c74 Subj : Market Action To : All From : Paul Rogers Date : Wed Jan 14 2004 06:22 pm

Once again the market closed significantly higher on high volume.  My
formula calls it an Accumulation Day, but I'm not so sure.

Some technical analysts just look at whether volume was higher than the
previous day, then call it accumulation or distribution depending on
whether prices closed up or down.  I think there's a certain amount of
normal volatility in prices and volatility in the market that is
essentially meaningless.  I wanted an indicator that would provide fewer
but more significant signals.

I chose to base the volume on a 30-day moving average, and require the
daily volume to be at least 10% higher than average, not just
yesterday's volume.  I did something similar with the price change.  I
measure the volatility in prices for the previous 20 days, 4 weeks.  I
want the price change to be at least half this normal volatility.  So my
formula ignores most of the "trivial" action in the market.  Prices have
to change substantially on substantial volume.

So what's my problem?  Volume was +18% above average, and average volume
has improved back to levels of mid-December, pre-holidays.  But volume
since the first of the year is notably higher than it was for the
previous couple months.  I think it's apples and oranges.  Today's
volume is only 1% above this year's average.  While the Advance:Decline
ratio was better than 2:1, the Oscillator has been falling for the past
couple weeks.  And my timing signal, which is based on recent price
action, has been falling for the past week.  And finally, today's move
didn't put prices higher than last Thursday's high.

So I'll reserve judgement for now.  I'll remain a little cautious.
Let's see how stocks respond to the first earnings reports.

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

 __>_      __>_      __>_      ___>      __|_      ___>     01/08
 _<__      __>_      __>_      ___>      __<_      ___>     01/09
 __<_      __|_      __>_      __>_      __|_      ___>     01/12
 _<__      __<_      __>_      __>_      __|_      ___>     01/13
 __<_      __<_      __>_      __>_      __|_      ___>     01/14

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
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