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August 2008 Indicant Weekly Stock Market Reports

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Aug 31, 2008 Indicant Weekly Stock Market Report

Volume 08, Issue 05 ISSN 1526 6516 © The Indicant Stock Market Report

 

Hard Economic Data – Physical Objects – Part 2

The drill bit, oil derrick, monkey boards, hard hats, spewing oil, gas, pumps, valves, pipes, gauges, etc. are all physical objects. They all help perform the task of extraction, which is one of the three ways economic wealth is created. The other two methods of economic wealth creation are agriculture and manufacturing. All three sectors create physical objects. Governments and related industries only produce abstract objects and are valueless.

 

Any raw material extracted from the earth (or outer space) and transformed into a higher product of value adds economic wealth. The U.S. Congress does not create economic wealth. The only way members of Congress could contribute to the cause of wealth is their employment in extraction, agriculture, or manufacturing. And you never see that anymore. Most are lawyers.

 

The paper the U.S. Constitution is written on is a physical object. The value of the document was created by a paper mill several hundred years ago. The content on the paper is purely abstract and therefore valueless. It did not create economic wealth. The Communist Doctrine similarly did not create economic wealth, while the contents were just as abstract as the U.S. Constitution. However, the content on the Communist abstract elevated poverty and economic hardship, while the U.S. Constitution abstract facilitated unprecedented economic wealth.

 

The problem with abstract objects is the necessity for their content to interact with individual thoughts and feelings. Most brains weigh around three and a half pounds and thus are limited in their capacity to interpret abstract objects. The construction or extraction of a physical object is not bounded by individual interpretation. It is what it is.

 

The U.S. Congress works with abstracts. All man-made law is abstract. Nature’s law is physical. A hurricane is a physical object that is completely insensitive to how a person interprets it. It simply does its thing, much like a drill bit, which is a man-made physical object.

 

Abstract objects cannot prevent physical objects from performing their task. For example, the U.S. Congress could invoke a law that deems hurricanes illegal. That abstract concept would not prevent hurricanes. Abstract concepts are puny when compared to physical objects.

 

The U.S. Congress has passed over 2,000 laws regarding guns. However, the illegal use of guns prevails. The U.S. Congress has passed legislation that prevents drilling for oil. The price of oil has risen and the quality of life has dropped for many due to Congress’ abstract nature. The extraction of oil adds economic wealth. Preventing that extraction reduces wealth. Those areas on earth that are not impeded by the U.S. Congress are accumulating tremendous wealth while those who Congress is suppose to represent are getting poorer.

 

There are a few thousand-drill bits in service at this time around the globe. Geographical areas where extraction occurs have a higher propensity for wealth creation than areas where it is discouraged.

 

About a hundred years ago, oil spewed onto the ground when the drill bit penetrated the pressure zone below the ground. Although this certainly polluted the natural habitat of the surrounding area, there was no legislation passed to prevent such environmental damage. Such pollution no longer happens. Since spewing oil was considered wasteful, capitalists solved the problem through technology and the creation of other physical objects. Abstracts had nothing to do with the actual solution other than engineering concepts prior to the physical construction of objects that prevented the spewing oil.

 

The stock market was primed to move bullishly late last week. However, on Friday, that bullish configuration shifted bearishly, due in part to hurricane Gustav and due in part to Dell’s disappointed earnings. Dell is not the predominant market mover it once was. Bearish behavior was induced more by the hurricane threat.

 

Congress resumes session on September 9. The stock market rewards the highly productive efforts of capitalists producing physical objects of appeal. Abstract objects from non-capitalistic functions, such as government, mute stock market bullishness. The stock market is threatened when Congress is in session because the effort required to produce abstract objects is nearly nothing. Abstract objects can be cranked out much quicker than physical objects.

 

The construction of a Congressional abstract object never adds value to the construction of a physical object. The construction of a physical object requires profound effort. Any new law (abstract object) adds burden on the construction of a physical object. Look around your house; all physical objects. Congress had nothing to do with them; other than adding cost to their construction.

 

Do not be surprised at bearish behavior upon the return of Congress in a week or so. Do not be surprised at stock market bearishness if Gustav unleashes considerable damage to offshore platforms or refining capacity along the Gulf Coast.

 

Keep your eye on the daily stock market report. It will help you differentiate sustainability versus spurts regardless of the directional intensity underway.

 

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 seven sell signals. There have been 106-buy signals in the past seven weeks. There have been 350-sell signals since October 26, 2007, but only fifteen in the past seven weeks. Buy signals will increase once tangential bullish protection manifests.

 

Although there were no buy signals, the Mid-term Indicant is signaling hold for only 170 of the 345-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 123.0%. That annualizes to 65.2%. The Mid-term Indicant has been signaling hold for these 170-stocks and funds for an average of 98.0-weeks.

 

Although there were no sell signals, the Mid-term Indicant is avoiding 168-stocks and funds of the 345- tracked by the Indicant. The avoided stocks and funds are down an average of 16.7% since the Mid-term Indicant signaled sell an average of 31.7-weeks ago.

 

One year ago, on Aug 31, 2007, the Mid-term Indicant was holding 256-stocks and funds out of the 345 tracked for an average of 122.9-weeks. They were up by an average of 146.6% (annualized at 62.0%). There were 87-avoided stocks and funds at that time. Those avoided stocks and funds were down an average of 5.6% since their respective sell signals an average of 15.8-weeks earlier.

 

The Mid-term Indicant was signaling hold for 229-stocks and funds of the 345-tracked two years ago on Sep 1, 2006. They were up by an average of 119.5% (annualized at 68.2%) since their respective buy signals an average of 91.1-weeks earlier. The Mid-term Indicant was avoiding 82-stocks and funds at that time. They were down an average of 8.3% since their respective sell signals an average of 23.2-weeks earlier.

 

There were 225-stocks and funds with hold signals on September 2, 2005 since their buy signals an average of 91.5-weeks earlier. They were up by an average of 106.9% (annualized at 60.7%). There were 91-avoided stocks and funds at that time. They were down by an average of 9.0% from their respective sell signals an average of 21.2-weeks earlier.

 

On August 27, 2004, the Mid-term Indicant was signaling hold for 176-stocks and funds out of 296-tracked. They were up by an average of 77.0% (annualized at 67.1%) since their buy signals an average of 59.7-weeks earlier. The Mid-term Indicant was avoiding 109-stocks and funds at that time. They were down by an average of 26.3% since their sell signals an average of 43.3-weeks earlier.

 

Five years ago, on Aug 30, 2003, there were 259-hold signals for stocks and funds out of the 296 tracked by the Mid-term Indicant at that time. They were up an average of 48.2% (annualized at 92.4%) since their respective buy signals an average of 27.1-weeks earlier. There were 29-avoided stocks and funds then. They were down an average of 8.3% since their respective sell signals an average of 10.5-weeks earlier.

 

On Aug 30, 2002, there were 215-stocks and funds with hold signals from the listing of 295-tracked by the Mid-term Indicant at that time. They were up an average of 6.3%, annualizing at 45.7%. There were 69-avoided stocks and funds then. They were down by an average of 47.9% since their sell signals an average of 25.0-weeks earlier.

 

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

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

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

 

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

 

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

 

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

 

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

As stated last week, the market is configured with bullish inspiration. The new bull cycle has not yet matured with obviations of bullish sustainability. Do not be surprised at volatility, which is common when the bear and bull battle for dominance. The battle is waging, configurations are suggesting the bull will be victorious and thus the buy signals.

 

Click the following link that will take you to the tangential protection charts.

 

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

 

The Quick/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 imbedded in this weekly report. This allows web-based retention records of the daily report for much longer than the last twelve months.

 

The Daily Indicant Stock Market Report for the last trading day of the current week is near the conclusion of this weekly stock market report. It is emailed each weekend, separately, so you can read it, either as a separate document, or in this document.

 

The Indicant Stock Market Report’s Secular Market Blend

The Dow is up 58.4% since its secular low on October 9, 2002. The NASDAQ is up 112.5% and the S&P500 is up 65.2% since then. The small cap index, S&P600, is up 126.9%. The major indices, with the exception of the Dow Utilities and NYSE, are now bullishly biased.

 

As stated the past several months, the secular bull that originated on October 9, 2002 no longer remains solid. A secular bear could indeed be unfolding. However, as stated the past four weeks, several short-term attributes continue configuring in favor of the bull.  Some attributes are weakening in that bullish support, but they remain bullish nonetheless.

 

The Dow is down 18.5% since its last closing peak on Oct 9, 2007. The NASDAQ is down 17.2% since its last peak on Oct 31, 2007. The S&P600 is down 13.0% since its last closing peak on Jul 19, 2007.

 

The NASDAQ is down 53.1% since its last weekly secular peak on March 9, 2000. The S&P500 is down 16.0% since its similar secular peak on March 23, 2000. The Dow is down by 1.5% 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.

 

The Dow is down 13.0% so far this year. The NASDAQ is down 10.7% this year. These conditions are incongruent with historical standards. This year should be bullish, based on those standards. The stock market occasionally delights in violating historical standards. This always happens when such standards gain in popularity. As stated for several years now, the phenomenon of commonality disallows stock market victories by the masses.

 

The short-term bullish cycle, ending eleven weeks ago, had been lending support to historical standards. As stated several times in prior weekly reports, that bullishness will be challenged during the dog days of summer. You saw that for about eight weeks until five weeks ago. The expected reversal to bullish bias on a short-term basis has formed. The question has been what is the breadth of sustainability?

 

The NASDAQ year-to-date performance was bearish by 25.4% through this week in 2001. Keep in mind the NASDAQ finished 2001 down by 23.3%.  This year had been configuring with 2001 similarity, but there is a mild chance historical standards (bullish) may be developing.

 

The NASDAQ was down by 31.5% through this weekend in 2002. Some of you recall the dynamic bear market in 2002, where the NASDAQ finished that year down by 31.5%. The NASDAQ YTD 2003 performance was up by 35.6%. It finished up in that solidly bullish year by 50.0%. It was down on this weekend in 2004 by 7.1%.  It was down by 1.7% in 2005. Many of you recall that 2004 and 2005 were meandering bear markets. In 2006, it was down by 1.5% and up by 6.1% at this time last year.  

 

Keep your eye on the daily stock market report.

 

Stop Loss Management

The Mid-term Indicant recommends a stop loss of 8% due to increasing bullish influences for the longer-term holdings. You should set them higher for any recent non-contrarian buys, such as 5% or enough to protect reasonable gains. A stop loss of 2.5% to 3.5% is recommended for Quick-term and Short-term buy signals for ETF’s four to five weeks ago. These tight stop losses are based on the absence of tangential protection. Volatility may trigger undesired sells. Keep your eye on the daily stock market report for re-entry guidance.

 

For the Mid-term Indicant, which is more tolerate of short-term swings, use a 8% trailing stop loss or the yellow or green values you will find on the tables for your longer-term hold positions. If your stock or fund is above the bearish yellow curve and below the green curve, set your stop loss equal to the greater of the yellow curve and the trailing stop loss. If your stock or fund is above the green curve, set your stop loss at no less the value of the green curve or 8% trailing, whichever is greater. If your stock or fund is above the red curve and you bought at the Mid-term Buy signal, you should use the 10% trailing stop loss.

 

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

 

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

 

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

 

Economic Conditions – Inflation, Currency, Interest Rates

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

 

Interest rates remain with bullish bias for the stock market.

 

After stabilizing for about seven weeks, the U.S. Dollar exerted significant strength last week. The expected cyclical strength continues to unfold. The question now is, “will this cyclical shift transform to a strengthening trend?” From an inflationary perspective, the weakening trend remains solidly in place.

 

Commodities continue attempting a cyclical shift to the south. Although they are down from recent record setting peaks, they remain cyclically north. The trend remains north. They are a long way off shifting to southerly cycle. Commodity induced inflation remains a significant threat. Soft global economies are offering some inflationary relief. Unfortunately, that lends itself to reduced corporate earnings.

 

These conditions remain supportive of a bullish stock market. However, such bullishness will be muted due to reductions in sales volume and corresponding corporate profits.

 

As stated the past eight weeks, the stock market will eventually respond bullishly to the idea the increasing number of capitalists in spite of the immediate inflationary threats imposed by the short-term inequality between supply and demand, as capitalists solve problems.

 

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 is up 301.8% since the April 13, 2001 buy signal. Its annualized growth since that buy signal is 40.3%. It moved to the north in 59 of the past 103-weeks – a little over one-half the time. It has been bullish in 30 of the last 54-weeks. This fund has been bullish in 15 of the last 29-weeks. It was bullish the past two weeks, following aggressive bearishness in the previous five weeks.

 

Fidelity Gold, Fund #28 is down 9.5% since the Midterm Indicant signaled sell on August 1, 2008. It is simply not performing and weakening economies are depressing demand for all commodities. However, it has been bullish the past two weeks.

 

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 357.0% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 58.3%. This fund has been bullish in 12 of the last 27-weeks. It was bullish the past two weeks, following bearish behavior in the prior seven weeks.

 

Vanguard Energy #18, VGENX, is up 226.3% (annualized at 41.3%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 219.2% (annualized at 45.7%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 175.2% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 34.3%.

 

Energy related funds were mildly bullish last week after enduring significant bearishness in the prior six weeks. Last week’s bullish behavior was consistent with the long-term bullish trend. Fundamentally, that long-term trend should continue. However, the short-term cyclical patterns are bearish. As stated the past few weeks, recent “energy” bearishness is an adjustment from the anticipated $170-oil to a smaller number. Oil and other commodities are moving cyclically to the south, but the trend remains north.

 

Investors in these funds are supporting a 1970’s type of market with high inflation and high oil prices. As long as capitalism remains in vogue around the globe and alternative sources of energy continue to lag exponentially increasing demand, a long-term perspective on holding strategy is appropriate. However, keep in mind OPEC can very quickly reverse this trend. They have done it before and remain capable of doing it again.

 

The SQI signaled sell for ETF#03 – Energy and Natural Resources on August 4, 2008. It is up 5.3% since that sell signal. It was up 242.4% (annualized at 44.8%) since its previous buy signal on March 26, 2003. This fund has been bearish in 17 of the past 31-weeks and in eight of the past 11-weeks. This ETF is configured for bearishness on a Short-term basis. It was bullish last week, but configured with a mere technical bounce to bearish pressures.

 

The SQI (Consolidated Short-term and Quick-term Indicant) model signaled buy for the GLD-ETF#11 on August 3, 2005. It is up 87.7% since then. It is annualized at 28.1%. This fund has been bullish in 36 of the past 53-weeks. It has been bullish in 17 of the last 28-weeks. It has been bearish in three of the past seven weeks. The Quick-term Indicant signaled sell on August 12, 2008, but the Short-term Indicant continues to signal hold.

 

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 then major indices that it tracks. They are up by an average of 2.3% since their bull signals an average of 3.9-weeks ago. They are annualizing at 117.8%.

 

Click this sentence to view a summary of their performance.

 

The Mid-term Indicant Dow Jones Industrial Average performance is at $36,661,279

That beats buy and hold performance of $1,756,207 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $180,217. That beats buy and hold’s $125,656 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $227,792. That beats buy and hold’s $82,902 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 2,027.6%, 46.0%, and 184.3%, respectively, for these indices as of this past week.

 

The Indicant’s percentage advantage over buy and hold does not change during bull signals. The advantage changes only during bear signals. That is because the buy and hold model has to keep holding, while the MTI-RYS model avoids bear markets. The only purpose of the 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.

 

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.

 

Note from April 5, 2008: Enron will be removed from Indicant tracking later this year. It was removed from the Dow Utility Index several years ago. It is now a penny stock, but the Indicant kept tracking it at the request of members. Its low cost nature is not friendly to Mid-term Indicant assessment due to small price changes and corresponding large percentage impact. The Mid-term Indicant is not designed for penny stocks. Although recovery is always possible, this stock has become too busy to track. This position will be re-accessed based on member feedback as the year progresses.

 

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 buy for ProFunds Ultra Short on January 18, 2008. It was down 32.3% since the Mid-term Indicant signaled sell on September 15, 2006 until the buy signal on January 18, 2008. Historical norms of market cyclicality suggested the next buying opportunity for this fund should not occur until 2009.

 

This fund is down 5.9% since the Mid-term Indicant signaled sell on August 1, 2008.

 

Click here for Mid-term Indicant Table of Mutual Funds

 

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

 

Long Term Indicant Positions - Dow Jones Industrial Average

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

 

The Dow is up 298.8% (annualized at 17.7%) since the Long-term Indicant signaled bull 878-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. A link to the Long-term Indicant is below:

 

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

 

Quick/Short-term Indicant Stock Market Report - Summary

Quick-term Red Bulls: Four of thirty. Remains supportive of the bull; weak but supportive.

Quick-term Yellow Bears/Threats: Eighteen of thirty. Again mixed without obviating bullish desires.

Quick-term Non-Bearishness: QTI differential is bearish 7.0%. Bull is gaining influence.

Short-term Non-Bearishness: Breakout/breakdown differential is bearish 8.0%. Recent bearish weakening was being challenged with additional Force Vector induced bearishness.

Force Vectors: Mixed behavior, but shifting direction is in bullish domains. Although not bullish, the position is non-bearish. The bearish cycle appears complete. Behavior in the next few days should enhance obviations of directional intensity on a Quick-term basis.

Vector Pressure: Eleven in bullish domains, offering reduced support to the bull, but in support nonetheless.

STI Tangential Support: No tangential protection yet, but the Dow Transports is attempting to configure tangential protection.

Immediate Tactics: Holding is increasingly safe; buy more on dips and profit taking sessions. Stop losses of about 3.5% is appropriate for the next day or two.

Current Quick-term Bias: Shifted mildly in favor of the bull on Thursday, July 31, 2008.

Overall Market Status: Bullish bias on a Short-term Cycle basis. The Quick-term cycle is vulnerable to bearish influences, but this threatening cycle now appears complete.

Profit Potential from Naked Options: Enhanced as volatility is significant and as expected. Out of money August strangles were profitable. Major indices are not holding above bullish red, inviting additional volatility. September strangles will not be as profitable, but call options should be favored.

Volume: Lethargy invokes minimal obviations of bearishness or bullishness. Low volume invites volatility but when seasonally adjusted, the bias remains non-bearish. Notice this has shifted slightly from bullish bias.

 

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

To view the STI-Tangential Protection for ten major indices, click here.  

The following is a discussion of each of the ten major indices’ configurations. We will continue doing this until we finalize the tour and complete documentation of bull/bear signaling. The model, which removes all economic, corporate, and other fundamental influences, in addition to normal seasonality,  has been thoroughly tested and validated. Documentation is a different matter and it will be completed in a few weeks.

 

DJIA

This index crossed below bullish red on Friday, continuing its vacillations. It is hugging bullish red on the low side of red, but remains with bullish configurations. Force Vector shifted south, but above Vector Pressure. Bullish disfigurement has not yet occurred.

 

DJ Composites

Configurations remain timid in support of the bull.

 

DJ Transports

As stated since last Wednesday, those desiring bullish behavior on a near-term basis do not want to see Force Vector fall from its current position. Although rising, Force Vector behavior is not strong in support of the bull.

 

DJ Utilities

As stated last Thursday, strong bullish configurations should invoke a bearish response. The bear indeed responded on Friday, removing this index from red bull status. Force Vectors moved south and with negative Vector Pressure, there is a relatively high priority this index will succumb to bearish influences for a few days.

 

NASDAQ

As stated last Thursday, the inflecting of the bullish red curve is of some concern. Adding to that concern is Force Vector’s directional shift back to the south on Friday. If it continues, the bullish cycle will become disfigured and succumb to bearish influences. This configuration could configure into a “hitch and post” pattern, which could support dynamic bullishness. We will know that by next Tuesday or Wednesday.

 

NASDAQ100

The QLD and QQQQ tighter stop loss, as recommended on Thursday evening turned out to save some money, as this index was hit hard by the bear last Friday. Its bullish configuration is teetering on collapse. Positive (bullish) Vector Pressure is holding up, but moving in a bearish direction.

 

S&P500

Contrary to yesterday, but consistent with day before yesterday, Force Vector behavior accelerated its support of the bull last Thursday and held that support through Friday’s bearish behavior.

 

S&P100

Solid Force Vector is supporting bullish ambition. As stated last Thursday, its bullish red curve  appears to be relaxing too much. This index needs to quickly elevate above bullish red to mitigate bearish potential. 


S&P400

This index lost red bull status on Friday. Most of the movement has been below bullish red, which threatens the bull cycle’s longevity.

 

S&P600

Contrary to the S&P400, most of the movement has been above bullish red. However, behavior the past two weeks for the most part has been below red. Friday’s bearish behavior with rising Force Vector was inconsistent with expectations and threatens the bull. The configuration remains strong though and significant bearish behavior would be required to disfigure its bullish cycle.

 

NYSE

As you can see from the chart, the laziest index is now forming a bullish baseline even with Friday’s bearish behavior.

 

VIX

As stated last week, this index has plenty of technical room to support a bullish stock market. VIX’s configuration is losing it stock market obviation of directional intensity again with its meandering Force Vector behavior on the bottom of the chart. However, its bearish Vector Pressure is configured in support of a bullish stock market. Notice, though, how the index is bouncing above and below yellow, which suggests limited stock market commitment in either direction.

 

Overall, configurations are supportive of short-term bullish behavior, but not solidly due to Force Vector’s relative position to Vector Pressure. So far, the bear is not being offered strong support, but the bull’s support is minimal at this time.

