September 2006 Indicant Weekly Stock Market Report

Sep 24, 2006 Indicant Weekly Stock Market Report

Volume 09, Issue 04 ISSN 1526 6516 © The Indicant Stock Market Report

Dear Indicant Members:

This Week’s Report

Divergent Configurations

Clicking the following link will take you to two Exchange Traded Funds; the first one is bellwether, QQQQ and the second one, contrarian, XLE.

http://www.indicant.net/Members/Updates/QTI-ETF-Charts/QTI-ETF1-Charts.htm#1

You will notice the QQQQ, ETF#01, has recently climbed above its bullish Quick-term Indicant Red Curve. Conversely, you will notice the contrarian fund’s, ETF#03-Natural Resources, has recently fallen below its bearish yellow curve. That, along with XLE’s declining Force Vector’s and negative Vector Pressure, prompted the Quick-term Indicant to signal sell a few days ago for the contrarian fund.

You will notice the contrarian fund, XLE, moved to the northeast on the chart (since early 2005), while the QQQQ held steady. In fact, the QQQQ was down from January 2005 until just a few weeks ago.

This is a Quick-term perspective of what is meant by market divergence. That is when one sector of the market is moving north (bullishly), while another sector is moving southeast (bearishly). Market divergence is not as bullish, in magnitude, as market convergence, which is when all sectors move north. Divergent market behavior with declining oil prices is expected, which should stimulate bullish behavior for the general stock market. The market has attributes similar to the early 1980’s with declining energy prices.

The past two Indicant Weekly Stock Market Reports have been discussing the similar configurations, but from a broader perspective. Several commodities tilted to the south-southeast a few weeks ago. This was triggered by the recent fall in oil prices. That anti-inflationary configuration triggered bullish stock market behavior. This is a classical illustration market divergence, favorable to a bullish theme.

This recent behavior, if continued, should be very similar to the market’s rise in the early 1980’s, with declining oil prices and the corresponding declines in inflationary threats. If these configurations continue, the heart and soul of bullish seasonality should be exceptionally rewarding to you. The heart and soul of bullish seasonality officially starts in a few more weeks.

Weekly Buy/Sell Summary – Stocks and Funds

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

Although there were no sell signals, the Mid-term Indicant is avoiding only 37-stocks and funds of the 345 tracked by the Indicant. The avoided stocks and funds are down an average of 15.1% since the Mid-term Indicant signaled sell an average of 19.6-weeks ago.

There were 86-stocks and funds avoided at this time last year. The avoided stocks and funds one year ago were down an average of 10.3% since their respective sell signals an average of 19.6-weeks earlier. Two years ago, on September 24, 2004, the Mid-term Indicant was avoiding 90-stocks and funds that were down an average of 28.2% since their respective sell signals an average of 47.0-weeks earlier. Three years ago on September 20, 2003, there were only 16-avoided stocks and funds. They were down 23.2% from their respective sell signals an average of 31.4-weeks earlier. On September 20, 2002, the Mid-term Indicant was avoiding 100-stocks and funds out of 295-tracked. They were down by an average of 30.4% since their sell signals an average of 14.3-weeks earlier.

In addition to the buy signal, the Mid-term Indicant is signaling hold for 307 of the 345-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 96.8%. That annualizes to 66.9%. The Mid-term Indicant has been signaling hold for these 307-stocks and funds for an average of 75.3-weeks.

One year ago on September 23, 2005, the Mid-term Indicant was holding 225-stocks and funds out of the 320 tracked at that time for an average of 92.6-weeks. Those 225-stocks and funds were up by an average of 104.5% (annualized at 58.7%). The Mid-term Indicant was signaling hold for 205-stocks and funds of the 296 tracked two years ago on September 24, 2004. They were up by an average of 69.3% (annualized at 64.1%) since their respective buy signals an average of 56.3-weeks earlier. There were 271-stocks and funds with hold signals on September 20, 2003 since their buy signals an average of 27.5-weeks earlier. They were up 53.8% (annualized at 101.7%). The Indicant was only tracking 296 stocks and funds in 2002-2004. On September 20, 2002, the Mid-term Indicant was signaling hold for only 74-stocks and funds out of 295-tracked. They were up by an average of 13.9% (annualized at 40.0%) since their buy signals 18.1-weeks earlier.

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

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

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

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

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

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

The Quick/Short-term Indicant Stock Market Report

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

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

The Indicant Stock Market Report’s Secular Market Blend

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

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

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

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

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

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

The Dow30 found bottom in the last presidential mid-term election year on October 9, 2002 at 7,286.27. The NASDAQ found bottom on the same day at 1114.11. Finding cyclical bottoms in mid-term election years is common. Fortunately, the bottom of 2006, so far, was minimal and not sharp when compared to that of 2002. The Dow is up 57.9% from the last mid-term presidential election year bottom. The NASDAQ is up 99.2% since October 9, 2002. The S&P600, small caps, is up even more by 116.2% since October 9, 2002.

The NASDAQ is down 56.0% from its historical high of 5048.62 on March 9, 2000. The Dow is down 1.8% from its historical high of 11723 on January 13, 2000. The S&P500 is down 13.9% since its all time high of March 23, 2000. So far, the new century, 2000 inclusive, has not been kind to long-term investors. The Dow needs to climb a mere 1.9% to match its all time week-end high. The NASDAQ needs to climb 127.5% and S&P500 by 16.2%.

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

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

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

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

As earlier stated, the Indicant began its buying barrage in October – November 2002 just after the market bottomed from the severe 2000-2002 Bear Market. There were 239 buy signals between October 5, 2002 and November 9, 2002 out of the 296 stocks and funds tracked by the Mid-term Indicant at that time. Even badly managed companies received a buy signal, which is a common attribute of sustainable new bull markets. As many of you noticed, those companies eventually dipped back to the south after the euphoria of new bullishness.

Since August 18, 2006, the Mid-term Indicant generated 135-buy signals and only two sell signals. That is an unusually high number of buy signals when considering seasonal market influences. However, all Indicant models supported this buying surge.

Some of you recall the Indicant Stock Market Report tracking the Short-term Indicant Bear for the NASDAQ in 2002. It was the longest in history. It even exceeded the Dow’s 1929-1932 Short-term Indicant Bear in breadth and approached it in magnitude. The good news is that the NASDAQ’s decline did not lead to a depression, which is a clear indication of how little influence tech stocks have on the economy.

There are two important axioms to remember and are always repeated in this report. 1) Real economic wealth is created in only three ways - manufacturing, agriculture, and extraction. 2) The only positive influence politicians have on the economy is to undo their prior damage. They are now doing their damage, some of which will be undone in 2007; the next presidential pre-election year. That is why the market typically finds a bottom in the mid-term election year. That is also why the presidential pre-election year is historically the most bullish on the four-year cycle. If the strength of the current Mid-term Bull can be subjected only to meandering behavior, like 2004 and 2005, then it is possible for the current Mid-term Bull to be a record setting one in terms of duration.

Political institutions reduce wealth. Politicians continually attempt to redistribute wealth, which flies in the face of the laws of nature. They promote “middle class” attainment. The larger the middle class, the more power politicians and their academic brethren have. The communists tried that, resulting 99% poverty, while the ruling 1% lived like kings. In other words, socialism rewards an ability to intellectualize, while capitalism rewards the results of appealing effort.

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

You will notice many of the mutual fund buy signals occurred in March 2003. Many of them endured sell signals for the first time since early 2003 the past few months. However, recent bullish spurts and the bull’s resiliency have minimized selling activity and resumed buying. As a matter of fact, the Mid-term Indicant is now signaling buy or hold for all mutual funds it tracks with the exception of contrarian funds.

Many of you recall how the market did not synchronize with the heart and soul of bullish seasonality from November 2002 through February 2003. December 2002 was the most bearish since 1931, but not nearly as dynamic as the 1931 bearish expression. After the asynchronous behavior in the November 2002 rolling third of the year, the market turned bullish in March 2003 and again did not synchronize with normal seasonality. The Mid-term Indicant continued signaling bull/hold during bearish seasonality in 2003. The market continued moving north during that time, contrary to historical standards. As stated in most of 2004, bearish expressions on a Mid-term basis between May and October 2004 should not be surprising. That is exactly what occurred. The result was a meandering market with a slight bearish bias during most of 2004 and 2005 and the first two-thirds of 2006.

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

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

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

Stop Loss Management

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

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

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

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

Do not short on stocks if they are up from an avoid signal. Stocks go up more often than they go down. Stocks have a tendency to march to their own drumbeat when rising. Some stocks rise and continue to rise in the most severe of bear markets. Short selling opens up an opportunity for the snakes on Wall Street to take everything you own. They can cause a stock to rise at their whim and without any regard to fundamental reason. It usually does not make sense to bet against the sweat and toil of hard-working people.

Stock and Fund Update

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

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

Economic Conditions – Inflation, Currency, Interest Rates

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

Fundamentals continue favorable to a bullish bias. Interest rates continue to flatten and are currently configured past their recent cyclical peaks. Commodities are diving sharply to the south, which also favors a bullish stock market bias. The U.S. Dollar is sufficiently weakened leaving room for the Federal Reserve Board to continue relaxing interest rates.

Last week’s Indicant Weekly Stock Market Report, highlighted these improving economic fundamentals.

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

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% two-hundred and twenty weeks ago since the MTI buy signal on April 13, 2001. Last week it closed up 264.1%. The current annualized growth rate since the April 13, 2001 buy signal is 47.6%. After falling sharply 66-weeks ago, it bounced north in 46-weeks of the past 66-weeks. This fund has fallen sharply the past three weeks, paralleling falling oil prices.

Fidelity Gold, Fund #28, is up 29.8% since the Mid-term Indicant signaled buy on August 26, 2005. That annualizes to 27.4%. This fund also fell the past three weeks.

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

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 229.1% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 52.7%. This fund also fell sharply the past three weeks.

Vanguard Energy #18, VGENX, is up 146.7% (annualized at 41.7%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 103.0% (annualized at 36.3%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 101.9% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 32.4%. These energy related funds moved aggressively to the south the past three weeks due to economic fundamentals, as opposed to profit taking.

