Subj : Market Action To : All From : Paul Rogers Date : Tue Dec 23 2003 05:50 pm

Prices continued to creep modestly higher on falling volume today, -13%
below average.  That's far from a bullish indicator.

I've warned before that action like this increases market capitalization
without a comensurate increase in actual investment values.  That's to
investors' benefit for a while, so it is allowed to continue.  But it
will create easily harvested profits unwarranted by underlying values.
They WILL be harvested, don't be surprized.  This is the sort of time
when you should be looking to sell at least some of your over-valued
positions, or get out of former losers cleanly.  Reacquired capital can
then be put to use in better values.

I think IBD is making rather too much of recent strength in the DJIA and
cyclical stocks as compared to the NASDAQ/OTC.  It's only been going on
for a few weeks, hardly the sort of rotation that should be worrysome.
To be sure, the market is usually a little ahead of itself and for it to
stay here the economy really does need to catch up with it.  The recent
GDP report of over 8% growth helps, but is unsustainable.  Like the
market itself, much of that is accounted for by it's very depressed
values over the past few years.

I think the fundamental mistake they, and many investors currently in
the market, are making is to assume, as the old lyric went, "second
verse, same as the first."  Subsequent Bull Markets are not just a
replay of their predecessors.  I think when Main Street returns to the
market they will be wiser than last time.  I'm expecting them to, as
they should, demand stocks with real earnings, with a functional
business plan.  I'm expecting them to be more conservative, interested
in the traditional companies that have consistently made money.  Those
companies are found on the NYSE & DJIA.  This is not to say that nimble
small cap companies which likewise make money reliably, and the funds
that invest in them, won't continue to be good investments, appropriate
to the riskier allocations in a portfolio.  If you want it in political
terms, this is the Bush Administration, not the Clinton Administration.
For at least another year, that is.

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

 __|_      _|__      __|_      __|_      __|_      ___|     12/17
 __>_      _|__      __|_      __|_      __|_      ___|     12/18
 _>__      _|__      __|_      ___>      __>_      ___|     12/19
 __>_      <___      __>_      _|__      __>_      ___|     12/22
 __>_      _|__      __>_      _|__      __|_      ___>     12/23

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
.... If ye dinae know what it meant, you wo'nae be embarrased. ___ MultiMail/MS-DOS v0.35 --- * Origin: The Bare Bones BBS (1:105/360) .