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The market oscillated back and forth 4 times across a horizontal trading
range most of the day.  The DJIA straddled the line, but the NASDAQ
mirrored the moves above the line.  Combining them with the S&P500
resulted in a chart that seemed to find find support and bounce off
yesterday's close.  In late afternoon it made some modest gains into the
close.  But volume was -13% below average, so it was a very "quiet" day.

There are a few things I've learned from my daily analysis, that I hope
you have or will see too.

1) As much as we might desire "signals" to tell us what to do, it's a
forlorn desire.  It doesn't matter how complicated we make them.  What
we're asking for is a crystal ball to predict the future.  Ain't no such
thing.  We have to make a decision.  It's our responsibility.  We can't
hand it off.  Nevertheless, some formulas can provide a useful alert
function.  They can interpret PAST action in a helpful way.

2) Price action isn't enough information for making tactical decisions.
We need to factor in volume, to tell us whether there is "enthusiasm" to
the buying or selling.  This applies to the overall market, but is
equally applicable to our research and tactical decisions on individual
stocks.

3) Even with volume included, we don't have enough information to judge
whether the market is starting something meaningful, or it's just a
"head-fake".  "The Market" as measured by the DJIA30,
NASDAQ100, even
the S&P500, can't do it by itself.  Without the support of the "broad
market", for which we look to some variation of the "Advance-Decline
Line", all we get is a rally, not a Bull Market.  I think of a broadly
based rally, in which the broad market participates, as a stable
pyramid.  But when only the few stock of the major indices participate,
it an obelisk that can be tipped over and fall.

4) Prices of the market or any particular stock are composed of an
intrinsic value which is in some way related to what we get from
"fundamental analysis."  But day to day in the market, a SIGNIFICANT
part of the trading price is an "appreciation premium."  It's how much
more than the intrinsic value people are willing to pay on speculation.
The evidence I've seen implies that's rather a lot!  The problem is that
this premium can evaporate just as quickly as it developed, because it
is not based on an objective reality.  For this reason, if we're active
investors we must have effective and usable tactical rules for buying
and selling stock, the right stocks, for the right price, at the right
time.  And I DO mean buying AND selling!

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

 __     05/13
 __|_     __     05/16
 __>_     __     05/17
 __>_     _     __>_     05/18
 __>_     _|__     __|_     _|__     ___>     __>_     05/19

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:  05/17/05 S&P:    1173
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 IS documented, look under "For Internal Use Only."
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