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

The SQI (Consolidated Short-term and Quick-term Indicant) model signaled buy for the GLD-ETF#11 on August 3, 2005. It is up 33.1% since then. It is annualized at 28.8%. This ETF moved slightly to the north last week, most likely, due to pre-determined buy points.

The SQI signaled buy for ETF#03 – Energy and Natural Resources on March 26, 2003. It is up 139.8% (annualized at 39.5%). It has fallen sharply to the south the past four weeks, but last week’s drop was mild.

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

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

All ten major indices are bulls. They are up by an average of 17.3% since the Mid-term Indicant signaled bull an average of 76-weeks ago. That annualizes to 11.8%, which is down significantly from the past three years. This is due to the bear signals for the S&P400 and S&P600 Indexes on July 21, 2006, which had been receiving a bull signal since October 25, 2002. Those two indices endured some fluttering after the expiration of the tremendous bull leg that lasted nearly four years. A new bull leg is underway and may proceed just as vigorously as the bull leg from October 2002 through July 2006.

The Mid-term Indicant Dow Jones Industrial Average performance is now at $34,860,793. That beats buy and hold performance of $1,760,814 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $169,757. That beats buy and hold’s $128,786 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $185,660 that beats buy and hold’s $76,939 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 1,879.0%, 31.8%, and 141.3%, respectively, for these indices as of this past week.

The Indicant’s percentage advantage over buy and hold does not change during bull signals. The advantage changes only during bear signals. That is because the buy and hold model has to keep holding, while the MTI-RYS model avoids bear markets. The only purpose of the MTI-RYS model is to avoid the bear markets. That is why it beat buy and hold by nearly 2,000% over the past 100+ years.

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

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

Divergence versus Convergence

There was mild bearish convergence the past two weeks, which more last week. Although bearish convergence is normally a major concern, it is not at this time. Profit-taking from the recent bullish expressions is most likely the cause of last week’s mild bearishness. Economic fundamentals are driving contrarian securities and commodities to the south. The latter typically induces bullish behavior.

Mid-term Indicant Positions - NASDAQ100 Stocks

Click here to see NASDAQ100 report card history.

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

Mid-term Indicant Positions - Dow Jones 30 Industrial Stocks

Click here to see Dow 30 report card history.

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

Mid-term Indicant Positions - Dow Jones 15 Utility Stocks

Click here to see Dow Utilities Report Card history.

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

Mid-term Indicant Positions - Indicant Selected Stocks

Click here to see Indicant Select Stock Report Card history.

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

Mid-term Indicant Positions - Mutual Funds

Click here to see Mutual Fund Report Card history.

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

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

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

Long Term Indicant Positions - Dow Jones Industrial Average

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

The Dow is up 297.6% (annualized at 19.9%) since the Long-term Indicant signaled bull 777-weeks ago. Economic data is the primary influence on the Long-term Indicant. The recession, deflation, and inflation have not been strong enough to signal bear. A link to the Long-term Indicant is below:

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

Quick/Short-term Indicant Stock Market Report – Summary

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

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

Force Vectors: Cycling south into bearish domains, but of minor concern at this time.

Vector Pressure: Showing significant resistance to bearish dominance.

Long-term Hold Positions: Solidly safe.

Current Quick-term Bias: Bullish.

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

Profit Potential from Naked Options: Declining volatility and absence of obvious direction minimizes profit potential.

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

Declining Force Vectors is of minor concern at this time. This is natural as these cycles are rapid. The declining Force Vector cycle is maturing, which bodes well for a bullish response upon expiration of the current cycle.

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

The NYSE Indicant Volume Indicator are relaxing from their recent cycle of robustness. Do not be concerned with this pause. The market can move to the north on light volume as we near the conclusion of deep bearish seasonality. Sustainability requires robustness, but the heart and soul of bullish seasonality does not need that.

The Dow is up 0.1% since the Short-term Indicant signaled bull on September 12, 2006 for both the Dow and NASDAQ. The NASDAQ is up 0.1% since the Short-term Indicant signaled bull on the same day. Click here to see the Short-term Indicant’s history.

Configurations suggest the historical standard of deep bearish seasonality is irrelevant at this time, but its influence remains possible. However, current configurations also suggest deep bearish seasonality’s dominance would be shallow.

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

There were no buy signals and no sell signals. Although there were no buy signals, the SQI is signaling hold for 30-ETF’s. They are up 44.0% (annualized at 28.2%) since their respective buy signals an average of 80.3-weeks ago. The SQI is not avoiding any of the 30-ETF’s.

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

Short-term Indicant Report Card, Status, and Charts

There were no buy signal and no sell signals. Although there were no buy signals, the Short-term Indicant is signaling hold for 30-ETF’s. They are up an average of 45.5% (annualized 30.3%) since the STI signaled, buy, an average of 77.3-weeks ago. The STI is not avoiding any of the 30-ETF’s.

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

Quick-term Report Card, Status, and Charts

There were no buy signals and no sell signals. Although there were no buy signals, the Quick-term Indicant is signaling hold for 29-ETF’s. They are up by an average of 4.2% (annualized at 14.9%) since the QTI signaled buy an average of 14.5-weeks ago. Although there were no sell signals, the Quick-term Indicant is avoiding one contrarian ETF at this time. It is down 1.6% since its sell signal 0.4-weeks ago.

Conflicts Between the Short-term and Quick-term Indicants

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

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

Quick-term Indicant Bull/Bear Health Report

Two of the 30-ETF’s are below their bearish yellow curves. One is a contrarian ETF and thus non-threatening to the overall market. The other one is a meanderer. The average position of all thirty ETF’s is above bearish yellow by 5.0%. This remains non-bearish.

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

All thirty ETF average positions are 1.1% below their bullish red curves. This attribute is non-bullish on a Quick-term Indicant basis. Please read on.

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

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

No non-contrarian-ETF are contacting their breakout lines. This is no longer a bullish attribute on a Short-term Indicant basis.

The average distance from breakout contact is 7.1%, which is not a great distance to take to find an area friendly for bullish exuberance.

The average distance from the price and breakdown is 15.7%. Although down significantly the past several months, this configuration still provides non-bearish support. The probability of immediate contact remains low and thus a non-bearish bias is maintained on a short-term basis.

Although the non-bearish baseline (yellow) can rise in a declining market, keep in mind that a 15.7% drop would leave early 2003 buyers in healthy hold positions, while new in-the-market-money would be painful to hold. This is non-threatening at this time.

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

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

ETF Force Vector Configurations

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

Nine of the ETF Force Vectors are in bullish domains, which is down from sixteen from September 1. The declining Force Vectors are not configured in a manner threatening to current bullish bias.

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

ETF Force Vectors/Vector Pressure Crossings/Option Signals

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

Click this sentence for Vector Pressure Option Signals. There were three put option buy signals after Friday’s close after eight consecutive trading days with no signal. The declining Force Vectors renewed some put option interest.

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

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

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

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

Quick-term and Short-term Indicant Summary

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

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

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

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

Quick-term ETF Options

Quick-term Indicant for ETF’s

Short-term Indicant for ETF’s

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

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

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

Short-term Indicant for DJIA and NASDAQ

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

Short-term Indicant Table for the NASDAQ Composite Index

Indicant Volume Indicator

Indicant Conclusion

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

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

The daily updates are on the following link.

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

Hyperlinks

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

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

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

Happy Investing,

www.indicant.net

09/24/06

Sep 17, 2006 Indicant Weekly Stock Market Report

Volume 09, Issue 03 ISSN 1526 6516 © The Indicant Stock Market Report

Dear Indicant Members:

This Week’s Report

Bull Market Underway

A review of hard economic fundamentals is worthy of your attention right now. Many significant shifts are transpiring. These shifts, if converted to sustainable cyclical reversals, will support a significant bullish bias in the upcoming months and the next two years.

By clicking the following link, you can see the 3-month T-Bill starting what could be a long directional cyclical shift to the south. This cyclical reversal birth is supported by other underlying economic factors.

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

You will notice similar configurations on the charts on the current northerly cycle that did not pan-out to a cyclical reversal. Those were pauses and never generated much excitement. Those were nonsensical pauses without any hope of sustainability. The current shift is a different story. It has a significant increase in probability of shifting dynamically to the south and with significant sustainability. That will foster a bullish stock market.

Clicking the following link will illustrates the U.S. Dollar’s weakness against most world currencies. The U.S. avoided domestic recessionary influences with the weak dollar. This configuration provides the Federal Reserve Board room to lower interest rates. That should promote a strengthening dollar, which should rebalance the international economy with fairer competition. That should impute an upper lid on pricing and thus restrict inflationary pressures.

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

For the first time since 2002, the CRB Bridge Futures fell below its bearish yellow curve. That is exceedingly bullish. In 2001, this commodity index was closely watched as deflation was threatening at that time. Its rapid rise the past few years is what imposed meandering conditions on the stock market, once the deflationary threat passed. Its recent rapid decline into bearish territory is an impetus for the stock market’s bull to exert its dominance away from any bearish threats and meandering behavior the past few years. Click the following link to review this dramatic shift in this commodity.

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

On the same web page, you will notice oil and gold are in their respective neutral zones. You will also notice they appear to have passed their pinnacle. If they cyclically shift to the south with sustainability in that direction, the stock market’s bull should express clear dominance.

Clicking the following link will take you to a chart of certificate of deposit yields. Although not yet dramatically falling to the south, you can intuitively see the increased probability of that scenario. The Indicant has more than intuitive support. It does not take much imagination to see how little demand for CD’s will be generated with their dismal yields. Many “potential” investors will hear people, such as yourself, commenting on double and triple digit gains from the stock market. That should skew additional demand for stocks against a relatively static supply of stocks. The price will, like always, be elastic to that demand-supply ratio, which is favorable to a bullish stock market.

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

All of the longer-term interest rates, such as mortgage interest, should minimize the housing bubble threat. That will be bullish for the stock market. Click the following link.

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

Of course, such fundamentals can be misleading from time to time as the market is not always nice enough to correlate perfectly to any particular set of data. However, the Quick-term Indicant remains solidly in support of a bullish stock market. There is more about that later in this report.

Weekly Buy/Sell Summary – Stocks and Funds

The Mid-term Indicant generated 46-buy signals and two sell signals.

