February

Dear Reader: That was a nail-biter; the S&P 500 almost closed down, which would have been a SELL signal, but it closed up 4 to 841.

The on-balance volume (OBV)(note 2) today was +347 (million shares). The 5 day moving average (5DMA)(note 1) of the OBV actually fell from +75 to +23; we dropped a +606 from the average from six days ago, giving us a negative bias for today. We will have a positive bias Monday due to dropping a negative number from the average from six days prior. Today was an Arm signal (see Glossary>Arm and Fire). If S&P500 closes down Monday, regardless of what 5DMA does, it will be a two-step SELL signal.

Long-term Investors paragraph: End-of-month review. The S&P500 needs to be about 10 points above these levels six weeks from now to turn the 200 DMA positive, so we can declare a new BULL market. If timing is not exact (which is very likely) then we need to advance about 100 points from here to turn the 200DMA. Also see Long-term page.

Dear Reader: The S&P 500 closed up 10 to 837. This gives a BUY signal (more below).

The on-balance volume (OBV)(note 2) today was +587 (million shares). The 5 day moving average (5DMA)(note 1) of the OBV rose from -117 to +75; we dropped a -373 from the average from six days ago, giving us a positive bias for today. We will have a negative bias Friday due to dropping a positive number from the average from six days prior. The simultaneous upturn in S&P500 and 5DMA, while the 5DMA is below the lower threshold of -20 (approx), gives us a BUY signal. Since we are Long Purchase Dirty (see Glossary>Long...), we BUY with only 50% of available funds on this first BUY signal since the last SELL signal. The Market State page has been updated.

Short Sellers Paragraph (please see Glossary for any unfamiliar terms): We bought back the shorts for a small loss. The Short State remains Clean since it is not the loss that changes the state, it is whether the bogey was violated or not. The bogey at 848.2 was not exceeded at any time since the short sale was made, so Short State remains Clean, meaning at the next SELL signal, we may sell short if we like.

Dear Reader: The S&P 500 closed down 11 to 828. This is below the minor bottom made on 2/24/03, so the pattern is lower minor highs and lower minor lows, indicating bias to the downside.

The on-balance volume (OBV)(note 2) today was -403 (million shares). The 5 day moving average (5DMA)(note 1) of the OBV actually rose from -120 to -117; we dropped a -418 from the average from six days ago, giving us a positive bias for today. We will have a positive bias Thursday due to dropping a negative number from the average from six days prior. No signals today.

Short Sellers Paragraph (please see Glossary for any unfamiliar terms): No change. Yesterday's up move gave us pause, but today was a little better for the shorts.

Dear Reader: Despite being down most of the day on news, the S&P 500 closed up 6 to 839.

The on-balance volume (OBV)(note 2) today was +341 (million shares). The 5 day moving average (5DMA)(note 1) of the OBV actually fell from -19 to -120; we dropped a +845 from the average from six days ago, giving us a negative bias for today. We will have a positive bias Wednesday-Thursday due to dropping negative numbers from the average from six days prior. No signals today.

Short Sellers Paragraph (please see Glossary for any unfamiliar terms): No change.

Dear Reader: The S&P 500 closed down 16 to 833; this gives a SELL signal (see below).

The on-balance volume (OBV)(note 2) today was -758 (million shares). The 5 day moving average (5DMA)(note 1) of the OBV fell from +287 to -19; we dropped a +773 from the average from six days ago, giving us a negative bias for today. We will have a negative bias Tuesday due to dropping a positive number from the average from six days prior. The simultaneous downturn in the S&P500 and the 5DMA, while 5DMA is above the upper threshold of +20 (apprx), gives us a SELL signal. We sold out 100% of longs today for a loss of 0.3% on total funds available. The year to date results are -0.2% versus S&P500 change of -5.4%. We are doing considerably better than S&P buy-and-hold, as usual.

Short Sellers Paragraph (please see Glossary for any unfamiliar terms): Since the Short state is Clean and the decline in S&P was more than four points, we sold short a small position today. The bogey that, if violated, will cause us to close out this position was 848.2, set on 2/21/03.

Dear Reader: The market is going our way for a change; the S&P 500 closed up 11 to 848.

