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As I checked a 5-day chart the remarkable thing was that we've traced
out a nice smooth ballistic curve since last Thursday morning, with each
day picking-up from the previous as if there were no off-hours trading
around the world and no weekend worries.  We also seem to be at the peak
of the curve.  So prices were flat today, and volume trailed off to -1%
below average.

Beginning to look like the old resistance line is scaring them again.
Why?  Well, there are lots of "reasons".

In the first place, these technical indicators, for all the graduate-
student papers that have been written about them, are just empirical.
They've been seen to "work", except when they don't.  They aren't
secret, many investors know about at least some of them.  Therefore they
can become self-fulfilling prophecies.  Trust me, I'm not the only one
with a horizontal pencil line somewhere between 1214 and 1225.  Some
investors aren't going to be the last to leave the party.

Also, it is summer.  The market often treads water through the "Summer
Doldrums".  It's not entirely because Main Street is thinking about
vacation.  There's nothing like the calendar year end driving a Santa
Claus rally.  No retirement funding trying to beat the April 15th
deadline.  When there is a summer rally it tends to be a low-volume
affair, driven more by restricted supply than a Bull Market, and those
tend to be short and constrained.  No, what we've got coming is October
when many of the mutual funds do their FY-end balancing and portfolio
window-dressing.  The extra selling in September and October often
drives the market down.

Main Street's vacations?  We're usually down at the "noise level".  We
don't have the BIG pocketbooks of the institutional investors.  We don't
know what we're doing either, so taken en-masse we tend to cancel each
other out!

The President may have been happy with the economic numbers he got, but
the Street is only loyal to the almighty buck.  Like Oliver, it says,
"Please, Sir, I want more."  Some entertain the idea more would have
been possible with other policies.  Is 5% unemplyoment so good if less
was possible?  Is a $325B deficit good because it was predicted to be
higher?  Is halving the total Federal deficit by 2006, 2007 or 2009 good
if we had a surplus?  So the Street isn't so happy with what we've got.

The Street doesn't always, but habitually it looks out 6-9 months in the
future.  If it can predict something profitable, it will move that
direction right away to maximize its gains.  In the mean time it will be
over-priced on that expectation.  So even if nothing bad happens to
cause a necessary correction, when we get out there nothing happens
because it's "already priced-in".  There has to be something good coming
to cause an improving market now, and apparently the Street doesn't see
it--and hasn't all year!

The Street hires the best sophisticated econometric models.  They have
exquisite balancing points between interest rates, dividends, and market
returns to decide their daily allocations.  When the market seems to
react daily to such things as crude futures, in part it's the result
of these models.  These days those models are considering the future
impact of the Fed raising rates out of the "accomodative" range, and a
certain probability they might become "restrictive" at some time in the
future.  Traditionally there's an inverse relationship between the
direction of interest rates and stock prices, because higher interest
rates increase business costs and present greater attractions among
short to intermediate term fixed income investments.

Their models also produce an estimate of what "fair value" of the market
is.  But what we're hearing is more disagreement about whether the
market is above, below or at "fair value".  To some extent that's just
talk, but it's not inspiring confidence.

The Bubble is over.  The Bear Market, well, probably.  It's time we got
back to traditional, conservative strategies.  Most investors don't know
what those are!  So what else do you have to do this summer?

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

 __|_     _|__     __|_     __|_     __|_     ___|     07/07
 ___>     _|__     __|_     __>_     __|_     ___|     07/08
 __>_     _>__     __|_     __>_     __>_     ___|     07/11
 __>_     _>__     __|_     __>_     __>_     ___>     07/12
 __>_     _>__     __|_     _>__     __>_     ___>     07/13

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:  07/01/05 S&P:    1194
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

... Gee! How'd you ever get it to do THAT?
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