Feb 21, 2010
Indicant Weekly Stock Market Report
Volume 02, Issue 03 ISSN 1526 6516 © The
Indicant Stock Market Report
The
Economic Splatter Effect
As expected,
those who shorted the stock market during options expiration were punished
last week. The bull expressed significant dominance this past week,
contrary to expectations of flat behavior.
The bull’s
dominance last week was a bit unusual for options expiration week. Recent
behavior has demonstrated more flatness during options expiration week. In
the weeks leading up to last week, VIX call options were unusually high.
Wall Street needs to make money somehow and apparently the losses incurred
by short trading to February expirations and VIX buying accomplished that
end.
In other
words, last week’s bullishness should be viewed with some suspicion. If
Near-term Vector Pressure shifts back into bullish domains, then strike
out the previous sentence. Last week’s bullish behavior could entice more
money into the market and through the laws of supply and demand, more
short-term bullishness could be enjoyed.
The Mid-term
continues signaling bull for the major indices with the exception of the
pitifully performing Dow Utilities. The Quick-term Indicant, using more
technical metrics, also continues to signal hold for many of the ETF’s,
tracked daily. The Mid-term and Quick-term models are slower moving and do
not nervously react to stock market volatility. There is occasional
fluttering around certain attributes. This occurs when the bull and bear
are engaging in significant battles for dominance. That fluttering has not
yet begun, but the past six weeks suggests an increasing probability of
this sort of behavior.
The Near-term
Indicant continues to signal avoid for most of the ETF’s. That is not
unanimous, though, as a few “retail sector” ETF’s are continuing to enjoy
hold signals. For example,
ETF#27-XLP is up 26.8% since
the Near-term Indicant signaled buy on April 2, 2009.
ETF#29-XLY is up 20.6% since
the Near-term Indicant signaled buy on July 30, 2009. XLY endured one of
those early July sell signals and quickly followed with a buy signal. It
enjoyed double-digit gains, though from its April 2009 buy signal until
the July 2009 sell signal, though.
The current
Mid-term Bull, although remaining in tact, contains a basic element of
suspicion regarding its potential longevity. It lacks sector breadth. Long
lasting bull legs, spanning years, do not discriminate against poorly run
corporations. Poorly managed corporations typically enjoy increases in
their stock prices during the early stages of bullish formation. A common
attribute among these long lasting bull legs is the bullish aggression by
corporations with weakness in earnings.
The emotional
part of stock market investing includes a mantra that even companies
enduring weakness in earnings will gain in earnings through the dribble
down and spread around effects of economic expansion. This may be referred
to as economic splatter. Robust economies tend to expand to a point where
capacity becomes limiting to corporate growth. While the more successful
companies expand their capacity, the weaker companies gain some market
share and earnings during ahead of this expansion. The better-managed
corporations toy with their weaker competitors; even to the extent of
helping the weaklings subsist.
For example,
in 2005, Toyota raised prices to help General Motors. In effect, Toyota
promulgated a strategic move to prevent GM from bankruptcy five years ago.
The idea was to reduce Toyota’s market share gains with the hope that GM
could gain share from Toyota’s price increase.
Now that the
U.S. government owns GM, one can speculate what it costs taxpayers to pay
off a U.S. brake supplier to generate inferior quality on Toyota products.
Some politicians maintain a close alliance to the UAW and other unions. It
would not take much effort to make a few adjustments to tools and
processes to produce faulty brakes. Some offer very compelling arguments
that Toyota is now a victim of a significant conspiracy. In essence,
economic splattering may be occurring by design, as opposed to a more
natural force.
Another
compelling argument that has been demonstrated for centuries. Founder’s
grandchildren typically screw up the enterprise they inherited. The
contemporary Mr. Toyoda and his pals may indeed be one of those who had
too much silver spooning of his pablum. More investigation is needed to
decipher which argument is the accurate one; maybe both.
Economic
robustness is not occurring at this time. Therefore, bullish breadth is
not correlating well, relative to the current Mid-term Bull versus that of
long lasting bull legs. For example, Alcoa has been a pitiful participant
in this bull leg. This blue chip and Dow30 constituent continues enduring
shy revenue volume, prohibiting its needs to generate bullishly desired
earnings. High fixed cost companies, such as Alcoa, need high revenues to
make money.
Integrated
Device Technologies, I-STK #79, is a constituent in the solidly bullish
technology sector. However, the spattering effect of economic expansion
and robustness has not helped this company generated bullish earnings.