The on-balance volume (OBV)(note 2) today was +606 (million shares). The 5 day moving average (5DMA)(note 1) of the OBV rose from +82 to +287; we dropped a -416 from the average from six days ago, giving us a positive bias for today. We will have a negative bias Monday due to dropping a positive number from the average from six days prior. No signals today. If you hear any TV talking heads saying that we were over-sold and due for a bounce, I want you to notice that the 5DMA is over-bought and poised for a SELL signal any day. I think the path of least resistance is down from here.

The market State changed from Plunge to Oscillatory on 2/4/03. I had failed to make note of that because of an unforeseen complication in the Plunge rules, which has now been resolved. The complication is that when three BUY signals occur in a row, giving us the Plunge state, we expect the Special SELL rule to come into play, meaning a downturn in the 5DMA when it rises above the Special threshold of -100. But in this case, the SELL occurred after the 5DMA had risen above the normal upper threshold (+20, for example). Does that negate the Plunge state?; the answer is yes it negates the Plunge state. We know this is resolved since we are now approaching another SELL signal and the 5DMA is above +20, so the Special SELL rule is not needed. So we now say the State changed to Oscillatory on 2/4/03. The Market State page has been updated; Glossary page was already correctly worded (Glossary>Market State).

Short Sellers Paragraph (please see Glossary for any unfamiliar terms): Please see paragraph added today to the column for 2/10/03, if you are interested in short sales. The short state changed to Clean on 2/10/03. Sorry for the oversight; there are no profit or loss consequences to the oversight. Since the Short state is Clean, we can sell short on the next SELL signal if we like.

The on-balance volume (OBV)(note 2) today was -373 (million shares). The 5 day moving average (5DMA)(note 1) of the OBV actually rose from +6 to +82; we dropped a -755 from the average from six days ago, giving us a positive bias for today. We will have a positive bias Friday due to dropping a negative number from the average from six days prior. No signals today.

Dear Reader: Down by more than 10 at one point today, the S&P 500 finally closed down 6 to 845.

The on-balance volume (OBV)(note 2) today was -418 (million shares). The 5 day moving average (5DMA)(note 1) of the OBV actually rose from -10 to +6; we dropped a -500 from the average from six days ago, giving us a positive bias for today. We will have a positive bias Thursday-Friday due to dropping negative numbers from the average from six days prior. No signals today.

Dear Reader: In a nice rally, the S&P 500 closed up 16 to 851. We look for the 870 level to provide resistance to advance.

The on-balance volume (OBV)(note 2) today was +845 (million shares). The 5 day moving average (5DMA)(note 1) of the OBV rose from -97 to -10; we dropped a +413 from the average from six days ago, giving us a negative bias for today. We will have a positive bias Wednesday-Friday due to dropping negative numbers from the average from six days prior. No signals today.

We have added some data to the Long-Term Investors page. Before, we compared the Field Long-term System to a 20 yr 5 mo buy-and-hold period. We have added comparisons to 15 yr 5 mo, 10 yr 5 mo, and 5 yr 5 mo buy-and-hold periods; the results are even poorer for buy-and-hold over the shorter periods versus the Long-term System.

We have exciting news and a change in a rule. We have completed a small research project to see if the Long Purchase State should be fixed as Dirty in BEAR markets and fixed as Clean in BULL markets. The answer is presented in the Summary Table by adding a column to show it (called Rule B, old rule called Rule A). Dramatically, the answer is yes, we should keep the Long Purchase State (see Glossary>Long..) as Dirty in a BEAR market and fixed as Clean in a BULL market. This will be the rule henceforth. The Results_History has been changed to reflect this new rule.

Dear Reader: In a nice rally, the S&P 500 closed up 18 to 835. BUY signal today (see below).

The on-balance volume (OBV)(note 2) today was +773 (million shares). The 5 day moving average (5DMA)(note 1) of the OBV rose from -387 to -97; we dropped a -678 from the average from six days ago, giving us a positive bias for today. We will have a negative bias Tuesday due to dropping a positive number from the average from six days prior (Monday is a holiday). The simultaneous upturn in S&P500 and 5DMA, while the 5DMA is below the lower threshold of -20 (approx), gives us a BUY signal. Since we are Long Purchase Dirty (see Market State and Glossary>Long...), and this is BUY signal #2, we BUY with 25% of available funds, bringing total investment to 75% of available funds.

