Subj : Market Action To : All From : Paul Rogers Date : Thu Feb 26 2004 06:23 pm


Once again prices were flat, and volume was down, -11% below average.
That's certainly no sign of enthusiasm.

There's one "formation" which I haven't mentioned specifically that an
active stock investor ought to be able to identify.  It's the "Climax
Run".  It is the very rapid run-up in price before prices totally
collapse.  It's the "you should have sold it two weeks ago" thing.  But
how do we predict the future?

Of course we really can't.  But we can sometimes identify circumstances
when the price-volume action isn't positive, when things are getting too
risky.  I saw this in this recent action of the S&P-500.

One sign is when prices break sharply through a previous upward trending
resistance line, when the "angle of ascent" increases.  From September
through mid-December the market was rising, but we could draw a straight
line through 5 major high formations that acted as a resistance line.
Then the market shot through that line and moved much more rapidly 50pts
higher without pause.  That looks like a classic Climax Run.  We don't
know what will follow, but that's good enough reason to "take the money
and run!"

Then there was a small correction and prices recovered to the previous
top.  But while volume was also making very noticable peaks during the
first few weeks of January approaching the first price peak, approaching
the second top volume was decreasing.  Flashing red light should be
going off!  I'd call that confirmation that the mid-December thru
January run-up was more likely a topping action Climax Run than a solid
useful rally.

The real issue is that when prices run up on a stock we hold, we're
ecstatic!  We're making easy money!  We don't want to think about
selling.  Who knows how high it could go?  We're greedy, we want MORE!
If we can't learn to identify Climax Runs, we're going to be
disappointed investors.

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

 _|__      _|__      __|_      _|__      _|__      ___|     02/20
 _<__      _|__      __|_      _<__      <___      ___<     02/23
 _<__      _|__      __|_      _<__      <___      ___<     02/24
 __<_      _|__      __|_      _<__      _|__      ___<     02/25
 __|_      <___      __|_      _<__      _>__      ___<     02/26

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:  11/24/03 S&P:    1052
Winner or Loser:  tbd                   By:     tbd

See my market tracking charts for '01-'02 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, paul.rogers@angelfire.com -o) http://www.angelfire.com/or/paulrogers /\\ Rogers' Second Law: Everything you do communicates. _\_V .... Calculus: The agony and dx/dc ___ MultiMail/MS-DOS v0.35 --- * Origin: The Bare Bones BBS (1:105/360) .