1-30-04 Dear Reader: The S&P500 fell today by 3 to 1131.

 The on-balance volume (OBV)(note 2) today was a +123 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV rose from -227 to -193. We dropped a -44 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.

We need to watch the bogey (recent minor low) set on 1/28/04. If the S&P closes below that level (1128.5), we say the Run-5 trade is busted and we lower the Market State to Oscillatory from Run-5. This generates a SELL signal. I was worried we might get that today. The threshold levels change when Market State changes. This is the for the Short-term System. As I have mentioned before,  we dont have an Intermediate term system (buy and sell signals every few months) as yet, but I think that change of Market State might be a possible signal for an Intermediate-term SELL signal. We are not declaring it so, but I am just revealing my tentative thinking on this.

End of Week/End of Month update. The 200DMA (40 week moving average-Friday closes) of the S&P500 continues to advance and the BULL market is still intact (we have stopped updating weekly the Long-Term Investors page, Table 3, but will resume same if a crisis approaches). Table 2 of the Long-Term System page has been updated, and that table shows clearly we are well above the nine month (appx 200 DMA) MA line. Barring a major decline, we should have several months (more than 12 weeks) of clear sailing. No change in positions; we are 100% long in SPY and QQQ for the equity allocation of total assets. The change in our position (based on S&P500) since the BULL market declaration on 4/25/03 is +25.8% (+34.9% using 50% S&P and 50% NASDAQ Composite). Please see Glossary for any unfamiliar terms.

1-29-04 Dear Reader: The S&P500 made a gain today of 6 to 1134. BUY signal today (see next paragraph).

 The on-balance volume (OBV)(note 2) today was a -281 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV rose from -230 to -227. We dropped a -299 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. The simultaneous upturn in S&P and 5DMA, while the 5DMA was below the lower threshold of -5, gives us a normal Run-5 BUY signal. We bought equal amounts of SPY, QQQ, and IWM (please see ETF page for explanation of symbols). The Market State page has been updated for the BUY. Please see Glossary for any unfamiliar terms.

1-28-04 Dear Reader: The S&P500 fell hard again by 16 to 1128. The market was up early, but Fed news knocked it down. I can say I am glad the System gave us a Short-term SELL signal yesterday.

 The on-balance volume (OBV)(note 2) today was a -1064 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV fell from +44 to -230. We dropped a +304 from the average from six days ago, giving us a negative bias for today. We will have a positive bias Thursday-Friday due to dropping a negative number from the average from six days prior. We are now in the normal BUYing range on 5DMA (below -5 for Run-5 State). No signals today.

1-27-04 Dear Reader: The S&P500 fell hard by 11 to 1144. This gave us a SELL signal (see next paragraph).

The on-balance volume (OBV)(note 2) today was a -353 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV fell from +214 to +44. We dropped a +498 from the average from six days ago, giving us a negative bias for today. We will have a negative bias tomorrow due to dropping a positive number from the average from six days prior. The simultaneous downturn in S&P and 5DMA, while the 5DMA was above the upper threshold of +2.5, gives us a SELL signal and changes the RunLite State to Dirty (because the RunLite BUY of yesterday caused a loss). The loss (using 30% of available funds) was -0.3%, bringing our gain for 2004 to 0.1%. The Results_Hist_99_03 and Market State pages have been updated.  Please see Glossary for any unfamiliar terms. The RunLite State of Dirty means we can not BUY on any RunLite signals in this sequence until we observe a profitable notional (on-paper only) RunLite trade.

1-26-04 Dear Reader: The S&P500 boomed ahead today with an advance of 14 to 1155. This gave us a RunLite BUY signal (#5 in a row)-see next paragraph.

The on-balance volume (OBV)(note 2) today was a +608 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV actually fell from +252 to +214. We dropped a +801 from the average from six days ago, giving us a negative bias for today. We will have a negative bias the next two days due to dropping positive numbers from the average from six days prior. The S&P advance above the bogey of 1147.6, set on 1/21/04, by more than 1.5 points gives us a RunLite BUY signal, the 5th in a row. The 5DMA does not enter into the RunLite signals. Our new rule (see column 1/20/04 below) says if the RunLite State is Clean, we can BUY a RunLite signal after the first one in a sequence. So today we bought 10% each of SPY, QQQ, and IWM, for a total of 30% of available funds risk. See ETF page for meaning of symbols. Please see Glossary for any unfamiliar terms. And see Market State page for update on BUY and to see RunLite State.

1-23-04 Dear Reader: The S&P500 closed down 2 to 1142.

