The Indicant Stock Market Report

Jul 18, 2010 Indicant Weekly Stock Market Report

Volume 07, Issue 03 ISSN 1526 6516 © The Indicant Stock Market Report

Drones, Paupers, Naysayers, and Congress

There was a time, when so-called responsible television media applied candid camera concepts to members of Congress. The television producers of shows, such as Sixty-Minutes, Dateline, and 20-20, would sneak around Fortune 500 seminars and workshops with congressional representatives in attendance.

The cameras revealed the congressional representatives would attend the workshop sessions from about 9:00 AM until 9:30 AM. After that, they spent the rest of the day on the golf course or chumming around town and living a tension-free lifestyle.

These television shows were gleeful at their “catching them in the act” productions. They took it a step further. The script of the last segment of these shows would question the congressional representatives’ whereabouts during their attendance at seminars and workshops. After listening to the congressional representatives lie for a few moments, the television hosts would then show them the film footage of their gallivanting around on the golf course or chasing women at the local pubs and whatnot.

It was always enjoyable watching congressional representatives stammer and stutter when confronted with facts that denied their lies. That is always indeed a very pleasurable event to observe. Some of you can spot it all time, even today, without candid camera trickiness. Unfortunately, most among the contemporary mass of voters cannot detect the lies of politicians.

Since this sort of television exposure, of which most occurred during the 1990’s, Congress has tightened up the rules. They are no longer allowed to gallivant around on the taxpayer’s dime; at least not in the U.S.A., (They now charter planes to get out of the U.S.A. for such shenanigans). They indeed enjoy the good live, while their constituent paupers continue voting for them. Rest assured their paupers are going to get poorer over time for doing so, but a pauper is a pauper and for good reason. They are generally stupid, which is prerequisite for being a pauper.

Paupers and drones are going to continue voting for bad people. Drones are those who have developed an intellectual linkage to verbiage. In other words, they tend to believe in the spoken word by someone who they perceive as powerful; especially, if it has no real meaning, such as “the only thing we have to fear is fear itself.” This allows the drone to apply a personal spin on it, offering a “feel good” moment at their perceived intellectual expansion that offsets their negativity that is associated with their lack of being productive. They tend to gravitate toward so-called intellectual expression, as opposed to productive output. Some of you have seen and heard them. Listening to them is a very difficult thing to do. You can almost see the air in their brains. It does not take much imagination to do so.

Paupers have their hand out. Their congressional representatives line their pocketbooks with just enough to keep the pauper living in the comforts expected by the pauper. Doing this requires “political” taking from the productive so they can “buy the votes of the non-productive.” The sham seems to working just fine in contemporary societies around the world.

Politicians have little to offer to the productive. There is an inherent conflict. Even the contemporary politician express difficulty finding a way to appeal to the ones he is planning to rob. So, they continue bantering around the idea of “giving” where that word has profound appeal to an ever increasing number of people. That generally reassures their reelection.

In the last two major elections in the U.S., 2006 and 2008, drones and paupers were the majority. As long as they are allowed to vote, the population of drones and paupers will continue to increase. Their excessive idle time lends itself to more breeding. As their numbers increase, the democracy and republic of the United States will continue to erode in terms of the quality of life. That is bearish. This is one reason why the S&P500 is down so far this century. All the major indices are down so far this century. The major indices are reflecting the quality of life. It has started a long and steady decline, right along with the stock market.

Now back to the Congressional shenanigans. The stock market was bullish when congressional representatives were fooling around in the 1990’s. Those television shows, albeit very entertaining and enjoyable, did all of us a disservice in the 1990’s. That resulted in more hard work for Congress. The harder they work the less likely a sustainable stock market bull will manifest. Everything Congress accomplishes has significant nay-saying elements. That is bearish. It always has been and always will be.

Naysayers are increasing in numbers. Those pitiful souls do nothing constructive. All they do is view something that is and then denounce it. Union members are a subset of all three classes; paupers, drones, and naysayers. Unionism is making a comeback, funded by the United States government (your taxes). That is bearish.

Paupers, naysayers, and drones are increasing in voting numbers. They are the ones your elected representatives represent. That is bearish. If you are productive, then you are not being represented. Being productive means you provide a service or product of appeal in a competitive market place. If you are not doing that, then you are not productive. If more than 50% of the voting population is not productive, then do not expect a sustainable stock market bull.

If status quo prevails in the upcoming November elections, the normally bullish post election year of 2011 will most likely be non-conforming to historical standards.

Congress passed financial reform late last week. Here they go again. Most of you noticed solid bearish expressions shortly followed. Cap and trade is up next. That will also be bearish, if passed. It will be interesting to see, what they will come up with next. Rest assured it will be bearish.

Keep your eye on the daily stock market report.

Weekly Buy/Sell Summary – Stocks and Funds – Mid-term Indicant

Click this sentence for a graphical summary of what follows. Simply scroll down the page to see graphical and detail content of this section.

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

The Mid-term Indicant is signaling hold for 138 of the 333-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 44.5%. That annualizes to 37.7%. The Mid-term Indicant has been signaling hold for these 138-stocks and funds for an average of 61.2-weeks.

