. As long as the Mid-term Indicant continues signaling bull, the depth of any bearish expressions will be shallow. If the Mid-term Indicant signals bear, there will be a much higher probability of a deep bearish expression. However, that would be preceded with a high sell signal volume to protect net worth.

Keep in mind Force Vectors and Vector Pressure are eight dimensional and cannot be plotted. We continue to research methods to convert to two-dimensional arrays so you can see them. About a year ago, one of our members, a Mechanical Engineer, made some suggestions that appear to be promising for plotting. Until then, we will continue to use words to describe them.

Please review the daily reports for more details regarding the Quick-term Indicant.

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

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

The Indicant Volume Indicator continues its modest rise. This increase in volume, although mild, has accompanied both bullish and bearish expressions. The market is still not showing its hand. Keep your eye on the daily reports.

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

The Dow Jones Industrial Index is up 1.1% since the Short-term Indicant signaled bear on July 8, 2004. The NASDAQ is down 1.3% since the Short-term Indicant signaled bear on July 8, 2004. The recent Quick-term technical rally helped reduce the depth of this Short-term Bear. The seasonal influences continue preventing a signal shift from bear to bull as this time. Other Quick-term Indicant attributes are not supporting a signal shift as well.

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

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

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

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

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

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

Perspectives

As stated the past few weeks, after racing to their respective breakdown lines, the NASDAQ100 Index and NASDAQ expressed resistance to contacting them. They are now above their respective breakdown lines by over 9.0%. The market can easily fall this amount at this time of year, while this separation is non-bearish with respect to your hold positions. Read your daily emails. It will be interesting to see what behavior transpires upon contact. In strong bear markets, the market typically plummets on contact. We will monitor this closely in the daily reports.

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

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

Refer to the daily reports for more information about the Quick-term Indicant.

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

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

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

Six of the eight major indices remain as bulls. They are up an average of 22.2% since the Mid-term Indicant signaled bull an average of 64.4 weeks ago. The Dow Transports is the strongest bull. It is up 43.9% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Jones Industrial Average is up 20.7% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Composite is up 29.9% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Utilities, Dow Transports, and Dow Composite of Sixty-Five stocks continue as Mid-term Indicant Red Bulls. That provides some comfort against any nasty crashes. The market seldom crashes when any index is a Red Bull. However, all the major indices are in jeopardy of losing their bull status.

The Mid-term Indicant signaled Bear for the NASDAQ and NASDAQ100 on July 23, 2004. They are up 3.3% and 3.7%, respectively, since that Mid-term Bear signal. That is a remarkable improvement from five weeks ago when they were down about 5.0%. The Mid-term Indicant is also influenced by deep bearish seasonality in disallowing a new bull signal.

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

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

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

The MTI-RYS performance is at $33,164,655 against buy and hold performance of $1,564,652 on a 1900 $10,000 investment. The MTI-RYS S&P500 is at $154,461 against buy and hold’s $110,545 on December 31, 1971 $10,000 investment. The MTI-RYS NASDAQ is at $162,506 against buy and hold’s $65,296 on an October 18, 1985 $10,000 investment. The Mid-term Indicant’s RYS model is outperforming buy and hold by 2,019.6%, 40.6%, and 148.9%, respectively, as of this past weekend.

Again, the charts and tables will be available on the website in a few days.

Mid-term Indicant Positions - International Markets

There was one new bull signal and no new bear signals.

Twenty of the twenty-two foreign indexes tracked by the Indicant are Mid-term Bulls. They are up an average of 94.7% since the Mid-term Indicant signaled bull an average of 82.7 weeks ago for an annualized gain of 59.5%, which is less than the 72.9% reported sixty-seven weeks ago.

One index has been a bear for 14.0 weeks. It is down by 3.9% since then.

