10-29-04 Dear Readers: The market was up and down near the close, but at the end the S&P500 was ahead again, this time by 3 to 1130. BEAR MARKET SIGNAL WEEK AGO FRIDAY. LONG TERM INVESTORS SHOULD HAVE SOLD EVERYTHING AND GONE TO 100% CASH EQUIVALENTS (meaning one year or less treasury securities or CD's). (see column 10/15/04).  Next week is a make or break week for the market. If S&P can power ahead into the 1132-1140 range by week's end, the 40 Week Moving Average will again turn up and the BULL market will be back. This (a BEAR market turnaround to BULL resumption after a short time) has happened only once in the last 20 years (see Long-term Investor's page, Table 1, 8/12/94 to 11/22/94).

The on-balance volume (OBV)(note 2) today was +296 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV rose from +274 to +442. We dropped a -542 from the average from six days ago, giving a positive bias to the 5DMA today. We will have a positive bias to the 5DMA Monday due to dropping a negative number from the 5DMA from six days prior. The 5DMA moving above 400 gives an over-bought signal; a decline could ensue at any time. Today's rise in S&P cancels the ARM & Fire sell signal that was set-up yeaterday. No buy-sell signals today. Please see Glossary for any unfamiliar terms.

Long-Term Investors End of Week/End-of-Month update. The 200DMA (40 week moving average (40WMA)-Friday closes) of the S&P500 continues to show a DECLINE week-over-week, but the S&P500 has risen above the 40WMA, indicating not only that the BEAR market continues, but this is an opportune time to SELL and SELL short (when we get a Short-term SELL signal, and if you are inclined to accept the risks of short-selling). This may be seen on Long-term Investor's page, Table 4, which is updated weekly. The last entry in Table 4 shows a decline in the 40WMA, and that the S&P500 close today is above that average. Long-term Investors' Table 1 has been updated for the end of the 2003-4 BULL market. That move saw a total profit of 23.3%, or 15.3%/yr averaged over the 1.47 years of the BULL market. This reduces the annualized gain of the Long-Term System from 17.5%/yr to 17.3%/yr. Table 2 of the Long-Term System page was updated for the month of October, and that table shows for the first time in a couple years, a decline in the nine month moving average. We are above the nine month (appx 200 DMA) MA line, but the 40 weeks MA is what we use for the BEAR signals. To get a BEAR market signal (Long-term System) we need BOTH to be below the 200DMA (40WMA) line and for the 200DMA line to turn DOWN. If the S&P then climbs above the average, no signal is given, but it is generally considered to be an opportune time to sell, as aforesaid. Please see Glossary for any unfamiliar terms.  

10-28-04 Dear Readers: Today the S&P500 was ahead again, this time by 2 to 1127. BEAR MARKET SIGNAL WEEK AGO FRIDAY. LONG TERM INVESTORS SHOULD HAVE SOLD EVERYTHING AND GONE TO 100% CASH EQUIVALENTS (meaning one year or less treasury securities or CD's). (see column 10/15/04).  

The on-balance volume (OBV)(note 2) today was +93 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV fell from +357 to +274. We dropped a +506 from the average from six days ago, giving a negative bias to the 5DMA today. We will have a positive bias to the 5DMA Friday-Monday due to dropping a negative number from the 5DMA from six days prior. Today's decline in 5DMA, while the 5DMA was above the upper threshold of +19, gives an ARM signal (first half of ARM & FIRE). Any decline in S&P500 tomorrow will complete the FIRE for a SELL signal. Please see Glossary for any unfamiliar terms.

10-27-04 Dear Readers: Today the S&P500 was ahead again, this time by 14 to 1125. BEAR MARKET SIGNAL WEEK AGO FRIDAY. LONG TERM INVESTORS SHOULD HAVE SOLD EVERYTHING AND GONE TO 100% CASH EQUIVALENTS (meaning one year or less treasury securities or CD's). (see column 10/15/04).  

The on-balance volume (OBV)(note 2) today was +813 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV rose from +199 to +357. We dropped a +26 from the average from six days ago, giving a neutral bias to the 5DMA today. We will have a negative bias to the 5DMA Thursday due to dropping a positive number from the 5DMA from six days prior. No signals today.

10-26-04 Dear Readers: Today the S&P500 boomed ahead by 16 to 1111. Short-term BUY signal today (please see next paragraph); Long-term Investors stay in 100% cash equivalents. BEAR MARKET SIGNAL WEEK AGO FRIDAY. LONG TERM INVESTORS SHOULD HAVE SOLD EVERYTHING AND GONE TO 100% CASH EQUIVALENTS (meaning one year or less treasury securities or CD's). (see column 10/15/04).  

