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March 9, 2008 Weekly Report Supplement

 
 
The Dow Transports has endured the most fluttering of the major indices since early 2007 with five bull/bear signals. Prior to this fluttering, it enjoyed nearly three years of pure bullish behavior. It along with several indices are now confined into a tightly constructed bearish trading range.

The Dow Composites endured no fluttering. It simply peaked, paused, and succumbed to bearish influences. The recent bear signal was the first signal since the bull signal on October 25, 2002. That bull leg lasted a little over five years. As you can see, it is also nestled into a tight bearish trading range.

NASDAQ Secular Lower Range Limit Threatened. As stated a few weeks ago, the next major resistance to the bear is a secular lower trading range limit (the orange line). The NASDAQ made contact this last Friday.

The Dow30 has contacted its breakdown line for the second time in the current bearish cycle. The contact in January 2008 was the first such contact since its October 2002 bottom. The purple lines sloping upward are other potential technical lows for the bear now underway. There are two remaining and do not require contact for a Quick-term Bullish Cycle. However, a secular bull since October 2002 would remain in tact even with the Dow30 falling to around 11,000. That should not occur until 2009, based on historical standards.
The NASDAQ continues falling below non-bearish technical resistance points. Each victory by the bear strengthens it. Eventually, the bear will become complacent with its successes. It will then expire. Its expiration will invite the birth of a new bull. An October 2002 stock market forecaster projecting a 2000-NASDAQ by the year, 2010, would have been viewed as "attractive" at that time. A mid-2007 forecaster saying the same thing would be viewed as "unattractive." The success or failure of the equity markets is not on this chart. It is based on "when you bought." The October 2002 buyer is okay with his or her wisdom. The late 2007 buyer is pretty much upset right now.

The Quick-term Indicant is signaling hold for only six of thirty ETF's it tracks on daily basis. Three of those six are contrarian; energy, gold, and government bonds. The number of holds became a minority of positions on a quick-term basis in late 2007. However, several of the Consolidated signals from late 2002 are maintaining their hold position. The timing in buy with respect to current position is the only source of relevance.

You should notice the increase in Vector Volatility on both charts. That, coupled with a few more non-bearish resistance points, should invite some more bullish spurts. One of them should form a Quick-term indicant Bullish Cycle before the end of this year. It is too early for the market to be concerned with 2009. Record low interest rates should invite more money rotation into stock equities. It certainly is not headed into real estate at this point, although a significant money flow is directed at commodities and other "hard assets."

As stated the past several weeks, the small cap index continues confinement to its bearish trading range. The past few encounters with its upper range limit line have been followed by bearish behavior.

ETF #31-QID continues as a solid Quick-term Bull. It is up 23.1%, annualizing at 140.9% since the Quick-term Indicant signaled buy on January 8, 2008.

Conversely, QQQQ is down 12.2% since the Quick-term Indicant signaled sell on January 9, 2008.

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