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The market made modest gains again today, though volume was only +1%
above average.

I don't think it applies now but what one doesn't want to see when
tracking either the market or individual stocks is improving prices on
"unenthusiastic", flat or declining, volume.  That's caused by holders
restricting the supply of stock to just what the buyers will take, but
neither are there an excess of eager buyers willing to bid up the price
to shake more stock loose.  Why should holders sell if prices are
rising?  But let prices get too far ahead, let the holders gain too much
profit on unchanged fundamentals, and one day they'll begin taking those
profits.

So when we're holders and we see this happening, as it did to the S&P in
July (1191 on 6/27 & 6/30 to 1244 on 7/28 & 8/2, 1245 on 8/3, while
volume stayed within a range mostly between 1800 & 2000Ms), we ought to
be thinking of either avoiding new positions (as we might also have done
between mid-October 2004 through March) or cycling out with some of
those profits and seeing if we'll get an opportunity to buy back in
(1205 on 8/26), if we're still convinced it's the best investment we
could make.

See, volume is the key.  If there were any fundamental changes that
really would have made the S&P more valuable there would have been more
buyers willing to bid up prices, resulting in rising volume confirming
rising price.  Not seeing that, we can expect the move to be temporary.
It's a speculative play for our "play money" of course.  But it's
watching how the game is played.

Soon after New Year's day I'll update my website's "Tracking the Market"
page, showing the 2004-2005 charts I've been watching and my analytical
review of the past two years.  You've already seen part of that.  Watch
for it.  And check out 2003 there while you still can.

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

 __     ___     12/08
 ___     12/09
 __|_     __     12/12
 __|_     __     12/13
 __>_     __     12/14

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

... It did what? Well, it's not supposed to do that.
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