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Prices were flat and volatility low until after lunch, then it all came
apart.  The head of the Dallas Fed Bank confirmed what the Street had
been fearing: there are signs of inflation at a level the FOMC will take
action against.  (I suppose the oil pit traders are saying, "Who, me?")
And with Q3 officially over and companies working on their earnings,
it's time for confessions again.  Clorox, and Proctor & Gamble released
warnings.  At the close prices were down enough to be significant, and
volume jumped to +17% above average.  That's enough for my formulas, or
anybody else's, to call it a "Distribution" day, when the big holders
were "distributing" their stock to anybody who would buy.  The price
change alone was enough to push my Momentum indicator into negative
territory, popping a Sell signal!  (Well, I didn't accept last week's
Buy.)

So we're right at what has appeared to be a Support level, and we got
here with "enthusiasm".  We'll see if it holds-up.  I expect more than a
little of today's selling came from stocks the mutual fund managers had
marked for sale, and they were just getting what they could before
prices fell even more.

There's a clue for tactical rules on "bottom fishing".  I watch the
behavior of stocks on my shopping list long before buying.  I never have
a "target price" that will prompt me to buy.  I watch the price and
volume action, just as I report here on the S&P500.  If a stock falls to
a price I had in mind as a bargain, but it has been falling on heavy
volume, I back off.  The big holders are bailing, so I don't want to be
their cushion.  That's more likely to happen on a day like this at this
time of year.  I'd rather see them fall on low and decreasing volume,
indicating sellers are already out and a lack of current interest.  But
that's not enough.  A stock can remain unloved for a long time, and the
longer, the more risk that something even worse might happen.  I'll keep
watching till it begins to show signs of buying interest, prices rising
on rising volume.  Then I'll reconsider buying.  And of course, if I'm
wrong and it falls 7% from my buy price, I'm gone.

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

 __|_     __     _>__     __<_     09/28
 __>_     __     _>__     __<_     09/29
 __>_     __     __>_     __<_     09/30
 _>__     _|__     __|_     __>_     __>_     __<_     10/03
 _|__     _|__     _|__     __>_     _>__     __<_     10/04

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

... "No maintenance" means impossible to fix
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