The once
dominant Motorola endures a similar configuration of disappointment. This
dilettante infested company is more interested in Six Sigma processes than
elevating earnings. However, as bad as Motorola is, it would enjoy the
splattering effect of increased earnings with real economic robustness.
To view charts of the above three examples of pitiful bullish
participation, click this sentence.
As stated
many times before, politicians provided the initial germs of The Great
Recession. After generating grave damage to the economy, they disallowed
the normal cleansing of incompetence and inefficiencies that good old
fashion recessions are good at doing. Capitalistic economies have always
endured recessions. Those recessions weeded out the fat, lazy, stupid, and
immoral. Once those recessions concluded, the quality of life returned to
what it was before and then accentuated yet a higher standard of living
for most. Unfortunately, the fat, lazy, stupid, and immoral are still
alive and well thanks to your tax dollars. Economic penalties the next
time around will be heavier than the first exposures in late 2008 and
early 2009.
For example,
the U.S. bailed out Chrysler in the late 1970’s. Their incompetence was
allowed to persist. They bred more like them. The next generation is now
without a job. Michigan and Ohio unemployment rates are very high. In
essence, the pain this time will be longer lasting and with more depth
than what would have occurred with allowing Chrysler to fail in 1979.
Economic
robustness is not occurring now. Play money is floating around. Spattering
the economy with play money will eventually run dry. Until real economic
wealth is created, earnings will not spread. Weaker corporations will not
enjoy the economic splattering effect. This cascades throughout the
economy and eventually earnings outlooks will diminish and bearishness
will follow.
Although the
Mid-term Bull remains in tact, it is configured with a shortage of desired
breadth for bullish longevity. Unless the economy expands much more
vigorously than its current rate, the current Mid-term Bull will be
replaced by a new bear market. The Chinese Finance minister may have more
influence on that in a few years than the Federal Reserve Board.
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 signals and no sell signals.
The Mid-term
Indicant is signaling hold for 215 of the 333-stocks and funds tracked by
the Indicant. The stocks and funds with hold signals are up an average of
25.9%. That annualizes to 38.4%. The Mid-term Indicant has been signaling
hold for these 215-stocks and funds for an average of 37.4-weeks.
The Mid-term
Indicant is avoiding 102-stocks and funds of 333- tracked by the Indicant.
The avoided stocks and funds are down an average of 25.9% since the
Mid-term Indicant signaled sell an average of 82.6-weeks ago.
One year ago,
on Feb 20, 2009, the Mid-term Indicant was holding 22-stocks and funds out
of 344 tracked for an average of 93.0-weeks. They were up by an average of
105.6% (annualized at 59.0%). There were 322-avoided stocks and funds at
that time. The avoided stocks and funds were down an average of 39.0%
since their respective sell signals an average of 37.7-weeks earlier.
The Mid-term
Indicant was signaling hold for 148-stocks and funds of the 345-tracked
two years ago on Feb 22, 2008. They were up by an average of 183.5%
(annualized at 59.1%) since their respective buy signals an average of
161.5-weeks earlier. The Mid-term Indicant was avoiding 189-stocks and
funds at that time. They were down an average of 11.1% since their
respective sell signals an average of 16.0-weeks earlier.
There were
311-stocks and funds with hold signals on Feb 16, 2007 since their buy
signals an average of 93.5-weeks earlier. They were up by an average of
114.0% (annualized at 63.4%). There were 30-avoided stocks and funds at
that time. They were down by an average of 11.6% from their respective
sell signals an average of 20.8-weeks earlier.
On Feb 17,
2006, the Mid-term Indicant was signaling hold for 285-stocks and funds
out of 320-tracked. They were up by an average of 115.9% (annualized at
65.2%) since their buy signals an average of 92.4-weeks earlier. The
Mid-term Indicant was avoiding 53-stocks and funds at that time. They were
down by an average of 9.2% since their sell signals an average of
20.5-weeks earlier.
Five years
ago, on Feb 18, 2005, there were 256-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 86.2% (annualized at 65.3%) since their respective buy signals
an average of 68.6-weeks earlier. There were 61-avoided stocks and funds
then. They were down an average of 29.6% since their respective sell
signals an average of 52.9-weeks earlier.
On Feb 20,
2004, there were 281-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 65.3%, annualizing at 82.6%, since the buy signals an average
of 42.7-weeks earlier. There were 15-avoided stocks and funds then. They
were down by an average of 27.9% since their sell signals an average of
42.7-weeks earlier.
There were
110-stocks and funds with hold signals on Feb 21, 2003. They were up by an
average of 28.3%, annualizing at 54.9%, since their buy signals 26.8-weeks
earlier. The 130-avoided stocks and funds were down an average of 9.2%
since their respective sell signals an average of 6.2-weeks earlier.