 

The Short-term Indicant signaled bull on August 5, 2008 for the Dow Jones Industrial Average and NASDAQ. The Dow is down 0.4% and the NASDAQ is up 0.8% since then.

 

Please read on. Click here to see the Short-term Indicant’s history.

 

The NYSE and NASDAQ Indicant Volume Indicators  continue lethargically. As stated the past several days, this is not obviating directional intensity. However, based on seasonal considerations, this configuration favors the bull. The charts are pure and do not reflect seasonality. The decreasing demand for stocks is simply slowing the bull’s magnitude; not its existence. Bearish behavior on low volume is not trend setting, which is equally true for bullish behavior.

 

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

There were no buy signals and no sell signals. The SQI is signaling hold for 22-ETF’s. They are up by an average of 30.3% (annualized at 66.1%) since their respective buy signals an average of 23.6-weeks ago. The SQI is avoiding nine ETF’s at this time. They are down by an average of 4.5% since their sell signals an average of 9.6-weeks ago.

 

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

 

Short-term Indicant Report Card, Status, and Charts

There were no buy signals and no sell signals. The Short-term Indicant is signaling hold for 22-ETF’s. They are up an average of 46.5% (annualized 101.0%) since the STI signaled, buy, an average of 23.7-weeks ago.  There are nine ETF’s with avoid signals. They are down by an average of 4.7% since their sell signals an average of 9.6-weeks ago.

 

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

 

Quick-term Report Card, Status, and Charts

There were no buy signals and no sell signals.  The Quick-term Indicant is signaling hold for 21-ETF’s. They are up by an average of 2.7% (annualized at 37.0%) since the QTI signaled buy an average of 3.8-weeks ago.  The Quick-term Indicant is avoiding ten ETF’s. They are down by an average of 2.7% since their sell signals an average of 5.0-weeks ago.

 

Current Strategy – August 25, 2008 – Force Vector bearish cycle appears completed. The worse should be over in terms of the bearish response to the ambition of the bull. Some attributes are tentative, which is common during the early stages of a short-term bull cycle. Unfortunately, this does not lower the probability of a return of bearish dominance. However, there are enough bullish supporting attributes to continue biasing in favor of the bull. Keep in mind the bullish cycle is still relatively young and therefore vulnerable.

 

August 26, 2008 – Nothing different.

 

August 27, 2008 – Force Vectors have nestled just below Vector Pressure, which increases probability of bearish expression on a near-term basis. If Force Vectors move above Vector Pressure, this increased probability of bearishness will be significantly reduced.

 

August 28, 2008 – Force Vectors easily crossed over Vector Pressure, which is bullish. The cycle is maturing, but if they continue moving north or just relax at their current levels, the bullish cycle should continue. Relax stop losses to 3.5% from recent buys. That should prevent stopping out while minimizing losses in the event the bear exerts a sudden influence. Current configurations, though, disallow protracted bearish behavior.

 

August 29, 2008 – Configurations did not shift in support of the bear with today’s bearish behavior. There were some minor shifts supporting bearish behavior, but overall this bull remains in tact. It is simply not a thoroughbred. This baby bull has lacked synergy since its birth and succumbs to the slightest threats, such as a hurricane that may hit the Gulf Coast over the weekend. Fundamentals, although weak, were incongruent with the market’s bearish behavior on Friday. The NASDAQ100 Index is of concern with its weakening attributes, but it remains a bullishly configured.

 

Quick-term Indicant Bull/Bear Health Report

Click the above heading to view the charts.

 

Eighteen of the 30-ETF’s are below their respective bearish yellow curves. The average relative position of all thirty ETF’s is below bearish yellow by 1.3%. This is miniscule bearish support and remains under attack by the bull. The bear has expressed resistance to this newly forming bull cycle, but not enough to cause bullish expiration. As stated last Thursday, the last time this attribute was this low (0.3%), the bear was offended and eroded the bull’s ambition. It again happened this Friday. The ghost of the last bear is apparently retaining some influence. However, the bull, albeit weak should respond in kind early next week if the hurricane turns east and wipes out mere mansions in Florida or turns west and scoots across the Mexican dessert. If it hits the refineries in South Texas/Louisiana, the bear’s ghost will manifest more influence on the stock market.

 

Four ETF’s are above their bullish red curves. This attribute remains mildly non-bullish. All thirty ETF average positions are below bullish red by an average of 5.7%. which is non-bullish, but weakening in its non-bullish support. Keep in mind, just one non-contrarian bull prevents complete bearish dominance. Three of the four red bulls are non-contrarian.

 

The QTI differential is bearish by 7.0%. This is the fifty-seventh consecutive trading day of a bearish reading. This could shift favorably to bull in the next few days, but the bull has been struggling for the past several weeks in this endeavor. This bearishness continues weakening, but ever so slowly.

 

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

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

 

None of the thirty ETF’s are contacting their breakout lines. This is non-bullish, although weakening in that support.

 

The average distance from breakout contact is 18.4%. Double digit variances from breakout contact for 166-consecutive trading-days has been non-bullish.  This attribute is now shifting toward bullish support, but has been enduring interruptions by the bear.

 

None of the thirty ETF’s are contacting their breakdown lines. Contact in 23-of the last 50-trading days supported bearishness, but losing influence. Contact density has relaxed with zero breakdown contact in 21 of the past 31-trading days.   That is increasingly non-bearish, but somewhat discerning with increasing contact in six of the last thirteen trading days. This is also highlighting the absence of sectored synergy, which remains a threat to the newly forming bull cycle.

 

The average distance between the price and breakdown is 10.4%. After providing non-bearish support since March 2003 with double digit readings, this has been a single digit expression (bearish) in 20 of the last 46-trading days. Double digits provide non-bearish relief. As stated last Tuesday, the bull should respond with some gusto in the next day or two. It responded on Wednesday and Thursday, but not yet obviated its degree of sustainability. Friday’s bearish behavior further reduced the desired degree of obviating the market’s directional intensity.

 

The breakout/breakdown differential is bearish by 8.0%. This attribute is supporting bearish ambition, but expected to weaken in that support in the next week or two. As stated the past few weeks, along the way, there will be some bearish disruptions.

 

ETF Force Vector Configurations

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

 

Twenty-two Force Vectors are in bullish domains. It gained by one even with Friday’s bearish behavior. This is again a bullish majority. They are currently moving in support of the bull with some minor shifts to the south on Friday, which is of concern.

 

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

 

ETF Force Vectors/Vector Pressure Crossings/Option Signals

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

 

Click this sentence for Vector Pressure Option Signals. There was one call option and one put option buy signal after Friday’s close. There have been 51-option buy signals in the past 16-trading days; 33-calls and 18-puts.

 

Today’s aggression by the bear was perfect for yesterday’s call option buy signals since deep discounted buy offers were accepted. What is needed now is a solid bullish response early next week

 

Eleven of the thirty ETF Vector Pressures are in bullish domains. You should notice this attribute continues creeping up, favoring bullish support. Although five bullish domains were lost five trading days ago, this attribute remains supportive of the bull.

 

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

 

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

 

Quick-term and Short-term Indicant Summary

A solid new bearish bias shift was born on June 11, 2008. It expired on August 1, 2008 with bullish bias.

 

ProFunds Ultra Short mutual fund moves inversely to the QQQQ by exponential amounts. See the Mid-term Indicant for its status.

 

The Quick-term and Short-term Indicant tracks ETF#31, QID, which is the ETF cousin to ProFunds Ultra Short. It is excluded from overall ETF statistics because it is purely contrarian. It is designed to move bullishly during bear markets and bearishly during bull markets. This exclusion is required for convergent/divergent monitoring.

 

The Indicant signaled sell for QID  on July 31, 2008. It is down 3.7% since that sell signal. As stated on August 22, Force Vector is shifting back to the north, which suggested QQQQ’s bearishness. This cycle is now mature and QID should start falling in price within a few days. Specifically, this bullish threat by QID appears ready to retreat.

 

Other Contrarian Funds

ETF#03-Natural Resources   - This ETF is up 1.4% since the Quick-term Indicant sell signal on July 24, 2008.  Its Force Vector is again falling, suggesting the hurricane will not damage refineries. Current configurations suggest a simple technical correction to its bearish onslaught.

 

ETF#11-Gold and Precious Metals   received a sell signal from the Quick-term Indicant on August 12, 2008. It is up 1.5% since this recent sell signal. This ETF’s configurations are very bearish at this time.

 

ETF#14-Long Government  is up 3.5% since the Quick-term Indicant signaled sell on August 5, 2008. It is a red bull, but overall market bullish probabilities influence continuing avoidance of this ETF. Keep in mind, if the Dow moves bearishly, this fund should perform well within the confines of the next paragraph.

 

This fund has some strategic risk. The dollar’s weakness and inflationary threats will eventually stimulate increased interest rates. With that, this fund, fundamentally, would endure bearish behavior. The contrarian movement to that fundamental prognosis would be high demand for safety purposes, depending on the nature of economic behavior. Do not be surprised at jawboning the dollar up, but the U.S. remains a net-importer and thus the continual downward pressure on the dollar, which fundamentally supports long-term upward pressure on interest rates.

 

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

 

Quick-term ETF Options

Quick-term Indicant for ETF’s

Short-term Indicant for ETF’s

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

 

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

 

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

 

Short-term Indicant for DJIA and NASDAQ

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

Short-term Indicant Table for the NASDAQ Composite Index

Indicant Volume Indicator

Short-term Indicant for Tangential Analysis

 

 

Divergence versus Convergence

There is nothing different from last week. The market again mixed last week with several sectors expressing bearishness while others expressed bullishness. Commodities and energy returned to their newly forming bearish cycle. As previously stated, a long-term view should be guided with caution as the declining energy prices correlate to declining demand. That correlates to economic recession at this time.

 

Overall, the market endured bearish divergence last week, but on a minor scale. The stock market continues formation of short-term bullishness, but economic and political instabilities are fomenting minimal commitments to the underlying desire to be bullish.

 

Indicant Conclusion

As stated the past five weeks, the bear completed its process of inflicting it influence on all pertinent sectors. A final nesting place in support of the bear occurred. The problem is that the bottoms in the various sectors did not occur at the same time, suggesting this short-term bull cycle is not sustainable on a mid-term basis. However, a short-term bull cycle of twelve to twenty weeks would help stabilize equities even if followed by another deep bearish cycle later this year.

 

As stated the past three weeks, from a short-term perspective a new bullish cycle has been forming. It may turn out to be a bullish spurt. To escape spurt potential, the Short-term Indicant needs to develop tangential protection, which has not yet occurred. The market needs to stabilize or continue bullishly for a few more weeks for this desired feature.

 

Last week’s intermittent bullish and bearish behavior resulted in wounds to the baby bull. Although shaken, it remains a bull. Unfortunately, though, the probability of sustainability was reduced last Friday. This bull was shaken in part by Dell’s disappointment and in part by the threat of hurricane in the Gulf.

 

Keep up with the daily stock market report as the Quick-term attributes can shift quickly.

 

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

 

The daily updates are on the following link.

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

 

Hyperlinks

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

 

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

 

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

 

Happy Investing,

 

 

www.indicant.net

08/31/08

 

 

 

 

Aug 24, 2008 Indicant Weekly Stock Market Report

Volume 08, Issue 04 ISSN 1526 6516 © The Indicant Stock Market Report

 

This Week’s Report

 

Hard Economic Data – Physical Objects

The late Shigeo Shingo, the brilliant Industrial Engineer who developed the infamous Toyota Production System, invested considerable time differentiating physical objects from abstract objects. Toyota stock price continues to increase. General Motors stock price is at a fifty-year low because they are more concerned with abstract creations, as opposed to physical objects.

 

A house is a physical object. The mortgage is an abstract object. This particular abstract object has been causative to the problems confronting the economy and the stock market. The physical object did not change with the subprime lending crisis. The abstract object caused the problem.

 

Man-made physical objects require honest energy and hard work. Abstract objects require little energy and with few exceptions, minimal work effort. Therein lays the problem. The construction costs of the house was $C. The original selling price was $S.  The difference between $C and $S was the profit or the loss. The first honest transaction was the original one when the construction company sold the house to a buyer. That is because the physical object was valued, based on cost plus the desired margin. Considerably personal risk was involved in the construction of the house, along with hard working effort.

 

Subsequent honest transactions occurred when owners of the house sold to subsequent buyers. These transactions were again based on the desired profit surrounding the “demonstrated” value of the physical object (the house).

 

The great white-collar hoax interjected itself into the process house selling and buying. The “white-collar world” is mainly limited to abstract objects. They are remote from physical objects. They more or less circulate abstract objects. They learned how they could make money with minimal effort with their abstract objects; mortgage agreements. Part of the process was asset valuations. Asset valuations without a specific physical object, a real buyer, and a real seller are completely abstract. In other words, the value of the asset is a guess and that always borders fiction.

 

All abstract objects are worthless until transformed into a physical object. Einstein’s infamous energy expression as mass times the speed of light squared was an abstract object. Until physical objects manifested from that brilliance, it was worthless. Einstein’s effort in the creation of that expression is not being criticized. There are a few; very few abstract objects that lead to physical object production or improved efficiency or quality of physical object production. Unless they do that, they are worthless. A mortgage agreement is a worthless abstract object. It merely replaced a handshake people use to use in the formation of agreements. A few dishonest types led to the creation of the abstract object.

 

Valuing physical objects without real buyers and sellers requires elements of fiction. The real value is not possible to determine without a real buyer of the property. Enron white-collar executives valued non-existing physical objects with very little effort in their abstract world. All fiction is abstract. Bearn Stearns financial reports, in addition, to any financial report from any organization are abstract. Some contain fiction, while most are accurate. Clintonism has accelerated the rise in the fictional types. Although all politicians have to lie in their attempt to convince the masses they “know the way.” All lies are abstract concepts. All physical objects are for direct observation; they are what they are. Individual perception and interpretation is a different manner, but the physical object has a higher degree of objective interpretation than that of an abstract object.

 

Communism was one of the biggest abstract concepts in the last century. Abstract producers (paper pushers) became the majority and physical object producers were among the minority. Consequently, 1% of the communist lived as kings, while the remaining 99% lived in poverty. Free market methods disallow such a skewed result. Socialistic methods enhance abstract modeling and add to the reduction of wealth and deteriorated quality of life of those who allow non-value adding abstract concepts to become the predominant force. All politicians and governments are purely abstract creators; they deliver no economic wealth.

 

Once the construction of a house is finished, real economic wealth stopped, when relating specifically to that house. If the construction cost of a home was $100,000 in 1960, real economic wealth was created for exactly $100,000. The sell of that house for $1,000,000 in 2008 added an accumulated profit of $900,000. If that profit is hidden in a bed mattress, no economic wealth was created from the sell of that house. The $900,000 hiding in the mattress is a mere abstract object and worthless in terms of economic contribution. If the profit makers bought a small yacht for $900,000, then real economic wealth was created by the construction of the small $900,000 yacht.

 

The paper pushers on Wall Street and the mortgage industry obviously spent some of their phony profits buying physical objects, such as televisions, I-pods, Blackberries, etc. The gap widened between the creation of real economic wealth and the phony world of abstract object creation by Wall Street, Lawyers, Bean Counters, and Bank Clerks.

 

Such gaps between physical object producers and abstract object creators reach a maximum whereby physical object creation lags too far behind abstract object creation. The $100,000-asset that evolved into a $1,000,000-asset was revalued by paper pushers remote from the physical object. They had no stake or applied effort in the production of the physical object. With the stroke of a pen, the paper pusher would strike out $1,000,000 and deem the asset at $1,200,000 based on some abstract economic report. The paper pusher would then sell this abstract asset valuation to a phony buyer, take the $200,000 phony profit and a processing fee for low effort work. Since these abstract objects required little effort and zero risks, they to regurgitate the same asset. The led to accelerated balance sheet assets that led to phony organizational net worth expressions.

 

The phony buyer of the house was not the yacht maker. The phony buyer was a bank clerk. In other words, all those in the circle of phoniness were not adding real economic wealth. However, when they were doing their phony transactions, they bought other physical objects. That suggested real economic wealth was indeed growing. However, because the participants of phoniness were not adding real economic wealth, the gap between physical object construction and abstract economic demand became too wide to sustain the cycle of phoniness.

 

The stock market sniffed this first in July 2007. The stench of the phony odor became too much for the stock market to stomach by October 2007. That was when it peaked and many of the financial institutions find their real value; less than half of the October 2007 valuations. The stock market and free markets are not through with the required “weeding out process.” The government has introduced and passed legislation (more abstract concepts). That will slow the required weeding out process of the lame and inefficient and hamper the bull’s desire to exert its influence on the stock market. (Keep in mind, the stock market is encouraged by some weeding out of the parasitical elites, but the bull’s ambition will be stifled with more and more abstract object creation).

 

Houses are not commodities since they cannot be used in the construction of additional physical objects, unless converted to a restaurant or manufacturing facility. Once their construction is finished, there is no more direct real economic wealth that can be produced from that house. Commodities, on the other hand, are used to create additional physical objects. They are bought and sold, daily, by real buyers and sellers. It is impossible for the paper pushing white-collar hoax person to interject their abstract concepts into the valuation of raw commodities.

 

Physical objects, such as commodities, exclude abstract influences for the most part. From time to time, organizations, such as OPEC, which is purely abstract, interject and create economic hardship. However, for the most part, the economic laws of supply and demand determine the asset valuations of commodities, as opposed to a paper pusher.

 

Because the weeding out process is decreasing demand, commodity prices are falling. The short-term interpretation of these falling commodity prices is reduced inflationary threats. The longer-term concern is how long will this reducing demand last. At some future point, the stock market will determine some degree in demand/supply equilibrium. If it finds limited variances between supply and demand, it should be bullish. Large variances and a reduction in physical object producers and potential buyers of physical objects will be bearish. Large variances in the other direction whereby abstract creators remain relatively high to physical object producers will be inflationary. That will be bearish.

 

For the first time since the early 1990’s and for a short period in early 2003, most of the economic elements on the following link are bullish. The only remaining bearish element is the producer price index. If commodity prices continue to fall, the producer price index will relax and shift to bullish configurations. These configurations offer an increasing probability of a continuation of the secular bull born in early 2003.

 

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

 

The abstract object producers are being laid off from Bear Stearns and other similar organizations. In essence, their abstract concept capacity is being reduced from the economy, as it should be, since abstract concepts do not produce economic wealth. This will dampen the demand for physical objects on a short-term basis, as fewer I-Pods, TV’s, Blackberries will be sold with the phony money from the low effort abstract producers. Therefore, less copper will be needed for the production of those type of physical objects.

 

Strategically, the economy’s long-term prospects are bright with the removal of abstract object creators. The economy will flourish and be more substantial with the Enron type of paper pushers in jail and those who got away with it, walking the streets.

 

Keep your eye on the daily stock market report. It will help you differentiate sustainability versus spurts regardless of the directional intensity underway.

 

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 three buy signals and no sell signals. There have been 106-buy signals in the past six weeks. There have been 343-sell signals since October 26, 2007, but only eight in the past six weeks. Buy signals will increase once tangential bullish protection manifests.

 

In addition to the buy signals, the Mid-term Indicant is signaling hold for only 174 of the 345-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 144.2%. That annualizes to 69.0%. The Mid-term Indicant has been signaling hold for these 168-stocks and funds for an average of 108.7-weeks.

 

Although there were no sell signals, the Mid-term Indicant is avoiding 168-stocks and funds of the 345- tracked by the Indicant. The avoided stocks and funds are down an average of 18.4% since the Mid-term Indicant signaled sell an average of 30.7-weeks ago.

 

One year ago, on Aug 25, 2007, the Mid-term Indicant was holding 257-stocks and funds out of the 345 tracked for an average of 121.7-weeks. They were up by an average of 145.5% (annualized at 62.2%). There were 88-avoided stocks and funds at that time. Those avoided stocks and funds were down an average of 5.0% since their respective sell signals an average of 14.7-weeks earlier.

 

The Mid-term Indicant was signaling hold for 221-stocks and funds of the 345-tracked two years ago on Aug 25, 2006. They were up by an average of 118.7% (annualized at 66.6%) since their respective buy signals an average of 92.7-weeks earlier. The Mid-term Indicant was avoiding 88-stocks and funds at that time. They were down an average of 7.6% since their respective sell signals an average of 17.2-weeks earlier.

 

There were 221-stocks and funds with hold signals on Aug 26, 2005 since their buy signals an average of 90.3-weeks earlier. They were up by an average of 118.7% (annualized at 66.6%). There were 90-avoided stocks and funds at that time. They were down by an average of 9.4% from their respective sell signals an average of 20.9-weeks earlier.

 

On August 20, 2004, the Mid-term Indicant was signaling hold for 157-stocks and funds out of 296-tracked. They were up by an average of 83.0% (annualized at 66.0%) since their buy signals an average of 65.4-weeks earlier. The Mid-term Indicant was avoiding 120-stocks and funds at that time. They were down by an average of 26.3% since their sell signals an average of 42.2-weeks earlier.

 

Five years ago, on Aug 23, 2003, there were 231-hold signals for stocks and funds out of the 296 tracked by the Mid-term Indicant at that time. They were up an average of 49.5% (annualized at 90.8%) since their respective buy signals an average of 28.3-weeks earlier. There were 36-avoided stocks and funds then. They were down an average of 8.4% since their respective sell signals an average of 9.6-weeks earlier.

 

On Aug 23, 2002, there were 189-stocks and funds with hold signals from the listing of 295-tracked by the Mid-term Indicant at that time. They were up 11.4%, annualizing at 81.1%. There were 69-avoided stocks and funds then. They were down by an average of 47.3% since their sell signals an average of 25.0-weeks earlier.

