The Indicant Stock Market Report

Jan 29, 2012 Indicant Weekly Stock Market Report

Volume 01, Issue 05 ISSN 1526 6516 © The Indicant Stock Market Report

Mutual Funds – Only One Avoided Non-contrarian

Nearly all of the mutual funds tracked by the Mid-term Indicant have hold signals. As stated in past reports, a study of mutual funds can offer added insight to stock market bias.

For the first time since early 2007, only one non-contrarian mutual fund is enduring an avoid signal. This lone avoided fund is MF#45-Fidelity’s Select Consumer Finance. It is down by 76.0% since the Mid-term Indicant signaled sell on Jan 26, 2007. This fund has endured an avoid signal now for five years, as of this weekend. That is an extraordinary long period for a quality mutual fund to endure an avoid signal. The good news is that it is the only one enduring that for those tracked by the Mid-term Indicant.

Looking at its chart, you will notice it peaked in early 2005. After crossing above the MTI bearish yellow curve in 2000, you will notice its limited participation in the 2001-2002 stock market bear. Even though it was bearish during that period, it never fell below the Mid-term bearish yellow curve during that bear market.

After peaking in early 2005, it finally contacted that yellow curve in January 2006, triggering a mid-term sell signal. It lingered just below yellow until late 2006, where a buy signal occurred. Shortly after that, it endured the Jan 26, 2007 sell signal. As earlier stated, it is down 76.0% since then.

A study of economics suggests much of the 1990’s stock market bull was fueled by rising home prices. After the Y2K stock market bear in 2002-2003, home prices continued to inflate. Since the 1980’s, home prices have escalated by a combination of two driving forces; normal pricing elasticity to laws of demand and supply and phony pricing elasticity to politicians interfering with normalcy.

The stock market report of August 24, 2008, Hard Economic Data – Physical Objects, described the high effort and real value of building a house and the low effort and negative value of political and government intrusion. The stock market report of September 28, 2008, Will Fake Cash Flow Help the Bull, described phony balance sheet content with abstract valuations of assets. MF#45-Fidelity’s Select Consumer Finance price decline by over 70% since falling below MTI-Yellow in early 2007 reflects the consequences of political meddling in capital markets. Interestingly, one would not be out of line paralleling that Fund’s performance and your healthcare in the years to come with yet more political meddling. There is no objective evidence in the annals of history where any group of people has benefitted even in the smallest way from political help. On the contrary, history consistently demonstrates wars, recessions, and other hardships from it. As old people die, new ones are born to tabula rasa. They then repeat the mistakes of their ancestors. Their mistake; believing political chit-chat. Universal laws always overrule them. It is always just a matter of time.

The best yielding Mutual Fund, based on Mid-term Indicant buy signals, is MF#33-Fidelity’s Select Computer. It is up 64.5% since the Mid-term Indicant signaled buy in July 2009. Politicians do not interfere too much in that industry and thus the high performance in spite of the fact that the outlook for microcomputers is mainly bearish. Cloud computers are micros biggest threat. However, that does not mean this fund will turn bearish.

Of the mutual funds tracked by the Mid-term Indicant, two are currently at all-time highs. MF#49-Fidelity’s Select Leisure and Entertainment is one of them. It is up 63.8% since the MTI buy signal in August 2009. Apparently, money is being made in the “soft industry” even though unemployment remains extraordinarily high. The haves are enjoying more while the have-nots continue with mere subsistence. That is what happens with increased socialism. If socialism expands, the fund will eventually shift bearish, as the “haves” will dwindle in population.

The other fund with a new all-time high is MF#96-Vanguard’s Targeted Retirement. Although it is enjoying an all-time high, it is up by only 16.5% since the MTI buy signal in July 2009. That is okay as this fund’s holdings contain ultra conservative investments. Even with that, you can see from its chart, it participated in the 2008-stock market bear, but has since rebounded and set new all-time highs in recent weeks.

Several other funds achieved all-time highs prior to bearish threats in late 2011. Some are struggling to regain that status, but overall, mutual funds are configured in favor of the stock market bull. Fund managers tend to buy the best in their sectors of interest. As long as the better companies hold up well, the stock market bear cannot dominate. It will be interesting if the lone avoided non-contrarian fund can earn its way to a mid-term buy signal.

Keep your eye on the daily stock market report.

Whipsawed – Review of Wild Swings Last Week

This section highlights last week’s biggest gainers and losers within each group of stocks and funds tracked by the Mid-term Indicant.

NAS100#85-ILMN was up 42.4% last week. It is up 44.7% since the Jan 13, 2012 buy signal. That annualizes at 1,150%. This stock has enjoyed a long-term bullish trend. Last week’s growth, of course will not continue at that rate. It is simply aligning itself back to its normal growth pattern after being pestered by the stock market bear late last year.