The on-balance volume (OBV)(note 2) today was a -44 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV fell from +274 to +252. We dropped a +65 from the average from six days ago, giving us a negative bias for today. We will have a negative bias the next three days due to dropping positive numbers from the average from six days prior. No signals today.

Long-Term Investors End-of-week update. The 200DMA (40 week moving average-Friday closes) of the S&P500 continues to advance and the BULL market is still intact (we have stopped updating weekly the Long-Term Investors page, Table 3, but will resume same if a crisis approaches). Table 2 of the Long-Term System page is updated monthly, and that table shows clearly we are well above the nine month (appx 200 DMA) MA line. Barring a major decline, we should have several months (more than 12 weeks) of clear sailing. No change in positions; we are 100% long in SPY and QQQ for the equity allocation of total assets. The change in our position (based on S&P500) since the BULL market declaration on 4/25/03 is +27% (+37.5% using 50% S&P and 50% NASDAQ Composite). Please see Glossary for any unfamiliar terms.

1-22-04 Dear Reader: The S&P500 closed down 4 to 1144. SELL signal today (see next paragraph).

The on-balance volume (OBV)(note 2) today was a -299 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV fell from +482 to +274. We dropped a +739 from the average from six days ago, giving us a negative bias for today. We will have a negative bias the next four days due to dropping positive numbers from the average from six days prior. The simultaneous decline in S&P and 5DMA, while the 5DMA was above the upper threshold of +2.5, gives us a Short-term SELL signal. We got a microscopic gain on this round-trip, and so the RunLite State remains Clean. The gain (using 25% of available funds) was 0.1%, bringing our gain for 2004 to 0.4%. The Results_Hist_99_03 and Market State pages have been updated. Oddly the NASDAQ 100 index (QQQ), which was the only index we traded this time, suffered a significant loss of 1%, but we keep score and generate signals using only the S&P500. We have observed for decades that the NASDAQ is more volatile than the S&P, but the S&P gives the correct signals almost every time that there is a disparity between them. Please see Glossary for any unfamiliar terms.

1-21-04 Dear Reader: The S&P500 closed up 9 to 1148.

The on-balance volume (OBV)(note 2) today was a +304 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV rose from +358 to +482. We dropped a -313 from the average from six days ago, giving us a positive bias for today. We will have a negative bias the next five days due to dropping positive numbers from the average from six days prior. Since we are over 400 on 5DMA, we say the market is over-bought. Could get a SELL signal as early as tomorrow. No signals today.

1-20-04 Dear Reader: The S&P500 closed down 1 to 1139.

The on-balance volume (OBV)(note 2) today was a +498 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV rose from +334 to +358. We dropped a +378 from the average from six days ago, giving us a negative bias for today. We will have a positive bias Wednesday due to dropping a negative number from the average from six days prior. No signals today (but see next paragraph).

We saw Friday the fourth RunLite signal in a row. We are announcing today the RunLite (RL) flag, with states Dirty and Clean. This flag applies to RunLite signals after the first. In other words, if Runlite signal #2 fails to produce a profit, then the RL flag is dirty and no further RunLite signal in that sequence are to be acted upon, but each one must be noted. If a RunLite signal greater than one (>1) shows a profit, then the RL flag changes to Clean, and we can act on RunLite signals>1 thereafter until one shows a loss, at which time the RL flag changes to Dirty. We are not allowed to BUY on those RunLite signals unless the RL flag is Clean. The flag would have been Dirty all though the early BULL market period (4/25/03 to 6/13/03) and so would have prevented us from BUYing the RunLite>1 signals in that time period. The next time frame when RunLite>1 occurred was 12/22/03 to present. The RL flag would have been Dirty before 12/22, and would have changed to Clean on 12/24 when we saw a small profit that would have come from RunLite #2, initiated on 12/22. So then the RunLite #3 on 12/29/03 would have been a BUY, and we would have a nice profit, when sold on 1/9/04. Also the RunLite #4 on 1/16/04 is a BUY using this new rule. Since this is a new rule, we are putting only 25% of available funds at risk, and when this position is closed out, we will apply the 25% to the gain/loss. We bought 25% at today's open, using QQQ only, since that index has been going up significantly more than SPY lately. Buy and Sell signals are still based on S&P alone. Please see Glossary for any unfamiliar terms. We have added an explanation of the RunLite State to the Run... paragraph in Glossary, and have added the RunLite State to the Market State page, and updated this page for the BUY signal on today's open (accounted as Friday's close). In accordance with our stated policy that the Results_Hist_99_03 should reflect the signals the System generates and that the table should reflect the latest rule set, we are adding a BUY on 12/29/03 and a sale on 1/9/04, using 25% of funds.