I am so glad we have the Long-Purchase variable which guides us to limit investment to 50% of available funds on first BUY signal, 25% on second BUY signal, etc., when the market has previously exhibited a trend to generate more than one BUY signal in a row. And we have an over-arching principle that trends in the market will continue until they change. It should be obvious to the reader that this plan will gain more or lose less than lack of the Long Purchase variable will produce. And that is the purpose of all the market state variables on this site.[this paragraph added 2/15/03]

Dear Reader: The market got flogged by news again today, down hard until a 1/2 hour before the close. I thought we were going to get a BUY signal with a positive S&P500 close, but the S&P 500 closed down 1 to 817. Friday and the weekend promise more big news. We ignore all news and stick with the System. The reason is the market can go down or up on bad news, or on good news as well.

The on-balance volume (OBV)(note 2) today was -416 (million shares). The 5 day moving average (5DMA)(note 1) of the OBV rose from -425 to -387; we dropped a -604 from the average from six days ago, giving us a positive bias for today. We will have a positive bias for one more day due to dropping negative numbers from the average from six days prior. No signals today. We should get BUY signal #2 in a day or two.

We have added to the Long-term System page a comparison of Field System results to buy-and-hold strategy over the 20 year, 5 month period of 8/28/82 to 1/27/03. The result for buy-and-hold is 10.3%/year gain versus Field Long-term System 17.5%/year gain.

The on-balance volume (OBV)(note 2) today was -755 (million shares). The 5 day moving average (5DMA)(note 1) of the OBV fell from -372 to -425; we dropped a -490 from the average from six days ago, giving us a positive bias for today. We will have a positive bias for two more days due to dropping negative numbers from the average from six days prior. No signals today. We should get BUY signal #2 in a day or two.

Dear Reader: Up and down again today in response to news. The S&P 500 closed down 7 to 829. We broke slightly the bogey (Glossary>bogey) from 2/7/03 that led to the BUY signal yesterday. We are already in Plunge state, so this bogey violation does not change any State variables. It looks like we are between the Scylla of 870 and the Charybdis of 777, i.e., a rally will probably be stopped at 870 and a decline should be stopped at 777.

The on-balance volume (OBV)(note 2) today was -499 (million shares). The 5 day moving average (5DMA)(note 1) of the OBV actually rose from -416 to -372; we dropped a -720 from the average from six days ago, giving us a positive bias for today. We will have a positive bias for three more days due to dropping negative numbers from the average from six days prior. No signals today. We should get BUY signal #2 in a day or two.

We have organized the Columns from June, 2002 through December, 2002 into an Archives page. For columns from those months, please click Archives, then click month desired.

Dear Reader: Up and down today in response to news; the market itself contains all we need to know to make money most of the time, we can ignore all news and stick to the System. The S&P 500 closed up 6 to 836. We are due a rally up to the 860-870 region, in my opinion.

The on-balance volume (OBV)(note 2) today was +413 (million shares). The 5 day moving average (5DMA)(note 1) of the OBV rose from -471 to -416; we dropped a +139 from the average from six days ago, giving us a negative bias for today. We will have a positive bias for four(!) days due to dropping negative numbers from the average from six days prior. The simultaneous upturn in S&P500 and 5DMA of OBV gives us a BUY signal. Since we are Long Purchase Dirty (please see Glossary>Long.. and Market State pages), we BUY with 50% of available funds, instead of 100%. One may purchase less than 50%, of course.

Short Sellers Paragraph: [added 2/20/03, I was remiss in not pointing out that our notional short sale of 2/4/03 would be closed today (2/10), without the SELL bogey having been violated, making the Short Sale State Clean.]

The on-balance volume (OBV)(note 2) today was -678 (million shares). The 5 day moving average (5DMA)(note 1) of the OBV fell from -191 to -471; we dropped a +719 from the average from six days ago, giving us a negative bias for today. We will have a negative bias Monday due to dropping a positive number from the average from six days prior. Since we did not get an upturn in the S&P500, the Arm signal from yesterday expires (see Glossary>Arm...). No signals today.

I don't know about you, but I am really glad the System got me out with the SELL on 2/4/03. Looking forward to a BUY signal in a few days.