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

Sep 12, 2004 Indicant.Net Weekly Update

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

Dear Indicant Members:

This Week’s Report

Conflicts-II

There is not much different from last week. We are in the midst of bearish seasonality. The market is down for the year in a normally bullish presidential election year. There are several weeks remaining for the duration of deep bearish seasonality. The stock market produced a technical rally, as expected before the end of August. However, that technical rally is holding up well as we near mid-September. Several indices are Red Bull on both a Quick-term and Mid-term basis.

Although the recent rally has not caved in to bearish influences, most of the Quick-term attributes are not expressing bullish characteristics. That coupled with deep bearish seasonality is the reason the recent run-up in stock prices is technical and not the beginning of a major new Mid-term Bull leg. This rally has positioned the market to protect against any surprising major crashes. That condition can change quickly on a Quick-term basis. So, it is important that you read your daily emails.

If seasonal standards hold true, then expect a surge in stock prices later this year. The Quick-term Indicant will advise when such a surge would be substantive. Currently, your hold positions are safe, while the recent buys may revert to sell signals quickly. The Mid-term Bull market is showing significant resistance to falling prey to seasonal bearish pressure.

The recent Quick-term technical rally appears to be over, but until obviated, there is no need to speculate. Its current configurations weakened slightly last week increasing a bearish bias. Read your daily reports.

Weekly Buy/Sell Summary

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

Although there were no sell signals, the Mid-term Indicant is avoiding one-hundred and four stocks and funds of the 296 tracked by the Indicant. The avoided stocks and funds are down an average of 26.2% since the Mid-term Indicant signaled sell an average of 45.6 weeks ago.

There were only sixteen stocks and funds avoided at this time last year in addition to six sell signals. The avoided stocks and funds one year ago were down an average of 22.7% since their respective sell signals an average of 31.1 weeks earlier. This contrasts strongly with the avoided stocks and funds two years ago. On September 13, 2002, the Mid-term Indicant was avoiding 101 stocks and funds that were down an average of 32.0% since their respective sell signals an average of 16.9 weeks earlier.

In addition to the buy signals this weekend, the Mid-term Indicant is currently signaling hold for 187 of the 296 stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 75.7%. That annualizes to 67.2%, which is down from 124.1% reported on June 7, 2003, but up from 50.2% reported over a year ago on February 15, 2003. The Mid-term Indicant has been signaling hold for these 187 stocks and funds for an average of 58.6 weeks.

One year ago, the Mid-term Indicant was holding 268 stocks and funds for an average of 27.6 weeks. They were up 51.4% (annualized at 96.9%). The Mid-term Indicant was signaling hold for only 171 stocks and funds two years ago on September 13, 2002. They were up by an average of 8.0% (annualized at 39.3%) since their respective buy signals an average of 10.6 weeks earlier.

This paragraph is a repeat from the last several weeks with a few modifications. The current bull market and buying barrage in late 2002 followed the predicted market bottom in 2002. The mid-term presidential election year phenomenon was consistent with history. Even more impressive was how the market synchronized with near perfection with normal seasonality in 2002. The Dow30 found bottom on October 9, 2002 at 7286.27. The NASDAQ found bottom on the same day at 1114.11. As earlier stated, the Indicant began its buying barrage in October – November 2002 just after the market bottomed from the severe 2000-2002 Bear Market. Some of you recall the Short-term Indicant Bear for the NASDAQ was the longest in history. It even exceeded the Dow’s 1929-1932 Short-term Indicant Bear in breadth. The good news is that the NASDAQ’s decline did not lead to a depression, which is a clear indication of how little influence the tech stocks have on the economy. Remember, real economic wealth is delivered in only three ways; manufacturing, agriculture, and extraction. All other industries are merely transfer agents of wealth.