NAS100#04-SNDK was down 11.0% last week, while still maintaining mid-term bullish attributes. It is up 40.2% since the Mar 2010 buy signal.

ISTK#08-RNWKD was up 35.1% last week. It is still down, however, by 64.1% since the sell signal in July 2007. It is enduring a long-term bearish trend.

ISTK#17-BVSN was down 21.4% and down by that same amount since last week’s buy signal. This stock is also enduring a bearish trend, but the previous week’s configuration were unusual enough to continue holding. Although a high risk buy, okay to buy more at this point, but with a a solid stop loss. Cheap stocks are cheap for a reason; usually multiple ones.

DJIA#17-CAT was up 5.3%. It is up 132.9% since the buy signal in Aug 2009. It is a solid hold as this is an outstanding company.

DJIA#29-TRV was down 5.7% last week. It is up 53.6% since the buy signal in Mar 2009. It is enjoying a solid long-term bullish trend.

DJU#15-FE was up 1.8% last week. This stock is down 5.6% since the buy signal in May 2011. It plummeted in 2008’s crash and struggling to return to its former solid bullish cycle. Because it is down with a hold signal, buying again is okay. The only problem is its declining Force and potential drop below Yellow. If you buy more, set a stop loss.

DJU#14-CNP was down 3.1%. It is enjoying a solid bullish cycle, but recently under attack by the utility bear. It is up 40.9% since the buy signal in Oct 2009. Buying more should be okay.

MF#28-FSAGX was up 8.5%, triggering a buy signal. Its Force crossed into bullish domains. This fund should move bullishly as gold is again configured with bullish attributes along the short-term cycle.

MF#22-USPIX was down 2.1%. This purely contrarian fund is down 82.2% since the April 2009 sell signal.

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

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

The Mid-term Indicant generated eighteen buy signals and one sell signal. The 170-buy signals in the past 15-weeks and 51-sell signals the past ten weekends illustrate an unusual bull-bear battle during the middle of the heart and soul of bullish seasonality. The stock market is confused as to what it should be; bull, bear, or neutral. However, the bull holds an edge here as the heart and soul of bullish seasonality is nearing its end. There are about two weeks remaining, but that does not mean a bearish cycle will follow. The stock market does not always respect historical patterns. It certainly disrespected this year’s heart and soul of bullish seasonality.

The Mid-term Indicant is signaling hold for 267 of the 331-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 62.1%. That annualizes to 41.9%. The Mid-term Indicant has been signaling hold for these 267-stocks and funds for an average of 77.1-weeks.

The Mid-term Indicant is avoiding 38-stocks and funds of 339-tracked by the Indicant. The avoided stocks and funds are down an average of 34.8% since the Mid-term Indicant signaled sell an average of 71.6-weeks ago.

One year ago, on Jan 28, 2011, the Mid-term Indicant was holding 292-stocks and funds out of 337-tracked for an average of 51.8-weeks. They were up by an average of 45.2% (annualized at 45.4%). There were 42-avoided stocks and funds at that time. The avoided stocks and funds were down an average of 45.4% since their respective sell signals an average of 120.0-weeks earlier one year ago. There were no buy signals and three sell signals on this weekend last year.

The Mid-term Indicant was signaling hold for 223-stocks and funds of the 317-tracked two years ago on Jan 29, 2010. They were up by an average of 22.4%, annualized at 34.7%, since their respective buy signals an average of 33.6-weeks earlier. The Mid-term Indicant was avoiding 91-stocks and funds at that time. They were down an average of 45.8% since their respective sell signals an average of 99.8-weeks earlier. There were zero-buy signals in addition to 196-buy signals in the prior 27-weeks. There were three sell signals on this weekend in 2010.

There were only 23-stocks and funds with hold signals of the 344-tracked by the Mid-term Indicant on Jan 23, 2009 since their buy signals an average of 69.1-weeks earlier. They were up by an average of 101.8% (annualized at 76.6%). There were 310-avoided stocks and funds at that time. They were down by an average of 36.5% from their respective sell signals an average of 35.5-weeks earlier. There were 10-sell signals on this weekend in 2009 in addition to 573-sell signals in the prior 63-weeks, as the bear market was nearing its eventual depth, but still incomplete in its final destruction. There was one buy signal on this weekend in 2009.

On Jan 25, 2008, the Mid-term Indicant was signaling hold for 149-stocks and funds out of 345-tracked. They were up by an average of 173.9% (annualized at 58.0%) since their buy signals an average of 156.0-weeks earlier. The Mid-term Indicant was avoiding 192-stocks and funds at that time. They were down by an average of 13.7% since their sell signals an average of 13.5-weeks earlier. There were no buy signals and four-sell signals on this weekend in 2008 in addition to 178-sell signals in the prior 13-weeks. The Mid-term bull cycle, originating in March 2003, was well past its peak at this time in 2007, as the democratic congress was implementing their “take from the productive and give to the non-productive” policies. A huge number of sell signals continued for the next several months as the bear market gained momentum throughout most of 2008, through early 2009.