 

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

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

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

 

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

 

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

 

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

 

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

As stated last week, the market is configured with bullish inspiration. The new bull cycle has not yet matured with obviations of bullish sustainability. Do not be surprised at volatility, which is common when the bear and bull battle for dominance. The battle is waging, configurations are suggesting the bull will be victorious and thus the buy signals.

 

Click the following link that will take you to the tangential protection charts.

 

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

 

The Quick/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 imbedded in this weekly report. This allows web-based retention records of the daily report for much longer than the last twelve months.

 

The Daily Indicant Stock Market Report for the last trading day of the current week is near the conclusion of this weekly stock market report. It is emailed each weekend, separately, so you can read it, either as a separate document, or in this document.

 

The Indicant Stock Market Report’s Secular Market Blend

The Dow is up 59.6% since its secular low on October 9, 2002. The NASDAQ is up 116.7% and the S&P500 is up 66.4% since then. The small cap index, S&P600, is up 126.9%. The major indices, with the exception of the Dow Utilities and NYSE, are now bullishly biased.

 

As stated the past several months, the secular bull that originated on October 9, 2002 no longer remains solid. A secular bear could indeed be unfolding. However, as stated the past three weeks, several short-term attributes continue configuring in favor of the bull.

 

The Dow is down 17.9% since its last closing peak on Oct 9, 2007. The NASDAQ is down 15.5% since its last peak on Oct 31, 2007. The S&P600 is down 13.0% since its last closing peak on Jul 19, 2007.

 

The NASDAQ is down 52.2% since its last weekly secular peak on March 9, 2000. The S&P500 is down 15.4% since its similar secular peak on March 23, 2000. The Dow is down by 0.8% 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.

 

The Dow is down 12.3% so far this year. The NASDAQ is down 9.0% this year. These conditions are incongruent with historical standards. This year should be bullish, based on those standards. The stock market occasionally delights in violating historical standards. This always happens when such standards gain in popularity. As stated for several years now, the phenomenon of commonality disallows stock market victories by the masses.

 

The short-term bullish cycle, ending ten weeks ago, had been lending support to historical standards. As stated several times in prior weekly reports, that bullishness will be challenged during the dog days of summer. You saw that for about eight weeks until four weeks ago. The expected reversal to bullish bias on a short-term basis has formed. The question now is the breadth of sustainability.

 

The NASDAQ year-to-date performance was bearish by 24.7% through this week in 2001. Keep in mind the NASDAQ finished 2001 down by 23.3%.  This year had been configuring with 2001 similarity, but there is a mild chance historical standards (bullish) may be developing.

 

The NASDAQ was down by 27.0% through this weekend in 2002. Some of you recall the dynamic bear market in 2002, where the NASDAQ finished that year down by 31.5%. The NASDAQ YTD 2003 performance was up by 32.2%. It finished up in that solidly bullish year by 50.0%. It was down on this weekend in 2004 by 8.3%.  It was down by 1.6% in 2005. Many of you recall that 2004 and 2005 were meandering bear markets. In 2006, it was down by 2.5% and up by 5.7% at this time last year.  

 

Keep your eye on the daily stock market report.

 

Stop Loss Management

The Mid-term Indicant recommends a stop loss of 8% due to increasing bullish influences for the longer-term holdings. You should set them higher for any recent non-contrarian buys, such as 5% or enough to protect reasonable gains. A stop loss of 2.5% is recommended for Quick-term and Short-term buy signals for ETF’s three to four weeks ago. These tight stop losses are based on the absence of tangential protection. Volatility may trigger undesired sells. Keep your eye on the daily stock market report for re-entry guidance.

 

For the Mid-term Indicant, which is more tolerate of short-term swings, use a 8% trailing stop loss or the yellow or green values you will find on the tables for your longer-term hold positions. If your stock or fund is above the bearish yellow curve and below the green curve, set your stop loss equal to the greater of the yellow curve and the trailing stop loss. If your stock or fund is above the green curve, set your stop loss at no less the value of the green curve or 8% trailing, whichever is greater. If your stock or fund is above the red curve and you bought at the Mid-term Buy signal, you should use the 10% trailing stop loss.

 

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

 

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

 

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

 

Economic Conditions – Inflation, Currency, Interest Rates

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

 

Interest rates are mixed, but with a mild bullish bias for the stock market.

 

After stabilizing for about six weeks, the U.S. Dollar exerted significant strength last week. The expected cyclical strength continues to unfold. The question now is, “will this cyclical shift transform a strengthening trend?” From an inflationary perspective, the weakening trend remains solidly in place.

 

Commodities rebounded last week after five consecutive weeks of aggressive bearishness. The balance one is looking for when desiring a bullish stock market is continuing demand for commodities, which suggests healthy economic growth, while maintaining price stability to offset inflationary pressures.

 

These conditions are supportive of a bullish stock market, but that exuberance will be quickly dashed in the event deflation becomes an issue. That is unlikely since the rising tide of capitalism will continue the longer-term trend of stoking demand for commodities.

 

As stated the past seven weeks, the stock market will eventually respond bullishly to the idea the increasing number of capitalists in spite of the immediate inflationary threats imposed by the short-term inequality between supply and demand, as capitalists solve problems.

 

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 is up 299.2% since the April 13, 2001 buy signal. Its annualized growth since that buy signal is 40.1%. It moved to the north in 58 of the past 102-weeks – a little over one-half the time. It has been bullish in 29 of the last 53-weeks. This fund has been bullish in 14 of the last 28-weeks. It was bullish last week following aggressive bearishness in the previous five weeks.

 

Fidelity Gold, Fund #28 is down 10.9% since the Mid—term Indicant signaled sell on August 1, 2008. It is simply not performing and weakening economies are depressing demand for all commodities. It was bullish last week.

 

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 354.8% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 58.1%. This fund has been bullish in 11 of the last 26-weeks. It was bullish last week, following bearish behavior in the prior seven weeks.

 

Vanguard Energy #18, VGENX, is up 226.3% (annualized at 41.4%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 222.1% (annualized at 46.5%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 173.7% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 34.1%.

 

Energy related funds were bullish last week after enduring significant bearishness in the prior six weeks. Last week’s bullish behavior was consistent with the long-term bullish trend. Fundamentally, that long-term trend should continue. However, the short-term cyclical patterns are bearish. As stated the past few weeks, recent “energy” bearishness is an adjustment from the anticipated $170-oil to a smaller number. Oil and other commodities are moving cyclically to the south, but the trend remains north.

 

Investors in these funds are supporting a 1970’s type of market with high inflation and high oil prices. As long as capitalism remains in vogue around the globe and alternative sources of energy continue to lag exponentially increasing demand, a long-term perspective on holding strategy is appropriate. However, keep in mind OPEC can very quickly reverse this trend. They have done it before and remain capable of doing it again.

 

The SQI signaled sell for ETF#03 – Energy and Natural Resources on August 4, 2008. It is up 0.2% since that sell signal. It was up 242.4% (annualized at 44.8%) since its previous buy signal on March 26, 2003. This fund has been bearish in 17 of the past 30-weeks and in eight of the past ten weeks. This ETF is configured for bearishness on a Short-term basis. It was bullish last week, but configured with a mere technical bounce to bearish pressures.

 

The SQI (Consolidated Short-term and Quick-term Indicant) model signaled buy for the GLD-ETF#11 on August 3, 2005. It is up 84.8% since then. It is annualized at 27.5%. This fund has been bullish in 35 of the past 52-weeks. It has been bullish in 16 of the last 27-weeks. It has been bearish in three of the past six weeks. The Quick-term Indicant signaled sell on August 12, 2008, but the Short-term Indicant continues to signal hold.

 

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 then major indices that it tracks. They are up by an average of 3.0% since their bull signals an average of 2.9-weeks ago. They are annualizing at 156.5%.

 

Click this sentence to view a summary of their performance.

 

The Mid-term Indicant Dow Jones Industrial Average performance is at $37,637,957

That beats buy and hold performance of $1,769,064 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $184,755. That beats buy and hold’s $126,574 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $238,019. That beats buy and hold’s $83,728 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 2,027.6%, 46.0%, and 184.3%, respectively, for these indices as of this past week.

 

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

 

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.

 

Note from April 5, 2008: Enron will be removed from Indicant tracking later this year. It was removed from the Dow Utility Index several years ago. It is now a penny stock, but the Indicant kept tracking it at the request of members. Its low cost nature is not friendly to Mid-term Indicant assessment due to small price changes and corresponding large percentage impact. The Mid-term Indicant is not designed for penny stocks. Although recovery is always possible, this stock has become too busy to track. This position will be re-accessed based on member feedback as the year progresses.

 

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 buy for ProFunds Ultra Short on January 18, 2008. It was down 32.3% since the Mid-term Indicant signaled sell on September 15, 2006 until the buy signal on January 18, 2008. Historical norms of market cyclicality suggested the next buying opportunity for this fund should not occur until 2009.

 

This fund is down 11.2% since the Mid-term Indicant signaled sell on August 1, 2008.

 

Click here for Mid-term Indicant Table of Mutual Funds

 

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

 

Long Term Indicant Positions - Dow Jones Industrial Average

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

 

The Dow is up 302.8% (annualized at 17.9%) since the Long-term Indicant signaled bull 877-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. A link to the Long-term Indicant is below:

 

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

 

Quick/Short-term Indicant Stock Market Report - Summary

Quick-term Red Bulls: Four of thirty. Shifting in favor of bull.

Quick-term Yellow Bears/Threats: Seventeen of thirty. Majority support of bear is holding, but should wane in the next few days.

Quick-term Non-Bearishness: QTI differential is bearish 7.3%. Bull now arguing with bear, but bear is shouting back a bit, but not too loudly.

Short-term Non-Bearishness: Breakout/breakdown differential is bearish 7.5%. Recent bearish weakening was being challenged with additional Force Vector induced bearishness. However, those bearish cycles are now mature and should return to alliances with the bull.

Force Vectors: Mixed behavior, but shifting direction is in bullish domains. Although not bullish, the position is non-bearish. The bearish cycle is maturing and its behavior in the next few days should enhance obviations of directional intensity.

Vector Pressure: Fifteen in bullish domains, offering increased support to the bull. This attribute remains in majority support of the bull.

STI Tangential Support: No tangential protection yet. None of the attributes support bearishness. However, there is little in the way of volatile expressions with periodic bearish support.

Immediate Tactics: Holding is increasingly safe; buy more on dips and profit taking sessions. Loosen stop losses to about 2.5% below prevailing prices until such time tangential protection can form.

Current Quick-term Bias: Shifted mildly in favor of the bull on Thursday, July 31, 2008.

Overall Market Status: Bullish bias on a Short-term Cycle basis. The Quick-term cycle is vulnerable to bearish influences, but this threatening cycle is now mature and should expire in the next day or two.

Profit Potential from Naked Options: Enhanced as volatility is significant and as expected. Out of money August strangles were profitable. Major indices are not holding above bullish red, inviting additional volatility. September strangles will not be as profitable.

Volume: Lethargy invokes minimal obviations of bearishness or bullishness. Low volume invites volatility but when seasonally adjusted, the bull is favored with current configurations. Bearish behavior earlier this week was not been accompanied with volume support. Neither was bullish behavior at the end of this week.

 

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

The Short-term Indicant signaled bull last Tuesday for the Dow Jones Industrial Average and NASDAQ. The Dow is up 0.1% and the NASDAQ is up 2.8% since then.

 

Please read on. Click here to see the Short-term Indicant’s history.

 

The NYSE and NASDAQ Indicant Volume Indicators  continue lethargically. This is not obviating directional intensity. However, based on seasonal considerations, this configuration favors the bull. The charts are pure and do not reflect seasonality. The decreasing demand for stocks is simply slowing the bull’s magnitude; not its existence. Bearishness earlier this week was not supported by volume. Similarly, bullish behavior on Thursday and Friday were also not supported by volume. As stated last week, several indices were simply too red hot and needed to cool. The cooling (bearishness earlier this week) configured within the confines of normal patterns of a baby bull market.

 

Keep in mind bearishness earlier this week was expected and should not have been surprising. The Quick-term Indicant did not generate sell signals because of it.

 

To view the STI-Tangential Protection for ten major indices, click here.  

The following is a discussion of each of the ten major indices’ configurations. We will continue doing this until we finalize the tour and complete documentation of bull/bear signaling. The model, which removes all economic, corporate, and other fundamental influences, in addition to normal seasonality,  has been thoroughly tested and validated. Documentation is a different matter and it will be completed in a few weeks.

 

DJIA

As stated yesterday, bearishly moving Force Vector continues maturing, fostering increased probability of bullish response. (the Dow gained nearly 200-points today). There is plenty of room for bullish Force Vector movement. The next key event will be Force Vectors interaction with Vector Pressure. That will probably occur next week. Those desiring bullish behavior do not want to see Force Vector react bearishly to that interaction. Bearish yellow continues to rise. Bear has not yet enjoyed victory.

 

DJ Composites

Vector Pressure continues to struggle within bearish domains. Index has not penetrated bearish yellow. Red bull curve has not yet collapsed. Although its bullish energy needs are higher, the bear has not enjoyed victory.

 

DJ Transports

It continues cooling from overheating. Vector Pressure remains inside bullish domains. Force Vector cycle is mature and should induce additional bullish to non-bearish behavior in the next few days.

 

DJ Utilities

Utilities are climbing out of oversold condition. It did not participate in last Monday’s and Tuesday’s bearish behavior. It is attempting for configure bullishly. The bull/bear battle wages. Utilities was bear’s last victim. During “real” bearish cycles, weaker securities and indices fall deeper and more rapidly than the others. This is a weaker index, but has resisted bearish overtures. That bodes well for those desiring bullish behavior. Keep in mind, if Utilities expansion into a bullish cycle requires patience since it is weak.

 

NASDAQ

Was too hot; had to cool. It regained red bull status with Friday’s aggression by the bull. No obviations here, but it now has opportunities for a bullish movement since Force Vector cycle is mature and Vector Pressure is solidly inside bullish domains.

 

NASDAQ100

Has yet to fall below bullish red. Its bullish red curve is solidly bullish. This is configuring for strong bullish behavior on a near-term basis.

 

S&P500

The dilettante infested corporations even have a solid bullish red curve with bullish Vector Pressure.  It moved above bullish red today.

 

S&P100

Ditto for the largest of large caps with the exception that it is not a bullish red index. However, there should be resistance to Vector Pressure falling into bearish domains, which is bullish on a near-term basis.


S&P400

The mid-cap bearish cycles are seldom deep. This is configured with bullish support, while the declining Force Vector is of a short-term concern.

 

S&P600

The small-caps are typically better managed and have more room to displace S&P100, which they do regularly. This remains solid with bullish configurations. It had to cool. Its Vector Pressure continues to suggest being overbought, but still solidly bullish.

 

NYSE

Bullish red collapsed last Tuesday, but breakdown contact continues to be avoided. As long as this “avoidance” continues, the bull can embellish its mark on the stock market.

 

VIX

This index still has plenty of room for bearish behavior, which is bullish for the stock market. Do not be surprised at it making breakdown contact. Its next bullish cycle will probably unfold when Congress returns to work. That will be bearish for the stock market. In the meantime, a bullish stock market, although still young and vulnerable, is still unfolding.

 

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

There were two buy signals and no sell signals. The SQI is signaling hold for 20-ETF’s. They are up by an average of 32.4% (annualized at 67.1%) since their respective buy signals an average of 24.8-weeks ago. The SQI is avoiding nine ETF’s at this time. They are down by an average of 5.6% since their sell signals an average of 8.6-weeks ago.

 

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

 

Short-term Indicant Report Card, Status, and Charts

There were two buy signals and no sell signals. The Short-term Indicant is signaling hold for 20-ETF’s. They are up an average of 51.6% (annualized 106.5%) since the STI signaled, buy, an average of 24.9-weeks ago.  There are nine ETF’s with avoid signals. They are down by an average of 5.8% since their sell signals an average of 8.6-weeks ago.

 

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

 

Quick-term Report Card, Status, and Charts

There were two buy signals and no sell signals.  The Quick-term Indicant is signaling hold for 19-ETF’s. They are up by an average of 3.3% (annualized at 55.9%) since the QTI signaled buy an average of 4.0-weeks ago.  The Quick-term Indicant is avoiding ten ETF’s. They are down by an average of 3.5% since their sell signals an average of 4.0-weeks ago.

 

Current Strategy – August 18, 2008 – The Indicant continues to signal hold even though several Force Vectors are moving bearishly. Although Vector Pressure is mixed with some in bullish domains and others in bearish domains, the stronger ETF’s remain configured with bullish bias. Although the desired synergy for bullish robustness remains absent, the probability of that developing remains high. Until bullish configurations are disfigured, the hold signals will prevail. However, configurations remain with some ominous risks due to the newness of this bull. It is recommended to maintain relatively tight stop losses on the newer buy signals. If you stop out and the bullish synergy configures, other ETF’s will offer re-entry opportunities in the event this bull becomes robust. August 19, 2008 – The declining Force Vector cycle is nearing maturity. If they continue south in a robust configuration, along with other attributes shifting in support of the bull, then sell signals will ensue in recognition this bullish cycle is a mere spurt. So far, though, several attributes continue supporting longevity.

 

August 20, 2008 – There is nothing different today.

 

August 21, 2008 – Force Vectors continue moving bearishly, but a few up-ticked today. Their bearish cycle is mature. This enhances probability of a resumption of bullish market behavior. Do not be concerned about news, regardless of negativity.

 

August 22, 2008 – Today’s bullish behavior offers increased probability of sustainable bullishness. Although dynamic bullishness is not likely, this young bull is gaining traction. There was some synergy in today’s bullish stock market. Loosen stop losses on recent buys to about 2.5% from prevailing prices. In the event this turns out to be a bullish spurt, that should protect some profits and/or minimize losses. This 2.5% range reduces probability of stopping out of a solid bull by about 80% while protecting your cash potential. Baby sitting your holdings will be required until tangential protection develops.

 

Quick-term Indicant Bull/Bear Health Report

Click the above heading to view the charts.

 

Seventeen of the 30-ETF’s are below their respective bearish yellow curves. The average relative position of all thirty ETF’s is below bearish yellow by 1.4%. This is miniscule bearish support and remains under attack by the bull in spite of bearish behavior earlier this week. The bear has expressed resistance to this newly forming bull cycle, but not enough to cause bullish expiration.

 

Four ETF’s are above their bullish red curves. This attribute remains mildly non-bullish. All thirty ETF average positions are below bullish red by an average of 5.9%. which is non-bullish, but weakening in its non-bullish support. Keep in mind, just one non-contrarian bull prevents complete bearish dominance. All four red bulls are non-contrarian.

 

The QTI differential is bearish by 7.3%. This is the fifty-second consecutive trading day of a bearish reading. This could shift favorably to bull in the next few days, but the bull has been struggling for the past two weeks, plus a few days, in this endeavor. This bearishness continues weakening, but ever so slowly. However, as stated last Friday, do not be surprised at bearish expressions in the next few days. As you saw, this past Monday and Tuesday endured fairly aggressive bearish assertions, but they were nearly wiped out toward the end of this week.

 

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

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

 

None of the thirty ETF’s are contacting their breakout lines. This is non-bullish, although weakening in that support.

 

The average distance from breakout contact is 18.2%. Double digit variances from breakout contact for 161-consecutive trading-days has been non-bullish.  This attribute is now shifting toward bullish support.

 

None of the thirty ETF’s are contacting their breakdown lines. Contact in 22-of the last 45-trading days was bearish, but losing influence. Contact density has relaxed with zero breakdown contact in 19 of the past 26-trading days.   That is increasingly non-bearish, but somewhat discerning with increasing contact in five of the last eight trading days. This is also highlighting the absence of sectored synergy, which remains a threat to the newly forming bull cycle.

 

The average distance between the price and breakdown is 10.7%. After providing non-bearish support since March 2003 with double digit readings, this has been a single digit expression (bearish) in 19 of the last 41-trading days. Double digits provide non-bearish relief. It reverted back to a single digit expression on Thursday and as stated at that time, the bull should re-invigorated with a strong response on Friday. The bull behaved consistently as each time this attribute has shifted to double-digit bearishness the past few weeks, the bull has responded.

 

The breakout/breakdown differential is bearish by 7.5%. This attribute is supporting bearish ambition, but expected to weaken in that support the next two to four weeks. As stated the past few days, along the way, there will be some bearish disruptions.

 

ETF Force Vector Configurations

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

 

Five Force Vectors are in bullish domains. This is no longer a bullish majority and a source of concern. Although they are moving south, several of them are doing so from healthy bullish domains. Many are configured for an explosive bullish bounce in the next few days, as their bearish cycle is mature. If they robustly move south without this bullish response, the bullish bias will expire.

 

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

 

ETF Force Vectors/Vector Pressure Crossings/Option Signals

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

 

Click this sentence for Vector Pressure Option Signals. There were two put option buy signals after Friday’s close. There have been 38-option buy signals in the past twelve trading days; 27-calls and 11-puts. Friday’s put option buy signals are not expected to perform well, but the desired bullish expression next Monday, followed by a solid bearish expression on Tuesday would be the perfect configuration.

 

Fifteen of the thirty ETF Vector Pressures are in bullish domains. You should notice this attribute continues creeping up, favoring bullish support. Although two bullish domains were lost today, this attribute remains with a majority supporting bullish inclinations.