Summary of
Stocks and Funds with Buy and Sell Signals This past Week
To maintain
appropriate security, you can see the Mid-term Indicant "buy/sell" signals
for stocks and funds for this week by clicking the following link. It is
in the member’s only section.
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.
Access all
updated information from the following link. You will need your login ID
and password.
http://www.indicant.net/Members/Updates/All%20Update%20Forms/UD%20Summary.htm
Comments
about Mid-term Indicant Buy and Sell Signals This Weekend
The
Long-term, Mid-term, and Quick-term attributes have not yet succumbed to
the stock market bear’s ambition. The Near-term cycle shifted in support
of bearish inclinations in early Feb 2010.
Most prices
and major indices remain solidly above their respective bearish yellow
curves. Bear and sell signals will not occur on these slower moving models
until price interaction with bearish yellow.
The bull
attacked the Near-term Indicant bearish attributes this past week. This
prevented additional sell signals by the Mid-term Indicant.
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 8%. 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.
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.
Currently,
the Near-term blue and green prices are falling due to the Near-term bear.
Most ETF prices are below those two values. The Mid-term blue and green
prices are mixed. If falling, the shorter-term trader (or recent buys)
should sell, if already not done so. The longer-term holdings with high
double digit or any triple digit gains should use MTI Bearish yellow as a
stop loss.
If your stop
loss triggered sell, while Indicant continues signaling hold, normal
advice would be to buy again. However, as long as the Near-term Indicant
is signaling bear, it is better to wait for specific buy signals from the
Mid-term Indicant.
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
42.8% since its secular weekly low on October 9, 2002. The NASDAQ is up
101.4% and the S&P500 is up 42.5% since then. The small cap index, S&P600,
is up 96.6% 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.
The NASDAQ is
down 55.6% since its last weekly secular peak on March 9, 2000. The S&P500
is down 27.4% since its similar secular peak on March 23, 2000. The Dow is
down by 11.3% 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 2008 congressional and presidential elections.
All democracies eventually fail by virtue of tyranny by the 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.
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
controls. 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 1.8% 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 10.2% 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 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 down by 0.1%. It finished up in that solidly
bullish year by 50.0%, which was consistent with historical pre-election
year results. It was up on this weekend in 2004 by 2.1% and finished up by
8.6% for that year, which was congruent with election year bullishness,
although shy of magnitude standards.
It was down
5.4% 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. 2005’s post election year 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 up 3.5% 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 3.4% 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 13.0% 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 down 8.5% at this time last year. It finished 2009 up by 43.9% in
extreme contrarian performance to historical standards. The Dow was down
14.9% 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
bullishness.
The Dow is
down 26.6% since its last weekly closing peak on Oct 9, 2007. The NASDAQ
is down 21.5% since its last peak on Oct 31, 2007. The S&P600-small cap
index is down 24.6% 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 resilience of the recently expired Near-term Bull
cycle suggests these cyclical bottoms may not again be tested.
In other
words, the next Near-term Bear cycle, which began in early Feb 2010, may
not fall below the March 9, 2009 cyclical bottoms. Even with that,
statistics supported by 100% accuracy, 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
58.9% since March 9, 2009. The NASDAQ is up 76.9% and the S&P500 is up
63.9% since then. 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.
Stock market
corrections after such a rise do not need too much of an excuse.
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. Reality exerts itself
without regard to its harshness or failing attempts by intellectuals,
whose “real contribution/worth” will eventually be recognized as closer to
zilch.
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
content in this section remains the same. Until conditions change, the
verbiage will change very little. The idea here is not entertainment, but
retention of facts in spite of its boring repeatability.
Short-term
rates remain configured at cyclical minimums. As stated for several
months, that would normally threaten the bull, as rate hikes typically
follow cyclical minimums. However, they are so low, a prognosis of
normalcy borders minutia. In essence, potential rate hikes are irrelevant
to the stock market at these levels.
The Fed’s
current strategy is to maintain low rates, conflicting with the normalcy
of rate hikes during economic recovery. This, coupled with excessive
government spending, is a recipe for hyperinflation and/or high interest
rates at some future point. That will eventually lead to a bear stock
market and high commodity prices, including gold.
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.
Some
short-term rates have been nudging north the past few weeks. This should
be monitored. 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.
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 will 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. This is one reason why
the dollar has been strengthening lately.