The Mid-term Indicant is avoiding 178-stocks and funds of 333- tracked by the Indicant. The avoided stocks and funds are down an average of 22.0% since the Mid-term Indicant signaled sell an average of 54.8-weeks ago.

One year ago, on Jul 17, 2009, the Mid-term Indicant was holding only 26-stocks and funds out of 332 tracked for an average of 98.7-weeks. They were up by an average of 119.0% (annualized at 62.7%). There were 290-avoided stocks and funds at that time. The avoided stocks and funds were down an average of 25.2% since their respective sell signals an average of 54.7-weeks earlier one year ago. Several stocks were identified as NLT, no longer traded, at this time one year ago. They will be replaced with new securities before the end of this year.

The Mid-term Indicant was signaling hold for 79-stocks and funds of the 345-tracked two years ago on Jul 18, 2008. They were up by an average of 255.1% (annualized at 70.6%) since their respective buy signals an average of 187.9-weeks earlier. The Mid-term Indicant was avoiding 263-stocks and funds at that time. They were down an average of 13.1% since their respective sell signals an average of 20.6-weeks earlier. There were 79-sell signals on this weekend and the two prior weekends in 2008.

There were 307-stocks and funds with hold signals on Jul 13, 2007 since their buy signals an average of 112.1-weeks earlier. They were up by an average of 145.0% (annualized at 67.3%). There were 37-avoided stocks and funds at that time. They were down by an average of 8.3% from their respective sell signals an average of 28.1-weeks earlier.

On Jul 14, 2006, the Mid-term Indicant was signaling hold for 177-stocks and funds out of 345-tracked. They were up by an average of 156.0% (annualized at 67.2%) since their buy signals an average of 120.7-weeks earlier. The Mid-term Indicant was avoiding 143-stocks and funds at that time. They were down by an average of 8.2% since their sell signals an average of 16.8-weeks earlier.

Five years ago, on Jul 15, 2005, there were 203-hold signals for stocks and funds out of the 320 tracked by the Mid-term Indicant at that time. They were up an average of 107.9% (annualized at 59.8%) since their respective buy signals an average of 93.8-weeks earlier. There were 97-avoided stocks and funds then. They were down an average of 6.2% since their respective sell signals an average of 16.5-weeks earlier.

On Jul 16, 2004, there were 212-stocks and funds with hold signals from the listing of 296-tracked by the Mid-term Indicant at that time. They were up an average of 79.1%, annualizing at 69.0%, since their respective buy signals an average of 45.0-weeks earlier. There were 50-avoided stocks and funds then. They were down by an average of 29.2% since their sell signals an average of 45.0-weeks earlier.

There were 277-stocks and funds with hold signals on Jul 18, 2003. They were up by an average of 44.4%, annualizing at 93.2%, since their buy signals 24.8-weeks earlier. The 13-avoided stocks and funds were down an average of 28.1% since their respective sell signals an average of 29.6-weeks earlier.

On Jul 19, 2002, there were 39-stocks and funds with a hold signal, enjoying a 38.4% gain since their respective buy signals an average of 44.4-weeks earlier. That annualized at 45.0%. There were 241-avoided stocks at that time. They were down 27.7% since their sell signals an average of 10.4-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.

Click this link to this week’s buy and sell signals.

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. Socio-economic interference can devastate your holdings from time to time. Governmental and political behavior can have immediate and long-lasting unfavorable influences on the capital markets.

Some companies will perform well, regardless of the depth of the bear market. Buy signals will be muted if Congressional action threatens the capital markets. Legislation, regulation, and politicians are the biggest threat to the stock market bull.

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

Comments about Mid-term Indicant Buy and Sell Signals This Weekend

As stated last week, the Long-term and Mid-term attributes have partially succumbed to the stock market bear’s ambition. There are elements of resistance; especially in the mid-caps and small caps. They are usually the last to succumb. So far, they continue resisting the bear on a mid-term basis.

The Dow Utilities shifted in favor of the bear on a Mid-term basis in early Feb 2010. The S&P100 Index received a Mid-term Bear signal on Jun 4, 2010. The S&P500 and the DJIA also shifted to bearish bias on a mid-term basis on Jul 2, 2010. Several stocks and funds also succumbed on Jul 2, 2010. Many of them reversing “reluctant buy signals” earlier this year and last year, as the 2009 bull market was configured as a “sucker rally.”

Although the market was aggressively bearish this past Friday, bullish behavior earlier last week resulted in a mildly bearish week. This overall result did not trigger sell signals, even though the Short-term Indicant is solidly favoring strong bearish bias. The Mid-term Indicant does not react to Short-term conditions. Most Mid-term stocks, funds, and indices remain above their bearish yellow curves and thus offering significant resistance values against a bearish onslaught.

Click the following link that will take you to the Near-term, Quick-term, and Short-term Indicant models.

http://www.indicant.net/Members/Updates/STI-Mkts/STI-10-Indices/STI08.htm

Stop Loss Management

The Mid-term Indicant recommends a trailing stop loss of 5% for holds with less than a 20%-unrealized gain. For your longer-term holdings where you are enjoying triple and quadruple digit gains, you may want to set your stop at the bearish yellow price.

