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I've been asked for an opinion about the judgement of another market
commentator, who claims there are signs of an imminent breakdown of the
market, and it's a good time to sell.  I have a couple thoughts about
that, so let me bring them public instead of private email.

1) It amounts to trying to predict the future, and nobody can do that
reliably.  We can make some judgements about the mood of investors in
general and how human beings and the computers they programmed might be
likely to respond with some success--if we recognize people are fickle
creatures.  But there are things we can reasonably predict, and things
we can't.

Nobody can predict natural disasters except in the most general terms.
When Katrina was approaching Miami it was little more than a tropical
storm.  The oil pits were already panicking, but without justification.
I have been suggesting all along that this summer's spike in energy
prices has been mainly speculation--"Because we CAN."  That said, people
are finally beginning to take seriously the proposition that oil is a
finite resource, we're using it faster than geological processes create
it, population and dependence on heavy utilization of energy to support
ourselves continues to increase.  We can predict a train-wreck a-coming.

I have also been consistently critical of the "minimum-cost, just in
time" paradigm of American business.  It is exceedingly fragile and what
we need is robust.  There is no room for error, or natural disaster in
that scheme.  That makes the markets more risky now than they used to
be--and that's to say nothing of national security.

Without intending to be unpatriotic, I also see parallels in America's
role as a world economy with Britain's in the 19th century.  China &
India seem to be playing "America" to our "Britain". 
The continued
changes in high-wage employment at home, offshoring, and the twin
deficits, are enough to cause realistic concern.  I believe successful
investors are going to learn to adapt to new investing paradigms--it's
not going to be the way we've come to expect it.

So while I'm NOT predicting a top in the market, I have several times
in this commentary pointed to the fact that we are not yet above the
S&P's 1527 high, and are technically still in the Bear Market.  What I
am suggesting is that there are important trends that are going to
influence the American economy, hence the markets.  I've been suggesting
all year we need to learn some more conservative, traditional investing
strategies.

2) I think if you review my commentary, say, for the year it's fair to
say my overall attitude has been skeptical.  This summer "rally" has
been little more than a move across a "horizontal channel" from a little
below the bottom "support line" to a little above the top "resistance
line".  Investors, the Street, the market have NOT been bullish!
They've just engineered a minor move they could make some money with,
and preserve the (their?) reputation of Wall Street as a proper place to
invest.

The position right now is barely above where the year started, but the
Oscillator is trending downward, and is now decidedly negative.  That
means the majority of NYSE stocks have been closing lower day after day,
"Decliners" have lead "Advancers".  How long that will
continue is
anybody's guess--see 1) above.  Whether that's a signal to buy, or sell,
or irrelevant, depends on one's particular strategies and tactics.  No,
really, it does!  It does confirm the falling value of the S&P in the
other 4,000 NYSE stocks.  This is not a "head fake".

I have also been insisting all along that we need to learn new tricks.
I've consistently talked about "selling into strength", taking profits
from minor rallies, rather than viewing them as the beginning legs of
Bull Markets.  Main Street too often waits for prices to rise before
they get interested.  When it takes a 10% rise to interest one, one is
getting interested at the time a professional investor sees he can book
a profit equal to the typical gain of the S&P for an entire year.
That's a dangerous time to buy in!  And you have yet to see me advocate
the sort of bargain-hunting, "bottom-feeding", "buy 'em when they're
down" tactics Main Street likes.  That is not to say that a significant
portion of my mutual funds isn't in "value" funds, it is.  But I'm
leaving that to the professionals with the means to judge whether a
stock in the dumpster is merely unloved, or is on it's way to cratering.

So, if you haven't gathered I think it's always a good time to lock-in
your profits, sell half when you hit a 100% home-run and recoup your
entire investment, then you haven't been paying attention.  If one wants
to sell now--it's always a good time.  There is risk in the market!


Now, as to today's market action, once again the morning was tough
sledding, but when Rita was downgraded once again and the oil pits
showed signs of relaxing, prices rose in the afternoon, only to give it
back into the close.  Closing prices were little changed and volume sank
to just +1% above average.

That's actually remarkable.  The Day-Traders wouldn't want to be
"holding" into the weekend.  Perhaps some action over the past week was
in part them running to cash out.

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

 _|__     _|__     __|_     __>_     _|__     __|_     09/19
 _|__     _|__     _|__     ___>     <___     __|_     09/20
 _     <___     __<_     09/21
 __     <___     __<_     09/22
 ___     <___     __<_     09/23

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:  09/06/05 S&P:    1233
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

... We learn from history that we do not learn from history.
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