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In spite of "Existing Homes Sales" and other news that was claimed to be
affecting the market, the truth is: it has been due for a correction.
This wasn't it, but it might be the start.  Prices were under-water all
day, nary a blip of upward snap-back.  Prices closed moderately down,
about 80% of what might be deemed significant.  Volume increased from
Friday's half-day session, but then it had to.  It was still -12% below
average.  And that's why this is a blip, not a correction.

If we're going to be investing in stocks, fundamental analysis isn't
enough.  We have to be tuned-in to the market's fluctuations.  As we now
should bloody-well know after the historic 2000-2002 Bear Market, we
must have strategic and tactical rules of some sort to protect us from
loss of profits and loss of principal.  Investing in stocks means both
buying and SELLING.  Selling is how we protect ourselves.

We also should have observed that besides secular Bull or Bear trends
that last months or even years, there are a lot of short-term
"head-fakes" in the market.  If we take a position during one of these
short rallies, AFTER it has already run up 5-10%, we're in a very
precarious position!  If the Street runs out of gumption and returns to
its previous levels, our protective rules could easily shake us out of a
position that would have been favorable if we'd just taken it at prices
that weren't "extended".  The long term gain in the market is about 10%.
We're up nearly 7% in just a month.  The Street's institutional
investors and traders could do well enough for themselves by cashing in
on a couple of these every year.

This puppy quite likely has maybe another month to run.  January is when
we often have a hard time, considering the year ahead.  Still, we can't
depend on either.  But what we can and must do is be careful about
getting into rallies like this too late, when the feeling is euphoria
instead of anticipation.  The time to have bought your chips for this
game was back in October, when mutual fund SELLING was the order of the
day.

I wouldn't suggest "buying on the dips" now either.  Remember, we
started the year at 1202.  If we add to the nearly 80pts we just made,
counting today's subtraction, another 20-30pts over the next month, then
we'd be up 8-9% for the year--and that's just about what was predicted
for the year, single digits.  I think the Street would be more or less
satisfied with that.  I'm not sure they feel the need to push it a lot
higher.  So "buying on the dips" would give us positions with modest
upside potential, a correction in the wings, and an uncertain year
ahead.

p.s. Did you catch the tactical rule I just gave you?  "When the feeling
is euphoria rather than anticipation it's too late to buy."

p.p.s. That's the feeling of the investors already IN, not the Johnny
Come Lately's who are anticipating there's some left for them.

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

 __>_     ___>     __>_     __     __>_     11/21
 __>_     ___>     __>_     _|__     __>_     __>_     11/22
 __>_     ___>     __>_     _|__     ___>     __>_     11/23
 __>_     ___>     __>_     _     11/25
 _|__     __|_     __>_     __     11/28

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

... I'm not illiterate!  My parents were married...
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