In addition to the sell signals, the Mid-term Indicant is avoiding only 36-stocks and funds of the 345 tracked by the Indicant. The avoided stocks and funds are down an average of 14.5% since the Mid-term Indicant signaled sell an average of 19.0-weeks ago.

There were 85-stocks and funds avoided at this time last year. The avoided stocks and funds one year ago were down an average of 9.0% since their respective sell signals an average of 22.6-weeks earlier. Two years ago, on September 17, 2004, the Mid-term Indicant was avoiding 84-stocks and funds that were down an average of 27.3% since their respective sell signals an average of 46.9-weeks earlier. Three years ago on September 13, 2003, there were only 16-avoided stocks and funds. They were down 22.7% from their respective sell signals an average of 22.7-weeks earlier. On September 13, 2002, the Mid-term Indicant was avoiding 101-stocks and funds out of 295-tracked. They were down by an average of 32.0% since their sell signals an average of 16.9-weeks earlier.

In addition to the buy signals, the Mid-term Indicant is signaling hold for 261 of the 345-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 112.5%. That annualizes to 69.8%. The Mid-term Indicant has been signaling hold for these 261-stocks and funds for an average of 83.8-weeks.

One year ago on September 16, 2005, the Mid-term Indicant was holding 231-stocks and funds out of the 320 tracked at that time for an average of 90.4-weeks. Those 231-stocks and funds were up by an average of 105.8% (annualized at 60.8%). The Mid-term Indicant was signaling hold for 186-stocks and funds of the 296 tracked two years ago on September 17, 2004. They were up by an average of 78.2% (annualized at 68.2%) since their respective buy signals an average of 59.6-weeks earlier. There were 268-stocks and funds with hold signals on September 13, 2003 since their buy signals an average of 27.6-weeks earlier. They were up 51.4% (annualized at 96.9%). The Indicant was only tracking 296 stocks and funds in 2002-2004. On September 13, 2002, the Mid-term Indicant was signaling hold for only 171-stocks and funds out of 295-tracked. They were up by an average of 8.0% (annualized at 39.3%) since their buy signals 10.6-weeks earlier.

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

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

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

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

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

The Quick/Short-term Indicant Stock Market Report

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

The Indicant Stock Market Report’s Secular Market Blend

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

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

The Dow30 found bottom in the last presidential mid-term election year on October 9, 2002 at 7,286.27. The NASDAQ found bottom on the same day at 1114.11. Finding cyclical bottoms in mid-term election years is common. Fortunately, the bottom of 2006, so far, was minimal and not sharp when compared to that of 2002. The Dow is up 58.7% from the last mid-term presidential election year bottom. The NASDAQ is up 100.7% since October 9, 2002. The S&P600, small caps, is up even more by 119.0% since October 9, 2002.

The NASDAQ is down 55.7% from its historical high of 5048.62 on March 9, 2000. The Dow is down 1.4% from its historical high of 11723 on January 13, 2000. The S&P500 is down 13.6% since its all time high of March 23, 2000. So far, the new century, 2000 inclusive, has not been kind to long-term investors. Historical standards suggest the NASDAQ will not return to historical high until 2025 or so. A 2000 buyer and holder will not be back to break-even until then, assuming zero inflation. Including inflation, a thirty-year-old investor will be in his or her eighties before the NASDAQ profits from 2000 investment dollars.

For example, the Dow fell 4.4% from January 31, 2004 through October 31, 2004. The NASDAQ fell by the same amount. The Dow fell 0.5% from January 31, 2005 through October 31, 2005, while the NASDAQ was up only 2.8%. Since January 31, 2006, the Dow is up 6.4% and the NASDAQ is down 3.0%. As you can see, the market was not bullishly expressive after the heart and soul of bullish seasonality the past two years. Recent bullish expressions have demonstrated little respect for historical normalcy. The Quick-term Indicant is currently suggesting the mid-term election year bottom may be behind us.

Since August 18, 2006, the Mid-term Indicant generated 134-buy signals and only two sell signals. That is an unusually high number of buy signals when considering seasonal market influences. However, all Indicant models support this buying surge.

You will notice many of the mutual fund buy signals occurred in March 2003. Many of them endured sell signals for the first time since early 2003 the past few weeks. However, recent bullish spurts and the bull’s resiliency have minimized selling activity and resumed buying. As a matter of fact, the Mid-term Indicant is now signaling buy or hold for all mutual funds it tracks with the exception of contrarian funds.

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

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

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

Stop Loss Management

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

Stock and Fund Update

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

Economic Conditions – Inflation, Currency, Interest Rates

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

Last week’s report illustrated improving conditions in the hard parts of the economy. Commodity prices are falling, including oil. Market driven interest rates are also falling. Simply put, economic fundamentals are shaping up to support a bullish stock market.

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

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% two-hundred and nineteen weeks ago since the MTI buy signal on April 13, 2001. Last week it closed up 267.8%. The current annualized growth rate since the April 13, 2001 buy signal is 48.7%. After falling sharply 65-weeks ago, it bounced north in 46-weeks of the past 65-weeks. This fund has fallen sharply the past two weeks, paralleling falling oil prices.

Fidelity Gold, Fund #28, is up 32.5% since the Mid-term Indicant signaled buy on August 26, 2005. That annualizes to 30.4%. This fund also fell the past two weeks.

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

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 227.2% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 54.9%. This fund also fell sharply the past two weeks.

Vanguard Energy #18, VGENX, is up 149.0% (annualized at 42.6%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 108.1% (annualized at 38.4%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 104.8% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 33.5%. These energy related funds moved aggressively to the south the past two weeks due to economic fundamentals, as opposed to profit taking.

The SQI (Consolidated Short-term and Quick-term Indicant) model signaled buy for the GLD-ETF#11 on August 3, 2005. It is up 31.9% since then. It is annualized at 28.1%. It also moved sharply to the south the past two weeks.

The SQI signaled buy for ETF#03 – Energy and Natural Resources on March 26, 2003. It is up 140.7% (annualized at 39.9%). It fell sharply to the south the past three weeks.

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

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

All ten major indices are bulls. They are up by an average of 18.3% since the Mid-term Indicant signaled bull an average of 75-weeks ago. That annualizes to 12.7%, which is down significantly from the past three years. This is due to the bear signals for the S&P400 and S&P600 Indexes on July 21, 2006, which had been receiving a bull signal since October 25, 2002. Those two indices endured some fluttering after the expiration of the tremendous bull leg that lasted nearly four years. A new bull leg is underway and may proceed just as vigorously as the bull leg from October 2002 through July 2006.

The Mid-term Indicant Dow Jones Industrial Average performance is now at $35,020,343. That beats buy and hold performance of $1,768,827 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $170,414. That beats buy and hold’s $129,285 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $187,054 that beats buy and hold’s $77,517 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 1,879.0%, 31.8%, and 141.3%, respectively, for these indices as of this past week.

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

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

Divergence versus Convergence

Divergent market behavior last week supports profound bullishness in the weeks, months, and years ahead. Contrarian sectors moved sharply to the south and general equities moved sharply to the north. Bullish divergence is not as powerful as bullish convergence, but the energy sector and inflation sensitive sectors are coming off all time highs. Bullish enthusiasm should be expected for most sectors in the near future.

Mid-term Indicant Positions - NASDAQ100 Stocks

Click here to see NASDAQ100 report card history.

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

Mid-term Indicant Positions - Dow Jones 30 Industrial Stocks

Click here to see Dow 30 report card history.

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

Mid-term Indicant Positions - Dow Jones 15 Utility Stocks

Click here to see Dow Utilities Report Card history.

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

Mid-term Indicant Positions - Indicant Selected Stocks

Click here to see Indicant Select Stock Report Card history.

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

Mid-term Indicant Positions - Mutual Funds

Click here to see Mutual Fund Report Card history.

The Mid-term Indicant signaled sell for ProFunds Ultra Short. This fund again disappointed as the stock market’s meandering behavior did not allow significant profitability. The next opportunity for this fund to perform well, based on historical standards will not occur until 2009. Of course, economic fundamentals may offer opportunities before this.

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

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

Long Term Indicant Positions - Dow Jones Industrial Average

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

The Dow is up 299.4% (annualized at 20.1%) since the Long-term Indicant signaled bull 776-weeks ago. Economic data is the primary influence on the Long-term Indicant. The recession, deflation, and inflation have not been strong enough to signal bear. A link to the Long-term Indicant is below:

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

Quick/Short-term Indicant Stock Market Report - Summary

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

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

Force Vectors: Bullish cycle is underway, slight suggestion of bullish sustainability.

Vector Pressure: Showing significant resistance to bearish dominance.

Long-term Hold Positions: Solidly safe.

Current Quick-term Bias: Bullish; now strengthening.

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

Profit Potential from Naked Options: Declining volatility and absence of obvious direction minimizes profit potential.

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

Bullish bias remains and increasing in strength.

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

The Indicant Volume Indicator’s continue in what appears to be the early stages of a robust cycle.

If it continues with bullish to non-bearish expressions, your new money investment strategy should be elevated to aggressive bullishness.

The Dow is up 0.5% since the Short-term Indicant signaled bull on September 12, 2006 for both the Dow and NASDAQ. The NASDAQ is up 0.9% since the Short-term Indicant signaled bull on the same day. Click here to see the Short-term Indicant’s history.

Configurations suggest the historical standard of deep bearish seasonality is irrelevant at this time.

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

There were no buy signals and no sell signals. Although there were no buy signals, the SQI is signaling hold for 29-ETF’s. They are up 45.5% (annualized at 28.5%) since their respective buy signals an average of 82.1-weeks ago. Although there were no sell signals, the SQI is avoiding one of the 30-ETF’s. It is down 2.1% since its sell signal 28.0-weeks ago.

Short-term Indicant Report Card, Status, and Charts

There were no buy signals and no sell signals. Although there were no buy signals, the Short-term Indicant is signaling hold for 29-ETF’s. They are up an average of 48.8% (annualized 31.8%) since the STI signaled, buy, an average of 79.0-weeks ago. Although there were no sell signals, the Short-term Indicant is avoiding one ETF. It is down 2.1% since its sell signal 28.0-weeks ago.