 

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

 

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

 

Quick-term and Short-term Indicant Summary

A solid new bearish bias shift was born on June 11, 2008. It expired on August 1, 2008 with bullish bias.

 

ProFunds Ultra Short mutual fund moves inversely to the QQQQ by exponential amounts. See the Mid-term Indicant for its status.

 

The Quick-term and Short-term Indicant tracks ETF#31, QID, which is the ETF cousin to ProFunds Ultra Short. It is excluded from overall ETF statistics because it is purely contrarian. It is designed to move bullishly during bear markets and bearishly during bull markets. This exclusion is required for convergent/divergent monitoring.

 

The Indicant signaled sell for QID  on July 31, 2008. It is down 8.8% since that sell signal. As stated last Friday, Force Vector is shifting back to the north, which suggested QQQQ’s bearishness. This cycle is now mature and QID should start falling in price within a few days.

 

Other Contrarian Funds

ETF#03-Natural Resources   - This ETF is up 1.4% since the Quick-term Indicant sell signal on July 24, 2008.  Its Force Vector is increasing, which always offers bullish potential. Current configurations suggest a simple technical correction to bearish onslaught.

 

ETF#11-Gold and Precious Metals   received a sell signal from the Quick-term Indicant on August 12, 2008. It is up 0.7% since this recent sell signal. This ETF’s configurations are very bearish at this time.

 

ETF#14-Long Government  is up 2.7% since the Quick-term Indicant signaled sell on August 5, 2008. It is a red bull, but overall market bullish probabilities influence continuing avoidance of this ETF.

 

This fund has some strategic risk. The dollar’s weakness and inflationary threats will eventually stimulate increased interest rates. With that, this fund, fundamentally, would endure bearish behavior. The contrarian movement to that fundamental prognosis would be high demand for safety purposes, depending on the nature of economic behavior. Do not be surprised at jawboning the dollar up, but the U.S. remains a net-importer and thus the continual downward pressure on the dollar, which fundamentally supports long-term upward pressure on interest rates.

 

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

 

Quick-term ETF Options

Quick-term Indicant for ETF’s

Short-term Indicant for ETF’s

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

 

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

 

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

 

Short-term Indicant for DJIA and NASDAQ

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

Short-term Indicant Table for the NASDAQ Composite Index

Indicant Volume Indicator

Short-term Indicant for Tangential Analysis

 

Divergence versus Convergence

The market mixed last week with several sectors expressing bearishness while others expressed bullishness. Commodities and energy enjoyed a technical bullish adjustment to their newly forming bearish cycle. As stated last week, configurations invited short-term bullishness which occurred during most of last week. As previously stated, a long-term view should be guided with caution as the declining energy prices correlate to declining demand. That correlates to economic recession at this time.

 

Overall, the market endured bearish divergence last week, but on a minor scale. The stock market continues formation of short-term bullishness, but economic and political instabilities are fomenting minimal commitments to the underlying desire to be bullish.

 

Indicant Conclusion

As stated the past four weeks, the bear completed its process of inflicting it influence on all pertinent sectors. A final nesting place in support of the bear occurred. The problem is that the bottoms in the various sectors did not occur at the same time, suggesting this short-term bull cycle is not sustainable on a mid-term basis. However, a short-term bull cycle of twelve to twenty weeks would help stabilize equities even if followed by another deep bearish cycle later this year.

 

As stated the past two weeks, from a short-term perspective a new bullish cycle has been forming. It may turn out to be a bullish spurt. To escape spurt potential, the Short-term Indicant needs to develop tangential protection, which has not yet occurred. The market needs to stabilize or continue bullishly for a few more weeks for this desired feature.

 

Keep up with the daily stock market report as the Quick-term attributes can shift quickly.

 

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

 

The daily updates are on the following link.

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

 

Hyperlinks

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

 

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

 

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

 

Happy Investing,

 

 

www.indicant.net

08/24/08

 

 

 

 

 

Aug 17, 2008 Indicant Weekly Stock Market Report

Volume 08, Issue 03 ISSN 1526 6516 © The Indicant Stock Market Report

  

This Week’s Report

 

A Reversal – Part 3

There is not too much that has changed since last week. Commodities continue to fall on a short-term cyclical basis, but their bullish trend remains in tact. The sub-prime lending crisis and financial institutions continue to surprise with their inability to either know what is going on with their financial statements or their lack of principle. The dollar continues to strengthen as international economies continue to falter.

 

Most of the international related funds and sectors are not participating in the recent short-term bullish cycle. Their faltering economies will eventually cause lower interest rates abroad. The U.S. dollar is not strengthening based on substantive performance, but due to faltering economies abroad.

 

The weak have been accommodated again with the bailout of homeowners. Well, as it has been stated, the meek shall inherit the earth. When that finally does happen, the rebirth of the stone age will have its new beginnings. Socialistic causes contribute to that claim.

 

However, in the meantime, the short-term bullish cycle underway remains in tact. The weaker stocks and funds are not participating in this bullish rally. That suggests a continuing threat of this being a mere bullish spurt.  

 

Let’s take a quick tour of the Short-term Indicant to understand this phenomena.

 

Click the following link to the NASDAQ and NASDAQ100

 

http://www.indicant.net/Members/Updates/STI-Mkts/STI-10-Indices/STI08b-NS.htm

 

As you can see, they well above their bullish red curves. This enhances profit taking, which is bearish on a very near term basis. If you bought QQQQ or QLD at the Quick-term buy signals a few weeks ago, you are holding a nice short-term profit. For those of you who are more of the trader type, set your stop losses at a trailing 2.5%. The risk in that is being stopped out. If the NASDAQ100 falls by 2.5% and then moves northward, you will no less find some disgust with that strategy. However, all stocks, funds, and major indices always eventually fall to their bullish red curves, even in the strongest of bull markets. The problem here is that can occur 25-bullish percentage points later. So, waiting on the security of index to fall to bullish red can be exasperating. One is not losing money when that happens, but watching the gains move without participating is disgusting.

 

The good news is the power of this early bullish movement. For those of you who are more tolerant of cyclical shifts within the confines of underling trends, a mid-term to long-term strategy would be more appealing. The probability of NASDAQ bullish spurt behavior is reducing due to the powerful movement in the bullish red curve. There will be no major bearish threat of sustainability unless the NASDAQ and NASDAQ100 fall to bearish yellow. The problem with that line of thinking is the vast difference between bearish yellow and the current underlying value of those two indices. Even the longer-term investor does not enjoy enduring a 10% drop in holding value.

 

Click this sentence to view the mid-cap and small-cap indices. The performance gap between S&P400 and S&P600 is wide. The bull desires money rotation from small cap to mid-cap so these two indices are more balanced in terms of performance. The S&P600 is hot; similar to the NASDAQ100. It has to cool. This cooling would not be disruptive to the young bull’s growth if the S&P600 moved along a meandering bearish cycle for a few weeks while the mid-caps moved along a meandering bull cycle for the same period. This would allow the bull’s muscular development to catch-up with its skeletal development. Right now, the young bull is somewhat wobbly with large caps under-performing and the small caps too hot.

 

Before continuing, take a look at the S&P600 index from the above link. Scroll down on the webpage and make sure you are looking at the S&P600. Look on the bottom portion of the chart. Find the Vector Pressure curve on the lower right hand side of the chart. It is the green curve. You should notice that is crossed above the Red-X line. The X means max. Vector Pressure at such altitudes suggests overbought conditions. The preferred response to that is a money rotation from this sector to another sector. That would induce mild bearishness on this particular index, whereas outright selling into cash positions would prompt bearishness that is more aggressive.

 

Now scroll up a bit to the lower portion of the S&P400 chart. You will notice its Vector Pressure has just crossed into bullish domains and not yet above the Red-X. That leaves some room for money rotation, which is more tame in profit-taking sessions, as opposed to simple sells to cash.

 

The NYSE was down sharply on its most recent bearish cycle. Click this sentence to view its chart. You will notice it is underperforming more so than the S&P400-mid-cap index. You should also notice its Vector Pressure still resides in bearish domains. This suggests the overall market  bullish cycle is very narrowed in scope. Bullish cycles with limited breadth, such as the one underway, carry with it a higher probability of spurt behavior as opposed to sustainability.

 

However, although sometimes misleading, but most of the time relevant, the VIX Index recent bearish cycle is young; very young. Scroll down a bit to view the VIX chart. Technically, there is plenty of room for more maturity in this young bearish cycle. That attribute offsets the lack of stock market bullish breadth. It should cycle south for a few more weeks. Doing so, should accompany stock market bullishness.

 

The Dow Utilities, like the NYSE, has been a non-participant is recent bullishness. That is because it is one of the weaker indices. Many of you recall, Utilities offered tremendous resistance to the June-July bearish onslaught. It held out the longest maintaining it bullish position for several weeks after the NASDAQ and other major indices fell prey to bearish influence. However, as predicted the bear left no survivors. Even the powerful Utilities Index, which caters to the low end of Maslow’s Hierarchy of human needs, fell prey. Because it resisted the most, the bear punished it the most once it had it down to its new breakdown line. That is the reason it is having difficulty joining forces with the bull. Nearly every bullish movement in the NASDAQ and Small Caps prompted what remains of the bear to slap down the Utilities.

 

You will notice on the same webpage, the Transports has been demonstrating a very tame bullish cycle even though the Utilities has been evasive in joining the cause of bullishness. The Transports has been vacillating around its northerly sloping bullish red curve. You will notice a pre-trail tangential line on the Transports chart. The Transports recognized the impending oil price reductions about two weeks before the $140/bbl peak price. It is sometimes amazing how well the stock market anticipates. When oil hit $140/bbl, pundits and few sheiks applied 8th grade algebra to the problem and projected $170/bbl. During all that chit-chat, the Transports started rising, which flew in the face of their 8th Grade algebra projections. Oil closed down this week at $113.70/bbl.

 

All the large caps are performing on par with the bullish cycle underway. However, they remain vulnerable to the bear. At the current time, though, the market does not sense deep recessionary behavior. Large caps move with economic activity. The predominant source for profits in large cap is the economy. In the absence of management talent, they go down when the economy goes down and they go up when the economy goes up. Since they are going up, the stock market is anticipating improved economic conditions in Q1-2009. Click this sentence to view the large Dow caps. Click this sentence to view the large S&P500 caps.

 

All in all this bullish cycle remains under bearish threat, but a bull cycle nonetheless. Depending on investing philosophy (trader vs. investor), set your stop losses accordingly.

 

Keep your eye on the daily stock market report. It will help you differentiate sustainability versus spurts regardless of the directional intensity underway.

 

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 seven buy signals and two sell signals. There have been 103-buy signals in the past five weeks. There have been 343-sell signals since October 26, 2007, but only eight in the past five weeks. This ratio suggests limited bullish commitment on a mid-term basis.

 

In addition to the buy signals, the Mid-term Indicant is signaling hold for only 167 of the 345-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 144.9%. That annualizes to 68.5%. The Mid-term Indicant has been signaling hold for these 167-stocks and funds for an average of 110.0-weeks.

 

In addition to the sell signals, the Mid-term Indicant is avoiding 169-stocks and funds of the 345- tracked by the Indicant. The avoided stocks and funds are down an average of 16.0% since the Mid-term Indicant signaled sell an average of 29.3-weeks ago.

 

One year ago, on Aug 18, 2007, the Mid-term Indicant was holding 256-stocks and funds out of the 345 tracked for an average of 121.0-weeks. They were up by an average of 137.7% (annualized at 59.2%). There were 82-avoided stocks and funds at that time. Those avoided stocks and funds were down an average of 7.3% since their respective sell signals an average of 14.5-weeks earlier.

 

The Mid-term Indicant was signaling hold for 175-stocks and funds of the 345-tracked two years ago on Aug 18, 2006. They were up by an average of 149.1% (annualized at 68.1%) since their respective buy signals an average of 113.9-weeks earlier. The Mid-term Indicant was avoiding 124-stocks and funds at that time. They were down an average of 6.2% since their respective sell signals an average of 16.0-weeks earlier.

 

There were 227-stocks and funds with hold signals on Aug 19, 2005 since their buy signals an average of 90.6-weeks earlier. They were up by an average of 102.3% (annualized at 58.7%). There were 87-avoided stocks and funds at that time. They were down by an average of 8.3% from their respective sell signals an average of 20.6-weeks earlier.

 

On August 13, 2004, the Mid-term Indicant was signaling hold for 155-stocks and funds out of 296-tracked. They were up by an average of 77.0% (annualized at 61.5%) since their buy signals an average of 65.1-weeks earlier. The Mid-term Indicant was avoiding 133-stocks and funds at that time. They were down by an average of 29.1% since their sell signals an average of 41.4-weeks earlier.

 

Five years ago, on Aug16, 2003, there were 197-hold signals for stocks and funds out of the 296 tracked by the Mid-term Indicant at that time. They were up an average of 52.6% (annualized at 88.2%) since their respective buy signals an average of 31.0-weeks earlier. There were 60-avoided stocks and funds then. They were down an average of 7.1% since their respective sell signals an average of 8.6-weeks earlier.

 

On Aug 16, 2002, there were 125-stocks and funds with hold signals from the listing of 295-tracked by the Mid-term Indicant at that time. They were up 14.4%, annualizing at 84.6%. There were 102-avoided stocks and funds then. They were down by an average of 42.9%.

 

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

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

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

 

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

 

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

 

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

 

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

The market is configured with bullish inspiration. It has not yet matured with obviations of bullish sustainability. Do not be surprised at volatility, which is common when the bear and bull battle for dominance. The battle is waging, configurations are suggesting the bull will be victorious and thus the buy signals.

 

Click the following link that will take you to the tangential protection charts.

 

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

 

The Quick/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 imbedded in this weekly report. This allows web-based retention records of the daily report for much longer than the last twelve months.

 

The Daily Indicant Stock Market Report for the last trading day of the current week is near the conclusion of this weekly stock market report. It is emailed each weekend, separately, so you can read it, either as a separate document, or in this document.

 

The Indicant Stock Market Report’s Secular Market Blend

The Dow is up 60.0% since its secular low on October 9, 2002. The NASDAQ is up 120.1% and the S&P500 is up 67.1% since then. The small cap index, S&P600, is up 131.8%. The major indices, with the exception of the Dow Utilities and NYSE, are now bullishly biased.

 

As stated the past several months, the secular bull that originated on October 9, 2002 no longer remains solid. A secular bear could indeed be unfolding. However, as stated the past two weeks, several short-term attributes continue configuring in favor of the bull.

 

The Dow is down 17.7% since its last closing peak on Oct 9, 2007. The NASDAQ is down 14.2% since its last peak on Oct 31, 2007. The S&P600 is down 11.1% since its last closing peak value on Jul 19, 2007.

 

The NASDAQ is down 51.4% since its last weekly secular peak on March 9, 2000. The S&P500 is down 15.0% since its similar secular peak on March 23, 2000. The Dow is down by 0.5% 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.

 

The Dow is down 12.2% so far this year. The NASDAQ is down 7.5% this year. These conditions are incongruent with historical standards. This year should be bullish, based on those standards. The stock market occasionally delights in violating historical standards. This always happens when such standards gain in popularity. As stated for several years now, the phenomenon of commonality disallows stock market victories by the masses.

 

The short-term bullish cycle, ending nine weeks ago, had been lending support to historical standards. As stated several times in prior weekly reports, that bullishness will be challenged during the dog days of summer. You saw that for about eight weeks until three weeks ago. The expected reversal to bullish bias on a short-term basis has formed. The question now is the breadth of sustainability.

 

The NASDAQ year-to-date performance was bearish by 22.3% through this week in 2001. Keep in mind the NASDAQ finished 2001 down by 23.3%.  This year had been configuring with 2001 similarity, but there is a mild chance historical standards (bullish) may be developing.

 

The NASDAQ was down by 31.0% through this weekend in 2002. Some of you recall the dynamic bear market in 2002, where the NASDAQ finished that year down by 31.5%. The NASDAQ YTD 2003 performance was up by 27.4%. It finished up in that solidly bullish year by 50.0%. It was down on this weekend in 2004 by 12.3%.  It was down by 0.4% in 2005. Many of you recall that 2004 and 2005 were meandering bear markets. In 2006, it was down by 4.1% and up by 1.8% at this time last year.  

 

Keep your eye on the daily stock market report.

 

Stop Loss Management

The Mid-term Indicant recommends a stop loss of 8% due to increasing bullish influences for the longer-term holdings. You should set them higher for any recent non-contrarian buys, such as 5% or enough to protect reasonable gains. A stop loss of 2.5% is recommended for Quick-term and Short-term buy signals for ETF’s two weeks ago. These tight stop losses are based on the absence of tangential protection. Volatility may trigger undesired sells. Keep your eye on the daily stock market report for re-entry guidance.

 

For the Mid-term Indicant, which is more tolerate of short-term swings, use a 8% trailing stop loss or the yellow or green values you will find on the tables for your longer-term hold positions. If your stock or fund is above the bearish yellow curve and below the green curve, set your stop loss equal to the greater of the yellow curve and the trailing stop loss. If your stock or fund is above the green curve, set your stop loss at no less the value of the green curve or 8% trailing, whichever is greater. If your stock or fund is above the red curve and you bought at the Mid-term Buy signal, you should use the 10% trailing stop loss.

 

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

 

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

 

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

 

Economic Conditions – Inflation, Currency, Interest Rates

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

 

Interest rates are mixed, but with a mild bullish bias for the stock market.

 

As stated the past six weeks, the U.S. Dollar continues with stabilizing configurations with a mild bias toward strengthening. The underlying theme is the necessity to strengthen it to help soften the inflationary threat from its weakness. There appears to be a cyclical strengthening shift underway. Unfortunately, from an inflationary perspective, the weakening trend remains solidly in place.

 

As stated the past several weeks, commodities have been aggressively bearish the past five weeks. Oil prices on a quick-term cyclical basis are shifting south, bringing other commodities with it. This is encouraging from an inflationary viewpoint but equally discerning from an economic view. Demand projections obviously are less than supply capacity, which suggests sour economic conditions.

 

These conditions are supportive of a bullish stock market, but that exuberance will be quickly dashed in the event deflation becomes an issue. That is unlikely since the rising tide of capitalism will continue the longer-term trend of stoking demand for commodities.

 

As stated the past six weeks, the stock market will eventually respond bullishly to the idea the increasing number of capitalists in spite of the immediate inflationary threats imposed by the short-term inequality between supply and demand, as capitalists solve problems.

 

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 is up 286.6% since the April 13, 2001 buy signal. Its annualized growth since that buy signal is 38.5%. It moved to the north in 57 of the past 101-weeks – a little over one-half the time. It has been bullish in 28 of the last 52-weeks. This fund has been bullish in 13 of the last 27-weeks. It has been aggressively bearish the past five weeks.

 

Fidelity Gold, Fund #28 is down 16.8% since the Mid—term Indicant signaled sell on August 1, 2008. It is simply not performing and weakening economies are depressing demand for all commodities.

 

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 325.5% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 53.5%. This fund has been bullish in 10 of the last 25-weeks. It has been bearish the past seven weeks.

 

Vanguard Energy #18, VGENX, is up 211.8% (annualized at 38.9%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 205.0% (annualized at 43.1%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 158.6% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 31.3%.

 

Energy related funds have been bearish the past six weeks, which conflicts with current fundamental requirements of bullishness. This bearishness is an adjustment from the anticipated $170-oil to a smaller number. Oil and other commodities are moving cyclically to the south, but the trend remains north.

 

Investors in these funds are supporting a 1970’s type of market with high inflation and high oil prices. As long as capitalism remains in vogue around the globe and alternative sources of energy continue to lag exponentially increasing demand, a long-term perspective on holding strategy is appropriate. However, keep in mind OPEC can very quickly reverse this trend. They have done it before and remain capable of doing it again.

 

The SQI (Consolidated Short-term and Quick-term Indicant) model signaled buy for the GLD-ETF#11 on August 3, 2005. It is up 78.3% since then. It is annualized at 25.5%. This fund has been bullish in 34 of the past 51-weeks. It has been bullish in 15 of the last 26-weeks. It has been bearish in three of the past five weeks. The Quick-term Indicant signaled sell on August 12, 2008, but the Short-term Indicant continues to signal hold.

 

The SQI signaled sell for ETF#03 – Energy and Natural Resources on August 4, 2008. It is down 0.1% since that sell signal. It was up  242.4% (annualized at 44.8%) since its previous buy signal on March 26, 2003. This fund has been bearish in 17 of the past 29-weeks and in eight of the past nine weeks. This ETF is configured for bearishness on a Short-term basis.

 

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 then major indices that it tracks. They are up by an average of 3.7% since their bull signals an average of 1.9-weeks ago. They are annualizing at 191.8%.

 

Click this sentence to view a summary of their performance.

 

The Mid-term Indicant Dow Jones Industrial Average performance is at $37,741,018

That beats buy and hold performance of $1,773,908 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $185,633. That beats buy and hold’s $127,161 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $241,746. That beats buy and hold’s $85,039 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 2,027.6%, 46.0%, and 184.3%, respectively, for these indices as of this past week.

 

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

 

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.

 

Note from April 5, 2008: Enron will be removed from Indicant tracking later this year. It was removed from the Dow Utility Index several years ago. It is now a penny stock, but the Indicant kept tracking it at the request of members. Its low cost nature is not friendly to Mid-term Indicant assessment due to small price changes and corresponding large percentage impact. The Mid-term Indicant is not designed for penny stocks. Although recovery is always possible, this stock has become too busy to track. This position will be re-accessed based on member feedback as the year progresses.