Five years ago, on Jan 26, 2007, there were 307-hold signals for stocks and funds out of the 344 tracked by the Mid-term Indicant at that time. They were up an average of 107.2% (annualized at 60.5%) since their respective buy signals an average of 92.2-weeks earlier. There were 31-avoided stocks and funds then. They were down an average of 12.8% since their respective sell signals an average of 21.3-weeks earlier. There was one buy signal and six sell signals on this weekend in 2007. The bull was solid, for the most part, in 2007 until July of that year.

On Jan 27, 2006, there were 280-stocks and funds with hold signals from the listing of 345-tracked by the Mid-term Indicant at that time. They were up an average of 118.7%, annualizing at 66.9%, since their respective buy signals an average of 92.3-weeks earlier. There were 58-avoided stocks and funds then. They were down by an average of 8.7% since their sell signals an average of 19.3-weeks earlier. There were no buy signals and no sell signals on this weekend in 2006.

There were 230-stocks and funds with hold signals on Jan 28, 2005. The Mid-term Indicant was tracking 320-stocks and funds since then. They were up by an average of 90.0%, annualizing at 64.5%, since their buy signals 72.6-weeks earlier. The 90-avoided stocks and funds were down an average of 26.8% since their respective sell signals an average of 49.1-weeks earlier. There were no buy signals and no sell signals on this weekend in 2005.

On Jan 30, 2004, there were 282-stocks and funds with a hold signal, enjoying a 67.1% gain since their respective buy signals an average of 39.7-weeks earlier. That annualized at 88.0%. There were only six-avoided stocks at that time. They were down by an average of 27.9% since their sell signals an average of 42.4-weeks earlier. The Mid-term Indicant was tracking 296 stocks and funds from 2002 through late 2004. There were zero-buy signals in addition to 433-buy signals in the prior 45-weeks. The 2003-04 bull market was 48-weeks old on this weekend in 2004. Unfortunately, a meandering bear market pestered throughout most of 2004.

On Jan 31, 2003, there were 137-stocks and funds with hold signals. They were up 26.5% since their buy signals an average of 22.2-weeks earlier, annualizing at 62.2%. There were 95-avoided stocks and funds since the Mid-term Indicant signaled sell an average of 5.3-weeks earlier. The avoided stocks and funds were down 6.8%. There were seven-buy signals in addition to 528-buy signals in the prior 27-weeks. Although the stock market bear remained in effect, its weakness was maturing in favor of the stock market bull. Some of the Aug. 2002-buy signals retained hold signals through late 2007 and early 2008, while others endured sell signals before the conclusion of calendar year 2002 and in early 2003. Energy related buy signals in Aug 2002, however, held strongly through the December 2002-record-bear for December and lasted until late 2008. There were 57-sell signal on this weekend in 2003, as the heart and soul of bullish seasonality was expiring and the bull was expressing dynamic timidity in dominating the stock market. In hindsight, the first quarter of 2003 just a mere bearish spurt, but threatening enough to signal sell for many stocks and a few funds.

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 here. It is in the member’s only section.

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 stock market bears. 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 and the related quality of life for the productive and honest.

Comments about Mid-term Indicant Bull and Bear Signals This Weekend

Recent buy signals are being triggered with stronger bullish attributes. Several stocks and funds contain zero evidence of potential stock market bear. The strong stocks and funds are very strongly bullish and the weak are getting stronger. Those stocks with a hold signal with paper losses are potentially excellent buy candidates.

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 holds with less than a 20% unrealized gain. Of course, this includes new buys. Stop losses shortly after buying are the trickiest. Right after buying, set the stop loss at the lesser value of 8% or green curve values, depending on your personal preferences.

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. Do not worry if you stop out. New opportunities always emerge. The idea is to minimize losses.

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

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

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

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

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 73.8% since its secular weekly low on October 9, 2002. The NASDAQ is up 152.8% and the S&P500 is up 69.5% since then. The small cap index, S&P600, is up 160.5% since October 9, 2002.

All of the major indices were at new lows on the same week in 2002, which is a common attribute for bottoming. That will again be an attribute to monitor in coming months. Configurations shifted in support of normal pre-election year bullishness twelve weeks ago. The stock market disappointed in the normally bullish pre-election year. However, the second most bullish year along the four-year cycle is the election year as the Fed and other disruptive forces typically stay on the sidelines. Historical standards favor the stock market bull this year. So far, mid-term and short-term attributes are supportive of that.