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

Quick-term Report Card, Status, and Charts

There were no buy signals and no sell signals. Although there were no buy signals, the Quick-term Indicant is signaling hold for 30-ETF’s. They are up by an average of 9.2% (annualized at 25.0%) since the QTI signaled buy an average of 18.9-weeks ago. The Quick-term Indicant is not avoiding any ETF’s at this time.

Conflicts Between the Short-term and Quick-term Indicants

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

There are eighty-eight total hold signals out of a possible 90, while there are only two avoid signals. This ratio supports the life of the bull. The pronounced bearish bias that pervaded the market most of the year is no longer present. Although there is considerable time remaining for deep bearish seasonality to exert its influence on the market, the probability of that occurring is minimal.

Quick-term Indicant Bull/Bear Health Report

One of the 30-ETF’s are below their bearish yellow curve. It again is contrarian fund, ETF #3, Natural Resources. The average position of all thirty ETF’s is above bearish yellow by 5.9%. This remains non-bearish.

Seventeen ETF’s are above their respective bullish red curves, which supports a bullish bias.

All thirty ETF average positions are 0.3% below their bullish red curves. There is some fluttering at this point and this non-bullish attribute is irrelevant.

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

Three non-contrarian-ETF’s are contacting their breakout lines. This is a bullish attribute, which supports bullish bias.

The average distance from breakout contact is 6.5%, which is not a great distance to take for bullish exuberance.

The average distance from the price and breakdown is 16.6%. Although down significantly the past several months, this configuration still provides non-bearish support. The probability of immediate contact remains low and thus a non-bearish bias is maintained on a short-term basis.

Although the non-bearish baseline (yellow) can rise in a declining market, keep in mind that a 16.6% drop would leave early 2003 buyers in healthy hold positions, while new in-the-market-money would be painful to hold. This is non-threatening at this time.

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

ETF Force Vector Configurations

Twenty of the ETF Force Vectors remain in bullish domains, which is up by five from yesterday, highlighting an increased bullish bias.

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

ETF Force Vectors/Vector Pressure Crossings/Option Signals

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

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

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

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

Quick-term and Short-term Indicant Summary

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

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

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

Quick-term ETF Options

Quick-term Indicant for ETF’s

Short-term Indicant for ETF’s

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

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

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

Short-term Indicant for DJIA and NASDAQ

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

Short-term Indicant Table for the NASDAQ Composite Index

Indicant Volume Indicator

Indicant Conclusion

There is nothing new from last week’s report. Deep bearish seasonality is becoming increasingly irrelevant in this mid-term election year. Economic fundamentals appear to be adjusting in favor of dynamic bullishness. The Quick-term Indicant shifted from bearish to bullish bias a few weeks ago. Although that bias is not supported by volume and is relatively weak, it is a bullish bias nonetheless. It seldom pays to be argumentative with the Quick-term Indicant’s bias. Also, basic fundamentals are shaping up for dynamic bullishness over the next few weeks, months, and years.

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

The daily updates are on the following link.

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

Hyperlinks

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

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

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

Happy Investing,

www.indicant.net

09/17/06

Sep 10, 2006 Indicant Weekly Stock Market Report

Volume 09, Issue 02 ISSN 1526 6516 © The Indicant Stock Market Report

Dear Indicant Members:

This Week’s Report

Forget Deep Bearish Seasonality

Deep bearish seasonality exerted some influence on the market last week. However, that influence was muted toward the end of the week with a bullish response. That is typical of this meandering market since early 2004 with the exception of the heart and soul of bullish seasonality, where the market’s growth occurs therein.

There are some very significant economic fundamental shifts underway. They should become a focal point for you in the coming weeks and months. Recent major oil discoveries in the Gulf of Mexico are contributing to falling oil prices. Insiders say there is more oil there than the entire Middle East. Click the following link to view the oil charts.

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

After seven years of rising oil prices, it appears to be past a pinnacle. You will notice gold just to the left of the oil chart shows the same.

Even more impressive is the rapid drop in the CRB Bridge Futures. That commodity-based index is representative of the law of supply and demand. Demand has not waned, but supplies continue to increase. The concerns about inflationary threats are rapidly dwindling.

Falling commodity prices will produce a bullish stock market. This is because inflationary threats will subside and leave the Fed room to reverse the interest rate cycle to the south. As you can see by clicking the following link, short-term interest rates appear to be have pinnacled. If that is true, next year’s pre-election year could be as bullish as that of 2003.

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

As you can see, the three month T-Bill appears bent on taking a southerly route along with short-term CD’s. That will be exceedingly bullish as many investors are not going to tolerate low returns while those invested in equities are going to brag about the double and triple digit earnings since late 2002. That phenomenon will add fuel to the impending bull market.

As you can see, longer-term interest rates have already penetrated the neutral zone, leaving an increased probability of a complete cyclical reversal that is favorable for igniting a bullish stock market.

Fundamental issues, such as these will have a far greater influence on the stock market than the historical tendency of deep bearish seasonality, which is profoundly consistent, but not perfect. In other words, it does not happen year-end and year out. When deep bearish seasonality performs at its best, the market’s drop is deep. Conditions are ripe to mute any deep desires of deep bearish seasonality.

Economic fundamentals are priming to support rising corporate income. The market has been apparently sniffing that potential for quite some time because it never behaved with normal bearish expressions in the face of such sour economic fundamentals with rising commodity prices, rising interest rates, and cooling economic conditions the past few years. It meandering behavior was indeed impressive. Even more impressive is how the market has ignored the normal political cycle’s bearish influence on a mid-term election year.

Suppose deep bearish seasonality has its way with the market and drives it hard to the south. Configurations and fundamentals suggest the rebound following that will more than offset it. Although some of the buy signals the past few weeks are disappointing, do not despair. Conditions are ripe for profound bullish behavior the next several months. If you bought conservatively and you are down on the investment, buy more of them now. Current configurations and fundamentals suggest they are about to rise and rise rapidly. Keep up with the daily stock market report and stay tuned to the bias features of the Quick-term Indicant models. Right now, although a weak, the bias is still bullish which is difficult in the face of deep bearish seasonality. That is what makes current conditions extremely impressive.

Weekly Buy/Sell Summary – Stocks and Funds

The Mid-term Indicant generated no buy signals and no sell signals. Deep bearish seasonality is depressing buy activity, but configurations suggest many more buys are around the corner.

Although there were no sell signals, the Mid-term Indicant is avoiding 82-stocks and funds of the 345 tracked by the Indicant. The avoided stocks and funds are down an average of 9.1% since the Mid-term Indicant signaled sell an average of 24.0-weeks ago.

There were 87-stocks and funds avoided at this time last year. The avoided stocks and funds one year ago were down an average of 7.9% since their respective sell signals an average of 21.7-weeks earlier. Two years ago, on September 9, 2004, the Mid-term Indicant was avoiding 104-stocks and funds that were down an average of 26.2% since their respective sell signals an average of 45.6-weeks earlier. Three years ago on September 6, 2003, there were only 18-avoided stocks and funds. They were down 8.0% from their respective sell signals an average of 13.5-weeks earlier. On September 6, 2002, the Mid-term Indicant was avoiding 75-stocks and funds out of 295-tracked. They were down by an average of 41.5% since their sell signals an average of 21.7-weeks earlier.

Although there were no buy signals, the Mid-term Indicant is signaling hold for 263 of the 345-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 112.9%. That annualizes to 71.3%. The Mid-term Indicant has been signaling hold for these 263-stocks and funds for an average of 82.4-weeks.

One year ago on September 9, 2005, the Mid-term Indicant was holding 227-stocks and funds out of the 320 tracked at that time for an average of 91.3-weeks. Those 227-stocks and funds were up by an average of 109.6% (annualized at 62.5%). The Mid-term Indicant was signaling hold for 187-stocks and funds of the 296 tracked two years ago on September 10, 2004. They were up by an average of 75.7% (annualized at 67.2%) since their respective buy signals an average of 58.6-weeks earlier. There were 264-stocks and funds with hold signals on September 6, 2003 since their buy signals an average of 27.7-weeks earlier. They were up 51.6% (annualized at 96.9%). The Indicant was only tracking 296 stocks and funds in 2002-2004. On September 6, 2002, the Mid-term Indicant was signaling hold for only 188-stocks and funds out of 295-tracked. They were up by an average of 5.8% (annualized at 35.1%) since their buy signals 8.7-weeks earlier.

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

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

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

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

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

The Quick/Short-term Indicant Stock Market Report

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

The Indicant Stock Market Report’s Secular Market Blend

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

The heart and soul of bullish seasonality, ending January 31, 2006, demonstrated bullish normalcy. The market had been more or less a meanderer, but recently succumbed to bearish influences on both a fundamental basis and historical conformance basis; that is until four weeks ago. Since January 31, 2006, the S&P500 is up 1.5%, the NASDAQ is down 6.1%, and the Dow is up 4.9%. The S&P500 had been in negative territory most of the year until four weeks ago when the Quick-term Indicant shifted from bearish to bullish bias.

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

The Dow30 found bottom in the last presidential mid-term election year on October 9, 2002 at 7,286.27. The NASDAQ found bottom on the same day at 1114.11. Finding cyclical bottoms in mid-term election years is common. The Dow is up 56.4% from the last mid-term presidential election year bottom. The NASDAQ is up 94.4% since October 9, 2002. The S&P600, small caps, is up even more by 113.3% since October 9, 2002.

The NASDAQ is down 57.1% from its historical high of 5048.62 on March 9, 2000. The Dow is down 2.8% from its historical high of 11723 on January 13, 2000. The S&P500 is down 15.0% since its all time high of March 23, 2000. So far, the new century, 2000 inclusive, has not been kind to long-term investors. Historical standards suggest the NASDAQ will not return to historical high until 2025 or so. A 2000 buyer and holder will not be back to break-even until then, assuming zero inflation. Including inflation, a thirty-year-old investor will be in his or her eighties before the NASDAQ profits from 2000 investment dollars.