Floor traders are aware of stop loss positions. If prices near those stop losses against the grain of directional bias, the floor traders will drive the price down to those stop losses and then buy for themselves and then quickly sell for profits at your expense. Although seemingly immoral, it is the nature of free markets and contributes to the desired liquidity of stock markets. This is one reason why stop losses should be well below prevailing prices but well above your buy price. That perfection, of course, is not attainable shortly after buying, which is the most dangerous period for holding. Use the Blue and Green curves or a combination thereof for stop loss management shortly after buying.

Long after a successful buy, monitor prices relative to the bearish yellow curve. That will minimize the number of trades, while protecting portfolio values.

For new buys, set stop losses at the blue or green values in the tables. If green is deeply lagging the prevailing price, you may want to average the blue and green prices for your stop losses. If the green curve is rising, set the stop loss just below it. Green is a common bouncing point. Consider a stop loss a percentage below its value. Once green passes above your buy price, then adjust your stop losses, periodically, say weekly, at or just below green. Once yellow passes above your buy price, you may want to set the stop loss at the yellow price. That is a good tactic when longer-term holding positions are supported with expected fundamentals and your enjoyment of owning a piece of a great company or fund.

If your stop loss triggered sell, while Indicant continues signaling hold, normal advice would be to buy again. However, if the Near-term Indicant is signaling bear/avoid, it is better to wait for specific buy signals from the Mid-term Indicant. In other words, other opportunities will be presented.

The ETF’s are signaled on the Near-term, Quick-term, and Short-term Indicant and are updated daily. These shorter-term models attempt participation in significant bullish spurts and rallies, while the Mid-term Indicant is focused on fundamentals and longer-term technical data.

The Indicant Stock Market Report’s Secular Market Blend

The Dow is up 38.6% since its secular weekly low on October 9, 2002. The NASDAQ is up 95.6% and the S&P500 is up 37.1% since then. The small cap index, S&P600, is up 92.7% since October 9, 2002. All of the major indices were at new lows on the same week in 2002, which is a common attribute for bottoming. That will again be an attribute to monitor in coming months if the stock market moves bearishly by significant amounts.

The NASDAQ is down 56.8% since its last weekly secular peak on March 9, 2000. The S&P500 is down 30.3% since its similar secular peak on March 23, 2000. The Dow is down by 13.9% since January 13, 2000 when it peaked from the 1990’s roaring bull. As stated the past several years in this report, do not be surprised at the NASDAQ equaling its March 9, 2000 high until after 2025.

As socialism increases, the NASDAQ may not hit its 2000 peak until after 2050. Even that depends on resurgence in entrepreneurialism and related capitalism. Politicians screwed up the economy and the majority apparently believed their proposed fixes in the 2006 congressional and 2008 presidential elections. All democracies eventually fail by virtue of tyranny of a stupid majority. We may be witnessing the early stages of that phenomenon, although recent events are suggesting resistance against the lazy brains of the 2006 and 2008 majority. More will be learned in Nov 2010. If the majority has their hands out, the markets will continue in their secular decline, using the pivot year of 2000. Since 2000, the capital markets are down. They will continue moving down if the majority has their hands out to their respective governments.

Politicians are now attempting to impose more constraints on business expansion and thus the continuation of wealth destruction should not be surprising. Politicians have deemed obsolete the normal efficiencies of capitalistic cleansing of the incompetent. That will wear down the capital markets as politicians continue their neurotic desires to expand their influence and control. Those leeches will eventually kill their host, but like all leeches, they continue on sucking away.

The NASDAQ year-to-date performance was bearish by 17.9% through this week in 2001. The NASDAQ finished 2001 down by 21.1%, which was congruent with standards of post-election-year-bearishness.

The NASDAQ was down by 29.5% through this weekend in 2002. Some of you recall the dynamic bear market in 2002, where the NASDAQ finished that year down by 31.5%. The NASDAQ stock market bear cycle found bottom in October 2002, which was consistent with the mid-term year’s historical standards of finding bottoms in mid-term election years.

The NASDAQ YTD 2003 performance was up by 30.9%. It finished up in that solidly bullish year by 50.0%, which was consistent with historical pre-election year results. It was down on this weekend in 2004 by 6.0% and finished up by 8.6% for that year, which was congruent with election year bullishness, although shy of magnitude standards.

It was down 0.9% in 2005’s post election year, which was consistent with historical standards of losses and/or minimal gains. Many of you recall that 2004 and 2005 were meandering bear markets. The post election year of 2005 finished up by a mere 1.4%, which was an excellent year, based on post election year historical standards of bearishness.

In 2006, the NASDAQ was down 7.6% on this weekend and finished that year with a 9.5%-gain, which again maintained congruency of historical bullishness for a mid-term election year. It was up by 11.7% at this time in 2007 and finished that year in positive territory by 9.8%, which was consistent with pre-election year bullishness.

The NASDAQ was down by 13.9% on this weekend in 2008. It finished down by 40.5% in 2008. That was extreme contrarian performance to the standards of historical election year bullishness. It was the most bearish presidential election year since related records from 1832.

The NASDAQ was up 19.5% at this time last year. It finished 2009 up by 43.9% in extreme contrarian performance to historical standards. Keep in mind, this extraordinary bullish cycle in 2009 finished that year down by 20.6% from its prior Mid-term cyclical peak on October 31, 2007. Historians will view that extraordinary bullishness as a mere spurt (reverberation) from 2008’s severe bear market. The 2008 bear market more accurately reflected economic fundamentals than the 2009 bull market. Much of the 2009 bull market correlated well with declining political popularity.

