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Prices fell right from the get-go, tried to recover in mid-day but
failed, gave it all up and more.  Volume increased a little, to 3% above
average.  So it's continuing its recent action.

See, the thing we have to understand about investing in the market is
that "big-money" investors aren't anything like us!  We invest with a
longer term outlook, infrequently.  For us, it's our future.  They're
"in the market" every day.  It's their job.  In some ways, it's a game
they play against other investors.

Sure, the sorts of macro-economic things that we look at, the economy,
earnings, employment, interest rates, are important, but they're not all
that controls market prices.  Psychology is about as important as any of
that.

Sure, they intend to make money by growth and higher prices.  But that's
not the only way they can make money in the short run.  Maybe they had
intentions of buying certain stocks now for the coming year.  Maybe they
still do.  They wouldn't mind paying less.  So when the market is
showing weakness they can sell short, easily driving prices lower,
pocketing short term profits.  When they "cover their shorts", by buying
the stock they already sold to balance their position at lower prices,
the buying activity is one of the things that causes the "snap-back"
action we see, e.g. Friday.  This is a situation when for a while they
can all cooperate to drive prices down, but when prices reach certain
levels they'll begin to "peel-off" and fill those positions they wanted.
The Street traders can detect whether action is just negligible short
covering or a "bottom" far better than we can.  They have access to more
data, e.g. "big block" trades & "short interest",
that give them clues
what their "opponents" might be doing.

It's important that we see these intermediate snap-backs for what they
are, and not jump in expecting prices to make significant gains.  It's
dangerous for us to commit much money to "piggyback" on their action.
Certainly we can't buy or sell enough stock to change prices like they
do.  We should just stick with our strategy and tactical rules.  Dollar
Cost Averagers will naturally take advantage of the lower prices.

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

 _|__     _|__     _|__     __>_     _>__     __<_     10/04
 __     _|__     ___>     _<__     __<_     10/05
 __     _|__     ___>     <___     __<_     10/06
 ___     _|__     __>_     _<__     __<_     10/07
 __     _|__     __>_     <___     __<_     10/10

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:  10/04/05 S&P:    1214
Winner or Loser:  Loser                 By:     -13

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

... Who says there were no survivors of Custer's last stand?
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