Subj : Market Action To : All From : Paul Rogers Date : Mon Apr 18 2005 08:35 pm Content-type: text/plain Prices were over the line most of the day, but it was mostly up and down with little direction. They closed modestly higher. Volume fell to +16% above average. I wouldn't make much of it. Looking at the intraday charts of Wednesday through Friday pasted side-by-side shows an uncommonly straight line downward with an equally uncommonly tight range. Today wasn't even a traditional snap-back, just a horizontal flattening. We were due. I've been meaning to mention this for quite a while, today's the day. I have been charting the mutual funds I use in my IRA for over 10 years. I collect the Thursday close, because Fridays are frequently holidays. I compute a 5% exponential moving average of the week to week percentage change. Now, these are all Vanguard funds, so I can't say this carries any weight for the mutual fund community in general. It appears the chart divides into 4 segments. From 7/94 through 7/98, and the "Asian Meltdown", most of the funds seemed to perform quite similarly--the traces seemed to move together. From 7/98 through 10/00, and the Bear Market, the variation between the funds increased--there was a noticably wider range from the best to worst performing funds. From 10/00 through 10/02, and the bottoming of the Bear Market, all heck broke loose. The variation between funds was even more extreme. Since 10/02 they've again been moving in lockstep. I'm thinking that this can be interpretted as the result of the Bear Market changing the psychology of the fund managers. Before the Asian Meltdown it was all Bull Market--"when the wind is strong enough, any turkey can fly". Then they got a shock, the likes of which they hadn't seen since the Crash of '87. That got compounded in spades with the Bear Market! They didn't know how to handle it--nobody had seen a Bear Market like this since '29! Some of them were betrayed by their holdings. They couldn't believe what always worked, didn't work! It made them more conservative since the bottom. One of the funds that's pretty well tracking the middle of the pack is the Index 500. Or should I say the pack has changed their behavior to follow the Index 500 more closely. So do I chalk it up to "getting their come-uppance", that they're older and wiser now? Is there something for individual investors to learn there? Or does it mean they've all adopted a "herd mentality" that lowers diversification? If there's an unexpected shock now, is it likely to take them ALL down? So should I be looking wide afield for diversification, international and/or emerging-markets funds? Price Vola- Momen- Volume Oscil- Summ. Change tility tum lator Index -__+ -__+ -__+ -__+ -__+ -__+ __|_ _<__ _|__ __>_ _|__ __|_ 04/12 <___ <___ _|__ __>_ _<__ __|_ 04/13 _<__ <___ _|__ ___> _<__ __|_ 04/14 <___ _>__ _|__ ___> <___ _|__ 04/15 __<_ _>__ _|__ __>_ _<__ _|__ 04/18 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: 04/08/05 S&P: 1181 Winner or Loser: loser By: -10 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.angelfire.com/or/paulrogers/Pers.html http://www.geocities.com/paulgrogers/Pers.html Paul Rogers, paulgrogers@yahoo.com -o) http://www.angelfire.com/or/paulrogers /\\ Rogers' Second Law: Everything you do communicates. _\_V .... Hark! What mail from yonder modem breaks? ___ MultiMail/MS-DOS v0.35 --- * Origin: The Bare Bones BBS (1:105/360) .