 

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 buy for ProFunds Ultra Short on January 18, 2008. It was down 32.3% since the Mid-term Indicant signaled sell on September 15, 2006 until the buy signal on January 18, 2008. Historical norms of market cyclicality suggested the next buying opportunity for this fund should not occur until 2009.

 

This fund is down 13.5% since the Mid-term Indicant signaled sell on August 1, 2008.

 

Click here for Mid-term Indicant Table of Mutual Funds

 

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

 

Long Term Indicant Positions - Dow Jones Industrial Average

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

 

The Dow is up 302.8% (annualized at 18.0%) since the Long-term Indicant signaled bull 876-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. A link to the Long-term Indicant is below:

 

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

 

Quick/Short-term Indicant Stock Market Report - Summary

Quick-term Red Bulls: Seven of thirty. Shifting in favor of bull.

Quick-term Yellow Bears/Threats: Eighteen of thirty. Now in majority support of bull.

Quick-term Non-Bearishness: QTI differential is bearish 6.5%. Bull now arguing with bear, but bear is shouting back a bit, but not too loudly.

Short-term Non-Bearishness: Breakout/breakdown differential is bearish 5.8% but weakening

Force Vectors: Mixed behavior, but shifting direction is in bullish domains. Although not bullish, the position is non-bearish.

Vector Pressure: Nineteen in bullish domains, offering increased support to the bull. This attribute is now in majority support.

STI Tangential Support: No tangential protection yet, although none of the attributes support bearishness. However, there is little in the way of volatile expressions with periodic bearish support.

Immediate Tactics: Holding is increasingly safe; buy more on dips and profit taking sessions. Tighten stop losses.

Current Quick-term Bias: Shifted mildly in favor of the bull on Thursday, July 31, 2008.

Overall Market Status: Bullish bias on a Short-term Cycle basis. The Quick-term cycle is vulnerable to bearish influences.

Profit Potential from Naked Options: Enhanced as volatility is significant and as expected. Out of money August strangles have been profitable. If major indices hold above bullish red, volatility should wane.

Volume: Losing robustness and with that a loss of one of the obviating factors of bearishness or bullishness. Low volume invites volatility but when seasonally adjusted, the bull is favored with current configurations.

 

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

The Short-term Indicant signaled bull last Tuesday for the Dow Jones Industrial Average and NASDAQ. The Dow is up 0.4% and the NASDAQ is up 4.4% since then.

 

Please read on. Click here to see the Short-term Indicant’s history.

 

The NYSE and NASDAQ Indicant Volume Indicators  continue lethargically. This is not obviating directional intensity. However, based on seasonal adjustments, this configuration favors the bull. The charts are pure and do not reflect seasonality. The decreasing demand for stocks is simply slowing the bull’s magnitude; not its existence.

 

To view the STI-Tangential Protection for ten major indices, click here.  

All attributes with the exception of volume in the current configuration suggests this short-term bull cycle will enjoy sustainability with the following additional concerns and exceptions.

 

Several indices are enjoying Vector Pressure deep inside bullish domains. This suggests an overbought condition, but does not mean a profit-taking bearish spurt is about to unfold. Although that is possible, do not be surprised at lateral movement, provided the bull continues to develop traction.

 

The weaker indices, such as the Dow Utilities is behaving like any weak security does during bullish spurts. Its bullish participation is absent, suggesting the desired lack of synergy for a solid bullish cycle to unfold. The NYSE is also expressing limited bullish commitment.

 

As stated the past few days, the NASDAQ, NAS100, and S&P600 appear overheated. However, their strong bullish cycle fosters enhanced probabilities of bullish sustainability, which would not be upset with a profit-taking bearish spurt.

 

However, the VIX remains in support of  bullish stock market. It has not completed a normal cycle.

 

Keep in mind as long as volume is light, volatile expressions will be more of the norm than the exception.

 

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

There were no buy signals and no sell signals. The SQI is signaling hold for 20-ETF’s. They are up by an average of 29.5% (annualized at 63.6%) since their respective buy signals an average of 23.8-weeks ago. The SQI is avoiding 11-ETF’s at this time. They are down by an average of 4.3% since their sell signals an average of 6.3-weeks ago.

 

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

 

Short-term Indicant Report Card, Status, and Charts

There were no buy signals and no sell signals. The Short-term Indicant is signaling hold for 20-ETF’s. They are up an average of 50.1% (annualized 107.7%) since the STI signaled, buy, an average of 23.9-weeks ago.  There are 11-ETF’s with avoid signals. They are down by an average of 4.4% since their sell signals an average of 6.3-weeks ago.

 

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

 

Quick-term Report Card, Status, and Charts

There were no buy signals and no sell signals.  The Quick-term Indicant is signaling hold for 19-ETF’s. They are up by an average of 4.7% (annualized at 116.2%) since the QTI signaled buy an average of 2.1-weeks ago.  The Quick-term Indicant is avoiding 12-ETF’s. They are down by an average of 3.6% since their sell signals an average of 2.6-weeks ago.

 

Aug 12, 2008 Note: The Quick-term Indicant signaled sell for two ETF’s that have been receiving hold signals since their July-August 2005 buy signals. ETF#11-GLD-Gold and Precious Metals and ETF#21-EWZ-South American Stocks were up 85.0% and 84.3% respectively since those buy signals. Their Force Vectors and Yellow Bear attributes forced these sell signals after holding on a Quick-term basis for about three years. This is the reason the annualized gain on the Quick-term summary being over 100%. It is because these two longer-term holds were eliminated from the “hold” subset of ETF’s, which depressed annualized performance data. Please note the Short-term Indicant have not yet signaled sell for these ETF’s.

 

Current Strategy – August 11, 2008 – Nearly all attributes within the Quick-term and Short-term Indicant are suggesting a sustainable Short-term Bull cycle. August 12, 2008-Bearish behavior did not threaten the bull cycle. Keep in mind, this embryonic bull cycle is vulnerable to bear attacks until such time tangential protection is configured. That will not occur for at least two to three more weeks. If such protection potential is voided by yellow curve merely inflecting back to the south, the bull cycle will expire and be replaced by a new bear cycle. Right now, though, several attributes are aligned with bullish support. August 13, 2008-Lateral to mild bearishness is common early in bull cycles. Volatile expressions are also not absent. August 14, 2008-Several indices and ETF’s are hot; too hot. Do not be surprised at a sell off in the next few days. Set tight stop losses. This bull is still young and vulnerable. August 15, 2008 – More days like today with mild bullishness to mild bearishness would be perfect for bullish sustainability. That will facilitate a solid support base for bull market behavior. Keep in mind the desired cross-sectored synergy remains absent, which arouses a little suspicion regarding this bull cycle’s longevity. Such synergy still has time to configure. That will be possible with a money rotation from overheated indices, sectors, and securities to the laggard ones.

 

Conflicts Between the Short-term and Quick-term Indicants

A solid bearish bias originated on Thursday, June 12, 2008, with all major indices without tangential support. As of August 1, 2008 that bias expired with bullish potential. There are now 59-holds, in addition against 31-avoids. Although many ETF’s moved to bearish yellow, their behavior since then has been somewhat disappointing. Bull/bear battles are typically noticeable and quite often defines the next cycle depending on the victor.

 

Quick-term Indicant Bull/Bear Health Report

Click the above heading to view the charts.

 

Eighteen of the 30-ETF’s are below their respective bearish yellow curves. The average relative position of all thirty ETF’s is below bearish yellow by 1.0%. This is now miniscule bearish support and under heavy attack by the bull. The bear has expressed resistance to this newly forming bull cycle, but not enough to cause bullish expiration.

 

Seven ETF’s are above their bullish red curves. This attribute remains mildly non-bullish. All thirty ETF average positions are below bullish red by an average of 5.6%. which is non-bullish, but weakening in its non-bullish support.

 

The QTI differential is bearish by 6.5%. This is the forty-seventh consecutive trading day of a bearish reading. This could shift favorably to bull in the next few days. This bearishness is rapidly weakening. However, do not be surprised at bearish expressions in the next few days.

 

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

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

 

None of the thirty ETF’s are contacting their breakout lines. This is non-bullish, although weakening in that support.

 

The average distance from breakout contact is 17.7%. Double digit variances from breakout contact for 156-consecutive trading-days has been non-bullish.  This attribute is now shifting toward bullish support.

 

Two of the thirty ETF’s are contacting their breakdown lines. Contact in 20-of the last 40-trading days is bearish, but losing influence. Contact density has relaxed with zero breakdown contact in 16 of the past 21-trading days.   That is increasingly non-bearish, but somewhat discerning with contact the past three days. This is also highlighting the absence of sectored synergy, which is a threat to the newly forming bull cycle.

 

The average distance between the price and breakdown is 11.9%. After providing non-bearish support since March 2003 with double digit readings, this has been a single digit expression (bearish) in 16 of the last 36-trading days. Double digits provide non-bearish relief. This is shifting to bullish favorability by virtue of double-digit readings the past several days.

 

The breakout/breakdown differential is bearish by 5.8%. This attribute is supporting bearish ambition, but expected to weaken in that support the next two to four weeks. Along the way, there will be some bearish disruptions.

 

ETF Force Vector Configurations

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

 

Twenty-one Force Vectors are in bullish domains. This bullish majority is favoring the bull.

 

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

 

ETF Force Vectors/Vector Pressure Crossings/Option Signals

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

 

Click this sentence for Vector Pressure Option Signals. There was one call option buy signal after Friday’s close. There have been 31-option buy signals in the past eleven trading days; 26-calls and 5-puts.

 

Nineteen of the thirty ETF Vector Pressures are in bullish domains. You should notice this attribute continues creeping up, favoring bullish support. This is now a majority and supportive of bullish inclinations.

 

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

 

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

 

Quick-term and Short-term Indicant Summary

A solid new bearish bias shift was born on June 11, 2008. It expired on August 1, 2008 with bullish bias.

 

ProFunds Ultra Short mutual fund moves inversely to the QQQQ by exponential amounts. See the Mid-term Indicant for its status.

 

The Quick-term and Short-term Indicant tracks ETF#31, QID, which is the ETF cousin to ProFunds Ultra Short. It is excluded from overall ETF statistics because it is purely contrarian. It is designed to move bullishly during bear markets and bearishly during bull markets. This exclusion is required for convergent/divergent monitoring.

 

The Indicant signaled sell for QID  on July 31, 2008. It is down 12.1% since that sell signal. Force Vector is shifting back to the north, which suggests QQQQ’s bearishness in the next few days.

 

Other Contrarian Funds

ETF#03-Natural Resources   - This ETF is down 3.8% since the Quick-term Indicant sell signal on July 24, 2008. Configurations favor bearish bias in spite of recent inventory reports on oil. Its Force Vector is increasing, which always offers bullish potential. Current configurations suggests a simple technical correction to bearish onslaught.

 

ETF#11-Gold and Precious Metals   received a sell signal from the Quick-term Indicant on August 12, 2008. It was up 86.4% at the time of this recent sell signal since the August 2005 buy signal. It is down 3.6% since this recent sell signal. This ETF’s configurations are very bearish at this time.

 

ETF#14-Long Government  is up 2.6% since the Quick-term Indicant signaled sell on August 5, 2008.

 

This fund has some strategic risk. The dollar’s weakness and inflationary threats will eventually stimulate increased interest rates. With that, this fund, fundamentally, would endure bearish behavior. The contrarian movement to that fundamental prognosis would be high demand for safety purposes, depending on the nature of economic behavior. Do not be surprised at jawboning the dollar up, but the U.S. remains a net-importer and thus the continual downward pressure on the dollar, which fundamentally supports long-term upward pressure on interest rates.

 

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

 

Quick-term ETF Options

Quick-term Indicant for ETF’s

Short-term Indicant for ETF’s

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

 

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

 

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

 

Short-term Indicant for DJIA and NASDAQ

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

Short-term Indicant Table for the NASDAQ Composite Index

Indicant Volume Indicator

Short-term Indicant for Tangential Analysis

 

Divergence versus Convergence

The market mixed last week with several sectors expressing bearishness while others expressed bullishness. Commodities and energy continue shifting south on a cyclical basis, which should invite short-term bullishness. A long-term view should be guided with caution as the declining energy prices correlate to declining demand. That correlates to economic recession at this time.

 

Indicant Conclusion

As stated the past three weeks, the bear has now completed its process of inflicting it influence on the pertinent sectors. Now, we are waiting for all major indices to find a final nesting place in their support of the bear. The bull cannot dominate on a mid-term basis until that happens.

 

However, as stated last week, from a short-term perspective a new bullish cycle has been forming. It may turn out to be a bullish spurt. To escape spurt potential, the Short-term Indicant needs to develop tangential protection, which has not yet occurred. The market needs to stabilize or continue bullishly for a few more weeks for this desired feature.

 

Keep up with the daily stock market report as the Quick-term attributes can shift quickly.

 

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

 

The daily updates are on the following link.

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

 

Hyperlinks

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

 

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

 

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

 

Happy Investing,

 

 

www.indicant.net

08/17/08

 

 

 

Aug 10, 2008 Indicant Weekly Stock Market Report

Volume 08, Issue 02 ISSN 1526 6516 © The Indicant Stock Market Report

  

This Week’s Report

 

A Reversal – Part 2

The economic page of hard fundamentals only has one yellow for the first time since early 2003. That is bullish. Click this sentence to view that page.

 

The bullish euphoria is shrouded in anti-inflationary perceptions. Although much of the bearishness since October 2007 has been attributable to sub-prime crisis, the added concern regarding inflation contributed to unknown magnitudes of bearish behavior. Although magnitude is unknown, it was more than zero.

 

The Federal Reserve’s rapid interest rate reductions earlier this year prompted a few bullish spurts and one bull leg of about 12-weeks of breadth. Although the designed intention was to enhance banking cash flow and solvency, it did little to stimulate consumer demand. The $140 oil prompted consumers to penny pinch.

 

This has spread around the world with a combination of recession or extremely slow growth. The stock market is anticipating reduce demand for commodities, including oil. This should continue and have a dampening effect on the PPI, which is always bullish for the stock market; that is, until deflation becomes threatening. That will be monitored if it threatens. Right now, it is not close to threatening, but can happen quickly.

 

The long-term prognosis for deflation is dim, as the rising tide of capitalism will maintain an underlying pressure of finite resources. However, the stock market is generally focused on the next six to nine months of economic activity and corporate profitability. Again, deflation is not threatening, but declining oil prices prognosticates reduced inflationary threats.

 

Corporations have a lot of leeway to produce increasing profits on flat to decreasing revenue. All they have to do is decrease cost at a rate greater than decreasing revenue. Most of the large caps are real slow in doing that; due mostly to a shortage of management talent. The small caps and many of the mid-caps are excellent at this. Many of them continue to increase revenue to hard economic times, which is one reason why those sectors outperform the larger caps.

 

ETF#10-IBB-Health led this bull market. As you can see from the link, it was an obedient participant during the bear cycle that originated late last year. It then climbed into the zone of neutrality between yellow and red, but more or less hugged the bearish yellow curve for several weeks. Then on July 8, 2008, it crossed into bullish domains, which was the first time a non-contrarian ETF had done so in several months. That was the first hint the bear cycle was expiring and the new bull cycle may enjoy sustainability. The market was concluding that there will be enough funds to take of the health issue in the face of bleak economic conditions.

 

A few days after the Quick-term buy signal for several more ETF’s, many of the major indices started fluttering and moved above their bearish yellow curves. We have been refining and developing the Tangential model for several months now. It is a model that will assist both long-term and short-term investment objectives; all on one chart. The Indicant originated many years ago before the Internet with a primary focus on long-term investing; mostly through mutual funds. In the past few years, significantly more data has been made available to gauge both the long and short-term prognosis.

 

ETF#27-XLP-Large Blends also moved above bullish red last week. That is the second non-contrarian red bull to do so in several months. It angered the bear with its first crossing last week. You saw that bearish response last Thursday. The bull took offense to this and responded with an even stronger statement last Friday. Although ETF history is short, there has never been an instance of complete bearish dominance when just one non-contrarian ETF has been a red bull.

 

This particular bull cycle remains in its embryonic phase. There are technical concerns. It did not enjoy the lead-in robust volume the March-May bull cycle enjoyed. With that, there should be some continuing suspicions as to the sustainability of this bull cycle.

 

However, this bull cycle is gaining some synergy. In late July when there was increasing evidence the bear was tiring, many sectors continued with bearish behavior. Strong bull markets force broad participation. Just as the bear would not leave any survivors in the June-July bearish cycle, the bull maintains that same sense of responsibility. The bull cannot develop the required ego when all sectors are not participating. Even sickest of ETF’s, XLF-Financials, participated with some bullish gusto last week. Yes, it got clobbered pretty hard last Thursday, but it rebounded with even more bullish gusto on Friday. The Quick-term Indicant even signaled buy for this ETF last Wednesday even though it was down over 40% since the Quick-term Indicant signaled sell in October 2007.

 

It is believed that all non-contrarian ETF’s are headed to the bearish yellow curves; similar to the projections made last March. Increased obviations of directional intensity will occur when they get there. If they continue northward to bullish red, then this bull leg has some sustainability. Deep bearish seasonality has lost its influence on the stock market due to the phenomenon of commonality. However, the heart and soul of bullish seasonality has not. It has started in August the past few years and there are no indications, as of this writing, it will do so again this year. Of course, once that observation becomes too popular, rest assured the market will adjust. It will not please the masses.

 

We will focus on the Tangential Model for the next several weeks while the bearish yellow curves attempt to transform from inflecting configurations to obviating curves of directional intensity. It has excellent promise to support the theme of happy investing. These charts are updated, daily, so you can keep up with the phenomenon on a daily basis.

 

There is not too much complexity in these models. To obviate bullish sustainability, all that is needed, is tangential protection. Click the following link.

 

http://www.indicant.net/Members/Updates/STI-Mkts/STI-10-Indices/STI08a-DJ.htm

 

As you can see, the two broad Dow indices are shaping a yellow curve upward. The Dow30 has a little more of a bullish configuration than the Dow Composites. Looking to the left on the Dow30 chart, you will notice a blue straight line sloping upward by 45-degrees. That is the tangential protection line. When you see one of them again in the future, the bull cycle cannot be disrupted by bearish ambition. We are several days from being able to construct a new tangential line. You will notice prior bullish cycles were mere bullish spurts. You will also notice they did not enjoy tangential protection, which is the current configuration. In other words, there are no obviating elements suggesting recent bullish behavior will be sustainable. However, there is significant probability suggesting most of the non-contrarian ETF’s are going to interact with their bearish yellow curves in the next few days. To do so, enhances the probability of being able to construct a tangential protection line. When that happens, there will be no need for any stock market paranoia.

 

Clicking the following link will take you to a table where you can review the other major indices. It is recommended you review these daily.

 

Keep your eye on the daily stock market report. It will help you differentiate sustainability versus spurts regardless of the directional intensity underway.

 

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 four buy signals and two sell signals. There have been 96-buy signals in the past four weeks. There have been 341-sell signals since October 26, 2007, but only six in the past four weeks.

 

In addition to the buy signals, the Mid-term Indicant is signaling hold for only 165 of the 345-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 148.0%. That annualizes to 70.0%. The Mid-term Indicant has been signaling hold for these 174-stocks and funds for an average of 109.9-weeks.

 

In addition to the sell signals, the Mid-term Indicant is avoiding 174-stocks and funds of the 345- tracked by the Indicant. The avoided stocks and funds are down an average of 17.2% since the Mid-term Indicant signaled sell an average of 28.1-weeks ago.

 

One year ago, on Aug 10, 2007, the Mid-term Indicant was holding 262-stocks and funds out of the 345 tracked for an average of 119.2-weeks. They were up by an average of 139.4% (annualized at 60.8%). There were 79-avoided stocks and funds at that time. Those avoided stocks and funds were down an average of 6.0% since their respective sell signals an average of 14.0-weeks earlier.

 

The Mid-term Indicant was signaling hold for 175-stocks and funds of the 345-tracked two years ago on Aug 11, 2006. They were up by an average of 141.8% (annualized at 65.3%) since their respective buy signals an average of 112.9-weeks earlier. The Mid-term Indicant was avoiding 168-stocks and funds at that time. They were down an average of 5.7% since their respective sell signals an average of 16.7-weeks earlier.

 

There were 230-stocks and funds with hold signals on Aug 12, 2005 since their buy signals an average of 88.2-weeks earlier. They were up by an average of 102.4% (annualized at 60.4%). There were 86-avoided stocks and funds at that time. They were down by an average of 17.3% from their respective sell signals an average of 20.9-weeks earlier.

 

On August 6, 2004, the Mid-term Indicant was signaling hold for 160-stocks and funds out of 296-tracked. They were up by an average of 75.8% (annualized at 61.1%) since their buy signals an average of 64.5-weeks earlier. The Mid-term Indicant was avoiding 130-stocks and funds at that time. They were down by an average of 27.8% since their sell signals an average of 40.5-weeks earlier.

 

Five years ago, on Aug 9, 2003, there were 199-hold signals for stocks and funds out of the 296 tracked by the Mid-term Indicant at that time. They were up an average of 48.9% (annualized at 82.9%) since their respective buy signals an average of 30.6-weeks earlier. There were only 33-avoided stocks and funds then. They were down an average of 11.0% since their respective sell signals an average of 15.0-weeks earlier.

 

On Aug 9, 2002, there were only 51-stocks and funds with hold signals from the listing of 295-tracked by the Mid-term Indicant at that time. They were up 26.7%, annualizing at 71.0%. There were 168-avoided stocks and funds then. They were down by an average of 37.2%.