Oil prices
continue vacillating in a range the Saudi Kingdom finds comfortable. As
stated for several months, the kingdom will assert its leadership and
regulate 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. As earlier stated, a continuation of
these configurations will eventually lead to inflation. Although commodity
prices have weakened the past few weeks, their underlying trend remains
bullish. China’s credit tightening, coupled with expanding socialism in
the West, is being viewed as strategically bearish in the long-term.
Although
bearish the past several days, 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.
A tremendous
amount of paper currency has been added to circulation well ahead of the
productive efforts normally required to support those levels. Inflation
has to follow at some future point. 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 may cost well over $10,000. Only the “established elite”
will enjoy those sort 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.
There is one
burgeoning bright spot developing. The Tea Party movement is highlighting
the excesses of members of the economic burden/overhead group. Those, who
do not add economic wealth, are getting wealthier than those who do. Union
labor management does not understand this phenomena. Most union members in
the manufacturing sector also do not understand. They will slowly devolve,
as they have been doing for years and many will go to their graves
unconscious of the stupidity their union dues supported. More and more
will not live the American dream and that is their fault.
Economic
overhead members do understand. They are very smart people. They are
simply unproductive and do not add economic wealth. That does not deter
them, though, to expand their “taking” capacity. It is always interesting
where the breech point occurs. The breech point is where they are
slaughtered; either figuratively or physically. Economic wealth production
is required in much more magnitude than the capacity to take. Since 2006,
there is a gap of concern.
Recently
softening gold prices is mere profit taking and a strengthening dollar.
The optimistic 2012 forecasted price of gold is holding at $1600. The low
cyclical forecast for gold is holding at $1300. The “meandering” forecast
is holding steady at $1000.
There are no quantifications suggesting a long-term decline in the price
of gold in spite of the mysticism guiding its value.
As stated
73-weeks ago, once the euphoria of the socialistic methods begin
displaying its harsh reality on the 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. (You may be witnessing the beginnings of
this tormenting cycle right now). This cycle should endure a double dip.
The heart and
soul of bullish seasonality concluded a bit earlier this year. The
pessimistic outlook for the market has a good chance to unfold now.
Politicians successfully ended the conclusion of the heart and soul of
bullish seasonality near the end of January 2010 with the president’s
state of the union address.
The above and
below paragraph may become obsolete, based on Blue Dog Democrats and a
general populace movement against the always damaging singularity in
political party voice, upsetting the assumed control of Congress by
socialists, communists, and creeps. If the Blue Dogs and populist movement
back down and join the evil ones, then the paragraphs remain in tact. The
senatorial election in the state of Massachusetts revealed the genius of
Thomas Jefferson, while exposing the stupidity of contemporary,
soft-handed/slow thinking politicians and their academic brethren. That
was bullish at the time and potentially obsoletes bearish commentary
contained herein.
The question
remains, is public resistance to healthcare reform and other socialistic
endeavors really from the grassroots? If so, and if its political
influence results in cessation of the rampant stupidity in Washington
D.C., the bull will find that too favorable to acquiesce to the bear on
the immediate horizon. Although healthcare reform is garnishing most of
the attention, cap and trade legislation will depress corporate profits,
depress capitalistic adventurism, and thus will eventually depress the
stock market.
There was no
bear market in 2009. However, previously mentioned threats remain, “if
taxes are raised on the highly productive and capital gained, do not be
surprised at a 1,000 Dow by 2010.” The bear was passive between March 2009
and January 2010. It has plenty of time to demonstrate its reflection of a
souring culture. The Blue Dogs and grass roots movements against big
government have upset this line of thinking and we will know more when
Congressional behavior is demonstrated over the next few weeks/months.
As stated the
past 25-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.
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. The Mid-term Indicant signaled
buy on Oct 16, 2009. It is down 1.5% since then, annualizing at -1.5%. It
was bullish the last two weeks following bearishness in the previous three
weeks. All commodities, including gold, are under pressure from the U.S.
dollar.
Fidelity Gold, Fund #28
received a buy signal on Sep 4, 2009. It is down 0.8% since then,
annualizing at -0.8%. It was bullish the past three weeks. This particular
fund marches to its own drumbeat. Although out-performing Vanguard Gold
and Precious metals at this time, it is not as stable as Vanguard.
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 is up 11.3%, annualizing at 20.1%
since its buy signal on July 31, 2009.
Fidelity Energy Services #40,
FSESX, was up 107.2% since the Mid-term Indicant signaled buy on December
6, 2003. It received a sell signal on October 3, 2008. The Mid-term
Indicant signaled buy on Sep 18, 2009. It is up 5.4% since that buy
signal, annualizing at 10.0%.