1-16-04 Dear Reader: The S&P500 closed up 8 to a new recovery high of 1140. The RunLite Buy signal today is ignored by our rules (see next paragraph).

The on-balance volume (OBV)(note 2) today was a +801 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV rose from +90 to +334. We dropped a -420 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. The advance of the S&P above the previous bogey (minor high) of  1131.9 from 1/8/04 by more than 1.5 points, gives us a RunLite BUY signal, number four in a row. But all RunLite BUY signals after the first are to be ignored by our System rules. When we have more evidence, we may change the RunLite rules. The RunLite has been around for us only about a year. If we had acted on RunLite #2, we would about broken even. If we had acted on RunLite #3 we would have made about 2%, which is a respectable return. Please see Glossary for any unfamiliar terms.

Long-Term Investors End-of-week update. Sorry I forgot to do this paragraph last week, no serious events occurred, though. The 200DMA (40 week moving average-Friday closes) of the S&P500 continues to advance and the BULL market is still intact (we have stopped updating weekly the Long-Term Investors page, Table 3, but will resume same if a crisis approaches). Table 2 of the Long-Term System page is updated monthly, and that table shows clearly we are well above the nine month (appx 200 DMA) MA line. Barring a major decline, we should have several months (more than 12 weeks) of clear sailing. No change in positions; we are 100% long in SPY and QQQ for the equity allocation of total assets. The change in our position (based on S&P500) since the BULL market declaration on 4/25/03 is +26.8% (+38% using 50% S&P and 50% NASDAQ Composite). Please see Glossary for any unfamiliar terms.

1-15-04 Dear Reader: The S&P500 closed up 2 to 1132.

The on-balance volume (OBV)(note 2) today was a +65 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV fell from +206 to +90. We dropped a +643 from the average from six days ago, giving us a negative 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.

1-14-04 Dear Reader: The S&P500 made a nice advance, closing up 9 to 1131.

The on-balance volume (OBV)(note 2) today was a +739 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV rose from +108 to +206. We dropped a +251 from the average from six days ago, giving us a negative bias for today. We will have a negative bias one more day due to dropping positive numbers from the average from six days prior. No signals today.

1-13-04 Dear Reader: After being down more than 12, the S&P500 finally closed down 6 to 1121. We need a little more of this to get us into BUYing range.

The on-balance volume (OBV)(note 2) today was a -313 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV fell from +189 to +108. We dropped a +90 from the average from six days ago, giving us a negative bias for today. We will have a negative bias two more days due to dropping positive numbers from the average from six days prior. The simultaneous downturn in the S&P and the 5DMA, while the 5DMA was above the upper threshold of +2.5, gives us a sterile SELL signal. Sterile because we have no positions on. Please see Glossary for any unfamiliar terms.

1-12-04 Dear Reader: Was this an exciting market day or what? NOT. I'm afraid this is going to be a boring year for the market. I think also that we will beat the S&P significantly in that environment, since the S&P may do little by the end of the year, but we will try and capture the better part of every up leg and none of the down legs. Today the S&P500 closed up 5 to 1127.

The on-balance volume (OBV)(note 2) today was a +378 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV actually fell from +276 to +189. We dropped a +817 from the average from six days ago, giving us a large negative bias for today. We will have a negative bias three more days due to dropping positive numbers from the average from six days prior. No signals today.

1-9-04 Dear Reader: A serious decline today. This is what we need to get to a System BUY signal soon. The S&P500 closed down 10 to 1122.

The on-balance volume (OBV)(note 2) today was a -420 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV fell from +374 to +276. We dropped a +67 from the average from six days ago, giving us a slight negative bias for today. We will have a negative bias the next four days due to dropping positive numbers from the average from six days prior. The simultaneous downturn in S&P and 5DMA, while the 5DMA was above the upper threshold of +2.5, gives us a SELL signal. But it is a sterile signal since we have no positions on. Please see Glossary for any unfamiliar terms.

1-8-04 Dear Reader:  If this is supposed to be the harbinger week for the month and year, it is shaping up as a very boring one indeed. Today the S&P500 closed up 6 to 1132.

The on-balance volume (OBV)(note 2) today was a +643 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV rose from +263 to +374. We dropped a +87 from the average from six days ago, giving us a negative bias for today. We will have a negative bias the next five days due to dropping positive numbers from the average from six days prior. No signals today.