The Dow was down 0.7% on this weekend last year but finished 2009 up by 18.1%. Although post election years are generally bearish, the Dow’s gain for 2009 was slightly below the average gain during years with post-election-year bullishness.

The Dow is down 28.7% since its last weekly closing peak on Oct 9, 2007. The NASDAQ is down 23.8% since its last peak on Oct 31, 2007. The S&P600-small cap index is down 26.1% since its last closing peak on Jul 19, 2007. Bull market expirations are not as obviating with simultaneous peaking like bear markets are with simultaneous bottoming among the major indices.

Most major indices last cyclical bottom occurred on March 9, 2009. That includes the four major Dow Indices, the NASDAQ and all of the major S&P Indices. The only exception is the NASDAQ100. It encountered its weekly bottom on November 20, 2008.

The current Near-term Bear cycle, originating during the weeks of May 9 and May 16, 2010, may not fall below the March 9, 2009 cyclical bottoms. Even with that, statistics supported by 100% confidence, suggest the Reverse Tangential Projections will occur at some future point. Those projections are above these cyclical bottoms, but well below prevailing prices.

Although exact simultaneous bottoming did not occur on March 9, 2009, tracking from that pivot-point has been and will continue to be appropriate. This inexactness lends credence to the reverse tangential projections with short-term view, albeit mildly so. Consequently, March 9, 2009 is the pivot date to monitor performance since the March 2009 bottoming from the 2007-2008 bear cycle.

The Dow is up 54.2% since March 9, 2009. The NASDAQ is up 71.8% and the S&P500 is up 57.4% since then. The S&P600, Small Cap Index, is up 81.0% since March 9, 2009. That March 2009-January 2010 bull leg was indeed powerful, but such cycles have occurred many times in the past only to be followed by bear cycles of varying breadth and depth. The Mid-term Indicant is now suggesting impending bearishness, while the Short-term Indicant remains solidly bearish.

Stock market corrections after such a rise do not need too much of an excuse to meander or even worse. Governments around the world, with the exception of China and possibly Japan, have borrowed too far ahead of real wealth creation. Monetary policies by those “fat governments” will not come from within, but with the harsh reality of their repeated impositions to real wealth creation. There is an upper limit to leech consumption, relative to the capacity for leeched items. Reality exerts itself without regard to its harshness or failing attempts by intellectuals, whose “real contribution/worth” is closer to zilch. The problem with leeches is their incessant desire to expand their capacity to do so.

Keep your eye on the daily stock market report.

Economic Conditions – Inflation, Currency, Interest Rates

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

Most of the hard economic data such as, interest rates, commodities, and currency exchange rates continue holding relatively constant. The discount rate is no longer a yellow bear. It is attempting a “technical U-turn” from the depths of its prior fall. It is now a Red Bull, albeit a depressed one. The sinusoidal waves suggests interest rates are anxious to start rising again. They are doing so in China. You should notice a subtle incline on CD rates. However, they dropped significantly last week. It will not be a smooth ride, as the Fed will endure conflicting policies between deflation and inflation in the coming months/years.

Keep in mind that the combination of high interest rates and inflation or deflation exceeding an absolute value of 8% has a history of being extremely bearish for both the stock market and the economy. Currently, that is not a threat when considering the United States as a single parameter. The world economy, on the other hand, is shaping a new dynamic.

Some prognosticate a future with deflation. The combination of prevailing interest rates and the absolute value of inflation/deflation exceeding eight percent produce very aggressive and deep stock market bears. At least that is the history. It does not matter which projection is accurate with respect to the stock market. Inflation or deflation, coupled to interest rates, exceeding the limits of tolerance will induce a stock market bear. Current levels of those tolerances remain safe in U.S. terms. Becoming trickier are the international parameters.

Evolving as a force are monetary policies of foreign governments. Projecting the U.S. Fed’s position is becoming a bit more complicated. These projections must now include China and even more recently, that of Europe. Economic leeches around the world continue draining the productive. At some point that will result in unmanageable disproportions between the productive and the non-productive. History suggests this is generally addressed by varying levels of civil discourse. That is usually bearish, depending on location and severity. You have recently witnessed civil discourse in Greece. The question is, how much will this spread? Also, what new political mumbo-jumbo leaders will evolve from such crises? Such crises typically propel militant sort of folks to the top of the political heap. This typically leads to war, which is ultimately bullish, albeit painful, and depending on the winning side.

Some short-term rates, which had been nudging north the past few weeks, paused last week. All major cycles, regardless of subject, begin with subtle movements in their favorable or unfavorable future paths. Sometimes there is nothing to it, but sometimes it is that point where one’s hindsight indicates the optimum point in time where one would have enjoyed taking profit-concluding action.