The on-balance volume (OBV)(note 2) today was +1041 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV rose from -154 to +199. We dropped a -725 from the average from six days ago, giving a positive bias to the 5DMA today. We will have a negative bias to the 5DMA Wednesday-Thursday due to dropping a positive number from the 5DMA from six days prior. The simultaneous upturn in S&P and 5DMA, while the 5DMA was below the lower threshold of -28, gives a Short-term BUY signal. Since the Long-Purchase state is Dirty, we buy with 50% of available funds. We bought equal amounts of SPY and QQQ. Please see ETF page for meaning of these symbols. Please read column 10/15/04. Please see Glossary for any unfamiliar terms. Since the BEAR market signal has priority over the Intermediate Downturn Signal (IDT), the Long-purchase state will now stay at Dirty, meaning we always scale-in purchases, starting with 50% on first buy signal, 25% on second buy, etc. The Market State page has been updated for these events today.

We have a rare ambiguity today, since the violation of the upper bogey (set at S&P 1106.5 on 10-21-04) by today's close should raise the Market State from OSCILLATORY to Run-5. However, we have history that says a Run-5 has never occurred in a BEAR market. Short sales are not allowed in Run-5. We will know by market action over the next week or so, which rule is dominant here. We like to say the Field Systems have almost NO ambiguity--you always know what to do to maximize profit or minimize risk.

Short-sellers paragraph. The shorts are covered with the short-term BUY signal. We dont include results from short sales in our history tables at this time. Please see Glossary for any unfamiliar terms.

10-25-04 Dear Readers: The S&P500 closed down less than a point to 1095. BEAR MARKET SIGNAL WEEK AGO FRIDAY. LONG TERM AND SHORT-TERM INVESTORS SHOULD SELL EVERYTHING AND GO TO 100% CASH (meaning one year or less treasury securities or CD's). (see column 10/15/04).  

The on-balance volume (OBV)(note 2) today was -35 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV fell from -121 to -154. We dropped a +131 from the average from six days ago, giving a negative bias to the 5DMA today. We will have a positive bias to the 5DMA Tueday due to dropping a negative number from the 5DMA from six days prior. No signals today. Please read column 10/15/04.

Short-sellers paragraph. Short positions are OK. No changes. Please see Glossary for any unfamiliar terms.

10-22-04 Dear Readers:  The S&P500 closed down hard by 11 to 1096. BEAR MARKET SIGNAL LAST FRIDAY. LONG TERM AND SHORT-TERM INVESTORS SHOULD SELL EVERYTHING AND GO TO 100% CASH (meaning one year or less treasury securities or CD's). (see column 10/15/04).  

The on-balance volume (OBV)(note 2) today was -542 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV fell from +56 to -121. We dropped a +341 from the average from six days ago, giving a negative bias to the 5DMA today. We will have a negative bias to the 5DMA Monday due to dropping a positive number from the 5DMA from six days prior. The simultaneous downturn in S&P and 5DMA, while the 5DMA was above the upper threshold of +19, gives a SELL signal, but it is sterile since we have no long positions on. We take this signal to put out short sales (please see next paragraph).  Please read column 10/15/04.

Short-sellers paragraph. With the aforementioned SELL signal, and since today's decline was more than four S&P points, we sold short positions in SPY, QQQ and DIA, in equal amounts, totalling 50% of available funds (only 50% because we are just being cautious...we have no particular "less than 100% rules" for short sales like we have for long purchases). Please see ETF page for meaning of these symbols and please see Glossary for any unfamiliar terms.

Long-Term Investors End of Week update. The 200DMA (40 week moving average (40WMA)-Friday closes) of the S&P500 continues to show a DECLINE week-over-week, and the S&P500 is below the 40WMA, indicating the BEAR market continues. This may be seen on Long-term Investor's page, Table 4, which is updated weekly. The last entry in Table 4 shows a decline in the 40WMA, and that the S&P500 close today is below that average. Long-term Investors' Table 1 has been updated for the end of the 2003-4 BULL market. That move saw a total profit of 23.3%, or 15.3%/yr averaged over the 1.47 years of the BULL market. This reduces the annualized gain of the Long-Term System from 17.5%/yr to 17.3%/yr. Table 2 of the Long-Term System page was updated for the month of September, and that table shows we are still below the nine month (appx 200 DMA) MA line. The 9 month MA line is still advancing, but we expect it too will show a decline at month's end. To get a BEAR market signal (Long-term System) we need BOTH to be below the 200DMA (40WMA) line and for the 200DMA line to turn DOWN. Please see Glossary for any unfamiliar terms.  The Market State Page has been updated for the BEAR signal. Press Release #3 has been added to Press Release Pages.

10-21-04 Dear Readers:  The S&P500 closed up by 3 to 1107. BEAR MARKET SIGNAL LAST FRIDAY. LONG TERM AND SHORT-TERM INVESTORS SHOULD SELL EVERYTHING AND GO TO 100% CASH (meaning one year or less treasury securities or CD's). (see column 10/15/04).  