 

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

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

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

 

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

 

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

 

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

 

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

The market is configured with bullish inspiration. It has not yet matured with obviations of bullish sustainability. Do not be surprised at volatility, which is common when the bear and bull battle for dominance. The battle is waging, configurations are suggesting the bull will be victorious and thus the buy signals.

 

Click the following link that will take you to the tangential protection charts.

 

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

 

The Quick/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 imbedded in this weekly report. This allows web-based retention records of the daily report for much longer than the last twelve months.

 

The Daily Indicant Stock Market Report for the last trading day of the current week is near the conclusion of this weekly stock market report. It is emailed each weekend, separately, so you can read it, either as a separate document, or in this document.

 

The Indicant Stock Market Report’s Secular Market Blend

The Dow is up 61.0% since its secular low on October 9, 2002. The NASDAQ is up 116.7% and the S&P500 is up 66.9% since then. The small cap index, S&P600, is up 126.2%. The major indices, with the exception of the Dow Utilities, are now bullishly biased.

 

As stated the past several months, the secular bull that originated on October 9, 2002 no longer remains solid. A secular bear could indeed be unfolding. However, as stated last week, several short-term attributes have recently configured in favor of the bull. Dynamic bullishness occurred last week.

 

The Dow is down 17.2% since its last closing peak on Oct 9, 2007. The NASDAQ is down 15.6% since its last peak on Oct 31, 2007. The S&P600 is down 13.2% since its last closing peak value on Jul 19, 2007.

 

The NASDAQ is down 52.2% since its last weekly secular peak on March 9, 2000. The S&P500 is down 15.1% since its similar secular peak on March 23, 2000. The Dow is down by 0.1% 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 if the NASDAQ equaling its March 9, 2000 high until after 2025.

 

The Dow is down 11.5% so far this year. The NASDAQ is down 9.0% this year. These conditions are incongruent with historical standards. This year should be a bullish year, based on those standards. The stock market occasionally delights in violating historical standards. This always happens when such standards gain in popularity. As stated for several years now, the phenomenon of commonality disallows stock market victories by the masses.

 

The short-term bullish cycle, ending eight weeks ago, had been lending support to historical standards. As stated several times in prior weekly reports, that bullishness will be challenged during the dog days of summer. You saw that for about eight weeks until two weeks ago. The expected reversal to bullish bias on a short-term basis has formed. The question now is the breadth of sustainability.

 

The NASDAQ year-to-date performance was bearish by 20.4% through this week in 2001. Keep in mind the NASDAQ finished 2001 down by 23.3%.  This year had been configuring with 2001 similarity, but there is a mild chance historical standards (bullish) may be developing.

 

The NASDAQ was down by 32.5% through this weekend in 2002. Some of you recall the dynamic bear market in 2002, where the NASDAQ finished that year down by 31.5%. The NASDAQ YTD 2003 performance was up by 23.1%. It finished up in that solidly bullish year by 50.0%. It was down on this weekend in 2004 by 11.3%.  It was down by 0.5% in 2005. Many of you recall that 2004 and 2005 were meandering bear markets. In 2006, it was down by 6.6% and up by 8.2% at this time last year.  

 

Keep your eye on the daily stock market report.

 

Stop Loss Management

The Mid-term Indicant recommends a stop loss of 8% due to increasing bullish influences for the longer-term holdings. You should set them higher for any recent non-contrarian buys, such as 5% or enough to protect reasonable gains. A stop loss of 2.5% is recommended for Quick-term and Short-term buy signals for ETF’s last week. These tight stop losses are based on the absence of tangential protection. Volatility may trigger undesired sells. Keep your eye on the daily stock market report for re-entry guidance.

 

For the Mid-term Indicant, which is more tolerate of short-term swings, use a 8% trailing stop loss or the yellow or green values you will find on the tables for your longer-term hold positions. If your stock or fund is above the bearish yellow curve and below the green curve, set your stop loss equal to the greater of the yellow curve and the trailing stop loss. If your stock or fund is above the green curve, set your stop loss at no less the value of the green curve or 8% trailing, whichever is greater. If your stock or fund is above the red curve and you bought at the Mid-term Buy signal, you should use the 10% trailing stop loss.

 

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

 

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

 

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

 

Economic Conditions – Inflation, Currency, Interest Rates

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

 

Interest rates are mixed, but with a mild bullish bias for the stock market.

 

As stated the past five weeks, the U.S. Dollar continues with stabilizing configurations with a mild bias toward strengthening. The underlying theme is the necessity to strengthen it to help soften the inflationary threat from its weakness. There appears to be a cyclical strengthening shift underway. Unfortunately, from an inflationary perspective, the weakening trend remains solidly in place.

 

Commodities have been aggressively bearish the past four weeks. Oil prices on a quick-term cyclical basis are shifting south, bringing other commodities with it. This is encouraging from an inflationary viewpoint but equally discerning from an economic view. Demand projections obviously are less than supply capacity, which suggests sour economic conditions.

 

These conditions are somewhat supportive of a bullish stock market, but that exuberance will be quickly dashed in the event deflation becomes an issue. That is highly unlikely since the rising tide of capitalism will continue the longer-term trend of stoking demand for commodities.

 

As stated the past five weeks, the stock market will eventually respond bullishly to the idea the increasing number of capitalists in spite of the immediate inflationary threats imposed by the short-term inequality between supply and demand, as capitalists solve problems.

 

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 is up 302.5% since the April 13, 2001 buy signal. Its annualized growth since that buy signal is 40.7%. It moved to the north in 57 of the past 100-weeks – a little over one-half the time. It has been bullish in 28 of the last 51-weeks. This fund has been bullish in 13 of the last 26-weeks. It has been aggressively bearish the past four weeks.

 

Fidelity Gold, Fund #28 is down 12.2% since the Mid—term Indicant signaled sell on August 1, 2008. It is simply not performing and weakening economies are depressing demand for all commodities.

 

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 326.5% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 53.8%. This fund has been bullish in 10 of the last 24-weeks. It has been bearish the past six weeks.

 

Vanguard Energy #18, VGENX, is up 213.2% (annualized at 39.3%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 206.2% (annualized at 43.5%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 159.3% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 31.5%.

 

Energy related funds have been bearish the past five weeks, which conflicts with current fundamental requirements of bullishness. This bearishness is an adjustment from the anticipated $170-oil to a smaller number. Oil and other commodities are moving cyclically to the south, but the trend remains north.

 

Investors in these funds are supporting a 1970’s type of market with high inflation and high oil prices. As long as capitalism remains in vogue around the globe and alternative sources of energy continue to lag exponentially increasing demand, a long-term perspective on holding strategy is appropriate. However, keep in mind OPEC can very quickly reverse this trend. They have done it before and remain capable of doing it again.

 

The SQI (Consolidated Short-term and Quick-term Indicant) model signaled buy for the GLD-ETF#11 on August 3, 2005. It is up 97.8% since then. It is annualized at 32.0%. This fund has been bullish in 34 of the past 50-weeks. It has been bullish in 15 of the last 25-weeks. It has been bearish in three of the past four weeks.

 

The SQI signaled sell for ETF#03 – Energy and Natural Resources on August 4, 2008. It was up  242.4% (annualized at 44.8%) since its previous buy signal on March 26, 2003. This fund has been bearish in 17 of the past 29-weeks and in eight of the past nine weeks. This ETF is configured for bearishness on a Short-term basis.

 

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

There was one new bull signal and no new bear signals.

 

In addition to the new bull signal, there are nine bull. They are up by an average of 3.8% since their bull signals last weekend. They are annualizing at 195.4%.

 

Click this sentence to view a summary of their performance.

 

The Mid-term Indicant Dow Jones Industrial Average performance is at $37,981,902

That beats buy and hold performance of $1,785,230 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $185,365. That beats buy and hold’s $126,977 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $237,959. That beats buy and hold’s $83,707 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 2,027.6%, 46.0%, and 184.3%, respectively, for these indices as of this past week.

 

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

 

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.

 

Note from April 5, 2008: Enron will be removed from Indicant tracking later this year. It was removed from the Dow Utility Index several years ago. It is now a penny stock, but the Indicant kept tracking it at the request of members. Its low cost nature is not friendly to Mid-term Indicant assessment due to small price changes and corresponding large percentage impact. The Mid-term Indicant is not designed for penny stocks. Although recovery is always possible, this stock has become too busy to track. This position will be re-accessed based on member feedback as the year progresses.

 

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 buy for ProFunds Ultra Short on January 18, 2008. It was down 32.3% since the Mid-term Indicant signaled sell on September 15, 2006 until the buy signal on January 18, 2008. Historical norms of market cyclicality suggested the next buying opportunity for this fund should not occur until 2009.

 

This fund is down 10.7% since the Mid-term Indicant signaled sell on August 1, 2008.

 

Click here for Mid-term Indicant Table of Mutual Funds

 

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

 

Long Term Indicant Positions - Dow Jones Industrial Average

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

 

The Dow is up 305.4% (annualized at 18.1%) since the Long-term Indicant signaled bull 875-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. A link to the Long-term Indicant is below:

 

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

 

Quick/Short-term Indicant Stock Market Report - Summary

Quick-term Red Bulls: Two of thirty. They are non-contrarian red bulls; Non-bullish status threatened.

Quick-term Yellow Bears/Threats: Eighteen of thirty.  Non-bearish support non-existent with majority yellow bears, but with increased probability of shifting bullishly.

Quick-term Non-Bearishness: QTI differential is bearish 7.1%. Bull now arguing with bear.

Short-term Non-Bearishness: Breakout/breakdown differential is bearish 5.7%; bearish influence diminishing, while the embryonic bull cycle is attempting to gain momentum. Low volume volatility is an invitation for disruptive bearish behavior, but bear has been countering with strong commitment.

Force Vectors: Same as the past few days. Many are starting a new bull cycle. Some are coupling above Vector Pressure, which could encourage the bull’s spurt potential, but not sustainable at this time. However, it is configured strong enough to generate buy signals, but not so strong that it prevented some sell signals on Thursday. Keep in mind the Quick-term Indicant is cyclically sensitive, as opposed to trend sensitive. The trend remains bearish but the Dow Transports are configuring to possibly disrupt bearish trend.

Vector Pressure: Nine in bullish domains which continues to expand favorable to bullish cause.

STI Tangential Support: All major indices are without tangential protection. However, a few indices are forming for potential tangential protection. There are limited obviations, but there is a definite bullish interest forming. Also, several indices are red bulls, which is encouragement to bullish inspiration. Keep in mind this bull remains embryonic and vulnerable. As long a bearish yellow continues inflecting, obviations of directional intensity will remain absent.

Immediate Tactics: Buying into a bullish spurt, but with caution. Stop losses should be tight. If indices fall below yellow, sell signals will follow and more bearishness should be expected.

Current Quick-term Bias: Shifted mildly in favor of the bull on Thursday, July 31, 2008. Two non-contrarian Quick-term red ETF bulls suggests increasing this bull’s potential for sustainability.

Overall Market Status: Mild bullish bias; could be a spurt, but worth the risk of buying right now on a Quick-term basis.

Profit Potential from Naked Options: Enhanced as volatility is significant and as expected. Out of money August strangles could be profitable. They were with Tuesday’s significant bullish expression, Thursday’s strong bearish expression, and Friday’s even stronger bullish expression. This past week has been options paradise with all the volatility. Out of the money strangles performed well, regardless of direction.

Volume: Losing robustness and with that a loss of one of the obviating factors of bearishness or bullishness. Low volume invites wild volatility.

 

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

The Short-term Indicant signaled bull last Tuesday for the Dow Jones Industrial Average and NASDAQ. The Dow is up 1.0% and the NASDAQ is up 2.7% since then.

 

As stated in the August 1, 2008 daily stock market report, there was an increasing likelihood of a bullish bounce on a near-term horizon. The NASDAQ is not participating in the same magnitude as the Dow’s pessimism. That suggests the underlying bullish bias can still mature. Remember, the market is focused on Quarter-II, 2009 in spite of AIG’s earnings disappointment this week.

 

Please read on. Click here to see the Short-term Indicant’s history.

 

Interestingly, the NASDAQ volume indicator is flattening, while the big board continues lethargically. That suggest increasing interest in bullish behavior and decreasing support for bearish behavior. Friday’s bullish aggression was accompanied with so-so volume offering limited obviations of directional intensity.

 

Click this to view Indicant Volume Indicators.  

 

To view the STI-Tangential Protection for ten major indices, click here.  

A quick tour of major index pairs will be helpful to you. As stated the past few days, there remains some risks of a bearish response, but each day’s maturity of this burgeoning bullish cycle will dampen that risk. Last week endured the expected volatility, but did not damage the embryonic bull cycle now forming.

 

The remainder of this section will offer commentary for proper chart interpretation only where attributes changed.

 

http://www.indicant.net/Members/Updates/STI-Mkts/STI-10-Indices/STI08a-DJ.htm

Aug 5, 2008-Tue-As you can see from the above link, both the large Dow indices bearish yellow curves are approaching their respective breakdown lines. That configuration has invigorated the bull since 1975.

 

Aug 7, 2008-Thu-You will notice on the charts, such invigorations can be short bullish spurts.

 

Aug 8, 2008-Fri-This bull cycle remains “in the woods” where the bear lurks.

 

http://www.indicant.net/Members/Updates/STI-Mkts/STI-10-Indices/STI08a-DJtu.htm

Aug 5, 2008-Tue-The Transports bearish yellow is shifting north. This does not mean it is past inflection, which means the dangerous black hole zone remains with us. Preventing a higher probability of bullish sustainability is the Utilities bouncing off breakdown. But you can extrapolate its bearish yellow and see it is headed for breakdown interaction, which suggests bullish behavior for several more days. Look to the left on the Utilities chart. You will see bearish yellow did not penetrate.

 

Aug 6, 2008–Wed-Notice the Transports bearish yellow’s last cyclical bottom was higher than the prior one. If this cycle matures, one will then find the bullish trend is their friend as far as the Transports are concerned. The Utilities Force Vector and Vector Pressure suggests this is oversold. Correcting that condition should be uplifting for the overall stock market.

 

Aug 8, 2008-Fri-The Utilities bearish yellow will need considerable bullish behavior the next two weeks to avoid bearish yellow’s interaction with breakdown. It is very possible for mixed behavior next week with indices moving in opposite directions. It is anticipated Utilities will move northward.

 

http://www.indicant.net/Members/Updates/STI-Mkts/STI-10-Indices/STI08b-NS.htm

Aug 5, 2008-Tue-Both NAS models never endured deep bearishness in this past cycle. Google,  Apple, Cisco, RIM, etc.  held it up. When one has good products and services, one makes a profit even during depressed environment. QID traders today were bantering around the term, barfaroma. Their disgust is not over.

 

Aug 6, 2008-Tue-Both indices are sizzling hot. They are not protected by bullish red, which should appear in the next day or two moving northeast. Additional buying of funds such as QQQQ or QLD would be appropriate after profit taking sessions. In other words, if the cycle holds in tact, by more when these indices fall below red.

 

Aug 7, 2008-Thu-The NAS100 is well above its bullish red curve. Although this suggests some degree of bullish sustainability, do not be surprised at its continued cooling to red over the next few days.

 

Aug 8, 2008-Fri-You will notice the NASDAQ is overheated. That suggests some gravitational pull back to bullish red, which would not disrupt the bullish cycle, but certainly would hurt current hold positions of securities such as QLD. However, current configurations suggests bullish red will be a bullish bouncing point as this bull cycle is increasingly probability of significant sustainability.

 

http://www.indicant.net/Members/Updates/STI-Mkts/STI-10-Indices/STI08c-SPL.htm

Aug 5, 2008-Tue – Even the dilettante infested S&P100 and S&P500 are moving north. Large Caps need volume. Sour economic news does not correlate well with the volume scenario. However, a bull is a bull regardless if emotionally based or fundamentally based.

 

http://www.indicant.net/Members/Updates/STI-Mkts/STI-10-Indices/STI08d-SPS.htm

Aug 5, 2008-Tue – The mid and small caps are mixed in interpretation. The S&P400 bearish cycle has been relatively shallow. But its bearish cycles are minor when compared to the other indices. This is the best group of stocks to own in any economic environment. There is room to grow and the dilettantes have not yet arrived in big numbers. The S&P600-Small Cap bearish yellow inflecting just above breakdown is encouraging to those who prefer bullish stock market behavior.

 

Aug 6, 2008-Tue-The S&P400 is not yet a red bull. However, its Force Vector and Vector Pressure are combining to support continuing bullishness. If Force Vectors move south and the index passes below yellow, the bear will resume dominance. The probability of that bearish scenario is low. The S&P600 is sizzling hot, similar to that of the NASDAQ and NAS100.

 

http://www.indicant.net/Members/Updates/STI-Mkts/STI-10-Indices/STI08e-NY-VIX.htm

Aug 5, 2008-Tue – The Big Board’s bearish yellow was as deep as they come in magnitude. This does not mean the market will turn strongly bullish in the next several days, but there is considerable evidence the market will be non-bearish for the next few weeks. The VIX bearish yellow inflected. The maturity of the last bullish curve suggests a bearish curve is about to unfold. Such cycles last average from three to six weeks. The stock market should be bullish if this new VIX bearish cycle manifests.

 

Aug 6, 2008-Tue-The NYSE (big board) is struggling, but it was one of the most depressed indices in the last bearish cycle. The weak always move the slowest when the cause shifts to bullish. However, paranoia is not out of order as long as its Force Vector remains below neutrality. It is a red bull though, but its bearish yellow is the slowest to inflect. Notice how the VIX is behaving as expected. The normal cycle last from six to eight weeks.

 

Aug 7, 2008-Thu-The VIX remains committed to a bearish cycle, which supports stock market bullishness.

 

Aug 8, 2008-Fri-VIX should endure at least two weeks of bearishness, which, at worst, would stabilize stock prices and at best foster continued bullish bias.

 

As stated the past few days, there remains an absence of obviating attributes identifying directional intensity. However, as long as bearish yellow continues inflecting and there is no collapse by bullish red, bullish bias on a Short-term cyclical basis remains favored.

 

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

There were no buy signals and no sell signals. The SQI is signaling hold for 22-ETF’s. They are up by an average of 30.1% (annualized at 74.4%) since their respective buy signals an average of 20.8-weeks ago. The SQI is avoiding nine-ETF’s at this time. They are down by an average of 4.8% since their sell signals an average of 6.7-weeks ago.

 

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

 

Short-term Indicant Report Card, Status, and Charts

There were no buy signals and no sell signals. The Short-term Indicant is signaling hold for 22-ETF’s. They are up an average of 47.7% (annualized 117.4%) since the STI signaled, buy, an average of 20.9-weeks ago.  There are nine-ETF’s with avoid signals. They are down by an average of 4.4% since their sell signals an average of 6.7-weeks ago.

 

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

 

Special Note August 4, 2008 - You will notice these performance statistics shifted quite a bit. The Short-term and Consolidated Indicant’s signaled sell ETF#03-XLE-Energy. That fund was up 229.7% since the March 26, 2003 buy signal. That significantly reduced the average holding period and thus inflated the annualized performance ratings. It is interesting that fund’s bullish performance originated with the initial bombing of Iraq. A bombing of Iran is not believed to produce similar geometry. However, if Force Vectors move north and price moves above yellow, rest assured there would be buy signal regardless of any bombing.

 

Special Note August 5, 2008 – Several performance statistics shifted dramatically today. That is because XLF-Financials was bought on the Short-term Indicant today. The Quick-term Indicant bought yesterday. That particular fund was down nearly 40% since its last sell signal in October 2007. That is the reason for the higher losses avoided values. Several other funds were down double digit amounts and the Quick-term buying spree since Friday, August 1, 2008 has led to considerable performance adjustments.

 

Quick-term Report Card, Status, and Charts

There were no buy signals and no sell signals.  The Quick-term Indicant is signaling hold for 23-ETF’s. They are up by an average of 11.0% (annualized at 45.4%) since the QTI signaled buy an average of 12.4-weeks ago.  The Quick-term Indicant is avoiding eight-ETF’s. They are down by an average of  3.7% since their sell signals an average of 2.7-weeks ago.

 

Current Strategy – Aug 4-2008-Very carefully buy some of the ETF’s recommended. For those who like a lot of excitement, buy QLD, as opposed to QQQQ. QLD moves exponentially.

 

Configurations are not obviating directional intensity, but the bullish bias that staring forming a few days ago has not been threatened by the bear. Even Thursday’s aggressive bearish behavior inflicted no damage to the bull. On the contrary, the bull responded on Friday with a sharp slap to the face of the bear.

 

During the early stages of a bull cycle, vulnerability to bear attacks is ever-present. That is why it is important to maintain tight stop losses. We have found that a 2% stop loss is good during these early stages of bullish formation. Once tangential protection is developed, then the stop losses can be widened to 5% to 8% of the current price.

 

Aug 5, 2008 – Nothing is different above with the following exceptions. Elevate your stop losses to protect today’s nice gains. Keep them tight to current prices. The bearish yellow curves need to escape inflection and develop a solid cycle. Although today’s bullish behavior was exciting, the market will not evolve into “directional intensity” until bearish yellow forms a solid northerly sloping curve. High holding risk remains. The order of the day is to maintain some tension with the idea that volatility can be great as long as volume is light. Relaxation will not be in order until we can construct a tangential protection line.

 

Aug 6, 2008 – There are no differences from the above.