This paragraph remains as a serious threat. The “political design” to prevent massive economic chaos remains ineffective. The Fed can do little for economic stimulation. Interest rates cannot go much lower. If the economy cools even more, the Fed’s contribution to solutions is limited. In essence, the Fed has laid all its cards on the table. Rest assured the Fed would take every opportunity to enhance its position to influence economic activity. In essence, interest rates will be quick to rise when economic recovery is perceived as real and sustainable. This is one reason why the dollar has been strengthening lately. The Fed backed that up with a hike in the discount rate several weeks ago, but has since taken a “easing” position. Another reason for the dollar’s strengthening is the weakening of foreign currencies. It is not based on the dollar’s merit, but based on European incompetence, laziness, stupidity, and a continuation on stringent controls in the class system. The parasitical elite will maintain their status, regardless of consequence. Eventually, that consequence does not bode well for them and their offspring.

Oil prices continue vacillating in a range the Saudi Kingdom finds comfortable. As stated for over a year, the kingdom continues asserting its leadership and regulating supplies to demands that will result in approximately $80/bbl for a lengthy period. Of course, normal human greed will occur and the result will be military action. Participants remain unknown, but most likely will begin with Israel and Iran, and concluding with the U.S. and Russia and possibly China. Any scenario is bullish for oil prices and bearish for the stock market from a longer-term perspective.

Several weeks ago, commodities began their elevation into the neutral zone from their bullish mini-cycle. Bearish yellow is now in a cyclical shift to the north, supporting a bullish cycle. However, they have been weakening the past few weeks, suggesting potential for a new bearish cycle. As earlier stated, a continuation of these configurations will eventually lead to inflation. Although commodity prices have weakened the past few weeks, their underlying Mid-term cyclical trend remains bullish. China’s credit tightening, coupled with expanding socialism in the West, is strategically bearish in the long-term for commodities and offering a bit of support to the prognosticators of deflation.

More recently, China is now expressing concerns regarding inflation. Commodity prices were rising, but that is against the trend for the time being. They have been taking it on the chin by the commodity bear the past few weeks. Increasing commodity prices will pressure rates more to the north. That will be non-bullish. Commodity prices appear to be stabilizing a bit, but gold is now under somewhat of a short-term threat for bearish excursions.

Gold is obviously anticipating significant inflationary behavior with paper currencies. It is also buffering portfolios against governmental policies around the world and a related increase is various forms of terrorism, militia developments, etc. The Gold Bull was attacked by the Gold Bear the past few weeks due to, in part, to currency exchange rates and their recent volatility. Gold is encountering some near-term duress, while its long-term projections remain bullish.

A tremendous amount of paper currency has been added to circulation well ahead of the productive efforts normally required to support those levels. Inflation typically follows that sort of political behavior. Increased socialism will inherently reduce supply of products and services, while paper money in the hands of the incompetent and non-productive will increase demand. At some future point, an I-Pod sort of product may cost well over $10,000. Only the “established elite” will enjoy those sorts of possessions, while the masses will have to relearn the drumbeats from their primordial past. Once that nonsensicality has passed, deflation will most likely follow. Interestingly, 2009’s PPI decline was the largest since 1938. Scroll down when clicking the link in the previous sentence.

The stimulus package, which was similar to FDR’s, predictably did not work. If the economy stalls again, more debt will be needed for yet another non-working stimulus, based on the errant thinking of contemporary leadership. The only one that works is a tax cut. That allows money to be used at maximum efficiency; in your hands as opposed to some yawning government bureaucrat and their corrupt partners.

Gold was solidly bearish the past few weeks. Its Force Vector is depressed, suggesting potential for non-bearishness to bullishness for the next few days. The optimistic 2012 forecasted price of gold is holding at $1600 in spite of bearishness the past few days. The low cyclical forecast for gold is holding at $1300. The meandering forecast remains at $1100. There are no quantifications suggesting a long-term decline in the price of gold in spite of the mysticism guiding its value. However, its short-term attributes are under some duress at this time.

As stated 94-weeks ago, once the euphoria of the socialistic methods begin displaying its harsh reality on the resultant reduced quality of life, rest assured the bear market will continue and with gusto. This is not technical. This is fundamental. You will see that prognosis continuing in spite of the March 2009-January 2010 Bull Leg. That bullish spurt from late Feb through early May turned out to be a fake.

The above and below paragraphs may become obsolete, based on the mid-term elections this year. A high Congressional turnover should at the very least stalemate government; at best garnish enough veto overriding votes to repeal recent political stupidity.

As stated the past 46-weeks, on a positive note, it appears enough of the populace are influencing their political representatives to slow the progress of stupidity in spite of recent escapades by the stock market bear. If this happens, then bearish expectations of great magnitude will be muted. A measure of American voter stupidity will conclude in November 2010. The stock market may anticipate reduced stupidity and with that, the current bull market could continue through 2012, but recent political/leeching events suggest that is now unlikely. Regardless of long-term prognosis, there is nothing wrong in participating in the various bull legs, such as the one from March 2009 through May 2010.

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 was up 162.2% from its April 13, 2001 buy signal until the Mid-term Indicant sell signal on October 3, 2008. It is up 4.5% since the recent sell signal on Jul 2, 2010.

Fidelity Gold, Fund #28 received a buy signal on Sep 4, 2009. It is up 6.6% since then, annualizing at 7.5%.

Vanguard Energy #18, VGENX, was up 144.9% from since the Mid-term Indicant buy signal April 5, 2003 until its sell signal on October 3, 2008. It received a buy signal on July 31, 2009 but flat until the sell signal on Jul 2, 2010. It is up 5.1% since that sell signal.