This paragraph is repeated from the past several weeks, but it does not hurt to reread it each week during bearish seasonality. You will notice many of the mutual fund buy signals occurred in March 2003. Many of you recall how the market did not synchronize very well with the heart and soul of bullish seasonality from November 2002 through February 2003. After that asynchronous behavior in November 2002 rolling third of the year, the market turned bullish in March 2003 and again did not synchronize with normal seasonality. The Mid-term Indicant continued signaling bull during bearish seasonality during most of 2003. It is unlikely we will enjoy back-to-back asynchronous market behavior with seasonal normalcy in 2004. Bearish expressions on a Mid-term basis in 2004 between May and October should not be surprising. So far, this year has been consistent with normal bearish seasonality. Unfortunately, bearish expressions started ahead of schedule this year.

The second most bullish year along the presidential election cycle is the election year, which is underway in 2004. We are anticipating enjoyment of that as well, but its bullish fervor may not unfold until just before the election this year. The following link will take you to charts that explain this phenomenon, which is currently underway. It is in a “members only” section. This paragraph will repeat throughout this year.

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. So far, we do not expect 2004 to be an exception. If it becomes an exception, the Quick-term Indicant and the other Indicant models will let you know.

Right now, the Mid-term Indicant continues to signal bull. There is more about that later in this report.

Stop Loss Management

The Mid-term Indicant continues recommending a stop loss of 5% because of bearish seasonality. If you are up by 50% or more you may find it advantageous to set your stop loss at 10% from your current hold position. If you sold a stock on the stop loss and the Indicant continues to signal hold, do not buy the stock unless the Quick-term Indicant is signaling bull.

Use either a 5% (or 10%) trailing stop loss or the yellow or green values you will find on the tables. If your stock or fund is above the bearish yellow curve and below the green curve, set your stop loss equal to the greater of the yellow curve and the trailing stop loss. If your stock or fund is above the green curve, set your stop loss at no less the value of the green curve or 8% 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 8% trailing stop loss. If you are up by triple digit amounts and enjoy your ownership of the stock or fund, then use a 15% trailing stop loss or the slow moving blue curve price. If you really enjoy holding the stock, keep a close eye on the management. Dilettante managers have a way of worming into the business. Watch closely for cronyism and lazy-hazy management dialog. Keep your eye on lavish spending and excessive concerns about social issues. Those types are more interested in burning your money for their pleasures, as opposed to making you money. High performing companies remain focused on honoring the investments made by their shareholders.

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

There have been quite a few buy signals the past few weeks that were driven by the technical rally. Be conservative with these buys and do not be surprised if sell signals for some them reverse.

Stock and Fund Update

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

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

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

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

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

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

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

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

Divergence versus Convergence

This technical stock market rally has stimulated some convergent behavior. If the Quick-term Red Bull holds up for the next two weeks, then the bull should continue moving onward and upward. That is not expected, but all major sectors are now moving north. That is a pattern of convergence and therefore bullish. This is believed to be technical, only, as the market is still in the midst of bearish seasonality.

Directional convergence remains bullish, but domain convergence still has spots of weakness (bearishness). As stated earlier in this report, this is the tricky time of year. The bias continues to favor the bear but that bias has been dented by the recent technical Quick-term bull spurt.

Economic Conditions – Inflation, Currency, Interest Rates

With the exception of the Canadian dollar, the U.S. dollar continues to display continuing strength. The Canadian dollar has reversed its cycle of weakness. It has recently been expressing a solid cycle of strength. Canada is home to the tar sand oil that exceeds that of the Saudi’s in terms of proven reserves. The tar sand oil is more costly to extract, but current prices are well above breakeven. If oil prices remain high, you can expect the Canadian dollar to strengthen if the U.S. decides to import significantly more tar sand oil. This could very well be one reason why the Canadian dollar has been expressing strength while other foreign currencies have been weakening.

Commodities continue to demonstrate resistance to an outright collapse. Even though it appears the last cyclical peak has been passed, there resistance to falling is justification for future increases in interest rates.

Interest rates continue their steady incline to the north. They are still historically low. The stock market has little experience with an unfavorable direction and a favorable position. So far, the market is not that depressed on the direction of interest rates.