 

Aug 7 ETF#05 – XLF – Financials was down significantly today due to AIG disappointing. At least they (AIG) appear honest, contrasting with the Bearn Stearns folks. Tight stop losses minimized the damage.  It is somewhat discerning Force Vector’s shifted south. However, the degree of robustness on the previous Force Vector bullish cycle continues suggesting this ETF will at the very least climb to bearish yellow. The problem is the low volume and companies reporting differing pain levels from the sub-prime crisis. Low volume always invites significant volatility.

 

The Quick-term Indicant continues to signal hold for this XLF, which means that you should buy even if the recommended tight stop losses triggered sell today. If you re-buy, immediately follow with another tight stop loss. Although Vector Pressure remains inside bearish domains and not supportive of dynamic bullishness, this is an appropriate tactic for those interested in trading. It is advised to re-buy during the day, say during your lunch break. If it incurs another deep down day, the Quick-term Indicant will most likely signal sell and this tactic will be abandoned.

 

Conflicts Between the Short-term and Quick-term Indicants

A solid bearish bias originated on Thursday, June 12, 2008, with all major indices without tangential support. As of August 1, 2008 that bias expired with bullish potential. It may only be a meandering bull, but a bull nonetheless. There are now 67-holds, in addition against 23-avoids. This continues suggesting a mild bullish bias on a quick-term and short-term basis. If more ETF’s cross above yellow bear curve, then bulls should dominate for a few weeks at a minimum. Keep in mind spurts and cyclical shifts are not void of volatility. If the bullish cycle matures with tangential protection, then enjoy the ride. You will have more certainty once bearish yellow discontinues inflecting and a solid bullish cycle forms. These inflection periods take some time. The sentiment shift is somewhat emotional.

 

Quick-term Indicant Bull/Bear Health Report

Click the above heading to view the charts.

 

Eighteen of the 30-ETF’s are below their respective bearish yellow curves. The average relative position of all thirty ETF’s is below bearish yellow by 1.2%. This is without non-bearish support and with bearish support. Bearish yellow had been acting as a ceiling to bullish ambition the past few weeks. That ceiling was cracked on Thursday, July 31, 2008, offering some bullish hope. The common backlash by the bear occurred a few days in between flashes of bullish inspiration. As stated the past three days, that should invigorate the bull. Significant bullish behavior last Tuesday with mild follow-on bullishness on Wednesday and again this Friday was impressive. Do not misread low volume volatility.

 

Two ETF’s are above their bullish red curves. This attribute remains solidly non-bullish. All thirty ETF average positions are below bullish red by an average of 7.1%. which is non-bullish, but weakening in its non-bullish support.

 

The red bulls are non-contrarian ETF#10-IBB-Health and ETF#27-XLP-Large Blend. They are up 9.5% and 3.7% since the Quick-term Indicant signaled buy on July 8, 2008 and July 31, 2008, respectively. As long as there is at least one non-contrarian in bullish domains, the bear cannot dominate.

 

The QTI differential is bearish by 7.1%. This is the forty-second consecutive trading day of a bearish reading. It is a long way from a bullish reading, but could shift favorably to bull in the next few days. This bearishness is rapidly weakening.

 

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

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

 

None of the thirty ETF’s are contacting their breakout lines, which again is non-bullish.

 

The average distance from breakout contact is 17.7%. Double digit variances from breakout contact for 151-consecutive trading-days has been non-bullish.  Near 20% distance has recently been a rallying call for the bull. Thursday’s bearishness got close to annoying the bull again. The bull responded ferociously on Friday with a 300+ Dow gain and a 50+ NASDAQ gain.

 

None of the thirty ETF’s are contacting their breakdown lines. Contact in 17-of the last 35-trading days is bearish, but losing influence. Contact density has relaxed with zero breakdown contact the in 13 of the past 15-trading days.  As you can see, bearish contact density is contracting and thus allowing more bullish energy.

 

The average distance between the price and breakdown is 12.0%. After providing non-bearish support since March 2003 with double digit readings, this has been a single digit expression (bearish) in 16 of the last 31-trading days. Double digits provide non-bearish relief. Double digit relief against the bearish onslaught has been in effect for the past few days until the past two days. That had been increasingly non-bearish. As stated the past four days, single digit expressions should invoke bullish responses.

 

The breakout/breakdown differential is bearish by 5.7%. This attribute is supporting bearish ambition, but expected to weaken in that support the next two to four weeks.

 

ETF Force Vector Configurations

You can scan the Quick-term Indicant for Exchange Traded Funds table and click on the charts to observe Force Vector configurations. Scroll down each of the charts, where a quick link has been added to take you to the next series of Quick-term ETF charts. Use you back arrow on your browser to return to the.1 previous page.

 

Twenty-one Force Vectors are in bullish domains. This is a bullish majority, but the bull/bear battle continues with a slight edge favoring the bull.

 

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

 

ETF Force Vectors/Vector Pressure Crossings/Option Signals

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

 

Click this sentence for Vector Pressure Option Signals. There were no option buys signal after Friday’s close. There have been 22-option buy signals in the past ten trading days; 17-calls and 5-puts.

 

Ten of the thirty ETF Vector Pressures are in bullish domains. You should notice this attribute continues creeping up, favoring bullish support. This minority position is yet not supportive of strong bullish inclinations, but the creeping suggests an increasing probability of such support.

 

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

 

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

 

Quick-term and Short-term Indicant Summary

A solid new bearish bias shift was born on June 11, 2008. It expired on August 1, 2008 with bullish bias.

 

ProFunds Ultra Short mutual fund moves inversely to the QQQQ by exponential amounts. See the Mid-term Indicant for its status.

 

The Quick-term and Short-term Indicant tracks ETF#31, QID, which is the ETF cousin to ProFunds Ultra Short. It is excluded from overall ETF statistics because it is purely contrarian. It is designed to move bullishly during bear markets and bearishly during bull markets. This exclusion is required for convergent/divergent monitoring.

 

The Indicant signaled sell for QID  on July 31, 2008. It is down 8.0% since that sell signal. All attributes suggest continuing bearishness for this fund, which is bullish for the stock market.

 

Other Contrarian Funds

ETF#03-Natural Resources   - This fund is down 3.3% since the Quick-term Indicant sell signal on July 24, 2008. Configurations favor bearish bias.

 

ETF#11-Gold and Precious Metals   is up 94.1% since the Quick-term Indicant signaled buy on August 3, 2005. It is annualizing at 30.8%. It has been bearish in 11 of the past 17-days. It remains in neutral zone between red and yellow and nearing a sell signal. Its bearish Force Vector cycle was very mature and was primed for a reversal. However, you will notice it shifted south last Tuesday and continued bearishly the past four days. Declining Vector Pressure remains a concern. The Quick-term Indicant will not signal sell as long as it remains above bearish yellow. Thursday’s bearish behavior, coupled with Wednesday’s bullishness was favorable to Tuesday’s put option buy signal.

 

ETF#14-Long Government  is up 1.5% since the Quick-term Indicant signaled sell last Tuesday.

 

This fund has some strategic risk. The dollar’s weakness and inflationary threats will eventually stimulate increased interest rates. With that, this fund, fundamentally, would endure bearish behavior. The contrarian movement to that fundamental prognosis would be high demand for safety purposes, depending on the nature of economic behavior. Do not be surprised at jawboning the dollar up, but the U.S. remains a net-importer and thus the continual downward pressure on the dollar, which fundamentally supports long-term upward pressure on interest rates.

 

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

 

Quick-term ETF Options

Quick-term Indicant for ETF’s

Short-term Indicant for ETF’s

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

 

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

 

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

 

Short-term Indicant for DJIA and NASDAQ

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

Short-term Indicant Table for the NASDAQ Composite Index

Indicant Volume Indicator

Short-term Indicant for Tangential Analysis

 

 

Divergence versus Convergence

The market was bullishly divergent last week with most sectors moving bullishly while the energy sector was weak. Commodities and energy are cyclically shifting south which should invite short-term bullishness. A long-term view should be guided with caution as the declining energy prices correlate to declining demand. That correlates to economic recession at this time.

 

Indicant Conclusion

As stated the past two weeks, the bear has now completed its process of inflicting it influence on the pertinent sectors. Now, we are waiting for all major indices to find a final nesting place in their support of the bear. The bull cannot dominate on a mid-term basis until that happens.

 

However, from a short-term perspective a new bullish cycle could be forming. It may turn out to be a bullish spurt. To escape bullish spurt potential, the Short-term Indicant needs to develop tangential protection, which has not yet occurred. The market needs to stabilize or continue bullishly for a few more weeks for this desired feature.

 

Keep up with the daily stock market report as the Quick-term attributes can shift quickly.

 

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

 

The daily updates are on the following link.

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

 

Hyperlinks

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

 

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

 

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

 

Happy Investing,

 

 

www.indicant.net

08/10/08

 

 

Aug 03, 2008 Indicant Weekly Stock Market Report

Volume 08, Issue 01 ISSN 1526 6516 © The Indicant Stock Market Report

  

This Week’s Report

 

A Reversal

Alan Greenspan once said the Federal Reserve developed a method that forecasted nine out of the last four recessions. In essence, he was stating that recessions are not predictable.

 

If recessions are unpredictable, the stock market is even more unpredictable. Recessions are economically based. Recessions, as well as expansions, require harmonized synergy of directional intensity. The stock market can move entirely on emotion, but the trend is always compliant to economic activity and corporate earnings.

 

A presidential candidate suggesting rebates from Exxon to U.S. citizens is bordering communism. That can invoke tremendous bearish emotion. It could even cause the collapse of the stock market institution.

 

Technically, the stock market is ignoring all the bad news and political threats for the time being. The major indices Force Vectors crossed above the upper level of bullish domains a few days ago. The bear finished its mission of leaving no survivors. The Dow Utilities finally succumbed, which was identified as a requirement in the July 20, 2008 Weekly Stock Market Report.

 

You will notice the Dow Utilities finally performed to bear market standards with a nice collapse since July 20. It is actually setting on its breakdown line. Click the following link and scroll down a bit to see its behavior as it stands now.

 

http://www.indicant.net/Members/Updates/STI-Mkts/STI-10-Indices/STI08a-DJtu.htm

 

Scroll up a bit and you will notice the Dow Transports closer to its breakout line than it is to its breakdown line. It endured significant bearishness ahead of utilities, while avoiding its breakdown line on the last bearish cycle.

 

You will notice the Transports interacted with breakdown lines in late 2007, while the Dow Utilities endured that dreadful fate this past week.

 

Since we are reviewing these two charts, you will notice synergistic commitment to directional intensity for these two indices were never concurrent until January 2008. During late 2007, the Transports were crashing, while the Utilities were smug in a nice bullish cycle. After January, these two indices tended to march to their own drumbeat.

 

Committed stock market bears do not incur this sort of asynchronous behavior. Although short-term money rotates from sector to sector during bull and bear swings, that rotation becomes less influential during deep bear markets. The short-term money is directed to ever shortening strategies, say for a day or two, as opposed to two to four week cycles.

 

Several attributes are configuring similar to that of the Transports. Look at the bottom of the Transports chart. You will notice the Force Vectors crossed above the upper band line on the bottom portion of the chart. For the lack of a better term, this is referred to as X, meaning max. The lower band is referred to as N, meaning minimum.

 

The tangential model will be signaling short-term bull when the underlying index move above its bullish red curve and the Force Vector moves above X. As you can see, the Transports did that several days ago. The Utilities did the opposite. Its Force Vector moved below N, while the Index fell below yellow.

 

This conflicting geometry suggests a lack of synergistic commitment in either bullish or bearish direction. That suggests recent non-bearish behavior with a mild bullish bias could be a mere bullish spurt underway.

 

The problem between bullish spurts and sustainable bullish cycles is that they both start out with the same geometry and similar behavior. In other words, differentiating between spurts and solid bullish cycles in the first four weeks technically difficult. That is when supporting fundamentals must be developed.  For example, if oil prices drift south, the stock market should move north.

 

The underlying fundamental thought at this time is the increasing possibility of declining oil prices. That will mitigate intense inflationary pressures, which will allow the Fed to keep interest rates low for an extended period. The stock market should anticipate this with a solid bullish cycle.

 

This particular reversal from deep bearish bias to potential bullish bias is without lead-in volume support. Many of you recall the last bullish cycle, which lasted for about twelve weeks, was preceded by significant volume. This particular cycle does not have that. So, technically, there is a higher probability of a bullish spurt underway than a sustainable bullish rally due to the absence of volume support. However, summertime bullishly sustainable cycles, on occasion, is not preceded with high volume. However, this bullish rally’s beginning stages is a little bothersome without the lead-in volume.

 

Last Thursday evening, the Quick-term Indicant shifted bias from bearish to bullish. Several buy signals were generated for the stronger ETF’s. That was followed by a few more buy signals after Friday’s close for some of the weaker ETF’s, including ETF#05, XLF-Financials. This was the weakest of all the ETF’s. It was down more than 40% since the QTI signaled sell last October. The current idea is for it, along with several other ETF’s, to move up to its bearish yellow curve in the next few weeks, as a part of the underlying bullish rally now underway.

 

Much of the reasoning for the recent buy signals was shared in a special report last Thursday night, which can be reviewed at the following link.

 

http://www.indicant.net/Non-Members/Back%20Issues/Supplements/Jul/2008-07-31.htm

 

The bullish cycle that appears to be in the early stages will be easily identified as having sustainability if the bearish yellow curve shifts into a northerly moving cycle. If the indices drop below it, bearish yellow will inflect and the bear will resume its dominance. Therefore, if you bought last Friday and plan on buying this Monday, you will not want to see bearish yellow inflect (shift back to the south).

 

The next two to four weeks are critical. If the major indices hold steady without fading below bearish yellow, it is very likely the bullish cycle could very well last through January 2009. Just as the heart and soul of bullish seasonality began in August 2006, a similar cycle could starting now. If the indices fall below bearish yellow, the bear will resume its dominance.

 

Fundamental soundness of the bullish potential rests with oil prices. OPEC may feel threatened. They probably do not want the gas guzzling SUV’s and Trucks to fad away too soon. They may even invest in GM, Ford, and Chrysler whose expertise is inefficiency; not only in product offerings, but management as well. Do not be surprised at weird behaviors over the next two to three months. That weirdness could lead to stock market bullishness; at least through the normal heart and soul of bullish seasonality. However, after that, it remains a solid expectation that the real economic recession will occur in 2009.  The wild card at this time remains oil prices.

 

Keep in mind, this bullish outlook is a short-term view. As stated in last week’s report, the trends remain bearish. We have a daily reminder pop-up with a link to the broker-trade page with a quick method to signal sell, as these buy signals are against the trend. We also have stop losses at around 8% to accommodate early volatility. If bearish yellow shifts cyclically to the north and tangential protections can manifests, relaxation and enjoyment will be in order. Right now, a little tension is appropriate if you are a buyer.

 

Keep your eye on the daily stock market report. It will help you differentiate sustainability versus spurts regardless of the directional intensity underway.

 

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 80-buy signals and four sell signals. There have been 92-buy signals in the past three weeks. There have been 339-sell signals since October 26, 2007.

 

This weekend’s buy signals have more technical support than last weeks.

 

In addition to the buy signals, the Mid-term Indicant is signaling hold for only 87 of the 345-stocks and funds tracked by the Indicant. The stocks and funds with hold signals are up an average of 220.6%. That annualizes to 64.9%. The Mid-term Indicant has been signaling hold for these 87-stocks and funds for an average of 176.7-weeks.

 

In addition to the sell signals, the Mid-term Indicant is avoiding 174-stocks and funds of the 345- tracked by the Indicant. The avoided stocks and funds are down an average of 19.6% since the Mid-term Indicant signaled sell an average of 27.6-weeks ago.

 

One year ago, on Aug 3, 2007, the Mid-term Indicant was holding 266-stocks and funds out of the 345 tracked for an average of 118.2-weeks. They were up by an average of 138.7% (annualized at 61.0%). There were 59-avoided stocks and funds at that time. Those avoided stocks and funds were down an average of 11.5% since their respective sell signals an average of 17.7-weeks earlier.

 

The Mid-term Indicant was signaling hold for 173-stocks and funds of the 345-tracked two years ago on Aug 4, 2006. They were up by an average of 149.5% (annualized at 67.7%) since their respective buy signals an average of 114.8-weeks earlier. The Mid-term Indicant was avoiding 165-stocks and funds at that time. They were down an average of 4.7% since their respective sell signals an average of 15.9-weeks earlier.

 

There were 229-stocks and funds with hold signals on Aug 5, 2005 since their buy signals an average of 88.7-weeks earlier. They were up by an average of 102.6% (annualized at 60.2%). There were 87-avoided stocks and funds at that time. They were down by an average of 17.2% from their respective sell signals an average of 19.9-weeks earlier.

 

On July 30, 2004, the Mid-term Indicant was signaling hold for 165-stocks and funds out of 296-tracked. They were up by an average of 82.9% (annualized at 68.3%) since their buy signals an average of 63.2-weeks earlier. The Mid-term Indicant was avoiding 129-stocks and funds at that time. They were down by an average of 13.6% since their sell signals an average of 21.8-weeks earlier.

 

Five years ago, on Aug 3, 2003, there were 260-hold signals for stocks and funds out of the 296 tracked by the Mid-term Indicant at that time. They were up an average of 44.8% (annualized at 85.9%) since their respective buy signals an average of 27.1-weeks earlier. There were only 27-avoided stocks and funds then. They were down an average of 23.3% since their respective sell signals an average of 28.0-weeks earlier.

 

On Aug 2, 2002, there were only 21-stocks and funds with hold signals from the listing of 295-tracked by the Mid-term Indicant at that time. They were up 63.1%, annualizing at 64.8%. There were 241-avoided stocks and funds then. They were down by an average of 32.0%.

 

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

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

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

 

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

 

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

 

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

 

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

Contrasting with last week’s report, the Quick-term and Short-term Indicant has identified bullish inspiration this past Thursday. It may amount to an bullish spurt of short duration. The tell signs will manifest when the ETF’s move up to their bearish yellow curves. Recent interactions has been followed by bearish behavior.

 

Expect increased volatility. That is common with the start of any new cycle. The key point is for all bearish expressions to remain above the bearish yellow curves for the major indices. That will be an easy accomplishment on a near term basis because bearish yellow is very depressed and many of the major indices are highly elevated with respect to bearish yellow.

 

For those of you desiring bullish behavior, you will want the bearish yellow curve to shift north. You want the bullish red curve to form along a straight line along a 30-degree or higher incline. You want tangential protection lines drawn in about six weeks. From then on, all we will have to do is wait for the next lost tangential protection and the next bear cycle. We will expand the numbers of contrarian funds so that bear cycles can be equally enjoyed to that of bullish cycles with some more variety.

 

Click the following link that will take you to the tangential protection charts.

 

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

 

The Quick/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 imbedded in this weekly report. This allows web-based retention records of the daily report for much longer than the last twelve months.

 

The Daily Indicant Stock Market Report for the last trading day of the current week is near the conclusion of this weekly stock market report. It is emailed each weekend, separately, so you can read it, either as a separate document, or in this document.

 

The Indicant Stock Market Report’s Secular Market Blend

The Dow is up 55.2% since its secular low on October 9, 2002. The NASDAQ is up 107.4% and the S&P500 is up 62.3% since then. The small cap index, S&P600, is up 118.2%. The major indices, with the exception of the Dow Utilities, are now bullishly biased.

 

As stated the past several months, the secular bull that originated on October 9, 2002 no longer remains solid. A secular bear could indeed be unfolding. However, several short-term attributes have recently configured in favor of the bull.

 

The Dow is down 20.0% since its last closing peak on Oct 9, 2007. The NASDAQ is down 19.2% since its last peak on Oct 31, 2007. The S&P600 is down 16.3% since its last closing peak value on Jul 19, 2007.

 

The NASDAQ is down 54.2% since its last weekly secular peak on March 9, 2000. The S&P500 is down 17.5% since its similar secular peak on March 23, 2000. The Dow is down by 3.4% 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 if the NASDAQ equaling its March 9, 2000 high until after 2025.

 

The Dow is down 14.6% so far this year. The NASDAQ is down 12.9% this year. These conditions are incongruent with historical standards. This year should be a bullish year, based on those standards. The stock market occasionally delights in violating historical standards. This always happens when such standards gain in popularity. As stated for several years now, the phenomenon of commonality disallows stock market victories by the masses.

 

The short-term bullish cycle, ending eight weeks ago, had been lending support to historical standards. As stated several times in prior weekly reports, that bullishness will be challenged during the dog days of summer. You saw that the past eight weeks. However, a reversal to bullish bias on a short-term basis appears to be forming.

 

The NASDAQ year-to-date performance was bearish by 16.3% through this week in 2001. Keep in mind the NASDAQ finished 2001 down by 23.3%.  This year had been configuring with 2001 similarity, but there is a mild chance historical standards may be developing.

 

The NASDAQ was down by 34.4% through this weekend in 2002. Some of you recall the dynamic bear market in 2002, where the NASDAQ finished that year down by 31.5%. The NASDAQ YTD 2003 performance was up by 28.5%. It finished up in that solidly bullish year by 50.0%. It was down on this weekend in 2004 by 5.8%.  It was up by a measly 0.9% in 2005. Many of you recall that 2004 and 2005 were meandering bear markets. In 2006, it was down by 6.5% and up by 5.7% at this time last year.  

 

Prior comments in the remainder of this section have become irrelevant. New developments are now forming. It will be interesting to see if fundamentals align their support with the potential bullish cycle that appears imminent.

 

Keep your eye on the daily stock market report.