The NASDAQ is down 44.2% since its last weekly secular peak on March 9, 2000. The S&P500 is down 13.8% since its similar secular peak on March 23, 2000. The Dow is up by 8.0% 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. One should note that buy and hold so far this century is a loser, as the stock market has been flat to bearish the last twelve years. Technically, one could call that a secular bear; albeit a mild one with respect to the Dow, but a major one in full force for the NASDAQ.

The Dow has stumbled three times when encountering its 2000 peak value. Will it do that again? It remains above its 2000 peak for the fourth time this century for the seventh consecutive week in this attempt to hold above that level. The S&P500 topped its 2000 peak for a few brief weeks in 2007 and has since drifted bearishly since then including its participation in the 2008-massive bear market. The 2009-2010 bullish rebound, though, has not overcome bearish influences so far this century. The NASDAQ has never come close, as its prior peak price was hype driven. The DOTCOM sector does not perform agriculture, manufacture, or extract. Therefore, most companies within that index created no wealth. It remains appropriately bearish relative to the 2000 phony peak prices.

If socialism expands, the NASDAQ may not hit its 2000 peak until after 2050 and that depends on a resumption of entrepreneurial support by politicians. Significant downsizing of federal governments and related regulatory shrinkage will stimulate a reassessment of the previous sentence. If the opposite occurs with increasing federal bureaucracies, the NASDAQ will never return to its 2000 peak. Look at the resumes of intellectual elites who argue against these points. You will detect they are pure economic leeches arguing on behalf of such regulations, which is a source of their livelihoods. None has ever produced anything of value.

The NASDAQ was up 12.6% on this weekend in 2001, as the heart and soul of bullish seasonality was topping out. It finished 2001 down by 21.1%, which was congruent with standards of post-election-year-bearishness. The heart and soul of bullish seasonality manifested early in the cycle, floundered ahead of Santa Claus, and asserted in early 2001. As many of you recall, the markets succumbed to the stock market bear later that year.

The NASDAQ was down 0.7% on this weekend in 2002. Some of you recall the dynamic bear market in 2002, where the NASDAQ finished that year down by 31.5%. The NASDAQ stock market bear cycle found bottom in October 2002, which was consistent with historical standards of finding bottoms during mid-term election years.

The NASDAQ was down 0.8% on this weekend in 2003. This turned out to be an excellent buying opportunity. It finished 2003 up by 50.0% in 2003, which was consistent with historical pre-election year results. It was up on this weekend in 2004 by 5.6%. The meandering bear market of 2004 dampened bullish enthusiasm, but the NASDAQ finished 2004 up by 8.6%. This was congruent with election year bullishness, although shy of magnitude standards.

It was down 5.9% on this weekend in 2005’s post-election year, which was consistent with historical standards of losses and/or minimal gains during post-election years. This was an excellent year, based on post-election year historical standards of bearishness. Many of you recall that 2004 and 2005 were meandering bear markets.

In 2006, the NASDAQ was up by 4.5% on this weekend. It finished up in 2006 by 9.5%, which maintained congruency of historical bullishness for a mid-term election year. It was up by 0.8% at this time in 2007, finishing that year up by 9.8%, which was consistent with pre-election year bullishness. The stock market peaked in 2007 from the 2003 bull leg after democrats took control of Congress in early 2007. George W. went along with them as opposed to repelling them. That accelerated the bear and added depth to its decline. The 2008-bear was already underway at this time of year in 2007.

The NASDAQ was down by 12.3% on this weekend in 2008. It finished 2008 down by 40.5%. That was extreme contrarian performance to the standards of historical election year bullishness. The overall stock market endured the most bearish presidential election year since related records from 1832.

It was down 4.6% on this weekend in 2009 and finishing that year up by 43.9%. Keep in mind, the extraordinary bullish cycle in 2009 finished that year down by 20.6% from its prior Mid-term cyclical peak on October 31, 2007. The 2008 bear market more accurately reflected economic fundamentals than the 2009 bull market. Much of the 2009 bull market correlated well with declining political popularity.

The NASDAQ was down 2.1% on this weekend in 2010. It finished 2010 up by 16.9%, which was consistent with mid-term election year bullishness; especially in the second half of such years. It was up 3.9% on this weekend in 2011. Unfortunately, the NASDAQ finished 2011 down by 1.8%. The S&P500 was flat in 2011 while the DJIA was up by 5.5% that year.

The Dow is up 3.6% this year. The S&P500 is up 4.7% for the year. The NASDAQ is up 8.1% this year. This is occurring on the tail end of the heart and soul of bullish seasonality, which suggests its historical standard may be achieved, albeit with minimal and disappointing magnitude.