Fidelity Energy Services #40, FSESX, was up 107.2% since the Mid-term Indicant signaled buy on December 6, 2003 until the next sell signal on October 3, 2008. The Mid-term Indicant signaled buy on Sep 18, 2009, but endured a sell signal on May 21, 2010 without generating much return in that cycle. It is down 1.8% since the May 21 sell signal.

State Street Research Global #9, SSGRX, was up 174.2% from its August 16, 2002 buy signal to the Mid-term Indicant sell on October 3, 2008. It was down 18.4% since that sell signal and the buy signal on January 8, 2010. The Mid-term Indicant signaled sell for this fund on Feb 12, 2010. It is down 14.1% since that sell signal. Although energy is an excellent long-term investment, cap and trade political threats and moratoriums on drilling in the U.S., coupled with the strengthening U.S. dollar may wreak more damage to this fund than previously computed.

Fidelity Energy #39, FSENX, was up 81.2% since the Mid-term Indicant signaled buy on August 16, 2003 and the sell signal on October 3, 2008. It disappointed on its recent buy signal and endured a sell signal on June 4, 2010. It is up 0.1% since the Jun 4, 2010 sell signal.

The Quick-term Indicant signaled, sell, for ETF#03 – Energy and Natural Resources on May 20, 2010. It is up 0.1% since then. It was up 242.4% (annualized at 44.8%) since the buy signal on March 26, 2003 until the September 2008 sell signal. It was mildly bearish between the Sep 2009 buy signal and the May 20, 2010 sell signal. The Near-term Indicant signaled sell for this ETF on May 7, 2010. It is down 5.5% since then.

The Quick-term Indicant signaled buy for the GLD-ETF#11 on December 11, 2008. It is up 44.7% since that buy signal, annualizing at 27.6%. It gained 81.4% from its August 3, 2005 buy signal until the September 8, 2008 sell signal. Its annualized gain during that hold period amounted to 27.1%. The Near-term Indicant signaled buy on April 24, 2009 and it gained 17.3% until its sell signal on Feb 4, 2010. It received a buy signal again from the Near-term Indicant on Mar 2, 2010. It is up 5.1% since that buy signal, annualizing at 13.5%.

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

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

The Mid-term Indicant signaled bull on July 31, 2009 for all ten major indices. Since then, the Mid-term Indicant signaled bear on Feb 12, 2010 for the Dow Utilities. It is up 3.6% since that bear signal. The S&P100 endured a Mid-term Bear signal on Jun 4, 2010. It is up 0.2% since the Jun 4 bear signal. The S&P500 and DJIA received Mid-term bear signals on Jul 2, 2010. They are up 4.2% and 4.1%, respectively, since that bear signal.

The six remaining major indices retaining bull signals are up by an average of 12.4% since there respective bull signals an average of 50.0-weeks ago. That annualizes at 12.9%.

The Mid-term Indicant Dow Jones Industrial Average performance is at $27,820,542. That beats buy and hold performance of $1,536,270 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $133,022. That beats buy and hold’s $104,308 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $198,574. That beats buy and hold’s $75,557 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 1710.9%, 27.5%, and 162.8%, 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 Mid-term Indicant model avoids bear markets. The only purpose of the Mid-term Indicant model is to avoid the bear markets. That is why it beat buy and hold by approximately 2,000% covering the past 100+ years. It will not be surprising to see the Mid-term Indicant outperform buy and hold by over 3,000% before the end of this decade. If the market remains bullish during this time, we’ll eat crow. It needs bears to outperform. That opportunity may now be manifesting with the bear signals for the DJIA and S&P500. However, the Mid-term Indicant has not yet signaled bear for the NASDAQ and thus holding the same performance ratio of 162.8%, while the DJIA and S&P500 performance worsened on last week’s bullish spurt.

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

Mid-term Indicant Positions - NASDAQ100 Stocks

Click here to see NASDAQ100 report card history.

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

Mid-term Indicant Positions - Dow Jones 30 Industrial Stocks

Click here to see Dow 30 report card history.

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

Mid-term Indicant Positions - Dow Jones 15 Utility Stocks

Click here to see Dow Utilities Report Card history.

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

Mid-term Indicant Positions - Indicant Selected Stocks

Click here to see Indicant Select Stock Report Card history.

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

Mid-term Indicant Positions - Mutual Funds

Click here to see Mutual Fund Report Card history.

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

The Mid-term Indicant signaled sell for ProFunds Ultra Short on April 3, 2009. It is down 56.8% since then. It will receive a buy signal only if the Quick-term Indicant signals buy for QID, which occurred earlier this past week. The Mid-term Indicant could not justify a buy signal this weekend due to the bullish spurt behavior by the stock market two weeks ago. Although this is classically a post-election-year hold, the Mid-term Indicant was unable to signal buy in 2009. The Short-term Bull displayed attributes of a thoroughbred in 2009 and thus no opportunities were available to shorting the stock market since the April 3, 2009 sell signal. It is getting close, though.