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 had to signal sell
for this fund on Feb 12, 2010. It is up 3.8% since that sell signal.
Although energy is an excellent long-term investment, cap and trade
political threats, 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 is up 9.5% since its buy signal on
Sep 11, 2009, annualizing at 21.2%.
The
Quick-term Indicant signaled buy for
ETF#03 – Energy and Natural Resources
on Aug 3, 2009. It is up 11.6% since then, annualizing at 20.5%. It was up
242.4% (annualized at 44.8%) since its previous buy signal on March 26,
2003 until the September 2008 sell signal. The Near-term Indicant signaled
sell for this ETF on Jan 29, 2010. It is up 5.2% since then.
The
Quick-term Indicant signaled buy for the
GLD-ETF#11 on December 11,
2008. It is up 35.7% since that buy signal, annualizing at 29.4%. 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 is up 4.9% since
that sell signal.
Most
commodities were mildly bullish last week and were not contrarian. That is
typically bearish unless the economy is solidly robust.
Mid-term Indicant Positions – Ten U.S. Indices
There were no new bull signals and one
new bear signal.
The Mid-term
Indicant signaled bull on July 31, 2009 for all ten major indices.
Unfortunately, the Mid-term Indicant signaled bear on Feb 12, 2010 for the
Dow Utilities. It is up 3.4% since that bear signal.
The nine
remaining major indices retaining bull signal are up by an average of
13.3% since there respective bull signals an average of 29.0-weeks ago.
That annualizes at 23.8%.
The Dow
Utilities was the weakest bull since the July 31, 2009 bull signal. That
contrast with it being the strongest bull from 2003 through the peaking in
2007.
Other than
the Dow Utilities, the remaining major indices remain with bullish
attributes.
The Mid-term Indicant Dow Jones Industrial Average
performance is at $29,876,592. That beats buy and hold performance of
$1,582,588 on a $10,000 investment in the Dow stocks in 1900. The
MTI S&P500 is at $144,287. That
beats buy and hold’s $108,646 on a December 31, 1971 $10,000 investment.
The
MTI-NASDAQ is at $204,481. That
beats buy and hold’s $77,804 on an October 18, 1985 $10,000 investment.
The Mid-term Indicant model beats buy and hold by 1787.8%, 32.8%, 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.
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.
The Mid-term
Indicant signaled sell for
ProFunds Ultra Short on April
3, 2009. It is down 54.3% since then. It will receive a buy signal only if
the Quick-term Indicant signals buy for QID. The Near-term Indicant
signaled buy for QID several days ago, but the Quick-term Indicant cannot
signal buy until its price crosses above bearish yellow curve. 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.
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
259.4% (annualized at 14.1%) since the Long-term Indicant signaled bull
955-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.
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.
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
The
March/April 2009 Near-term Bull expired on Feb 4, 2010 even though most of
the ETF’s received sell signals in the prior week. That Near-term Bull was
a thoroughbred in terms of its performance. The average Near-term cycle
durations range from eight to twelve weeks. This one extended for
approximately ten months, whose breadth approximated the Mar 2003 bull
leg. However, the March 2003 bull was supported with volume, which fueled
follow-on bull legs, lasting until 2007. The more recent one did not have
volume support, suggesting the stock market’s vulnerability to bearish
ambition remains in effect.
The 2003 bull
leg met a meandering bear that lasted through all of 2004 and most of
2005. Contemporary and projected fundamentals, as opposed to those in
2003, are more supportive of a more ambitious bear in 2010 than endured in
2004 and 2005.
Bullish
behavior the past several days remains configured as a bullish spurt in
the face of a Near-term Bear. If pressure rises again into bullish
domains, then a new Near-term Bull could emerge. Probabilities, however,
remain high for bearish bias to resume on a Near-term horizon.
As stated in
the last weekly report, the market indeed punished those who shorted the
market during options expiration this past week. Next week, the market
will most likely follow and more rationally path, which is bearish. If
more pressure increases into bullish domains, then a new Near-term Bear
could evolve, even though probabilities are suggesting otherwise.
Near-term,
Quick-term, Short-term Indicant Stock Market Details
The Near-term
Indicant signaled no new bulls and no new bears.
The lone NTI
Bull is the VIX. It is down 15.7% since the Near-term Indicant signaled
bull 3.1-weeks ago, annualizing at -15.7%.
The Near-term
Indicant is signaling bear for eleven major indices. They are up by an
average of 3.5% since their bear signals an average of 2.8-weeks ago.
The
Quick-term Indicant signaled no new bulls and no new bears.