The Dow is down 10.6% since its last weekly closing peak on Oct 9, 2007. The NASDAQ is down 1.5% since its last cyclical peak on Oct 31, 2007. The S&P500 is down 15.9% since its Oct 9, 2007 peak. This coincides with political coziness in Washington D.C., which solidified in early 2007, as George W. Bush’s liberal tendencies melded well with the newly elected democratically controlled congress.

Bull market expirations are not as obviating with simultaneous peaking like bear markets are with simultaneous bottoming among the major indices. As you can see, the stock market continues to struggle beyond where it was prior to the great bear market of 2007-2008. In spite of that, though, a few indices have eclipsed pre-crash highs, as noted by the S&P600 thirty weeks ago. That was the second time in this cycle such accomplishment has been enjoyed by this small cap index.

Eclipsing and holding above 2007 cyclical peaks remains elusive. As of this past weekend, all major indices are below their 2007 peaks with the exception of the NASDAQ100 and the S&P400. This NASDAQ is up 10.0% since its Oct 31, 2007 peak. The S&P400-Mid-cap is above its Jul 31, 2007 peak by 1.7%. This is the second time since 2009, the midcaps have crossed above its 2007 peak price. The other major indices continue expressing difficulty justifying an escape from those 2007-peak prices.

Several indices have never challenged those peak prices. The weakest index, S&P100, continues lagging. It is down by 18.4% since its Oct 9, 2007 weekly closing peak. As you can see from recent stock market behavior, suspicions about the 2009-2011 bull leg had merit. It still does. The reason for those suspicions was near maximal incongruence between political leadership and the underlying principles of capital markets. The Dec 12, 2010 Indicant Weekly Stock Market Report discussed this phenomenon.

Most major last cyclical bottoms 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 last weekly cyclical bottom on November 20, 2008.

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 a short-term view and increasingly so. Consequently, March 9, 2009 is the pivot date to monitor performance since the March 2009 bottoming from the 2007-2008 bear cycle. If prices fall below reverse tangential projections, new pivot points will be defined.

The Dow is up 93.7% since March 9, 2009, which is the “bottoming” pivot date from the great bear market of 2007/8. The NASDAQ is up 122.0% and the S&P500 is up 94.6% since then. The S&P600, Small Cap Index, is up 144.7% since March 9, 2009. That March 2009-current bull leg was/is indeed powerful, but such cycles have occurred many times in the past only to be followed by bear cycles of varying breadth and depth. Such a successor bear cycle may now be underway, although not expected to continue as Washington DC has a propensity to stalemate during presidential election years. This is especially true when the president is unpopular. Both of those conditions persist and favorable to the stock market bull, but polls are suggesting it is too close to inspire the stock market bull. That, coupled with European weakness, confronts the stock market bull.

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.

Although this paragraph has remained unchanged for a couple of years, do not fall asleep. It will change. It will be significant and dramatic when it does change. The markets both free and controlled are not constant. This will result in a massive bear market, depending on the magnitude of combined interest rates and inflation. As you have seen the past several weeks, the potential for a massive and long-lasting bear is possible, as dilettantes, worldwide, continue converting their currencies to meaningless expressions. Interestingly, an “instinctive” resistance to this is manifesting, which could obsolete the previous sentence. Unfortunately, the dilettantes have not been locked-up, yet. The rate of undoing prior economic damage by politicians is slowing and may not manifest. Politicians never optimize. All their solutions are degenerative, as their goal is simply personal power; nothing else.

As promised by Bernanke in late 2008, the discount rate (and prime) rate continues holding flat at their depressed levels. The fed funds closing rate and call money also continue flat and very depressed. The 2012 forecast suggests values closer to zero than any other value. Bernanke continues with his promise of more of the same through 2014, which was extended from 2012 last week. Policy settings typically remain fixed during the second half of a president’s term. That stability is one reason why the historical record demonstrates stock market bullishness from the mid-term election year through the election year. Fortunately, U.S. politicians are losing influence on the shrinking world stage. Unfortunately, foreign politicians are made of the same DNA, which is unfavorable to any economic activity. Unfortunately, the paper currency basis of worldwide economies is under threat, as the culmination of OPM disease by politicians may be approaching the “critical dimension.”

The 3-month T-Bill remains flat and depressed, along with short-term CD’s. After yielding zero in the previous 24-weeks, the 3-month T-Bill was trading at 0.3% the last two weeks.

The Euro jumped to Red Bull status 54-weeks ago. It lost Red Bull status 19-weeks ago with a continuing sharp drop against the greenback. You can see it has a triple camelback with negative (bearish) trend. It is now a Yellow Bear and appears readying for a yellow bear cycle.

The Canadian dollar is solidly entrenched in cycle of weakness. The CA$ moved above Red three weeks ago. It remains as a Red Bull (bearish for the CA$).