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

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% one-hundred and sixteen weeks ago since the MTI buy signal in April 2001. One-hundred and nine weeks ago, it closed up 30.1%. Last week it closed up 99.5%, which is higher than the 75.9% reported sixty weeks ago. The current annualized growth rate since the April 13, 2001 buy signal is 28.7%, which is slightly higher than 23.1% reported sixty weeks ago. This fund is also down considerably since its most recent peak on December 5, 2003 when it was up 117.3%.

The Fidelity Gold Fund #28 is down 3.4% since the Mid-term Indicant signaled buy on August 20, 2004. This fund is reflecting the recent declining price of gold and other commodities. A sell signal in the near future should not be surprising. The last buy/sell cycle was from December 7, 2001 to April 30, 2004 resulted in a 52.7% profit. If Greenspan gets aggressive in his fight against inflation, this fund will most likely not provide the nice profit it did on the last buy/sell cycle.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 108.4% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 51.6%. Vanguard Energy #18, VGENX, is up 50.4% (annualized at 34.7%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 26.5% (annualized at 34.2) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 32.0% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 29.5%. All of these energy-related funds rose nicely the past three weeks in the face of declining oil prices. Apparently, there is not optimism about continuing increases in oil prices from the energy industry. Such movement could induce a pessimistic outlook about equities.

There is more about mutual funds, including contrarian ProFunds Ultra Short, later in this report and the links to the mutual fund tables can be found there.

The Gold Index is up 1.0% since the Mid-term Indicant signaled bull on July 9, 2004. Is this the 1970’s all over again?

As repeatedly stated in this weekly report, gold prices will tumble if terrorism and inflationary threats subside.

These funds and the gold and silver index should convey the market’s perception of terrorism, inflation, and the economy. As long as they are in solid hold positions, there remains some pessimism regarding the future of the economy.

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

Quick-term and Short-term Indicant Update

The eight major indices are up 2.5% since the Quick-term Indicant signaled bear on July 21, 2004. The most bearish is the NASDAQ. It is up 1.1%. The second most bearish is the S&P400, which is up 1.7% since July 21, 2004.

As stated the past eleven weeks, there is little chance of robust bullish expressions on a Quick-term basis. The Quick-term bias remains in favor of the bear, although the anticipated technical rally did in fact occur, providing additional support for your hold positions.

All eight indices are above the bearish yellow curve, which contrasts with four weeks ago when all eight were below it. All eight indices are now above their respective Quick-term Red curves. They are Quick-term Red Bulls. The market has slipped with bearish responses to this configuration since last March. Do not be surprised if the market recedes below bullish red in the next few weeks. The cyclical configurations and deep bearish seasonality favor that. However, the current configuration of red bull status provides an assurance against impending deep crashes.

Force Vector direction turned south after last Friday’s close. That southerly direction is not robust. The recent rally was not supported with dynamic robustness. The market is still indecisive, which is favorable to your hold positions.

All eight Vector Pressures remain in bullish domains, but still remain close to bearish domains. As long as the Mid-term Indicant continues signaling bull, the depth of any bearish expressions will be shallow. If the Mid-term Indicant signals bear, there will be a much higher probability of a deep bearish expression. However, that would be preceded with a high sell signal volume to protect net worth.

Keep in mind Force Vectors and Vector Pressure are eight dimensional and cannot be plotted. We continue to research methods to convert to two-dimensional arrays so you can see them. About a year ago, one of our members, a Mechanical Engineer, made some suggestions that appear to be promising for plotting. Until then, we will continue to use words to describe them.

Please review the daily reports for more details regarding the Quick-term Indicant.

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

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

The recent lethargic expressions by the Indicant Volume Indicator have bottomed out. There is an embryonic shift back to the north. This increasing volume is becoming an important variable. Much of the recent increases accompanied an increasing stock market. That is normally bullish, but embryos seldom reveal conviction. It is too early to detect a bullish commitment at this time. It is not uncommon for high volume to enter just prior to market directional shifts. A few more days of a mature cycle, if it continues, will force the market to show its hand on a longer-term direction.