The
Quick-term Indicant is signaling bull for 11-major indices, including
contrarian VIX. They are up by an average of 17.2%, annualizing at 26.9%,
since their bull signals an average of 33.0-weeks ago. The Quick-term
Indicant will signal bear if and when the indices fall below their
respective bearish yellow curves.
The
Quick-term Indicant signaled bear on Feb 8, 2010 for the Dow Utilities. It
fell below bearish yellow. This was the first major index to fall below
yellow in nearly a year. It is vacillating now, which is common around
bearish yellow.
The DJU is up
3.1% since the QTI signaled bear 1.6-weeks ago. Continuing weakness in
Utilities suggests recent bullishness is without required sectored density
for sustainability purposes.
As stated the
past several days, the overall stock market is configured with increased
potential for sustainable bearishness on a near-term horizon.
-Short-term Trend Sensitive Attributes (Includes Near-term and Quick-term)
Quick-term Attributes (This is a longer cycle than Near-term cycles)
QTI-Red Bull Count; Five non-contrarian; limited bullish support and
some protections against dynamic bearish behavior.
QTI-Bullish Red Curve Trend; Only five non-contrarians; down from 11,
eight trading days ago.
QTI-Bearish Yellow Curve Trend; Non-bearish majority with 10 of
11-non-contrarian indices in non-bearish trend, supporting non-bearish
bias along this slower cycle.
QIT-Yellow
Bear Count; One of the non-contrarian’s was inflicted with this attribute
the past few days; the DJU. Bearish bias on the slower moving QTI is still
lacking a thorough enough commitment to feed the bear’s hunger.
Longer-term holders should focus on this attribute; especially if you
enjoy the fundamentals of your holdings and have accumulated significant
gains.
Near-term Attributes (This is a shorter cycle than the Quick-term cycles)
NTI-Blue
Bull Count; Eleven non-contrarian; configured as a bullish spurt in face
of Near-term bear.
NTI-Bullish Blue Curve Trend; Eleven non-contrarian; increasing bullish
support.
NTI-Bearish Green Curve Trend; Zero non-contrarian; positive bearish
support.
Short-term Force Vectors and Pressure Attributes
STI-Force Vector Position; Eleven in bullish domain; increasing bullish
support.
STI-Vector Pressure Trend; Eleven moving bullishly, but lending to
non-bearishness due to increasing maturity of the cycle.
STI-Vector Pressure Position; Most major indices are enduring negative
(bearish) pressure. The mid-caps and small-caps lost positive bullish
pressure on Feb 11, 2010. The S&P400 developed positive pressure today,
introducing a serious challenge to the bear.
Short-term Market Summary
The
Near-term Indicant is bearishly biased while the Quick-term Indicant
offers potential resistance to the bear. Some of that resistance was lost
with the Dow Utilities recently succumbing to bearish influences. However,
there remains some potential resistance to bearish ambition with only one
Yellow Bear.
-Tangential Protection –
There are none. The last three
evaporated on Thursday, Feb 4, 2010. This has facilitated more freedom for
the bear to roam.
-Political Climate –
Increasing discourse between the two Congressional parties and the
executive branch of the U.S. Government is strategically bullish. If they
continue bickering with little accomplished, the long-term view should be
bullish. A new political influence is burgeoning in China, though, where
one party remains dominant, which is generally bearish.
-Reverse
Tangential Bearish Detection -
The March/April 2009 Near-term Bull expired Feb 4, 2010, giving birth to
a new Near-term Bear. This suggests a focus on this tangential phenomenon.
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. Keep
in mind, this may not occur on the current stock market near-term bear
cycle, but there is some future point where the major indices and noted
ETF’s will be below those noted values.
The Quick-term
bearish yellow curve stands between the above claim and prevailing prices.
If prices fall below this bearish yellow curve, the probability of
tangential bearishness on this cycle will be high. The Dow Utilities moved
toward supporting this phenomenon a few days ago. Today’s bullish bounce
did nothing to challenge this theme.
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 favor
before the first half of this year (2010). Much of this depends on
political influences. There will be some unfavorable influences. There
always is. The question is, when? As long as the aforementioned attributes
are suggesting bullishness and non-bearishness, the Mid-term bull will
continue dominance. That dominance is now being challenged by the
Near-term bear, but has not yet cascaded into a complete Short-term bear
market.
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
The NYSE and
NASDAQ indicators are configuring
with robustness, which supports the near-term bear cycle. However,
increasingly light volume may stimulate lethargy. This can influence
meandering behavior, while the overall cycle remains in favor of the bear.
(Recent chronological observations are expressed below in reverse order).