For example, the Dow fell 4.4% from January 31, 2004 through October 31, 2004. The NASDAQ fell by the same amount. The Dow fell 0.5% from January 31, 2005 through October 31, 2005, while the NASDAQ was up only 2.8%. Since January 31, 2006, the Dow is up 4.9% and the NASDAQ is down 6.1%. Right now, the major indices has offered the mid-term election year to find a bottom since it is now properly depressed since the last heart and soul of bullish seasonality concluded on January 31, 2006. The Quick-term Indicant is currently suggesting the mid-term election year bottom may be behind us.

Many of you recall how the market did not synchronize with the heart and soul of bullish seasonality from November 2002 through February 2003. December 2002 was the most bearish since 1931, but not nearly as dynamic as the 1931 bearish expression. After the asynchronous behavior in the November 2002 rolling third of the year, the market turned bullish in March 2003 and again did not synchronize with normal seasonality. The Mid-term Indicant continued signaling bull during bearish seasonality in 2003. The market continued moving north during that time, contrary to historical standards. As stated in most of 2004, bearish expressions on a Mid-term basis between May and October 2004 should not be surprising. That is exactly what occurred. The result was a meandering market with a slight bearish bias during most of 2004 and 2005 and the first two-thirds of 2006.

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

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

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

Stop Loss Management

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

Stock and Fund Update

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

Economic Conditions – Inflation, Currency, Interest Rates

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

As stated the past four weeks, interest rates appear to have peaked. The longer-term rates have moved from bearish to neutral in terms of stock market impact. Mortgage rates have fallen below their bullish red curve. The short-term rates continue their southerly movement. Overall, there is an increasing probability of fundamental support for a bullish stock market in the upcoming pre-election year.

As stated last week, commodity prices appear to be at a pinnacle, but too early to tell if a new cyclical configuration supporting a stock market bull will unfold. However, the configuration contains some excitement for the possibility of an explosive bull market.

The U.S. Dollar remains weak, providing the Federal Reserve Board some latitude with interest rate reductions.

Commodity prices are also cooling adding to the Federal Reserve Board’s tolerance for adjusting rates to the south.

Conditions are ripe for support of bullish market behavior.

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

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% two-hundred and eighteen weeks ago since the MTI buy signal on April 13, 2001. Last week it closed up 287.3%. The current annualized growth rate since the April 13, 2001 buy signal is 52.4%. After falling sharply 64-weeks ago, it bounced north in 46-weeks of the past 64-weeks. This fund fell sharply last week.

Fidelity Gold, Fund #28, is up 41.3% since the Mid-term Indicant signaled buy on August 26, 2005. That annualizes to 39.3%. This fund also fell last week.

Do not be surprised at continuing bearishness of the above two funds in the weeks/months ahead.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 246.4% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 59.8%. This fund fell slightly last week.

Vanguard Energy #18, VGENX, is up 158.7% (annualized at 45.6%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 120.2% (annualized at 43.0%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 115.1% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 37.0%. These energy related funds moved aggressively to the south last week.

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

The SQI (Consolidated Short-term and Quick-term Indicant) model signaled buy for the GLD-ETF#11 on August 3, 2005. It is up 39.3% since then. It is annualized at 35.3%. This ETF continues to be bullishly biased. It also moved to the south last week.

The SQI signaled buy for ETF#03 – Energy and Natural Resources on March 26, 2003. It is up 150.9% (annualized at 43.1%). It fell sharply to the south the past two weeks along with the energy sector.

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

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

All ten major indices are bulls. They are up by an average of 15.8% since the Mid-term Indicant signaled bull an average of 74-weeks ago. That annualizes to 11.1%, which is down significantly from the past three years. This is due to the bear signals for the S&P400 and S&P600 Indexes on July 21, 2006, which had been receiving a bull signal since October 25, 2002. Those two indices endured some fluttering after the expiration of the tremendous bull leg that lasted nearly four years. A new bull leg is underway, but vulnerable to bearish ambition.

The Mid-term Indicant Dow Jones Industrial Average performance is now at $34,509,432. That beats buy and hold performance of $1,743,168 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $167,709. That beats buy and hold’s $127,233 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $181,213 that beats buy and hold’s $75,097 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 1,879.0%, 31.8%, and 141.3%, respectively, for these indices as of this past week.

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

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

Divergence versus Convergence

The stock market endured bearish convergence last week with nearly all sectors falling in price. That is meaningless at this point as much of this bearishness was due to deep bearish seasonality, which appears to be setting up as meaningless. Economic fundamentals and the various Indicant models suggest profound bullishness in the coming weeks and months.

Mid-term Indicant Positions - NASDAQ100 Stocks

Click here to see NASDAQ100 report card history.

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

Mid-term Indicant Positions - Dow Jones 30 Industrial Stocks

Click here to see Dow 30 report card history.

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

Mid-term Indicant Positions - Dow Jones 15 Utility Stocks

Click here to see Dow Utilities Report Card history.

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

Mid-term Indicant Positions - Indicant Selected Stocks

Click here to see Indicant Select Stock Report Card history.

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

Mid-term Indicant Positions - Mutual Funds

Click here to see Mutual Fund Report Card history.

The Mid-term Indicant continues signaling hold for ProFunds Ultra Short even though the Quick-term and Short-term Indicant are now holding the QQQQ. The daily reports suggested selling this fund last week. However, the Mid-term Indicant has some minor influences from deep bearish seasonality that is forcing the hold signal. This fund is up 5.5% since the Mid-term Indicant signaled buy on June 20, 2006. That annualizes to 20.1%. If Force Vectors shift back to the north next week, which is expected, the Mid-term Indicant will signal sell this coming weekend.

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

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

Long Term Indicant Positions - Dow Jones Industrial Average

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

The Dow is up 293.6% (annualized at 19.7%) since the Long-term Indicant signaled bull 775-weeks ago. Economic data is the primary influence on the Long-term Indicant. The recession, deflation, and inflation have not been strong enough to signal bear. A link to the Long-term Indicant is below:

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

Quick/Short-term Indicant Stock Market Report - Summary

Quick-term Red Bulls: Twelve; mildly supporting bullish bias

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

Force Vectors: Bullish cycle is underway, but no longer suggesting sustainability.

Vector Pressure: Showing significant resistance to bearish dominance.

Long-term Hold Positions: Solidly safe.

Current Quick-term Bias: Bullish, but weakening.

Overall Market Status: Bullish on a Quick-term basis, but weakening.

Profit Potential from Naked Options: Declining volatility and absence of obvious direction minimizes profit potential.

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

The lack of volume disappoints potential for bullish sustainability. Force Vectors are mixed but majority recently fell into bearish domains. However, their recent movement has not been supportive of bearish ambitions. Attributes continue to suggest meandering behavior even in the face of deep bearish seasonality.

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

The Indicant Volume Indicator’s lethargic configuration has subsided. It does not appear anxious to obviate market’s sustainable intentions. It will eventually do that. The key is to not be yawning when it does. The current configuration continues to support your longer-term hold positions. Overall, the support continues to be directed at a meandering market, but that can change in the next few days.

The Dow Jones Industrial Average is up 6.0% since the Short-term Indicant signaled bear on February 8, 2006. The NASDAQ is down 4.3% since the Short-term Indicant signaled bear February 3, 2006. The Short-term Indicant for the two major indices is no longer bearishly biased, as of August 15, 2006. However, the Short-term Indicant is still unable to signal bull for these two major indices in the face of impending deep bearish seasonality. This is factored into some buy/sell signaling for some stocks, which correlates to seasonal behavior. Click here to see the Short-term Indicant’s history.

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

There were no buy signals and no sell signals. Although there were no buy signals, the SQI is signaling hold for 26-ETF’s. They are up 45.3% (annualized at 25.7%) since their respective buy signals an average of 90.5-weeks ago. Although there were no sell signals, the SQI is avoiding four ETF’s. They are up by an average of 2.3% since their sell signals an average of 15.8-weeks ago.

Short-term Indicant Report Card, Status, and Charts

There were no buy signals and no sell signals. Although there were no buy signals, the Short-term Indicant is signaling hold for 29-ETF’s. They are up an average of 48.0% (annualized 31.7%) since the STI signaled, buy, an average of 78.0-weeks ago. Although there were no sell signals, the Short-term Indicant is avoiding one ETF. It is down 2.2% since its sell signal 26.9-weeks ago.

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

Quick-term Report Card, Status, and Charts

There were no buy signals and no sell signals. Although there were no buy signals, the Quick-term Indicant is signaling hold for 27-ETF’s. They are up by an average of 9.8% (annualized at 24.8%) since the QTI signaled buy an average of 20.0-weeks ago. Although there were no sell signals, the Quick-term Indicant is avoiding three ETF’s. They are up 0.6% since their respective sell signals an average of 14.0-weeks ago.

Conflicts Between the Short-term and Quick-term Indicants

Unanimous bullish consensus between the Short-term Indicant and the Quick-term Indicant remains absent. However, a bullish majority prevails, albeit weak. There are only four conflicts, where the Short-term Indicant and the Quick-term Indicant are in disagreement between hold and avoid status. The bias shift on August 15, 2006 remains in favor of the bull, but the recent bullish cycle that was born of this bias has been pathetic and without volume support. The various configurations barely support a bullish bias, but it is bullish nonetheless.

There are eighty-five total hold signals out of a possible 90, while there are only five avoid signals. This ratio supports the life of the bull. The pronounced bearish bias that pervaded the market most of the year is no longer present. Keep in mind though that there is still plenty of time for deep bearish seasonality to exert its influence on the market.

Quick-term Indicant Bull/Bear Health Report

The Quick-term Bull is now showing strength, contrary to its weakening since early February. None of the 30-ETF’s is below its bearish yellow curve. The average position of all thirty ETF’s is above bearish yellow by 5.2%, which is down significantly the past several months. However, it is up from the past few weeks, highlighting an increased bullish bias on a Quick-term Indicant basis.

Twelve ETF’s are above their respective bullish red curves, which is down by one from last Wednesday. The good news is that it is difficult for the market to crash as long as just one non-contrarian ETF is a red bull.

All thirty ETF average positions are 1.0% below their bullish red curves. After seventy-seven consecutive trading days with average relative position to bullish red was negative, that average returned to a positive position on September 1. It is somewhat discerning that it is now negative for the past three days.