The Japanese Yen continues strengthening, although bearish the past several weeks. The Japanese yen remains extraordinarily strong due to that country’s superior management in the private sector. It appears to be attempting a weakening cycle, but the country’s resiliency and significant productivity offers significant confrontation to weakening. However, it crossed into neutrality last week and threatening a bearish cycle against the greenback.

Gold’s optimistic 2012 forecast has been elevated to $1800/oz. After a few weeks of falling below Red, it is again a Red Bull. Despite solid bearish behavior in ten of the past 18-weeks, it continues trading above the 2012 yearend forecast curve, but getting close to losing that lofty position. The $2,000/oz.-forecast by 2014 remains challenged, based on political dynamics. For example, reduced government spending should strengthen paper currencies and with that, the price of gold would decrease. So far, this thesis remains weak. It may take a few more years before this political influence manifests. Statistical bullishness remains intact along the mid-term cycle. At the same webpage, you will notice oil is less stable with a mild, but with deepening bearish bias. It fell below yellow 24-weeks ago on souring economic news, but rebounded 14-weeks ago. Despite periodic days of depressed behavior, it is holding up well. It escaped Yellow Bear status, as expected, and again with Red Bull status. As you can see, it has endured a similar bearish cycle in the past. With a strategic perspective, such cycles were obviously irrelevant. Printing more paper currencies will continue elevating the price of gold and other precious metals.

Commodity prices continue falling from their recent record highs due to souring economic forecast. None are Red Bulls, but they were significantly bullish last week. Their potential contribution to inflationary pressures remains absent, as all those tracked are now Yellow Bears. Their mid-term cycles are no longer bullish and remain under attack by the commodities bear.

Scrolling down a bit on the aforementioned webpage, the CRB Bridge Futures fell prey to bearish economic pressures the past few months. It is approaching Yellow Bear status, but it continues resisting that condition with a strong rebound in six of the last ten weeks.

Commodity prices, overall, are favoring potential for a bearish cycle. If it manifests, some elements of inflationary threats will be dampened.

Mortgage rates continue moving bearishly. They did not find comfort at their first Red Curve interaction since late 2008 on Feb 11, 2011. They continue along a bearish cycle.

The consumer price index and producer price index are computing with unfavorable results. Inflationary threats are detectable. However, the combined absolute value of interest rates and inflation or deflation remains relatively safe at this time. The CPI was down last month, dampening inflationary concerns, but elevating the potential for deflation, albeit mildly so.

Overall, hard economic data is supportive of lackluster economic behavior and currently non-threatening toward inflation or deflation. Stability in their prices or even mild bullish behavior could very well be inspirational to the stock market bull.

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 again signaled buy on Sep 17, 2010, but had to signal sell on Dec 16, 2011 for a disappointing loss of around 15%. It received a new buy signal this weekend.

Fidelity Gold, Fund #28 also received a buy signal this weekend.

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. The Mid-term Indicant signaled buy on Sep 17, 2010, following a couple of buy/sell cycles since late 2008. It received a buy signal on Oct 28, 2011 after missing an 18% opportunity due to rapid bullishness ahead of Force Vector justification to signal buy. It is down 7.1% since that buy signal. This condition offers even yet a greater buying opportunity. It was bullish the past two weeks.

Fidelity Energy Services #40, FSESX, was up 107.2% since the Mid-term Indicant signaled buy on December 6, 2003 until the next sell signal on October 3, 2008. The Mid-term Indicant signaled buy on Oct 28, 2011 after missing about 20% of opportunity. The Mid-term Indicant had to signal sell on Dec 16, 2011. The MTI missed a 10% growth spurt, as the Mid-term Indicant signaled buy on Jan 13, 2012. It is up 7.3% since then, annualizing at 187.9%.

State Street Research Global #9, SSGRX, was up 174.2% from its August 16, 2002 buy signal to the Mid-term Indicant sell on October 3, 2008. It was down 18.4% since that sell signal and the buy signal on January 8, 2010. The Mid-term Indicant signaled sell on Nov 25, 2011. It is up 4.3% since the MTI sell signal on Nov 25, 2011. It received a buy signal this weekend.

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. After a few disappointing buy/sell cycles since late 2008, the Mid-term Indicant again signaled, buy, on Sep 17, 2010 and was basically flat until the Mid-term Indicant signaled sell on Sep 30, 2011. It again signaled buy on Oct 28, 2011 after missing about 24% of opportunity. Unfortunately, the Mid-term Indicant had to signal sell on Dec 16, 2011. The MTI missed an approximate 10% growth spurt until a buy signal on Jan 13, 2012. It is up 4.1% since then, annualizing at 106.2%.

