Subj : Market Action
To   : All
From : Paul Rogers
Date : Tue May 31 2005 06:13 pm

Content-type: text/plain

The Chicago Purchasing Managers' Index dropped sharply and unexpectedly,
indicating a slowing manufacturing sector in the midwest.  Consumer
confidence numbers rose sharply and unexpectedly also.  That wasn't
quite a "push" because we've had other consumer numbers recently.  Oil
rose to nearly $52/bbl.  So on balance it was a pretty negative day on
the Street.  Prices dropped in the morning and levelled off, tried to
climb in the afternoon but near the close gave up and fell sharply.  The
bad news is volume rose sharply, up to -2% below my 30-day Moving
Average, +16% above average for the past week and a half.

We've picked up a few new subscribers recently, so for everybody's
benefit let me explain my "mini-charts" below.

There's only so much one can do with character text.  I first used
numbers, and that didn't work at all.  Numbers may be precise, but
they're hard to understand at a glance.  So I began interpretting the
numbers with these scales.

The common 10-point scale is too broad for most purposes.  I don't like
a 5-point scale because the middle point is too attractive and means
what?  So I use a 4-point scale--"get off the dime, is it positive or
negative?"  The underscores, "_", are just place holders so if you're
using a proportional font everything doesn't collapse.  It's where the
other mark, indicating the trend, is that the relevant daily indicator.
So the interpretation of the "-__+" is, decidedly negative, moderately
negative, moderately positive, or decidedly positive.  The trend marker,
"<", "|", or ">" shows you both where today's value falls, but also what
direction the SHORT TERM trend is going, negative, flat, or positive.
Now, "flat" can mean two things.  Either that the trend really is flat
for the time being, or that we're going through an "inflection point"
where the trend is changing direction.

So that one line for today means: prices were a little below the line,
but are relatively trendless.  Volatility was up a little, but
flattening after having been trending higher.  Short term Momentum is
moderately positive (meaning the last signal was a Buy), and at least
for the last couple days seems to be moving higher.  Volume was
moderately below average, and is trending lower (which we should expect
after the high volume of March and April dragged the average from below
1600Ms/day in the previous year or more, to nearly 2100Ms/day early this
month).  The Oscillator, a short term measure of the momentum of the
NYSE Advance-Decline line, is moderately positive but relatively
trendless.  (So most stocks on the NYSE have been doing OK, but no Bulls
in sight.)  And the Summation Index, the grand total of the Oscillator
daily values for a long, long time, is also moderately positive, and
trending higher, as it would with positive Oscillators.  (In spite of
the three years of the Bear Market, the predominantly Bullish market of
the entire '90's has given the Summation Index a positive bias, and the
Summation Index goes back even further.)

That's quite a lot to encapsulate in just that one line, assuming you
HAVE been paying attention what the market has been doing this year!
And I think it gives a rather complete idea of just what the market is
about right now.  You probably don't hear much about volatility,
momentum, the advance-decline line, and may not normally factor these
into your evaluation of the market.  But each has a story to tell about
a different aspect of the market.  Think about each of them
independently.  What does high or low volatility indicate about the
market, if prices are in a rally or correction, or even flat?  What does
it mean if prices are flat, but the Oscillator, i.e. Advance-Decline
line, is rising or falling?

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

 __|_     __>_     __|_     _|__     __|_     __>_     05/24
 _|__     __>_     __|_     _<__     __<_     __>_     05/25
 __|_     __>_     __|_     _<__     __|_     __>_     05/26
 __|_     __|_     __>_     <___     ___|     __>_     05/27
 _|__     __|_     __>_     _<__     __|_     __>_     05/31

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@yahoo.com                       -o)
http://www.angelfire.com/or/paulrogers                   /\\
Rogers' Second Law: Everything you do communicates.     _\_V

.... A hangover is the wrath of grapes.
___ MultiMail/MS-DOS v0.35

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