Click here for Mid-term Indicant Table of Mutual Funds

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 248.8% (annualized at 13.3%) since the Long-term Indicant signaled bull 976-weeks ago. Economic data is the primary influence on the Long-term Indicant. Recessions, deflation, inflation, and unreasonable interest rates have not been strong enough to signal bear since that bull signal, including relative performance since that bull signal. Even with today’s economy and stock market position, the 1991 investor is still up triple digit amounts, which remains above average performance when considering long-term planning.

Influencing parameters in the LTI include prior bull cycles. The great bull market in the 1990’s was powerful enough to offset the 2008-2009 recessionary bear market in this long-term modeling.

The Short-term Indicant Stock Market Report

The Indicant website maintains the last twelve months of daily reports on an annual basis. These weekly reports are maintained on the website for much longer periods. Beginning in March 2006, the daily stock market report for the last trading day of each week is included in this weekly report. This allows web-based retention records of the daily report for much longer than the last twelve months. This report is in the next section and a mere repeat of the daily report you received on the last trading day of the week, which is usually on Friday evening.

Short-term Indicant Stock Market Report - Summary

Configurations are indicating expiration of bullish spurt support. Most short-term attributes remain in support of the bear. Force is nearing maximum values. If they retreat, the bear should resume dominance. If not, the short-term bearish theme will become obsolete. As you can see, the stock market bull is valiantly resisting the bear, but consuming significant energy. Configurations suggest little hope for the bull to overcome the bear. Today’s bearish aggression will be more inspirational to the bear, than invigorating the bull. Do not be surprised at continuing bearishness until prices interact with Green and/or Force Vector interaction with Pressure.

Near-term, Quick-term, Short-term Indicant Stock Market Details

The Near-term Indicant signaled no new bulls and no new bears.

The VIX is the lone NTI bull. It is up 15.1% since the bull signal 11.4-weeks ago. That annualizes at 68.6%.

The Near-term Indicant is signaling bear for the remaining eleven indices. They are down by an average of 4.6% since their bear signals an average of 10.0-weeks ago.

The Quick-term Indicant is signaling bull only for the VIX. It is up by 15.1%, annualizing at 68.6%, since the bull signal 11.4-weeks ago.

The Quick-term Indicant is signaling bear for eleven indices. They are up by an average of 2.3% since their bear signals an average of 6.1-weeks ago. Their recent bullishness remains configured as a bullish spurt and unsustainable.

Short-term Market Summary

Short-term attributes continue supporting the bear. The expected bullish bounce occurred two weeks ago and early this past week. As you saw with Friday’s bearish aggression, bullish spurt energy waned, as expected.

-Tangential Protection – None!

-Political Climate – Economic culprits, U.S. Congress, were hard at work this week. Their efforts delighted the bear, as they passed financial reform and continue barking irrational rhetoric.

-Reverse Tangential Bearish Detection – This phenomenon is worthy of closely monitoring, as we are now enduring a significant Near-term bearish cycle. The timing is unknown, but there is 100% confidence the major indices and ETF’s will eventually fall to those prices noted in the below link.

Click this sentence to the table, highlighting RTP’s (Reverse Tangential Projections). The values and magnitudes are expressed in the table on the website. Keep in mind there is 100% confidence in these bearish projections. The problem is not knowing when, but odds continue favoring it will occur in this bearish cycle. Political and historical cycles suggest this should manifest before the heart and soul of bullish seasonality this autumn. Much of this depends on political influences. There will be some unfavorable influences. There always is. The question is, when?

The Quick-term bearish yellow curve is no longer offering a point of resistance to bearish ambition even though the major indices are bouncing around it.

Click the Short-term Indicant to see the combined table of the Near-term Indicant, Quick-term, and Short-term Indicant. The table has links to charts for each. Each chart contains all three models and there are two separate buy and sell signals for the Near-term and/or Quick-term Indicant.

The tour is still being developed, but most of you are now familiar with the Near-term bull/bear cycles as well as the tangential protections and reverse tangential bearish detectors.

Indicant Volume Indicators

Volume indicators remain lethargic. Some of this lethargy is traced to seasonal behavior. The expiring robustness configured during solid bearish expressions during May and June. Therefore, volume relationships remain biased in favor of the bear. (Recent chronological observations are expressed below in reverse order).

Jul 16, 2010-Fri-Unseasonably aggressive volume on bearish aggression adds to bearish bias.

Jul 15, 2010-Thu-Same as yesterday.

Jul 14, 2010-Wed-Mild volume on flat behavior, although seasonal, suggests little interest in dynamic market behavior in either direction. However, bearish bias prevails.

Jul 13, 2010-Tue-Volume was up a bit on today’s bullish aggression, but not enough to suggest a bias shift.

Jul 12, 2010-Mon-Light volume continues. Bearish bias remains.

Jul 9, 2010-Fri-Light summertime volume on mild bullishness does very little to inspire a sustainable bullish cycle.

Short-term ETF Report Card, Status, and Charts

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

The Near-term Indicant is signaling hold for four ETF’s. They are up by an average of 8.1%, annualizing at 42.4%, since their buy signals an average of 10.0-weeks ago.

The NTI is avoiding 28-ETF’s. They are down an average of 3.8% since their sell signals an average of 8.1-weeks ago.