The Near-term and Quick-term signaled buy for ETF#03 – Energy and Natural Resources on Jan 3, 2012. It is up by 0.6% since those buy signals, annualizing at 9.1%. It was up 242.4% (annualized at 44.8%) since the Quick-term buy signal on March 26, 2003 until the September 2008 sell signal. It was up over 25.0%, annualized at 29.0% from its Quick-term buy signal on Sep 15, 2010 and the Quick-term sell signal on Aug 8, 2011. It was down slightly between the Dec 1, 2011 buy signal and the sell signal on Dec 14, 2011.

The Quick-term Indicant signaled sell for the GLD-ETF#11 on December 28, 2012. It was up about 90.0% since the previous buy signal in Dec 2008 and annualizing at 30.5%. It is up 7.1% since the most recent buy signal on Jan 5, 2012, annualized at 116.1%. It gained 81.4% from its August 3, 2005 buy signal until the September 8, 2008 sell signal. Its annualized gain during that hold period amounted to 27.1%. The Near-term Indicant signaled buy on April 24, 2009 and it gained 17.3% until its sell signal on Feb 4, 2010. It received a sell signal from the Near-term Indicant on Jul 27, 2010, but received a new buy signal on Aug 9, 2010. It was up by 12.0% since that buy signal, annualizing at 28.0% at the time of the Near-term sell signal on Jan 20, 2011. It was up 2.0% since that sell signal when the Near-term Indicant signaled buy on Fri, Feb 18, 2011. The near-term model lost an opportunity of about 2% between Jul 27 and Aug 9, 2010. It enjoyed an approximate 7.0% gain since the Near-term Indicant buy signal on Feb 18, 2011. The NTI signaled buy on Jul 6, 2011. It was up about 10% until the NTI signaled sell on Sep 23, 2011. It was flat since that sell signal and its most recent buy signal on Oct 26, 2011. It was down slightly from that Oct 26, 2011 buy signal until the sell signal on Dec 12, 2011. It is up 7.1% since the Jan 5, 2012 Near-term buy signal, annualizing at 116.1% since then.

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

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

The Mid-term Indicant is signaling bull for all ten of the major indices. They are up by an average of 10.7%, since their bull signals an average of 17.5-weeks ago, annualizing at 31.7%.

The Mid-term Indicant Dow Jones Industrial Average performance is at $32,179.797. That beats buy and hold performance of $1,926,131 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $137,978. That beats buy and hold’s $128,937 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $224,618. That beats buy and hold’s $97,661 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 1,570.7%, 7.0%, and 130.0%, 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 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. The stock market did not succumb to the bear during the post-election year, 2009, which is the historical standard.

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

Mid-term Indicant Positions - NASDAQ100 Stocks

Click here to see NASDAQ100 report card history.

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

Mid-term Indicant Positions - Dow Jones 30 Industrial Stocks

Click here to see Dow 30 report card history.

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

Mid-term Indicant Positions - Dow Jones 15 Utility Stocks

Click here to see Dow Utilities Report Card history.

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

Mid-term Indicant Positions - Indicant Selected Stocks

Click here to see Indicant Select Stock Report Card history.

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

Mid-term Indicant Positions - Mutual Funds

Click here to see Mutual Fund Report Card history.

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

The Mid-term Indicant signaled sell for MF#22-ProFunds Ultra Short on April 3, 2009. It is down 82.2% since then. Although this is classically a post-election-year hold, the Mid-term Indicant was unable to signal buy in 2009, as the stock market bear remained in hibernation for the most part. 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, which approximates the normal time to buy this fund.

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 337.4% (annualized at 16.6%) since the Long-term Indicant signaled bull 1,056-weeks ago. Economic data is the primary influence on the Long-term Indicant. Recessions, deflation, inflation, and unreasonable interest rates have not been strong enough to signal bear since that bull signal, including relative performance since that bull signal. Even with today’s economy and stock market position, the 1991 investor is still up triple digit amounts, which remains above average performance when considering long-term planning.

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

The Short-term Indicant Stock Market Report

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

Short-term Indicant Stock Market Report – Summary

Despite mild bearishness this Friday, comments below remain the same as this past Thursday.

Although not yet robust, both Indicant Volume Indicators are again shifting north, offering potential for increasing stock market interest. This could be inspirational to both bull and bear, but current configurations favor the bull. Of course that can change, but it is what it is right now.

The remainder of this section remains the same from last Monday.

The stock market bull is gaining momentum along the short-term cycle, but without significant volume support. Although not dynamically stimulating, a bull is a bull and to be enjoyed.

Bearish unanimity exists with pure contrarians indices and ETF’s are enduring avoid signals. Bullish unanimity also exists as all non-contrarians are appropriately enjoying bull or hold signals.

The stock market bull remains without volume support. That is okay, but will eventually be required for a dynamic bull.

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

Index Report Card Summary

The Near-term Indicant signaled no new bulls and no new bears. Click this sentence to see table leading to the charts.