Feb 19,
2010-Fri-Volume was again non-descriptive on potential shifts in bias.
Therefore, near-term bearish bias continues.
Feb 18,
2010-Thu-Volume was down slightly on mild bullishness. There is no change
from previous comments. Bearish bias prevails.
Feb 17,
2010-Wed-Volume was down on today’s mild bullish behavior, which remains
non-supportive of bullish sustainability along the near-term cycle.
Feb 16,
2010-Tue-Volume was relatively mild on bullish aggression, suggesting
limited follow-on behavior by the bull along the near-term cycle.
Feb 12,
2010-Fri-Significant intraday volatility did not upset the recent pattern
of lackluster volume. This suggest little interest and/or ability to
overturn the current stock market bias, which is bearish.
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 five ETF’s, including contrarian QID. They
are up by an average of 8.2%, annualizing at 23.7%, since their buy
signals an average of 18.1-weeks ago.
The NTI is
avoiding 26-ETF’s. They are up by an average of 4.1% since their sell
signals an average of 2.7-weeks ago.
The
Quick-term Indicant generated no buy signals and no sell signals.
The
Quick-term Indicant is signaling hold for 30-ETF’s. They are up an average
of 25.3% since their buy signals an average of 36.2-weeks ago. Those with
hold signals are annualizing at 36.3%.
The lone
avoided ETF, QID, is down 57.0% since its sell signal 47.1-weeks ago.
Near-term Indicant ETF Key Attributes
NTI Blue
Bulls Count; there are twenty-seven, which is appears to be a boomerang
increase; potential bullish support, but higher probability suggests
bearish aggression looms.
NTI Blue
Curve Trend; 29-contrarians are sloping north; improved, but temporary,
bullish support.
NTI Green
Curve Trend; Two sloping north with declining bullish support. This is
encouraging domination by the short-term stock market bear.
Quick-term Indicant ETF Key Attributes
QTI Red Bull
Count; Seventeen non-contrarian, limited bullish support.
QTI Bullish
Red Curve Trend; minority of 15-sloping north in support for Quick-term
Bull, but under bear threat due to the declining population of Red Bulls.
Lost several in last few days.
QTI Yellow
Bear Count; zero non-contrarian represents a solid majority supporting
Quick-term non-bearishness. (This is a potential source of resistance to
bearish aggression).
QTI Bearish
Yellow Curve Trend; 29-sloping north, highlighting non-bearishness along
a slower moving plane.
The
Short-term Indicant ETF Key Attributes:
Vector
Pressure Bullish Domain Occupancy; a minority of fifteen non-contrarians
in bullish domains, offering decreasing support for the bull. Many have
now endured bearish convergence. Current configurations suggest this
recently converged behavior will be inspirational to the bear.
Pressure
Slope Relative to Vector Pressure: 12-non-contrarian in bullish position
and leaning toward support of the stock market bear.
Vector
Pressure Trend; twenty-eight with limited bearish support at this time,
but configured as a temporary condition.
Short-term
Summary: Volume continues suggesting support for the bear and limited
substantive support for the bull. The NTI-Bearish Green Curve is sloping
to the south, which is bearish. Several bounced above green about one week
ago with similar momentum the past three days, but this is analogized to
the boomerang effect. In essence, this is a bullish spurt in the face of a
near-term bear. Vector Pressure is directionally supporting the bear, but
a few are holding in bullish domains and thus preventing some sell
signals. Fundamentals are setting up to support bear and technical
configurations are acquiescing to those fundamental demands.
Contrarian
Funds
ETF#03-Natural Resources is up
5.2% since the Near-term Indicant signaled sell on Jan 29, 2010. The
Quick-term Indicant continues signaling hold. It is up 11.6% since the buy
signal on August 3, 2009, annualizing at 20.8%. The Quick-term Indicant
will signal sell only after the price drops below QTI Yellow Curve with
assistance from other attributes.
ETF#11-Gold and Precious Metals
is up 35.7% since the QTI signaled buy on
December 11, 2008. Annualized growth is at 29.6%. Bearish yellow is a good
price to set stop losses for a longer-term hold position, which is at
$98.30 and still rising.
The Near-term
Indicant signaled sell on Feb 4, 2010. It is up 4.9% since then. Negative
pressure is preventing a new buy signal.
Click this sentence for additional charting and current forecasting of the
actual price of gold.
As stated for
the last several 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 highlight that potential
when this occurs.
Fundamentally, gold, like most commodities, is under pressure from a
strengthening U.S. dollar.
Also gold has
been aggressively advertised the past several months. This invites more
participants in owning gold. Such behavior typically invites short-term
bearishness.