 

Stop Loss Management

The Mid-term Indicant recommends a stop loss of 8% due to increasing bullish influences for the longer-term holdings. You should set them higher for any recent non-contrarian buys, such as 5% or enough to protect reasonable gains. Volatility may trigger undesired sells. Keep your eye on the daily stock market report for re-entry guidance.

 

Use a 8% trailing stop loss or the yellow or green values you will find on the tables for your longer-term hold positions. If your stock or fund is above the bearish yellow curve and below the green curve, set your stop loss equal to the greater of the yellow curve and the trailing stop loss. If your stock or fund is above the green curve, set your stop loss at no less the value of the green curve or 8% trailing, whichever is greater. If your stock or fund is above the red curve and you bought at the Mid-term Buy signal, you should use the 10% trailing stop loss.

 

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

 

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

 

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

 

Stock and Fund Update

Click the following link to see sorted performance of stocks and funds with hold/avoid signals. In the past, they were included in this email message but now display them on the website. This is available to the public, while the specific buy and sell transactions are limited to members only. The below table is public information and not updated on a frequent basis.

 

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

 

Economic Conditions – Inflation, Currency, Interest Rates

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

 

Interest rates continue configuring an unfavorable reversal. Both Fannie Mae’s crossed into bullish domains. As stated the past few weeks in the weekly stock market report, the Fed will attempt to bias economic support until the election. After the election, the bias should shift drastically to fending off inflation.

 

As stated the past four weeks, the U.S. Dollar continues with stabilizing configurations with a mild bias toward strengthening. The underlying theme is the necessity to strengthen it to help soften the inflationary threat from its weakness. There appears to be a cyclical strengthening shift underway. Unfortunately, from an inflationary perspective, the weakening trend remains solidly in place.

 

Commodities have been aggressively bearish the past three weeks. Oil prices on a quick-term cyclical basis are shifting south, bringing other commodities with it. This is encouraging from an inflationary viewpoint but equally discerning from an economic view. Demand projections obviously are less than supply capacity, which suggests sour economic conditions.

 

As stated the past four weeks, the stock market will eventually respond bullishly to the idea the increasing number of capitalists in spite of the immediate inflationary threats imposed by the short-term inequality between supply and demand, as capitalists solve problems.

 

The idiots at Bear Stearns and liars from Enron are not capitalists. They, for the most part, are hirelings with zero integrity. The first group followed the demand curve north and with their zero anticipatory skills lied about it. The second group created false demand curves and in doing so lied. So, beware of phony capitalists, dilettante management teams, and their fictional financials.

 

As stated last week, from a long-term perspective, even the in the face of a bearish stock market and short-term problems,  it is comforting to know that there are now billions of potential solutions to all problems, as opposed to just a few hundred million.

 

Fear Metrics: Economics and Terrorism

Vanguard Gold and Precious Metals (VGPMX) - #19 is up 318.5% since the April 13, 2001 buy signal. Its annualized growth since that buy signal is 43.0%. It moved to the north in 57 of the past 99-weeks – a little over one-half the time. It has been bullish in 28 of the last 50-weeks. This fund has been bullish in 13 of the last 25-weeks. It has been aggressively bearish the past three weeks.

 

 

 

 

Fidelity Gold, Fund #28 received a sell signal this past weekend. It is simply not performing and weakening economies are depressing demand for all commodities.

 

State Street Research Global #9, SSGRX, which is isolated in the energy sector, is up 369.7% since the Mid-term Indicant signaled buy on August 16, 2002. It is annualizing at 61.1%. This fund has been bullish in 10 of the last 23-weeks. It has been bearish the past five weeks, following five consecutive weeks of solid bullish behavior.

 

Vanguard Energy #18, VGENX, is up 229.6% (annualized at 42.5%) since the Mid-term Indicant signaled buy on April 5, 2003. Fidelity Energy Services #40, FSESX, is up 232.7% (annualized at 49.3%) since the Mid-term Indicant signaled buy on December 6, 2003. Fidelity Energy #39, FSENX, is up 177.7% since the Mid-term Indicant signaled buy on August 16, 2003. It is annualized at 35.3%.

 

Energy related funds have been bearish the past five weeks, which conflicts with current fundamental requirements of bullishness. This bearishness is an adjustment from the anticipated $170-oil to a smaller number. Oil and other commodities are moving cyclically to the south, but the trend remains north.

 

Investors in these funds are supporting a 1970’s type of market with high inflation and high oil prices. As long as capitalism remains in vogue around the globe and alternative sources of energy continue to lag exponentially increasing demand, a long-term perspective on holding strategy is appropriate. However, keep in mind OPEC can very quickly reverse this trend. They have done it before and remain capable of doing it again.

 

The SQI (Consolidated Short-term and Quick-term Indicant) model signaled buy for the GLD-ETF#11 on August 3, 2005. It is up 109.8% since then. It is annualized at 36.4%. This fund has been bullish in 34 of the past 49-weeks. It has been bullish in 15 of the last 24-weeks. It was mildly bullish last week, following bearishness in the previous two weeks.

 

The SQI signaled buy for ETF#03 – Energy and Natural Resources on March 26, 2003. It is up 242.4% (annualized at 44.8%). This fund has been bearish in 17 of the past 28-weeks and in seven of the past eight weeks. The Quick-term Indicant signaled sell for this fund last Thursday, while the Short-term Indicant and Consolidated models continue signaling hold. That suggests a lack of commitment to directional intensity in either direction.

 

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

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

 

The lone bear is the Dow Utilities. It is down 8.4% since its July 3, 2008 bear signal.

 

Click this sentence to view a summary of their performance.

  

The Mid-term Indicant Dow Jones Industrial Average performance is at $36,661,279

That beats buy and hold performance of $1,723,158 on a $10,000 investment in the Dow stocks in 1900. The MTI S&P500 is at $180,217. That beats buy and hold’s $123,451 on a December 31, 1971 $10,000 investment. The MTI-NASDAQ is at $227,792. That beats buy and hold’s $80,130 on an October 18, 1985 $10,000 investment. The Mid-term Indicant model beats buy and hold by 2,027.6%, 46.0%, and 184.3%, respectively, for these indices as of this past week.

 

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

 

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.

 

Note from April 5, 2008: Enron will be removed from Indicant tracking later this year. It was removed from the Dow Utility Index several years ago. It is now a penny stock, but the Indicant kept tracking it at the request of members. Its low cost nature is not friendly to Mid-term Indicant assessment due to small price changes and corresponding large percentage impact. The Mid-term Indicant is not designed for penny stocks. Although recovery is always possible, this stock has become too busy to track. This position will be re-accessed based on member feedback as the year progresses.

 

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 buy for ProFunds Ultra Short on January 18, 2008. It was down 32.3% since the Mid-term Indicant signaled sell on September 15, 2006 until the buy signal on January 18, 2008. Historical norms of market cyclicality suggested the next buying opportunity for this fund should not occur until 2009.

 

The Mid-term Indicant signaled sell for this fund this weekend after producing a small profit.

 

Click here for Mid-term Indicant Table of Mutual Funds

 

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

 

Long Term Indicant Positions - Dow Jones Industrial Average

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

 

The Dow is up 291.3% (annualized at 17.3%) since the Long-term Indicant signaled bull 874-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. A link to the Long-term Indicant is below:

 

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

 

Quick/Short-term Indicant Stock Market Report - Summary

Quick-term Red Bulls: One of thirty. One non-contrarian red bull; Non-bullish.

Quick-term Yellow Bears/Threats: Twenty-one of thirty.  Non-bearish support non-existent with majority yellow bears, but will increased probability of shifting bullishly.

Quick-term Non-Bearishness: QTI differential is bearish 10.4%. Solid bearish support, but so low, the bull now has to argue.

Short-term Non-Bearishness: Breakout/breakdown differential is bearish 8.2%; solid bearish support, but the bull appears positioned to argue with such complete dominance.

Force Vectors: The bearish cycle is now mature. Some are coupling above Vector Pressure, which could encourage the bull’s spurt potential, but not sustainable at this time. However, it is configured strong enough to generate ten buy signals Thursday and five more Quick-term buy signals on Friday. Keep in mind the Quick-term Indicant is cyclically sensitive, as opposed to trend sensitive.

Vector Pressure: Seven in bullish domains, but many more appear on the verge of crossing into bullish domains.

STI Tangential Support: All major indices are without tangential protection. However, a few indices are forming for potential tangential protection. There are limited obviations, but there is a definite bullish interest forming right now.

Immediate Tactics: Some non-contrarian ETF’s justify buying due to non-participation in bearish cycle. So far, only one; ETF#10-IBB, which has a hold signal. There were ten more buy signals last Thursday and five on Friday. ETF#10-IBB-Health is demonstrating significant bullish tenacity.

Current Quick-term Bias: Shifted mildly in favor of the bull last Thursday and Friday’s mild bearish behavior should invigorate the bull.

Overall Market Status: Mild bullish bias; could be a spurt, but worth the risk of a few additional buys for the time being.

Profit Potential from Naked Options: Enhanced as volatility is about to increase.

Volume: Losing robustness and with that a loss of one of the obviating factors of bearishness. Low volume invites wild volatility.

 

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

The Short-term Indicant signaled bear on May 20, 2008 for the Dow Jones Industrial Average and on May 21, 2008, for the NASDAQ. The Dow is down 11.7% and the NASDAQ is down 5.6% since their respective bear signals. As stated the past several weeks, the bear moved from having a tactical advantage to a position of dominance.

 

However, the bull is gaining a small advantage on a near-term basis. The major indices are primed for a non-bearish cycle. This does not mean there will be a bullish cycle. However, there are indications several securities tracked herein will move from bearish depths to bearish yellow. The altimeter from current depths ranges from four to eight percent. The ride north will be a bit bumpy.

 

This configuration is similar to that of last March, where the Quick-term Indicant correctly called a similar ride from bearish depths to bearish yellow. However, the Bear Stearns fiction disrupted that prompting a model change and an additional model. The new model is completely insensitive to increasingly inaccurate/dishonest corporate jibber-jabber.

 

The Short-term model referenced above is the older one and remains influenced by historical seasonality, which worked well for decades. However, too many picked up on it and therefore, by the law of commonality, it is increasingly dysfunctional. However, we will continue using it until such time obsolescence is completed by final testing of the tangential model.

 

August/September are historically bearish and thus one reason for it continuing to signal bear.

 

Also, the bullish cycle about to start is not accompanied with volume attributes consistent with bullish sustainability. That does not mean the market will not get an early start to the heart and soul of bullish seasonality. Many of you recall the August 15, 2006 heart and soul was exceedingly profitable. Every now and then the market drivers who avoid vacation and other time-wasting activities get a jump start on those who endeavor in such matters. The weekly report will elaborate in more detail.

 

Please read on. Click here to see the Short-term Indicant’s history.

 

Both Indicant Volume Indicators  remain at a cyclical plateau. This suggests reducing interest in directional market intensity. Its peak and the early stages of lethargic behavior coincide with recent bullish interest. In other words, the current behavior is not obviating directional intensity. The robust cycle just completed had obviated the previous bearish ambition and associated cycle. There is no obviation of bullish support in terms of volume, but other Quick-term attributes are suggesting the bull has had enough of the bear’s dominance and is going on the offensive. The bear appears positioning to allow the bull to win a few battles on a near-term basis. However, there will be skirmishes.

 

To view the STI-Tangential Protection for ten major indices, click here.  

As stated on Thursday, there are significant differences from prior daily reports. Most of the indices yellow curves are inflecting. This means a sentiment shift is in process. Volatility will be enhanced. Several buy signals were generated by the Quick-term Indicant for ETF’s on Thursday evening. There are more being issued today.

 

It is believed this shifting bias favors the bull, but with no volume support. That suggests the non-bearish and possibly bullish cycle will be a mere bullish spurt or lateral behavior for a few weeks. However, with only one exception, eleven ETF’s crossed above yellow into neutral territory with mature Force Vector cycles. The Quick-term Indicant will signal buy on such configurations. The deep yellow bears continue to receive avoid signals, even though most will participate in a bullish rally.

 

All major bullish cycles originate similar to the configurations now underway. Please click the below link to get a better understanding of this transformation.

 

http://www.indicant.net/Non-Members/Back%20Issues/Supplements/Jul/2008-07-31.htm

 

As you can see, several attributes favor bullish bias. The absence of volume suggests a bullish spurt and there is little doubt of increasing volatility. Out of the money option spreads for August and September will be appropriate.

 

As the tangential configurations mature, greater precisions of obviating directional intensity will manifest.

 

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

There were no buy signals and no sell signals. The SQI is signaling hold for 15-ETF’s. They are up by an average of 35.5% (annualized at 35.7%) since their respective buy signals an average of 51.3-weeks ago. The SQI is avoiding 16-ETF’s at this time. They are down by an average of 10.6% since their sell signals an average of 11.3-weeks ago.

 

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

 

Short-term Indicant Report Card, Status, and Charts

There were no buy signals and no sell signals. The Short-term Indicant is signaling hold for 15-ETF’s. They are up an average of 87.8% (annualized 88.2%) since the STI signaled, buy, an average of 51.2-weeks ago.  There are 16-ETF’s with avoid signals. They are down by an average of 11.0% since their sell signals an average of 11.2-weeks ago.

 

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

 

Quick-term Report Card, Status, and Charts

There were five buy signals and no sell signals.  The Quick-term Indicant is signaling hold for 14-ETF’s. They are up by an average of 15.4% (annualized at 41.2%) since the QTI signaled buy an average of 19.3-weeks ago.  The Quick-term Indicant is avoiding 12-ETF’s. They are down by an average of 8.6% since their sell signals an average of 6.9-weeks ago.

 

Current Strategy – Very carefully buy some of the ETF’s recommended. For those who like a lot of excitement, buy QLD, as opposed to QQQQ. It moves exponentially to bullish inclinations.

 

Configurations are not obviating directional intensity, but there is a slight bullish bias forming.

 

Conflicts Between the Short-term and Quick-term Indicants

A solid bearish bias originated on Thursday, June 12, 2008, with all major indices without tangential support. That bias is now expiring with bullish potential. It may only be a meandering bull, but a bull nonetheless. There are now 44-holds, in addition to several buys today against 41-avoids. This is now suggesting a mild bullish bias on a quick-term and short-term basis. If more ETF’s cross above yellow bear curve, then bulls will dominate.

 

Quick-term Indicant Bull/Bear Health Report

Click the above heading to view the charts.

 

Twenty-one of the 30-ETF’s are below their respective bearish yellow curves. The average relative position of all thirty ETF’s is below bearish yellow by 2.8%. This is without non-bearish support and with bearish support. Bearish yellow had been acting as a ceiling to bullish ambition the past few weeks. That was bearish. That ceiling was cracked on Thursday, July 31, 2008, offering some bullish hope. The common backlash by the bear occurred on Friday, August 1, 2008. All that did was invigorate the bull more so. It always does.

 

One of the ETF’s is above its bullish red curve. This attribute remains solidly non-bullish. All thirty ETF average positions are below bullish red by an average of 7.6%. which is non-bullish, but weakening in its non-bullish support.

 

The lone red bull is ETF#10-IBB-Health. It is also non-contrarian, which could be the market leader for follow-on bullishness. It has been immune to the bear attack. It has been bullish in 11-of the last 12-trading days. It is up 10.1% since the Quick-term Indicant signaled buy on July 8, 2008, annualizing at 164.2%. It finally endured a drop and simply cooling off since its sizzling bullish run.

 

The QTI differential is bearish by 10.4%. This is the thirty-seventh consecutive trading day of a bearish reading. It is a long way from a bullish reading, but could shift favorably to bull in the next few days.

 

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

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

 

None of the thirty ETF’s is contacting its breakout line. Last Thursday enjoyed the first bullish contact in several weeks. It was ETF#10-IBB-Health, which backed off a bit on Friday.

 

The average distance from breakout contact is 18.8%. Double digit variances from breakout contact for 146-consecutive trading-days has been non-bullish. 

 

None of the thirty ETF’s are contacting their breakdown lines. Contact in 15-of the last 30-trading days is bearish, but losing influence. Contact density has relaxed with zero breakdown contact the past 11-trading days.  Bearish density increased significantly nearly three weeks ago, but quiet since then. This quietness is now relevant, offering bullish inspiration.

 

The average distance between the price and breakdown is 10.6%. After providing non-bearish support since March 2003 with double digit readings, this has been a single digit expression (bearish) in 14 of the last 26-trading days. Double digits provide non-bearish relief. Double digit relief against the bearish onslaught has been in effect for the past few days. That is increasingly non-bearish.

 

The breakout/breakdown differential is bearish by 8.2%. This attribute is supporting bearish ambition, but expected to weaken in that support the next two to four weeks.

 

ETF Force Vector Configurations

You can scan the Quick-term Indicant for Exchange Traded Funds table and click on the charts to observe Force Vector configurations. Scroll down each of the charts, where a quick link has been added to take you to the next series of Quick-term ETF charts. Use you back arrow on your browser to return to the.1 previous page.

 

Nineteen Force Vectors are in bullish domains. They reversed Thursday and Friday, offering an opportunity for a few days of bullish ambition.

 

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

 

ETF Force Vectors/Vector Pressure Crossings/Option Signals

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

 

Click this sentence for Vector Pressure Option Signals. There were two option buy signals after Friday’s close. There have been 13-put option buy signals in the past seven trading days. There was one call option buy signal and one put option buy signal. The put option signal is not expected to perform well.

 

Seven of the thirty ETF Vector Pressures are in bullish domains. You should notice this attribute is creeping up, favoring the potential for bullish support. This minority position is not supportive of bullish inclinations. However, as stated last Wednesday, this is an increase of three from last Monday and offering a glimmer of hope for those desiring bullish behavior. However, keep in mind that only seven remains minority and not supportive of bullish ambition due to the non-bullish breadth. Many are nearing bullish domains though and this conservative commentary could quickly reverse.

 

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

 

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

 

Quick-term and Short-term Indicant Summary

A solid new bearish bias shift was born on June 11, 2008.

 

ProFunds Ultra Short mutual fund moves inversely to the QQQQ by exponential amounts. See the Mid-term Indicant for its status.

 

The Quick-term and Short-term Indicant tracks ETF#31, QID, which is the ETF cousin to ProFunds Ultra Short. It is excluded from overall ETF statistics because it is purely contrarian. It is designed to move bullishly during bear markets and bearishly during bull markets. This exclusion is required for convergent/divergent monitoring.

 

The Indicant signaled sell for QID  last Thursday with a 6% gain. It never found comfort above bullish red in the recent cycle. It rebounded on Friday a bit, but its Force Vector remained directionally bearish. Its Vector Pressure is trending bearishly.

 

Other Contrarian Funds

ETF#03-Natural Resources   - was up nearly 30.0% since the Quick-term Indicant signaled buy on Oct 25, 2006.  The Quick-term Indicant signaled sell on Thursday, July 24, 2008. It rebounded yesterday and then collapsed last Thursday. Although its Force Vector is rising, Vector Pressure continues residence in domains of the bear. Its configurations remain somewhat pathetic.

 

This fund is up 1.2% since the sell signal.

 

ETF#11-Gold and Precious Metals   is up 105.8% since the Quick-term Indicant signaled buy on August 3, 2005. It is annualizing at 34.8%. It has been bearish in seven of the past 12-days. It lost Red Bull status one week ago, but nowhere near a sell signal. Its bearish Force Vector cycle is very mature and primed for a reversal. You will notice it up-ticked the past two days. Declining Vector Pressure is somewhat of a concern, but we have several more days before doing something drastic, like signaling sell.

 

ETF#14-Long Government  received a buy signal on July 15, 2008. It is down 1.5% since then.  Its Force Vector continues moving north, favoring a mild bullish bias, but unfortunately, appearing tired. Vector Pressure has drifted to bearish domains, but not yet critically so. It is configured to support increasing bullishness with a “flight to safety paradigm; at least in the early stages of additional stock market bearish aggression.” The Quick-term Indicant continues to signal hold due to its rising Force Vector and its price contained within the bull/bear bands.

 

This fund has some strategic risk. The dollar’s weakness and inflationary threats will eventually stimulate increased interest rates. With that, this fund, fundamentally, would endure bearish behavior. The contrarian movement to that fundamental prognosis would be high demand for safety purposes, depending on the nature of economic behavior. Do not be surprised at jawboning the dollar up, but the U.S. remains a net-importer and thus the continual downward pressure on the dollar, which fundamentally supports long-term upward pressure on interest rates.

 

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

 

Quick-term ETF Options

Quick-term Indicant for ETF’s

Short-term Indicant for ETF’s

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

 

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

 

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

 

Short-term Indicant for DJIA and NASDAQ

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

Short-term Indicant Table for the NASDAQ Composite Index

Indicant Volume Indicator

Short-term Indicant for Tangential Analysis

 

Divergence versus Convergence

The market was again bearish divergent but not strongly so. Commodities and energy are cyclically shifting south which should invite short-term bullishness.

 

Indicant Conclusion

As stated last week, the bear has now completed its process of inflicting it influence on the pertinent sectors. Now, we are waiting for all major indices to find a final nesting place in their support of the bear. The bull cannot dominate on a mid-term basis until that happens.

 

However, from a short-term perspective a new bullish cycle could be forming. It may turn out to be a bullish spurt.

 

Keep up with the daily stock market report as the Quick-term attributes can shift quickly. As stated the past few weeks, they continue favoring the bear.

 

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

 

The daily updates are on the following link.

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

 

Hyperlinks

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

 

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

 

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

 

Happy Investing,

 

 

www.indicant.net

08/03/08

 

 

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