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

The Quick-term Indicant is signaling hold for four ETF’s. They are up an average of 21.2% since their buy signals an average of 36.5-weeks ago. Those with hold signals are annualizing at an average rate of 30.1%.

The Quick-term Indicant is avoiding 28-ETF’s. They are down by an average of 1.0% since their sell signals an average of 4.6-weeks ago.

Short-term Summary: As stated the past few days, the bear is too strong to delay sell signals in spite of the recent bullish spurt. As stated the past few days, the avoid signals from those sell signals may appear to some as a mistake, but current configurations continue suggesting there is no mistake.

Contrarian Funds

ETF#03-Natural Resources. The Near-term Indicant signaled sell on May 7, 2010. It is down 5.5% since that sell signal. The Quick-term Indicant signaled sell on May 20, 2010, as its price fell below QTI Bearish yellow curve. It is down 0.4% since the QTI sell signal. Vector Pressure remains in bearish domains, obviating solid bearishness. Its Force Vector is bullishly mature, suggesting non-bullishness on the immediate horizon. As stated last Thursday, Pressure and Force favor put options. It was down considerably on Friday. It is currently behaving as a non-contrarian, but historically it is contrarian.

ETF#11-Gold and Precious Metals is up 44.7% since the QTI signaled buy on December 11, 2008. Annualized growth is at 27.6%. Bearish yellow is a good price to set stop losses for a longer-term hold position, which is at $107.55 and still rising. Although Gold has been under dollar pressure, the QTI buy signal was at $80.65. So, that stop loss will generate over 20%-gain.

The Near-term Indicant signaled buy on Mar 2, 2010. It is up 5.1% since that buy signal, annualizing at 13.5%. It is under near-term cyclical pressure but as long as pressure is positive, the NTI will not signal sell. Force is moving mildly north in bearish domains and Pressure is moving south, but still in bullish domains. This combination is a bit threatening to the near-term hold cycle.

Click this sentence for additional charting and current forecasting of the actual price of gold.

As stated for the last year-plus months, gold remains fundamentally sound for long-term holding and a technical measure of authenticity in that assessment is in its bearish yellow curve. If it crosses below bearish yellow, you will not want to be holding. The Quick-term Indicant will advise of that potential when it occurs.

ETF#14-TLT-Long Government received a buy signal from both the Near-term and Quick-term Indicant models on Apr 27, 2010. It is up 10.5% since those buy signals, annualizing at 47.4%. This ETF is increasing its bullish attributes. It is usually contrarian to the overall stock market. As stated last Tuesday, call options are attractive for this fund. It is up by nearly $2.50 since then and has been profitable. It is below blue, but Pressure remains in bullish domains with rising Force. There is more upside potential.

The Near-term Indicant signaled buy for ETF#31-QID on Thursday, May 13, 2010. It is up 11.4% since then, annualizing at 64.2%. Short-term attributes are solidly favoring this hold and similar ETF’s that short the market. As stated last week, the bullish spurt will hurt it a bit, but continue holding.

The Quick-term Indicant signaled buy on July 6, 2010 for QID after avoiding it since March 26, 2009. It was down over 55.0% from the March 29, 2009 sell signal until the July 6, 2010 buy signal. Force Vector continues shifting to the south. It penetrated bearish domains a few days ago, but its cycle is mature and primed for recoil. There is room for a bit more bearishness, but not too much.

The Near-term Indicant signaled buy for ETF#32-VXX on Jul 14, 2010. It is up 5.6% since that buy signal, annualizing at 999.6%. It’s Force Vector matched a prior minimum on Jul 14, 2010 and now rising with positive (bullish) Pressure. That is bullish. The right hand chart suggests cyclical minimums are at or very near bottom. This ETN should perform bullishly on stock market bearishness. It monitors short-term VIX futures. The VIX is generally contrarian on short cycles, while its longer term trends can march to its own drum beat, depending on call/put ratios.

Major ETF Events

Jul 16, 2010-Fri-Unseasonably high volume, coupled with bearish aggression, supports an eventual manifestation of dynamic bearishness.

Jul 15, 2010-Thu-The stock market was mainly bearish most of the day, but finished in bullish mode. That does not suggest a return of bullish dominance.

Jul 14, 2010-Wed-Today’s flat stock market behavior is supported by extreme attribute positions, where meandering or cyclical redirection quite often unfolds.

Jul 13, 2010-Tue-Most Force Vectors are at a max, which is the opposite of their minimums that led to the recent bullish spurt. If they do not retreat, the bearish theme contained herein will become obsolete.

Jul 12, 2010-Mon-Most Force Vectors are mature. Contrarians are in bearish domains and non-contrarians in bullish domains. This is minor convergence with Vector Pressure continue in favoring the bear.

Jul 9, 2010-Fri-Several Force Vectors crossed into bullish domains. There are a few more remaining before obviations of directional intensity manifest.

Current Strategy-Short-term Indicant- Jul 16, 2010-Fri-The bear finally growled and there is very little to suggest it will stop on the short-term horizon! Jul 15, 2010-Thu-Same! Jul 14, 2010-Wed-Same! Jul13, 2010-Tue-Same as yesterday. Jul 12, 2010-Mon-Configurations supporting the bullish spurt are configuring for expiration.

Click Quick-term Indicant, Near-term, and Short-term for all 31-ETF’s.