1-7-04 Dear Reader:  In a near repeat of yesterday's action, the S&P500 was mostly down all day but closed up 3 to 1126.

The on-balance volume (OBV)(note 2) today was a +251 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV rose from +232 to +263. We dropped a +100 from the average from six days ago, giving us a negative bias for today. We will have a negative bias the next five days due to dropping positive numbers from the average from six days prior. No signals today. The ARM signal of yesterday expired because no downturn in S&P occurred today.

1-6-04 Dear Reader:  In a fairly boring follow-through to yesterday's boom, the S&P500 closed up 2 to 1124.

The on-balance volume (OBV)(note 2) today was a +90 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV actually fell from +383 to +232. We dropped a +844 from the average from six days ago, giving us a negative bias for today. We will have a negative bias the next five days due to dropping positive numbers from the average from six days prior. The decline in 5DMA while it was above the upper threshold of +2.5, while the S&P did not decline, gives us a sterile ARM signal (first half of an ARM & FIRE SELL signal). Sterile because we have no Short-Term positions on.  Any decline in S&P tomorrow will complete the FIRE signal for a SELL. A few good down days will get us into the BUY range. Please see Glossary for any unfamiliar terms.

1-5-04 Dear Reader: A boomer rally for the first real trading day of the new year. This augers well for the week, the month and the year. The S&P500 closed up 14 to 1122.

The on-balance volume (OBV)(note 2) today was a +817 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV rose from +246 to +383. We dropped a +132 from the average from six days ago, giving us a negative bias for today. We will have a negative bias the next five days due to dropping positive numbers from the average from six days prior. No signals today. Our Long-Term System benefits from this rally, but our Short-Term System has no positions on. The closest we came to a BUY signal was on 12/29 when we got RunLite Buy signal #3 which we ignored by our RunLite rules (please see Glossary>Run...). If we get more data points we may have to refine the RunLite rules, so we can capture rallies like today. For now we just have to have discipline to follow the rules and wait for a rule-based BUY signal. While these rules have been in development for 40 years, the RunLite rule is just about a year old.

1-2-04 Dear Reader: The market opened the year continuing in its dull holiday character. The S&P500 closed down 3 to 1108. I expect more normal behavior next week (either up or down!).

The on-balance volume (OBV)(note 2) today was a +67 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV rose from +221 to +246. We dropped a -55 from the average from six days ago, giving us a positive/neutral bias for today. We will have a negative bias the next five days due to dropping positive numbers from the average from six days prior. No signals today.

Long-Term Investors End-of-week/End of Month update. The 200DMA (40 week moving average-Friday closes) of the S&P500 continues to advance and the BULL market is still intact (we have stopped updating weekly the Long-Term Investors page, Table 3, but will resume same if a crisis approaches). Table 2 of the Long-Term System page has been updated, and that table shows clearly we are well above the nine month (appx 200 DMA) MA line. Barring a major decline, we should have several months (more than 12 weeks) of clear sailing. No change in positions; we are 100% long in SPY and QQQ for the equity allocation of total assets. The change in our position (based on S&P500) since the BULL market declaration on 4/25/03 is +23.3% (+31.6% using 50% S&P and 50% NASDAQ Composite). Please see Glossary for any unfamiliar terms.

There is an old market saw that the trend seen in January forecasts the trend for the year, and that the first five business days of January forecasts the month of January. I haven’t been able so far to find statistics on how good this old saw really is. Some research I saw says that there is a strong tendency for small cap stocks to outperform other stocks in January, so with this in mind, when we get BUY signals in Jan, we will be allocating 50% to IWM and 25% each to SPY and QQQ. Please see ETF page for meaning of these symbols. This is sometimes called the January effect.

 There is a very high level of bullishness in the advisor community (it is now at an incredible 84%-see investorsintelligence.com), which should give one pause (everyone in the market cant be right). Also the economic fundamentals have steadily improved, lending further confidence to advisors and their clients. But this excessive optimism does not worry me because both our Systems (Long-Term and Short-Term) will get us out of the market before serious damage is done. Some advise getting out of the market simply because this bullishness is so high. But the high level of optimism can go on for some time before the market declines significantly.

 Another caution being broadcast these days is that the NASDAQ increased 50% since 12/31/02, and that that rate of gain is unsustainable for another year. Probably true, but we have in place Systems to avoid any significant decline, so we dont need to act based on this caution alone. By the way, the Russell 2000 index (small caps) was up 45% for the year.