The Near-term Indicant is signaling bull for all eleven non-contrarian indices. They are up by an average of 4.8% since their bull signals an average of 5.0-weeks ago, annualizing at 49.9%. The lone near-term bear, contrarian VIX, is down 39.5% since its bear signal 8.4-weeks ago.

The Quick-term Indicant signaled no new bull and no new bears.

The eleven Quick-term bulls are up by an average of 4.9% since their bull signals an average of 5.3-weeks ago, annualizing at 48.5%. Contrarian VIX is the lone Quick-term bear. It is down 39.5% since its bear signal on Nov 29, 2011.

Indicant Volume Indicators

No changes to this paragraph for several weeks. Both IVI’s sloped downward on recent bullishness, which suggests a lack of bullish inspiration. This is troubling. Adding to that concern is the NASDAQ’s IVI falling into low interest domains during the most recent near-term bull cycle. The NYSE did the same in early November 2011. Some of that, however, was due to seasonally depressed volume. Volume is past a standard minimum, suggesting increased volume support for prevailing bias. You will notice a mild movement to the north in recent days.

Jan 27-Fri-Low volume on mild bearishness does not scare the stock market bull.

Jan 26-Thu-Increasing volume on mild bearish behavior suggests increased stock market interest while not obviating directional intensity at this time.

Jan 25-Wed-Relative to recent history, volume was up on bullish behavior, adding support for prevailing bullish bias.

Jan 24-Tue-Light volume during this stock market pause is not disrupting bullish bias.

Jan 23-Mon-Volume was a bit depressed on mild volume in support of the stock market bull. Remember, configurations support a pause and mild bearishness lends good support for that thesis.

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 29-ETF’s. They are up by an average of 5.8% since their buy signals an average of 4.7-weeks ago, annualizing at 64.1%.

The NTI is avoiding three-ETF’s. They are down by an average of 17.0% since their sell signals an average of 4.8-weeks ago.

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

The Quick-term Indicant is signaling hold for 29-ETF’s. They are up by an average of 6.5% since their buy signals an average of 6.2-weeks ago. This annualizes at 54.5%.

The Quick-term Indicant is avoiding three-ETFs. They are down by an average of 17.0% since their QTI sell signals an average of 4.8-weeks ago.

Contrarian Funds

ETF#03-Natural Resources. The Quick-term Indicant and Near-term Indicant signaled buy on Jan 3, 2012. It crossed above NTI Blue with Force Vector support for additional bullishness. It is up 0.6% since then, annualizing at 9.1%. Force remains in bullish domain. It has been bullish in five of the last eight trading days and bearish the past two days.

ETF#11-Gold and Precious Metals received a buy signal from both the Near-term and Quick-term models on Jan 5, 2012. Price climbed above NTI Blue and Force climbed into bullish domains. It is up 7.1% since those buy signals, annualizing at 116.1%. Force is oscillating in bullish domains, which is bullish.

Click this sentence for additional charting and current forecasting of the actual price of gold. As the U.S. dollar strengthens, gold is in trouble along the short-term cycle. However, it is again ignoring all made man objects, both physical and abstract, in favor of a universal production, as gold was derived from meteorites and a lot more difficult to produce than paper money. Of course, it is more valuable and increasingly so.

ETF#14-TLT-Long Government received sell signals from the Near-term Indicant and Quick-term Indicant on Friday, January 20, 2012. Price fell below NTI Green with weak Force. This contrarian EFT should fall in the face of stock market bullishness. Do not be surprised at price contraction to QTI Yellow. It is up 0.9% since those sell signals.

ETF#31-QID received sell signals from both the Near-term and Quick-term Indicant on Dec 23, 2011, as Force crossed below Pressure and into bearish domains. It is down 14.3% since those sell signals. Force is increasing, which offers some bullish hope for this ETF, but recent stock market bullish attributes are strengthening and not friendly to expectations of contrarian bullishness.

The Quick-term and Near-term Indicant signaled sell on Nov 30, 2011 for ETF#32-VXX. It is down 37.6% since those sell signals.

Major ETF Events

Jan 27-Fri-No major events, but bull is gaining momentum despite bearish behavior today.

Jan 26-Thu-Increasing volume suggests increasing stock market interest.

Jan 25-Wed-Nothing major other than the bull defeating the bear after the state of the union address, which had a capitalistic undertone. That was contrary to the first three. Of course, it is a smoke screen, but the verbiage was friendlier to capitalistic endeavors.

Jan 24-Tue-Still moving through a pausing phase.

Jan 23-Mon-None.

Current Strategy-Short-term Indicant-Jan 26, 2011-As stated for several days, stock market Force Vectors continue flattening with some accelerating in bullish domains, adding to bullish potential. Contrarian VIX is poised for a bullish bounce that counters bullish bias, but non-threatening to the bullish bias.

Reverse Tangential Projections

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.

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.

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