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

The Dow Jones Industrial Index is up 1.4% since the Short-term Indicant signaled bear on July 8, 2004. The NASDAQ is down 2.1% since the Short-term Indicant signaled bear on July 8, 2004. The recent Quick-term technical rally helped reduce the depth of this Short-term Bear. The seasonal influences are preventing a signal shift from bear to bull as this time. Other Quick-term Indicant attributes are not supporting a signal shift as well.

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

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

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

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

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

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

Perspectives

Just as stated last week, after racing to their respective breakdown lines, the NASDAQ100 Index and NASDAQ expressed resistance to contacting them. They are now above their respective breakdown lines by over 8.0%. The market can easily fall this amount at this time of year. Read your daily emails. It will be interesting to see what behavior transpires upon contact. In strong bear markets, the market typically plummets on contact. We will monitor this closely in the daily reports.

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

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

Refer to the daily reports for more information about the Quick-term Indicant.

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

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

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

Six of the eight major indices remain as bulls. They are up an average of 21.8% since the Mid-term Indicant signaled bull an average of 63.4 weeks ago. The Dow Transports is the strongest bull. It is up 42.5% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Jones Industrial Average is up 21.0% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Composite is up 29.5% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Utilities, Dow Transports, and Dow Composite of Sixty-Five stocks continue as Mid-term Indicant Red Bulls. That provides some comfort against any nasty crashes. The market seldom crashes when any index is a Red Bull. However, all the major indices are in jeopardy of losing their bull status.

The Mid-term Indicant signaled Bear for the NASDAQ and NASDAQ100 on July 23, 2004. They are up 2.4% and 2.7%, respectively, since that Mid-term Bear signal. That is a remarkable improvement from four weeks ago when they were down about 5.0%. The Mid-term Indicant is also influenced by deep bearish seasonality in disallowing a new bull signal.

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

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

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

The MTI-RYS performance is at $33,256,914 against buy and hold performance of $1,569,005 on a 1900 $10,000 investment. The MTI-RYS S&P500 is at $154,823 against buy and hold’s $110,091 on December 31, 1971 $10,000 investment. The MTI-RYS NASDAQ is at $162,506 against buy and hold’s $65,296 on an October 18, 1985 $10,000 investment. The Mid-term Indicant’s RYS model is outperforming buy and hold by 2,019.6%, 40.6%, and 148.9%, respectively, as of this past weekend.

Again, the charts and tables will be available on the website in a few days.

Mid-term Indicant Positions - International Markets

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

Twenty of the twenty-two foreign indexes tracked by the Indicant are Mid-term Bulls. They are up an average of 90.6% since the Mid-term Indicant signaled bull an average of 81.7 weeks ago for an annualized gain of 57.6%, which is less than the 72.9% reported sixty-six weeks ago.

Two indices have been bears for an average of 14.9 weeks. They are down by an average of 5.9% since then.

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

Sep 05, 2004 Indicant.Net Weekly Update

Volume 9, Issue 1 ISSN 1526 6516 © The Indicant Stock Market Report

Dear Indicant Members:

This Week’s Report

Conflicts

Weekly Buy/Sell Summary

The Mid-term Indicant generated three buy signals and three sell signals for stocks and funds.

In addition to the sell signals, the Mid-term Indicant is avoiding one-hundred and six stocks and funds of the 296 tracked by the Indicant. The avoided stocks and funds are down an average of 27.7% since the Mid-term Indicant signaled sell an average of 44.4 weeks ago.

There were only eighteen stocks and funds avoided at this time last year in addition to four sell signals. The avoided stocks and funds one year ago were down an average of 8.0% since their respective sell signals an average of 13.5 weeks earlier. This contrasts strongly with the avoided stocks and funds two years ago. On September 6, 2002, the Mid-term Indicant was avoiding seventy-five stocks and funds that were down an average of 41.5% since their respective sell signals an average of 21.7 weeks earlier.