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

The Short-term Bull for ETF’s weakened today. None of the 30-ETF’s are contacting their breakout lines, which is down by two from last Wednesday. This does not support any increased probability of a sustainable bullish breakout.

The average distance from breakout contact is 7.2%, which is not a great distance to take for bullish exuberance.

The average distance from the price and breakdown is 15.8%. Although down significantly the past several months, this configuration still provides non-bearish support. The probability of immediate contact remains low and thus a non-bearish bias is maintained on a short-term basis.

Although the non-bearish baseline (yellow) can rise in a declining market, keep in mind that a 15.8% drop would leave early 2003 buyers in healthy hold positions, while new in-the-market-money would be painful to hold.

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

You will notice significant bearish drops on the Short-term Indicant charts. However, prices remain higher than the breakdown lines. Severe and sustainable bearish drops occur when contact with bearish yellow occurs.

ETF Force Vector Configurations

Only three of the ETF Force Vectors remains in bullish domains, which is down by twenty from August 18, shortly after the shift to bullish bias.

Although several Force Vectors are moving south, there is no organized effort by the bear with some mixed behavior here. The current Force Vector cycle is not supportive of either bearish or bullish behavior.

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

ETF Force Vectors/Vector Pressure Crossings/Option Signals

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

Click this sentence for Vector Pressure Option Signals. There were two put option buy signals.

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

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

Quick-term and Short-term Indicant Summary

The shift from bearish bias to bullish bias started on Tuesday, August 15, 2006 after maintaining a bearish bias since early February 2006. Although historical standards, economic fundamentals, and the political election cycle favor a bearish dip before November, the Quick-term and Short-term Indicant models are suggesting bullish bias. This is not a strong bullish bias since the market is encumbered with deep bearish seasonality.

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

The Quick-term Bull remains in tact with a mild increase in probability of strengthening.

ProFunds Ultra Short mutual fund moves inversely to the QQQQ by exponential amounts. The Consolidated Indicant model is no longer avoiding QQQQ, which no longer supports holding contrarian fund, ProFunds Ultra Short. As stated on August 16, 2006, you may want to sell this fund, given the increasing bullish bias by the various Quick/Short-term Indicant models. The Mid-term Indicant signaled buy for ProFunds Ultra Short after the market close on June 2, 2006. If you have not already done so, now is the time to sell Pro Funds Ultra Short. The Mid-term Indicant did not signal sell the past four weekends due to the Quick-term Indicant’s continued avoid signal, but it will signal sell this coming weekend in the event the QQQQ retains its hold signal. That hold signal remains very weak.

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

Quick-term ETF Options

Quick-term Indicant for ETF’s

Short-term Indicant for ETF’s

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

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

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

Short-term Indicant for DJIA and NASDAQ

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

Short-term Indicant Table for the NASDAQ Composite Index

Indicant Volume Indicator

Indicant Conclusion

Deep bearish seasonality is becoming increasingly irrelevant in this mid-term election year. Economic fundamentals appear to be adjusting in favor of dynamic bullishness. The Quick-term Indicant shifted from bearish to bullish bias a few weeks ago. Although that bias is not supported by volume and is relatively weak, it is a bullish bias nonetheless. It seldom pays to be argumentative with the Quick-term Indicant’s bias. Also, basic fundamentals are shaping up for dynamic bullishness over the next few weeks/months/years.

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

The daily updates are on the following link.

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

Hyperlinks

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

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

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

Happy Investing,

www.indicant.net

09/10/06

Sep 03, 2006 Indicant Weekly Stock Market Report

Dear Indicant Members:

This Week’s Report

Deep Bearish Seasonality – Week One

The stock market demonstrated no respect for historical tradition last week. All the major indices moved solidly to the north. The Quick-term and Short-term Indicant signaled “buy” for several ETF’s. The Mid-term Indicant signaled buy for several mutual funds and stocks this weekend. The high number of buy signals in the face of deep bearish seasonality flies in the face of historical standards.

The market delights in surprising any assumed pattern. The stock market has repeatedly proven exceptions to consistent patterns. The stock market will continually ensure that the majority of investors will not be winners because of that fact. Simple assumptions and stock market patterns mix like oil and water.

It takes years to determine when the phenomenon of commonality destroys patterns consistent with tradition. So, this year’s exception, if indeed it manifests, does not prove the pattern is gone. There have been several exceptions to deep bearish seasonality in the past 104-years. These exceptions are required for the following. As soon as a critical mass of investors and traders use the same model, the market always adjusts to destroy those assumptions of that critical mass.

This is not to say that deep bearish seasonality will not unfold this year. It still has plenty of time to unleash its wrath. Let’s review recent history of deep bearish seasonality. Click the following link:

http://www.indicant.net/Non-Members/Tours/MTIRYS-Mkts-US/MTIRYS-01-DJI-2000-2004.htm

Focus on the second white line segment on the chart for each of the four years. You will notice that segment moving to the south on the charts in 2000, 2001, 2002, and 2004. You will notice deep bearish seasonality did not move to the south in 2003, which was when the current bull market unleashed its power over the bear. It did that in 2003 after shaking out the critical mass of investors who were following the same model from the 1990’s.

That model was excessively simple - the stock market moves north all the time. Once a critical mass of investors blindly adopted that model, the market punished them. Just as the last group of blind believers were eliminated from participating in stock market wealth, the bull was born in March 2003. That is because the stock market will not allow the majority of investors to be winners. Stock market winners get their money from the losers. The old 80-20 rule will never be violated as long as the stock market is not over-regulated by political control freaks. They cater to “tyranny by the majority” that is commonplace in democracies to get votes. That is why the U.S. is a Republic, whereby political leadership can actually be a leader regardless of what the “weak” majority wants. Political leadership biases their behavior to enhance the volume of weak constituents.

Deep bearish seasonality unleashed its wrath in 2000. You will notice the second white line segment in 2000 moving sharply to the south. It again moved sharply to the south in 2001, which was stimulated by the terrorist’s attack of 911. Deep bearish seasonality again unleashed its power in 2002, which was the last mid-term election year. Deep bearish seasonality was mild in 2004, but many of you recall its power in 2005.

Click the below link to the Indicant Volume Indicator. This is in the members section only.

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

Scroll down slightly to the NASDAQ chart. You will notice robust volume in 2000 starting just ahead of deep bearish seasonality. This was the first wave of the market shaking out those who blindly adopting the model of the 1990’s – the market always goes up.

The second shakeout occurred just ahead of deep bearish seasonality in 2001. You will again notice a robust Indicant Volume Indicator supporting the dynamic bearish behavior in that period. You will notice the final shakeout occurring with relatively high volume in 2002, concluding with a pronounced robust Indicant Volume Indicator.

After the NASDAQ collapsed nearly 80% in a two-year period, the shakeout was completed. Many retirees had to return to work; poverty conditions were inflicted on many paper millionaires just two years earlier.

Scan to the far right of the Indicant Volume Indicator Chart to get a handle on the current situation. You will notice the lethargic configuration of the current Indicant Volume Indicator. The recent bullish cycle on a Quick-term basis lacks volume support. That usually means the new Quick-term bull cycle is not sustainable. However, as the market nears the heart and soul of bullish seasonality, there is an increasing probability of sustainability; even in the face of deep bearish seasonality.

The heart and soul of bullish seasonality is a market phenomenon that has held up for over 100-years. The heart and soul of bullish seasonality pattern has been consistent because of the consistency in deep bearish seasonality. The market can only move north after a bearish cycle completes.

The Quick-term Indicant Force Vectors and the number of Quick-term Red Bulls are currently at the forefront in assessing market bias. None of the Quick-term Indicant ETF’s are below their bullish red curves. Click the following link to the QQQQ.

http://www.indicant.net/Members/Updates/QTI-ETF-Charts/QTI-ETF1-Charts.htm#1

As stated last week, the Quick-term Indicant’s Force Vectors reveal a pattern of bullish support. You will notice the Force Vector cycles have a rising low point and a rising high point. That configuration was announced on August 15, whereby the bearish bias since early February 2006 shifted to bullish. This configuration supports a sustainable bullish cycle. The problem is that it lacks volume support. In other words, this configuration can reverse itself with an equally powerful bearish configuration over the next few weeks. Such configurations are not predictable. However, those configurations, quite often, precede the market’s eventual direction.

Recent stock market history is supported by over 100 years of tradition. Deep bearish seasonality exerts its influence except during strong bull markets. This market has been a meanderer for the most part since early 2004 with most of its bullish positioning occurring during the heart and soul of bullish seasonality and meandering the other eight to nine months of the year. However, as always there are exceptions to historical standards. Right now, the Quick-term Indicant supports an exception. It also is supporting a baseline to lead into the normally bullish presidential pre-election year of 2007.

Keep your eye on the daily stock market report to make certain this exception to historical standards maintains its posturing for a sustainable bullish cycle.

Weekly Buy/Sell Summary – Stocks and Funds

The Mid-term Indicant generated 34-buy signals and no sell signals.

Although there were no sell signals, the Mid-term Indicant is avoiding 82-stocks and funds of the 345 tracked by the Indicant. The avoided stocks and funds are down an average of 8.3% since the Mid-term Indicant signaled sell an average of 23.2-weeks ago.

There were 91-stocks and funds avoided at this time last year. The avoided stocks and funds one year ago were down an average of 9.0% since their respective sell signals an average of 21.2-weeks earlier. Two years ago, on September 2, 2004, the Mid-term Indicant was avoiding 106-stocks and funds that were down an average of 27.7% since their respective sell signals an average of 44.4-weeks earlier. Three years ago on August 30, 2003, there were only 29-avoided stocks and funds. They were down 8.3% from their respective sell signals an average of 10.5-weeks earlier. On August 30, 2002, the Mid-term Indicant was avoiding 69-stocks and funds out of 295-tracked. They were down by an average of 47.9% since their sell signals an average of 25.0-weeks earlier.

In addition to the buy signals, the Mid-term Indicant is signaling hold for 229 of the 345-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 119.5%. That annualizes to 68.2%. The Mid-term Indicant has been signaling hold for these 229-stocks and funds for an average of 91.1-weeks.

