Subj : Market Action
To   : All
From : Paul Rogers
Date : Wed Jun 08 2005 05:46 pm

Content-type: text/plain

Once again the market was OK until after lunch, then flipped upside
down.  Prices lost a couple points, and volume dropped to -10% below
my somewhat inflated average.  According to the "news" it's because of
"investor uncertainty prior to Greenspan speaking to the Joint Economic
Task Force", whatever that is.  Do we need more confirmation the Street
is spooky?

Look, I'm not saying we all should necessarily bail and sit in cash,
though if I was heavy in cash I wouldn't necessarily feel panicked to
get it into the market either.  This certainly isn't 2001-2002 all over
again.  If we're sitting with good "value" stocks the Street doesn't
love, that we bought close to their fundamental value, aren't likely to
fall more than -7% below our purchase price, have bulletproof and very
respectable earnings, and have good reputations for being solid
corporate citizens, and we have a currently profitable cushion, I'd sit
on them.  We should all be so lucky.  But I wouldn't turn my back on the
market, ignore it and head to the lake for the summer.

It's just that I wouldn't be taking any risky positions.  I'd avoid way
overpriced stocks, the Street's latest darlings--you know who they are!
If I had a new position, I wouldn't be waiting for it to drop as far as
-7% below my purchase price to protect my assets.  And I'd do so
gladly--we've seen stocks take a -30% hit in one day.

The thing is don't dwell, whine and whimper over our losses!  Do a post
trade analysis after EVERY sale.  Making losing trades is unavoidable,
but not learning what we did wrong from our mistakes is to lose TWICE on
one stock trade!  Capitalize your lesson and move on.  Geez, I know
people who are still whining about FDR and the man has been dead over 60
years!  That's 15 Presidental terms and 30 Congresses ago, and they
still can't give it up.  The Street does NOT look backward like that.
They may get stuck dwelling on the moment from time to time, but usually
most of them are looking out 6-9 months in the future.  And if as
investors we aren't paying attention to the future, we're going to get
blind-sided, expensively.

Learn to get over your winners too.  What we saw in the 90's was a
bubble.  It was an aberration.  Don't expect to make those kinds of
returns, that easily, again.

We all know the Fed's accomodative gravy-train, desperately trying to
pump up the economy and end the Bear Market has come to an end.  All the
Street's dithering about "will they or won't they" isn't looking into
the future.  In the end, whenever, we know short-term interest rates
will be higher.  The economy and corporate earnings are going to have to
"make it" on their own, without the Fed's help.  But long term rates
also affect the economy and the market.  Long term rates don't depend on
the Fed.  They depend on the Street's satisfaction with the over-all,
long-term, macro-economic environment.  And that depends on things like
the federal and trade deficits, i.e. the Administration policies and
Congress doing pragmatic things that really work.  OK, those are hard to
predict--not what they're likely to do, but whether the things work,
whether they're up to being able to make mid-course corrections when
things don't work as expected.

Keep looking ahead.

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

 __|_     __|_     __|_     _<__     ___|     ___>     06/02
 _|__     __>_     __|_     _<__     __|_     ___>     06/03
 __|_     __>_     __|_     <___     __|_     ___>     06/06
 _<__     __|_     __|_     _<__     __|_     ___>     06/07
 _<__     __|_     __|_     _<__     __<_     ___>     06/08

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

.... To err is dysfunctional; to forgive, co-dependent...
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 * Origin: The Bare Bones BBS (1:105/360)

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