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Prices were over the line most of the day, but it was mostly up and down
with little direction.  They closed modestly higher.  Volume fell to
+16% above average.

I wouldn't make much of it.  Looking at the intraday charts of Wednesday
through Friday pasted side-by-side shows an uncommonly straight line
downward with an equally uncommonly tight range.  Today wasn't even a
traditional snap-back, just a horizontal flattening.  We were due.

I've been meaning to mention this for quite a while, today's the day.  I
have been charting the mutual funds I use in my IRA for over 10 years.
I collect the Thursday close, because Fridays are frequently holidays.
I compute a 5% exponential moving average of the week to week percentage
change.  Now, these are all Vanguard funds, so I can't say this carries
any weight for the mutual fund community in general.

It appears the chart divides into 4 segments.  From 7/94 through 7/98,
and the "Asian Meltdown", most of the funds seemed to perform quite
similarly--the traces seemed to move together.  From 7/98 through 10/00,
and the Bear Market, the variation between the funds increased--there
was a noticably wider range from the best to worst performing funds.
From 10/00 through 10/02, and the bottoming of the Bear Market, all heck
broke loose.  The variation between funds was even more extreme.  Since
10/02 they've again been moving in lockstep.

I'm thinking that this can be interpretted as the result of the Bear
Market changing the psychology of the fund managers.  Before the Asian
Meltdown it was all Bull Market--"when the wind is strong enough, any
turkey can fly".  Then they got a shock, the likes of which they hadn't
seen since the Crash of '87.  That got compounded in spades with the
Bear Market!  They didn't know how to handle it--nobody had seen a Bear
Market like this since '29!  Some of them were betrayed by their
holdings.  They couldn't believe what always worked, didn't work!  It
made them more conservative since the bottom.  One of the funds that's
pretty well tracking the middle of the pack is the Index 500.  Or should
I say the pack has changed their behavior to follow the Index 500 more
closely.

So do I chalk it up to "getting their come-uppance", that they're older
and wiser now?  Is there something for individual investors to learn
there?  Or does it mean they've all adopted a "herd mentality" that
lowers diversification?  If there's an unexpected shock now, is it
likely to take them ALL down?  So should I be looking wide afield for
diversification, international and/or emerging-markets funds?

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

 __|_     __     _|__     __|_     04/12
 _     _<__     __|_     04/13
 _     _<__     __|_     04/14
 __     _|__     ___>     <___     _|__     04/15
 ____     _|__     __>_     _<__     _|__     04/18

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: SELL       Date:  04/08/05 S&P:    1181
Winner or Loser:  loser                 By:     -10

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.angelfire.com/or/paulrogers/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

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