One year ago on September 1, 2005, the Mid-term Indicant was holding 225-stocks and funds out of the 320 tracked at that time for an average of 91.5-weeks. Those 225-stocks and funds were up by an average of 106.9% (annualized at 60.7%). The Mid-term Indicant was signaling hold for 184-stocks and funds of the 296 tracked two years ago on September 4, 2004. They were up by an average of 75.3% (annualized at 67.1%) since their respective buy signals an average of 58.3-weeks earlier. There were 259-stocks and funds with hold signals on August 30, 2003 since their buy signals an average of 27.1-weeks earlier. They were up 48.2% (annualized at 92.4%). The Indicant was only tracking 296 stocks and funds in 2002-2004. On August 30, 2002, the Mid-term Indicant was signaling hold for only 215-stocks and funds out of 295-tracked. They were up by an average of 6.3% (annualized at 45.7%) since their buy signals 7.1-weeks earlier.

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

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

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

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

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

The Quick/Short-term Indicant Stock Market Report

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

The Indicant Stock Market Report’s Secular Market Blend

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

The market synchronized with near perfection to normal seasonality in 2002. The rolling half of May-October is typically bearish. The 2002 seasonal bear leg was dynamic and configured perfectly to historical standards. The current mid-term election year of 2006, fundamentally, supports historical standards. As stated since late 2005, expect no bullish enthusiasm in the first half of 2006 with rising interest rates and rising energy costs, and based on these historical standards. As you can see, there was absolutely no bullish enthusiasm in the first half of 2006. The S&P500 was up 1.8% for the year on June 30, 2006 and the NASDAQ was down 1.5%. It is also true there was no bearish enthusiasm. As indicated in the daily stock market report, the market was a meanderer during the first half of 2006 with a slight bearish bias.

Sell/avoid signals are now higher than 2003, 2004, and 2005, which is a testament to this historical phenomenon. The bear signals for the S&P400 and S&P600 on July 21, 2006 were the first signals since their October 25, 2002 bull signals, providing further evidence of this historical congruence. However, those bear signals were reversed into new bull signals after a few weeks of fluttering behavior.

The resiliency of this bull market is indeed impressive with war, inflationary pressures, and rising interest rates. Fundamentally, there is tremendous support for the bear. The meandering nature of this market is indeed impressive. A Quick-term Indicant shift to a bullish bias three weeks ago was even more impressive.

Until recently, the current Mid-term Bull has been surprisingly strong with weak fundamentals and the normal political threat of post-election-year traditions. The market was mixed in 2005 with some bearishness and bullishness in the broader indices. That lack of dynamic presidential post-election -year bearishness in 2005 imposes a historical need to induce bearishness in the first half of 2006. The aforementioned statement manifested. Fortunately, that expected bearishness was mild with a minor impact on the market’s position.

Keep in mind, the heart and soul of bullish seasonality (Nov-Jan) is historically bullish regardless of fundamental reason or political cycle. The market can find a cyclical bottom in this year’s mid-term election year since the heart and soul of bullish seasonality elevated the market right on cue. The market accommodated with typical bullishness from October 2005 through January 2006. As stated consistently since early October 2005, it would not be surprising for a nice rise during the heart and soul of bullish seasonality only to be followed with bearish expressions after January 2006. That configuration had been occurring until mid-August with some minor disruptive bullish spurts in nine of the last twenty-four weeks preceding mid-August 2006.

The heart and soul of bullish seasonality, ending January 31, 2006, demonstrated bullish normalcy. The market had been more or less a meanderer, but recently succumbed to bearish influences on both a fundamental basis and historical conformance basis; that is until three weeks ago. Since January 31, 2006, the S&P500 is up 2.4%, the NASDAQ is down 4.9%, and the Dow is up 5.5%. The S&P500 had been in negative territory most of the year until three weeks ago.

The heart and soul of bullish seasonality, which ended on January 31, 2006 produced gains of 2.8%, 4.2%, and 7.2% for the Dow, S&P500, and NASDAQ, respectively. Historical standards suggest those gains will be wiped out before October of this year. As you can see from the aforementioned paragraph, this mid-term election year had wiped out the NASDAQ’s gains from the heart and soul of bullish seasonality. As stated most of this year, the market meandered with a slight bearish bias since the conclusion of the last period of the heart and soul of bullish seasonality.

The Dow30 found bottom in the last presidential mid-term election year on October 9, 2002 at 7,286.27. The NASDAQ found bottom on the same day at 1114.11. Finding cyclical bottoms in mid-term election years is common. The Dow is up 57.3% from the last mid-term presidential election year bottom. The NASDAQ is up 96.9% since October 9, 2002. The S&P600, small caps, is up even more by 116.6% since October 9, 2002.

The NASDAQ is down 56.6% from its historical high of 5048.62 on March 9, 2000. The Dow is down 2.2% from its historical high of 11723 on January 13, 2000. The S&P500 is down 14.2% since its all time high of March 23, 2000. So far, the new century, 2000 inclusive, has not been kind to long-term investors. Historical standards suggest the NASDAQ will not return to historical high until 2025 or so. A 2000 buyer and holder will not be back to break-even until then, assuming zero inflation. Including inflation, a thirty-year-old investor will be in his or her eighties before the NASDAQ profits from 2000 investment dollars.

For example, the Dow fell 4.4% from January 31, 2004 through October 31, 2004. The NASDAQ fell by the same amount. The Dow fell 0.5% from January 31, 2005 through October 31, 2005, while the NASDAQ was up only 2.8%. Since January 31, 2006, the Dow is up 5.5% and the NASDAQ is down 4.9%. Right now, the major indices has offered the mid-term election year to find a bottom since it is now properly depressed since the last heart and soul of bullish seasonality concluded on January 31, 2006. The Quick-term Indicant is currently suggesting the mid-term election year bottom may be behind us.

Many of you recall how the market did not synchronize with the heart and soul of bullish seasonality from November 2002 through February 2003. December 2002 was the most bearish since 1931, but not nearly as dynamic as the 1931 bearish expression. After the asynchronous behavior in the November 2002 rolling third of the year, the market turned bullish in March 2003 and again did not synchronize with normal seasonality. The Mid-term Indicant continued signaling bull during bearish seasonality in 2003. The market continued moving north during that time, contrary to historical standards. As stated in most of 2004, bearish expressions on a Mid-term basis between May and October 2004 should not be surprising. That is exactly what occurred. The result was a meandering market with a slight bearish bias during most of 2004 and 2005 and the first third of 2006.

As stated since late October 2005 and early November 2005, do not be surprised at increasing quick-term and short-term bullish expressions in the immediate future, followed by increased bearish expressions early next year. That prognosis occurred with those expectations with the normal bullish cycle that began in October 2005. However, each bearish cycle since January 31, 2006 has been followed by a bullish response and thus the reason for a meandering conclusion. The market turned bearish as expected, although mild.

The magnitude of 2006 bearishness is not predictable. Simply wait for the various Indicant model’s advisement of bull/bear status, as forecasting the market is a waste of time. However, it is appropriate to anticipate fundamental shifts before they happen. Keep a close eye on the Fed. It can damage the underlying bull. Keep in mind, the bull market is in tact from both a Mid-term and Quick-term basis. The Indicant models are not sensitive to tradition or fundamentals. They simply read the market and find its directional propensity. Right now, that propensity remains a bull.

The Quick-term Indicant’s bearish bias most of this year was replaced with a bullish bias three weeks ago.

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

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

Stop Loss Management

The Mid-term Indicant recommends a stop loss of 5% on recent buys because of the Short-term Indicant’s continuing bear signal, the high probability of bearishness in the current political cycle, and threatening economic fundamentals.

Stock and Fund Update

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

Economic Conditions – Inflation, Currency, Interest Rates

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

As stated the past three weeks, interest rates appear to have peaked. The longer-term rates have moved from bearish to neutral in terms of stock market impact. Mortgage rates have fallen below their bullish red curve. The shorter-term rates appear to be shifting south, but have not yet crossed below their red bullish curves. Overall, there is an increasing probability of fundamental support for a bullish stock market in the upcoming pre-election year.

The U.S. Dollar remains weak, providing the Federal Reserve Board some latitude with interest rate reductions.

Oil prices have cooled recently, but not shifted to a cyclical reversal. They remain in neutral position. It will be extremely bullish for the stock market if this particular commodity stabilizes.

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

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 75.2% two-hundred and seventeen weeks ago since the MTI buy signal on April 13, 2001. Last week it closed up 303.2%. The current annualized growth rate since the April 13, 2001 buy signal is 55.5%. After falling sharply 63-weeks ago, it bounced north in 46-weeks of the past 63-weeks. This fund moved north the past three weeks, even though commodity prices, including gold have fallen.

Fidelity Gold, Fund #28, is up 43.4% since the Mid-term Indicant signaled buy on August 26, 2005. That annualizes to 42.1%. This fund should do well in the event this market turns into a 1970’s type of market. This fund moved north the past two weeks.

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 267.9% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 65.3%. This fund fell slightly last week after moving north the previous two weeks.

Vanguard Energy #18, VGENX, is up 172.7% (annualized at 49.9%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 129.6% (annualized at 46.7%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 127.2% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 41.2%. These energy related funds moved slightly to the south last week.

Investors in these funds are supporting a 1970’s type of market with high inflation and high oil prices. Energy and gold always do well during such times. Fundamental trends continue to support holding these, but there could be a new cycle developing.

These funds should do well even if the market turns extremely bearish. Continue to hold them until the Mid-term Indicant signals sell.

The SQI (Consolidated Short-term and Quick-term Indicant) model signaled buy for the GLD-ETF#11 on August 3, 2005. It is up 43.0% since then. It is annualized at 39.3%. This ETF continues to be bullishly biased. It moved mildly to the north the past two weeks.

The SQI signaled buy for ETF#03 – Energy and Natural Resources on March 26, 2003. It is up 162.8% (annualized at 46.7%). It fell sharply to the south last week along with the energy sector.

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

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

All ten major indices are bulls. They are up by an average of 17.5% since the Mid-term Indicant signaled bull an average of 73-weeks ago. That annualizes to 12.4%, which is down significantly from the past three years. This is due to the bear signals for the S&P400 and S&P600 Indexes on July 21, 2006, which had been receiving a bull signal since October 25, 2002. Those two indices endured some fluttering after the expiration of the tremendous bull leg that lasted nearly four years. A new bull leg is underway, but vulnerable to bearish ambition.

