Content-type: text/plain

In spite of "favorable" CPI numbers today the market just couldn't get
excited.  Prices were above the line most of the day, but in a tightly
constrained channel.  Volume was nothing to get excited about either,
-7% below average.

Now, to be sure, that's coming off a period of high activity for the
past several months.  If and when the underlying values of any moving
average undergo a dramatic change, it takes some time for the moving
average to catch up.  But if it didn't, the moving average wouldn't be
valuable.  It's purpose is to alert one to changes which are more than
just a "flash in the pan".  Similarly, now it will help us judge when
this high activity period will be over.

The trick is to pick the right time span for the moving average.  The
shorter the time span, the faster the moving average changes, reacts to
changes one might say; but by the same token, the sooner it "forgets"
what came before.  Technicians typically watch 50-day and 200-day, i.e.
10-week and 40-week, moving averages of indices and stock prices.

They like to look at where the current price, 1231, as compared to the
moving averages, 1211 & 1202.  It's above, and the 50-day is above the
200-day.  That's a positive sign.  But they also like to look at
inflection points, where the averages change direction.

I tend to prefer "exponential" moving averages to the simple
"arithmetic" averages.  The common arithmetic average values, or
"weights" each day in the range equally.  The exponential weights the
most recent data more.

But in any event, the numbers are inherently meaningless.  They only
have value such as people impute to them.  People can be wrong.  Keeping
that foremost in my thoughts, if I can discern from what they commonly
watch how they are likely to interpret things, maybe I'll get an idea
what they will do, rightly or wrongly.  If I'm right and they're wrong,
my investments will profit.  If they're right and I'm wrong, I've got an
opportunity to learn something--I profit.

That's where I derive my corollary to Buffet's First Law, "Don't lose",
i.e. "Don't lose twice on the same investment."

 Price    Vola-    Momen-   Volume   Oscil-   Summ.
 Change   tility   tum               lator    Index
 -__+     -__+     -__+     -__+     -__+     -__+

 __|_     __>_     __|_     __|_     __|_     __>_     11/10
 __>_     __>_     __>_     |___     __|_     __>_     11/11
 _>__     __>_     __>_     _|__     __|_     __>_     11/14
 _|__     __>_     __>_     __|_     ___     11/15
 ___     __>_     __     11/16

Timing Signals:  I don't use or recommend timing signals, but they're
fun to watch.  If I did though, well, I might use something like this.
(Be warned!!  It tends to whipsaw around signal points!)

Last Signal: BUY        Date:  10/31/05 S&P:    1207
Winner or Loser:  tbd                   By:     tbd

See my market tracking charts for '03-'04 and my investment strategy
study at my website(s):
http://www.xprt.net/~pgrogers/Pers.html
http://www.geocities.com/paulgrogers/Pers.html




Paul Rogers, paulgrogers{at}yahoo.com                       -o)
http://www.angelfire.com/or/paulrogers                   /\\
Rogers' Second Law: Everything you do communicates.     _\_V

... Admit it.  You've unleashed forces beyond your control.
___ MultiMail/MS-DOS v0.35

---