In addition to the buy signals this weekend, the Mid-term Indicant is currently signaling hold for 184 of the 296 stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 75.3%. That annualizes to 67.1%, which is down from 124.1% reported on June 7, 2003, but up from 50.2% reported over a year ago on February 15, 2003. The Mid-term Indicant has been signaling hold for these 184 stocks and funds for an average of 58.3 weeks.

One year ago, the Mid-term Indicant was holding 264 stocks and funds for an average of 27.7 weeks. They were up 51.6% (annualized at 96.9%). The Mid-term Indicant was signaling hold for only 188 stocks and funds two years ago on September 6, 2002. They were up by an average of 5.8% (annualized at 35.1%) since their respective buy signals an average of 8.7 weeks earlier.

This paragraph is a repeat from the last several weeks with a few modifications. The current bull market and buying barrage in late 2002 followed the predicted market bottom in 2002. The mid-term presidential election year phenomenon was consistent with history. Even more impressive was how the market synchronized with near perfection with normal seasonality in 2002. The Dow30 found bottom on October 9, 2002 at 7286.27. The NASDAQ found bottom on the same day at 1114.11. As earlier stated, the Indicant began its buying barrage in October – November 2002 just after the market bottomed from the severe 2000-2002 Bear Market. Some of you recall the Short-term Indicant Bear for the NASDAQ was the longest in history. It even exceeded the Dow’s 1929-1932 Short-term Indicant Bear in breadth. The good news is that the NASDAQ’s decline did not lead to a depression, which is a clear indication of how little influence the tech stocks have on the economy. Remember, real economic wealth is delivered in only three ways; manufacturing, agriculture, and extraction. All other industries are merely transfer agents of wealth.

This paragraph is repeated from the past several weeks, but it does not hurt to reread it each week during bearish seasonality. You will notice many of the mutual fund buy signals occurred in March 2003. Many of you recall how the market did not synchronize very well with the heart and soul of bullish seasonality from November 2002 through February 2003. After that asynchronous behavior in November 2002 rolling third of the year, the market turned bullish in March 2003 and again did not synchronize with normal seasonality. The Mid-term Indicant continued signaling bull during bearish seasonality during most of 2003. It is unlikely we will enjoy back-to-back asynchronous market behavior with seasonal normalcy in 2004. Bearish expressions on a Mid-term basis in 2004 between May and October should not be surprising. So far, this year has been consistent with normal bearish seasonality. Unfortunately, bearish expressions started ahead of schedule this year.

The second most bullish year along the presidential election cycle is the election year, which is underway in 2004. We are anticipating enjoyment of that as well, but its bullish fervor may not unfold until just before the election this year. The following link will take you to charts that explain this phenomenon, which is currently underway. It is in a “members only” section. This paragraph will repeat throughout this year.

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. So far, we do not expect 2004 to be an exception. If it becomes an exception, the Quick-term Indicant and the other Indicant models will let you know.

Right now, the Mid-term Indicant continues to signal bull. There is more about that later in this report.

Stop Loss Management

The Mid-term Indicant continues recommending a stop loss of 5% because of bearish seasonality. If you are up by 50% or more you may find it advantageous to set your stop loss at 10% from your current hold position. If you sold a stock on the stop loss and the Indicant continues to signal hold, do not buy the stock unless the Quick-term Indicant is signaling bull.

Use either a 5% (or 10%) trailing stop loss or the yellow or green values you will find on the tables. If your stock or fund is above the bearish yellow curve and below the green curve, set your stop loss equal to the greater of the yellow curve and the trailing stop loss. If your stock or fund is above the green curve, set your stop loss at no less the value of the green curve or 8% 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 8% trailing stop loss. If you are up by triple digit amounts and enjoy your ownership of the stock or fund, then use a 15% trailing stop loss or the slow moving blue curve price. If you really enjoy holding the stock, keep a close eye on the management. Dilettante managers have a way of worming into the business. Watch closely for cronyism and lazy-hazy management dialog. Keep your eye on lavish spending 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.