ETF#14-TLT-Long Government
received a buy signal from both the Near-term and Quick-term Indicant on
Feb 8, 2010. It is down 2.9% since then. It will receive a sell signal on
next Monday if there is no solid bullish bounce on that day. Pressure
never crossed into bullish domains and it is starting to move negatively,
which increases potential for sell signal in the next day or two.
The Near-term
Indicant signaled buy for
ETF#31-QID on Feb 4, 2010. It is down 9.8% since that buy
signal. It’s NTI Green is starting to rise. Pressure remains in bullish
domains, but barely. If pressure drops back into bearish domains, a sell
signal will ensue.
The
Quick-term Indicant signaled sell for QID on March 26, 2009. It is down
57.0% since then. The Quick-term Indicant will not signal buy until it
contacts the bearish yellow curve, which is valued at $25.22 and still
falling.
Major ETF
Events
Feb 19,
2010-Fri-S&P400 pressure crossed back into bullish domains, challenging
the Near-term Indicant’s bearish bias theme. Options expiration week, as
expected, punished those that shorted the market.
Feb 18,
2010-Thu-No major events.
Feb 17,
2010-Wed-TLT’s NTI bullish blue curve collapsed today. Pressure suggests a
bullish response to this.
Feb 16,
2010-Tue-Today’s bullish behavior is a bullish spurt in the face of a
Near-term Bear. TLT was not contrarian today as it was bullish along with
the stock market. That suggests it will be even more bullish on bearish
stock market behavior.
Current
Strategy-Short-term Indicant-
Feb 18, 2010-Thu-Same, but the rising bullish pressure by the S&P400 Index
challenges the Near-term Indicant bearish theme. Feb 17, 2010-Wed-Same.
Feb 16, 2010-Tue-Same as last Friday. Feb 12, 2010-Fri-Negative pressure,
coupled with declining NTI Blue and Green offers little hope for a new NTI
bull signal. Bias remains in favor of the bear, but the QTI Bearish Yellow
Curve offers resistance to any dynamic behavior that may unfold.
Click
Quick-term Indicant, Near-term, and Short-term for all 31-ETF’s.
Other links:
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
Near-term, Quick-term, and Short-term Indicant for Major Indices
Divergence
versus Convergence
The stock
market enjoyed bullish convergence last week. That is the second
consecutive week of bullish convergence. Unfortunately, that follows
bearish convergence in the preceding four weeks. That bearish convergence
of four consecutive weeks is overriding and thus remaining as an extremely
bearish attribute. It, however, has not upset the Mid-term Indicant
bullish attributes, but certainly threatening.
Indicant
Conclusion
As stated the
past nineteen weeks, low interest rates offer narrowed alternative
investment opportunities. The expiration of the Near-term Bull suggests
this is increasingly an irrelevant observation, relative to more worldly
dynamics, which appear to be leaning in favor of the bear.
There is a
strategic view unfolding that China may tighten credit too much. Some
logic suggests that large caps may leave China. That leads to a heightened
concern regarding interest rates and/or inflation. This also could lead to
reduced revenue volumes for larger cap companies and other business
interest in China.
Trade
tensions can mount. Such behavior will invoke a repeat of the 1930’s. Any
legislation or behavior leading to restrictions on free trade will unleash
a bear that will make the 1930’s bear be like a teddy bear.
The stock
market bull enjoyed additive magnitude with the additional number of
capitalists in China. Chinese government leaders consist of the exact same
psychological profile as any other politicians, where control freak,
egotistical self-aggrandizement, and lying are common attributes. Forces
far away from Washington D.C. can shake the world’s economy.
The expected
convergence occurred two weeks ago. The Near-term Bull signaled bear and
sell for most of the ETF’s that are tracked daily. But it has not yet
signaled sell for all of the daily tracked ETF’s. This suggests some
possibilities, the Near-term Indicant may have been premature in the
sell/bear signals. In other words, the bear has not yet garnished
unanimous support for its ambition. However, the near-term attributes
continue in their support of the bear. The market can be more volatile
during periods of convergence. The bullish bounce the last two weeks
remains configured as a bullish spurt in the face of a near-term bear.
The
Quick-term Indicant has yet to signal bear with the exception of the Dow
Utilities. It will be interesting to observe how the markets and ETF’s
interact with Bearish Yellow when and if contact is made in the next few
weeks. The Dow Utilities made contact with bearish yellow and bounced
bullishly off of it, but not enough to signal bull again.
Keep up with
the daily stock market report as the Quick-term and Near-term 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
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
02/21/2010