The Mid-term Indicant Dow Jones Industrial Average performance is now at $34,727,658. That beats buy and hold performance of $1,754,127 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $169,270. That beats buy and hold’s $126,417 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $183,504 that beats buy and hold’s $76,046 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 1,879.0%, 31.8%, and 141.3%, respectively, for these indices as of this past week.

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

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

Divergence versus Convergence

Divergent market behavior occurred last week with energy and inflation related securities moved mildly to the south and general equities moved solidly to the north. That is the exact opposite of the previous week, where energy/inflation securities moved solidly to the north and general equities moved mildly south. Last week’s configuration prompted a shift from an unusual neutral bias to a bullish bias. This configuration supports a meandering market but retaining a bullish bias.

Mid-term Indicant Positions - NASDAQ100 Stocks

Click here to see NASDAQ100 report card history.

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

Mid-term Indicant Positions - Dow Jones 30 Industrial Stocks

Click here to see Dow 30 report card history.

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

Mid-term Indicant Positions - Dow Jones 15 Utility Stocks

Click here to see Dow Utilities Report Card history.

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

Mid-term Indicant Positions - Indicant Selected Stocks

Click here to see Indicant Select Stock Report Card history.

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

Mid-term Indicant Positions - Mutual Funds

Click here to see Mutual Fund Report Card history.

The Mid-term Indicant signaling hold for ProFunds Ultra Short due, in part, to the Quick-term Indicant’s avoid signal of QQQQ. This fund is up 3.5% since the Mid-term Indicant signaled buy on June 2, 2006. It is annualizing at 13.9%. A rough plan suggests holding onto it through September. Detailed execution of its sell is when the Quick-term Indicant announces the bullish cycle that is incumbent to the heart and soul of bullish seasonality.

This fund moved to the south last week, as the market moved bullishly. As we near September, monitor the daily stock market report, as the Quick-term and Short-term Indicant models will indicate the market’s bias. They will announce the birth of the heart and soul of bullish seasonality. Detailed specific action will be displayed on the daily report and the Mid-term Indicant.

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

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

Long Term Indicant Positions - Dow Jones Industrial Average

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

The Dow is up 296.0% (annualized at 19.9%) since the Long-term Indicant signaled bull 774-weeks ago. Economic data is the primary influence on the Long-term Indicant. The recession, deflation, and inflation have not been strong enough to signal bear. A link to the Long-term Indicant is below:

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

Quick/Short-term Indicant Stock Market Report - Summary

Quick-term Red Bulls: Sixteen; supports bullish bias, with a continuing increase in bullish support.

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

Force Vectors: Bullish cycle is underway and lending support to sustainable bullishness.

Vector Pressure: Showing significant resistance to bearish dominance.

Long-term Hold Positions: Solidly safe.

Current Quick-term Bias: Bullish.

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

Profit Potential from Naked Options: Declining volatility and absence of obvious direction minimizes profit potential.

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

A new northerly moving Force Vector cycle is underway. Most of you recognize these cycles are quick, lasting on average from four to six days. The last two Force Vector downward cycles did not induce bearish aggressions. This is favorable to those of you who desire a bullish stock market. The market is now mired in historical deep bearish seasonality. There is plenty of time for it to exerts its wrath on the market, but configurations support little to no deep bearish seasonal configurations like those that occurred in 2000, 2001, 2002, 2004, and 2005. The heart and soul of bullish seasonality immediately follows deep bearish seasonality. Configurations, right now, support an early arrival to the heart and soul of bullish seasonality, which would then lead into the normally bullish presidential pre-election year.

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

Nothing new here. As stated the past several days, passive volume has not been supportive of either bullish or bearish direction. The configurations, though, support a solid bullish cycle during the heart and soul of bullish seasonality, which is due in a few weeks. Both Indicant Volume Indicator’s continue lethargically. This configuration supports your longer-term hold positions. Overall, the support continues to be directed at a meandering market.

The Dow Jones Industrial Average is up 6.6% since the Short-term Indicant signaled bear on February 8, 2006. The NASDAQ is down 3.1% since the Short-term Indicant signaled bear February 3, 2006. The Short-term Indicant for the two major indices is no longer bearishly biased, as of August 15, 2006. However, the Short-term Indicant is still unable to signal bull for these two major indices in the face of impending deep bearish seasonality. This is factored into some buy/sell signaling for some stocks, which correlates to seasonal behavior. Click here to see the Short-term Indicant’s history.

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

There was one buy signal and no sell signals. In addition to the buy signal, the SQI is signaling hold for 22-ETF’s. They are up 49.8% (annualized at 24.2%) since their respective buy signals an average of 105.9-weeks ago. Although there were no sell signals, the SQI is avoiding seven ETF’s. They are up by an average of 4.0% since their sell signals an average of 12.2-weeks ago.

Short-term Indicant Report Card, Status, and Charts

There were no buy signals and no sell signals. Although there were no buy signals, the Short-term Indicant is signaling hold for 29-ETF’s. They are up an average of 50.4% (annualized 33.7%) since the STI signaled, buy, an average of 77.0-weeks ago. Although there were no sell signals, the Short-term Indicant is avoiding one ETF. It is down 1.7% since its sell signal 26.0-weeks ago.

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

Quick-term Report Card, Status, and Charts

There were two buy signals and no sell signals. In addition to the buy signals, the Quick-term Indicant is signaling hold for 21-ETF’s. They are up by an average of 14.6% (annualized at 30.5%) since the QTI signaled buy an average of 24.5-weeks ago. Although there were no sell signals, the Quick-term Indicant is avoiding seven ETF’s. They are up 2.5% since their respective sell signals an average of 11.9-weeks ago.

Conflicts Between the Short-term and Quick-term Indicants

Unanimous bullish consensus between the Short-term Indicant and the Quick-term Indicant remains absent. However, a bullish majority prevails, albeit weak. There are ten conflicts, where the Short-term Indicant and the Quick-term Indicant are in disagreement between hold and avoid status. This is typical of meandering behavior. The bias shift on August 15, 2006 remains in favor of the bull. The various configurations barely support a bullish bias.

There remains a conflict in market direction. There are seventy-nine total hold signals out of a possible 90, while there are only nine avoid signals. This ratio supports the life of the bull. The pronounced bearish bias that pervaded the market most of the year is no longer present.

Quick-term Indicant Bull/Bear Health Report

The Quick-term Bull is now showing strength, contrary to its weakening since early February. None of the 30-ETF’s are below their bearish yellow curves. The average position of all thirty ETF’s is above bearish yellow by 6.8%, which is down significantly the past several months, but up from the past several days, highlighting an increased bullish bias.

Sixteen ETF’s are above their respective bullish red curves. The good news is that it is difficult for the market to crash as long as just one non-contrarian ETF is a red bull.

All thirty ETF average positions are 0.4% above their bullish red curves. After seventy-seven consecutive trading days with average relative position to bullish red was negative, that average is now positive and thus the continuation of the bias shift in favor of the bull on August 15, 2006. The non-bullish configuration perished on Friday, September 1.

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

The Short-term Bull for ETF’s, although not expired, remain severely weakened. Three of the 30-ETF’s are contacting their breakout lines, which is up by one from last Thursday. This still supports an increase in the probability sustainable bullish breakout, although minimal.

The average distance from breakout contact is 6.1%, which is not a great distance to take.

The average distance from the price and breakdown is 17.7%. Although down significantly the past several months, this configuration still provides non-bearish support. The probability of immediate contact remains low and thus a non-bearish bias is maintained on a short-term basis.

Although the non-bearish baseline (yellow) can rise in a declining market, keep in mind that a 17.7% drop would leave early 2003 buyers in healthy hold positions, while new in-the-market-money would be painful to hold.

ETF Force Vector Configurations

Twenty-seven of the ETF Force Vectors remains in bullish domains, which is up by twenty-one from last week. This is a testament to a renewing bullish cycle on a Quick-term Indicant basis.

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

ETF Force Vectors/Vector Pressure Crossings/Option Signals

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

Click this sentence for Vector Pressure Option Signals. Again, there were no option buy signal.

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

Quick-term and Short-term Indicant Summary

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

The Quick-term Bull remains in tact with a mild increase in probability of strengthening.

ProFunds Ultra Short mutual fund moves inversely to the QQQQ by exponential amounts. The Consolidated Indicant model is avoiding QQQQ, which supports holding contrarian fund, ProFunds Ultra Short. As stated on August 16, 2006, you may want to sell this fund, given the increasing bullish bias by the various Quick/Short-term Indicant models. The Mid-term Indicant signaled buy for ProFunds Ultra Short after the market close on June 2, 2006. The Consolidated model has yet to signal buy for QQQQ, due to an uncooperative Quick-term Indicant. Continued holding of the ProFunds Ultra Short is increasingly risking your current profit position. The Mid-term Indicant did not signal sell the past three weekends due to the Quick-term Indicant’s continued avoid signal.

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

Quick-term ETF Options

Quick-term Indicant for ETF’s

Short-term Indicant for ETF’s

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

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

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

Short-term Indicant for DJIA and NASDAQ

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

Short-term Indicant Table for the NASDAQ Composite Index

Indicant Volume Indicator

Indicant Conclusion

Deep bearish seasonality remains a threat to the stock market. The recent Quick-term and Short-term Indicant shifted from bearish to bullish on August 15, 2006 after being bearishly biased from most of the year. After shifting to neutral two weeks ago, which is unusual, the market shifted back to bullish bias last week. The Quick-term Indicant had been signaling a bearish bias from February until mid-August.

The market completed the first week of deep bearish seasonality with a resounding bullish expression. The Quick-term Indicant is not showing support for the historical standard of deep bearish seasonality. There is time for deep bearish seasonality to exert its influence on the market, as its duration approximates eight weeks.

Read your daily stock market reports, as the Quick-term Indicant attributes can shift quickly.

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

The daily updates are on the following link.

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

Hyperlinks

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

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

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

Happy Investing,

www.indicant.net

09/03/06