Stock and Fund Update

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

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

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

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

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

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

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

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

Divergence versus Convergence

Commodity related sectors have remained stable the past three weeks. The formerly bullish counter cyclicals fell closer to bearish domains. Nearly all other sectors participated in the recent bullish rally.  The Internet sector is now in neutral domains. That cost them a few billion in capitalization. The Internet sector is not friendly right now in addition to bearish seasonality.

Directional convergence remains bullish, but domain convergence is still not convincing. As stated earlier in this report, this is the tricky time of year. The bias continues to favor the bear.

Economic Conditions – Inflation, Currency, Interest Rates

As stated last week, oil prices finally turned to the south, but from their astronomical bullish domains. The drop in oil prices needs to be deeper.

The U.S. Dollar appears to have bottomed on a Mid-term Indicant basis, but struggling to again dominate world currencies. The high price of oil and the high volume of imported oil is causing a large export of U.S. dollars. This biases in favor of a weakening dollar. The dollar’s increased strength is dependent on increased interest rates and/or a further reduction in oil prices.

Interest rates continue to ease up. Greenspan will accelerate the rate hikes after the election with the sole purpose of reducing demand for energy. That will slow the economy. He and his comrades will do this without regard to unemployment.

Commodities continue to express their stiff bullish domain position. Although it appears their cyclical peak is behind us, they are resisting pressures to express bearish behavior. They seem to know this is an election year and Greenspan is somewhat powerless to mitigate their potential for inflationary pressures.

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

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% one-hundred and fifteen weeks ago since the MTI buy signal in April 2001. One-hundred and eight weeks ago, it closed up 30.1%. Last week it closed up 99.3, which is higher than the 75.9% reported fifty-nine weeks ago. The current annualized growth rate since the April 13, 2001 buy signal is 28.9%, which is slightly higher than 23.1% reported fifty-nine weeks ago. This fund is also down considerably since its most recent peak on December 5, 2003 when it was up 117.3%.

The Fidelity Gold Fund #28 is down 3.1% since the Mid-term Indicant signaled buy on August 20, 2004. This fund is reflecting the recent declining price of gold and other commodities. A sell signal in the near future should not be surprising. The last buy/sell cycle was from December 7, 2001 to April 30, 2004 resulted in a 52.7% profit. If Greenspan gets aggressive in his fight against inflation, this fund will most likely not provide the nice profit it did on the last buy/sell cycle.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 107.8% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 51.8%. Vanguard Energy #18, VGENX, is up 49.6% (annualized at 34.5%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 26.7% (annualized at 35.3%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 31.2% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 29.3%. All of these energy-related funds rose nicely the past two weeks in the face of declining oil prices. Apparently, there is not optimism about continuing increases in oil prices from the energy industry. Such movement could induce a pessimistic outlook about equities.

There is more about mutual funds, including contrarian ProFunds Ultra Short, later in this report and the links to the mutual fund tables can be found there.

The Gold Index is up 1.2% since the Mid-term Indicant signaled bull on July 9, 2004. Is this the 1970’s all over again?

As repeatedly stated in this weekly report, gold prices will tumble if terrorism and inflationary threats subside.

These funds and the gold and silver index should convey the market’s perception of terrorism, inflation, and the economy. As long as they are in solid hold positions, there remains some pessimism regarding the future of the economy.

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

Quick-term and Short-term Indicant Update

The eight major indices are up 0.9% since the Quick-term Indicant signaled bear on July 21, 2004. The most bearish is the NASDAQ. It is down 1.6%. The second most bearish is the NASDAQ100, which is down 1.1% since July 21, 2004.

