The Indicant Stock Market Report

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.