Dear Reader: Last evening on Nightly Business Report (PBS), Robert Doll of Merrill Lynch Investment Management was interviewed and he said "...investors need to take a more trading approach to the market. OK, said the interviewer, but where can they get the information on WHEN to BUY and SELL?" The answer is RIGHT HERE, FOLKS. If you haven't already, check out our summary table (Summary Table) or the detailed results (Results_Summary) for the most recent nine years to see how we compare to the S&P500.

The on-balance volume (OBV)(note 2) today was -604 (million shares). The 5 day moving average (5DMA)(note 1) of the OBV actually rose from -255 to -191; we dropped a -921 from the average from six days ago, giving us a positive bias for today. We will have a negative bias Friday and Monday due to dropping positive numbers from the average from six days prior. The rise in the 5DMA is an ARM signal (see Glossary>Arm...). If tomorrow we get an upturn in the S&P500, that will be a FIRE signal, the two combined constituting a BUY signal.

The on-balance volume (OBV)(note 2) today was -490 (million shares). The 5 day moving average (5DMA)(note 1) of the OBV fell from -94 to -255; we dropped a +312 from the average from six days ago, giving us a negative bias for today. We will have a positive bias Thursday due to dropping a negative number from the average from six days prior. No signals today.

Dear Reader: The S&P 500 closed down 12 at 848. It is not clear if the 870 resistance level was acting yesterday, or will we get another rally up closer to 870 before we get a significant decline? I'm guessing the former, that the 870 was a resistance.

The on-balance volume (OBV)(note 2) today was -720 (million shares). The 5 day moving average (5DMA)(note 1) of the OBV fell from +191 to -94; we dropped a +707 from the average from six days ago, giving us a negative bias for today. We will have a negative bias Wednesday due to dropping a positive number from the average from six days prior. The simultaneous downturn in the S&P500 and the 5DMA, while the 5DMA was above the upper threshold of -100 (since we are in Plunge state), gives a SELL signal today. This brings our results for 2003 to -1.1% versus -3.6% for S&P. The Results_Summary and Market State pages have been updated.

Short-sellers paragraph (see Glossary for any unfamiliar terms): Since we are Short-sale Dirty (see Market State), we cannot sell short; however, we must do a notional (on paper only) short sale to keep track of the Clean/Dirty State.

Dear Reader: After a horrific tragedy in the space program, the market hesitantly moved higher. The S&P 500 closed up 5 at 860. This newsletter comes to you from Houston, TX, very near the Johnson Space Center. Dr. Field's former career was as thermal engineer on the Shuttle and Space Station programs. A Shuttle thermal tile (from testing) sits on my desk as I write this.

The on-balance volume (OBV)(note 2) today was +139 (million shares). The 5 day moving average (5DMA)(note 1) of the OBV rose from -63 to +191; we dropped a -1130 from the average from six days ago, giving us a positive bias for today. We will have a negative bias for Tuesday and Wednesday due to dropping positive numbers from the average from six days prior. No signals today.

For Long-Term Investors: We have extended the Long-Term Results Table back 20 years, and show that the Long-Term System generates 17.5% per year average over the time when the investor is IN the market. Of the six BULL markets during that time, only one actually lost money (and a very small amount at that) using this method during the 20 years. We believe these results lend great weight to our belief that the 200 Day Moving Average method (see Glossary>Two Hundred..) is THE way to properly define BULL and BEAR markets and the Long-Term method is THE method for investors (as opposed to speculators) to use.

DISCLAIMER: Past results are no guarantee of future results. StockMarketScience is for information and opinion only, and should not be considered stock or market advice. The user is totally responsible for any actions taken as a result of reading this publication, and StockMarketScience assumes NO liability for any losses suffered by anyone based on anything written here.

TRADEMARKS: Standard & Poor's, S&P, S&P100, and S&P500 are registered trademarks of The McGraw Hill Companies, Inc.

The Dow Jones averages are trademarks of Dow Jones & Co.

Nasdaq-100 Trust, "Nasdaq" and related marks are trademarks or service marks of The Nasdaq Stock Market, Inc.

This site written and copyright by Richard L. Field, BA, BSME, MSME, PhD.

MAIL: We receive email at rfield55@yahoo.com.

STOCKMARKETSCIENCE

February 2003 Columns