As stated the past ten weeks, there is little chance of robust bullish expressions on a Quick-term basis. The Quick-term bias remains in favor of the bear, although the anticipated technical rally did in fact occur, providing additional support for your hold positions.

All eight indices are above the bearish yellow curve, which contrasts with three weeks ago when all eight were below it. Interestingly some of the indices crossed above Red last week. That provides an assurance against impending deep crashes. Interactions with the Quick-term Red curve has been met with severe bearish responses.

Force Vector direction is mixed with some moving north and others to the south. They continue to configure themselves with a non-committal attitude toward bullish or bearish support.  

All eight Vector Pressures remain in bullish domains, but still remain close to bearish domains. As long as the Mid-term Indicant continues signaling bull, the depth will be shallow. If the Mid-term Indicant signals bear, there will be a much higher probability of a deep bearish expression. However, that would be preceded with a high sell signal volume to protect net worth.

Keep in mind Force Vectors and Vector Pressure are eight dimensional and cannot be plotted. We continue to research methods to convert to two-dimensional arrays so you can see them. About a year ago, one of our members, a Mechanical Engineer, made some suggestions that appear to be promising for plotting. Until then, we will continue to use words to describe them.

Please review the daily reports for more details regarding the Quick-term Indicant.

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

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

The Indicant Volume Indicator continues to reveal a lethargic stock market. It has resumed its pathetic slide, which supports no strong commitment to either a bullish or bearish direction..

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

The Dow Jones Industrial Index is up 0.9% since the Short-term Indicant signaled bear on July 8, 2004. The NASDAQ is down 4.7% since the Short-term Indicant signaled bear on July 8, 2004. The recent Quick-term technical rally helped reduce the depth of this Short-term Bear.

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

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

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

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

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

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

Perspectives

After racing to their respective breakdown lines, the NASDAQ100 Index and NASDAQ expressed resistance to contacting them. They are now above their respective breakdown lines by 5.2% each. The market can easily fall this amount at this time of year. Read your daily emails. It will be interesting to see what behavior transpires upon contact. In strong bear markets, the market typically plummets on contact. We will monitor this closely in the daily reports.

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

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

Refer to the daily reports for more information about the Quick-term Indicant.

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

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

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

Six of the eight major indices remain as bulls. They are up an average of 20.4% since the Mid-term Indicant signaled bull an average of 62.4 weeks ago. The Dow Transports is the strongest bull. It is up 38.8 since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Jones Industrial Average is up 20.4% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Composite is up 28.2% since the Mid-term Indicant signaled bull on March 22, 2003. The Dow Utilities, Dow Transports, and Dow Composite of Sixty-Five stocks continue as Mid-term Indicant Red Bulls. That provides some comfort against any nasty crashes. The market seldom crashes when any index is a Red Bull. However, all the major indices are in jeopardy of losing their bull status.

The Mid-term Indicant signaled Bear for the NASDAQ and NASDAQ100 on July 23, 2004. They are down 0.2% and 0.3%, respectively, since that Mid-term Bear signal. That is a remarkable improvement from three weeks ago when they were down about 5.0%.

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

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

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

The MTI-RYS performance is at $33,088,423 against buy and hold performance of $1,560,962 on a 1900 $10,000 investment. The MTI-RYS S&P500 is at $153,406 against buy and hold’s $109,083 on December 31, 1971 $10,000 investment. The MTI-RYS NASDAQ is at $162,506 against buy and hold’s $65,296 on an October 18, 1985 $10,000 investment.

Click the following link to view the charts.

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

Mid-term Indicant Positions - International Markets

There was one new bull signal and no new bear signals.

Nineteen of the twenty-two foreign indexes tracked by the Indicant are Mid-term Bulls. They are up an average of 91.2% since the Mid-term Indicant signaled bull an average of 84.9 weeks ago for an annualized gain of 55.8%, which is less than the 72.9% reported sixty-five weeks ago.

Two indices have been bears for an average of 13.9 weeks. They are up by an average of 0.4% since then.

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

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