The on-balance volume (OBV)(note 2) today was +506 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV rose from -316 to +56. We dropped a -603 from the average from six days ago, giving a positive bias to the 5DMA today. We will have a negative bias to the 5DMA Friday due to dropping a positive number from the 5DMA from six days prior.  No signals today. Please read column 10/15/04.

10-20-04 Dear Readers:  The S&P500 closed up by less than a point to 1104. BEAR MARKET SIGNAL LAST FRIDAY. LONG TERM AND SHORT-TERM INVESTORS SHOULD SELL EVERYTHING AND GO TO 100% CASH (meaning 1 year or less CD's or T-bills). (see column 10/15/04).  

The on-balance volume (OBV)(note 2) today was -725 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV fell from -264 to -321. We dropped a -436 from the average from six days ago, giving a positive bias to the 5DMA today. We will have a positive bias to the 5DMA Wednesday-Thursday due to dropping a negative number from the 5DMA from six days prior. No signals today, but please read column 10/15/04. You may also want to read our Press Release #3, which has been added to Press Release Pages.

10-19-04 Dear Readers:  The S&P500 closed down hard by 11 to 1103. BEAR MARKET SIGNAL LAST FRIDAY. LONG TERM AND SHORT-TERM INVESTORS SHOULD SELL EVERYTHING AND GO TO 100% CASH. (see column 10/15/04).  

The on-balance volume (OBV)(note 2) today was -725 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV fell from -264 to -321. We dropped a -436 from the average from six days ago, giving a positive bias to the 5DMA today. We will have a positive bias to the 5DMA Wednesday-Thursday due to dropping a negative number from the 5DMA from six days prior. No signals today, but please read column 10/15/04. You may also want to read our Press Release #3, which has been added to Press Release Pages.

Today the market started out to the upside, but closed down. Hate to say it, but the market may be confirming our BEAR market signal. The previous low of 1103 was set on 10/14/04. The close today matched that. A close even one point below that will give some additional credence to the BEAR signal. Not that we need any confirmation, the signal comes from the definition of BULL and BEAR markets (please see Glossary>BEAR). When the market action meets the definition of a BEAR market, we get a BEAR market signal. No amount of arm waving or talk about the economy, the election, etc. will change that. Isnt that what doctors do, if symptoms are this, the disease may be that. And many sciences are the same, meteorology, petroleum geology, etc. Only in stocks do we have the arm wavers and the TV talking heads who dont want to recognize ANY definition for these things and thus they ignore the signals . It could be because they will earn less commissions if their customers go to cash and pull the money away. You have only to look at the record of the Long-term System, Table 1, to see the efficacy of the definitions for BULL and BEAR market and of acting on the signals. Some people use a rule that a 20% decline in the market from its high represents the beginning of a BEAR market; they like this rule because it is easy for the public to understand. You may once again have the opportunity to see the effectiveness of that rule, because a 20% decline from the 1156 high of S&P on 3/1/04 would take us to 925 on the S&P. Do you want to own stocks during a fall from 1103 (today) to 924?

10-18-04 Dear Readers:  The S&P500 closed up by 6 to 1114. BEAR MARKET SIGNAL LAST FRIDAY. LONG TERM AND SHORT-TERM INVESTORS SHOULD SELL EVERYTHING AND GO TO 100% CASH. (see column 10/15/04).  

The on-balance volume (OBV)(note 2) today was +131 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV rose from -295 to -264. We dropped a -24 from the average from six days ago, giving a neutral bias to the 5DMA today. We will have a positive bias to the 5DMA for the next three days due to dropping a negative number from the 5DMA from six days prior. No signals today, but please read column 10/15/04. This rally is a good time to get out.

10-15-04 Dear Readers:  The S&P500 closed up by 5 to 1108. BEAR MARKET SIGNAL TODAY. LONG TERM AND SHORT-TERM INVESTORS SHOULD SELL EVERYTHING AND GO TO 100% CASH. (see LONG-TERM INVESTORS paragraph below).  

The on-balance volume (OBV)(note 2) today was +338 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV rose from -472 to -295. We dropped a -550 from the average from six days ago, giving a positive bias to the 5DMA today. We will have a positive bias to the 5DMA for the next four days due to dropping a negative number from the 5DMA from six days prior. Notwithstanding that we got a Short-term BUY signal, the BEAR market signal over-rides that and we ignore the BUY signal. Please see Glossary for any unfamiliar terms. The Market State Page has not been updated for the BUY.

Short-sellers paragraph. With the aforementioned BUY signal, we covered the short positions for a nice profit of about 2% on the funds invested. We do not include these gains in any of the tables here. Please see Glossary for any unfamiliar terms. Since we dont study or attempt long-term short positions, we closed out this month's short sales today. We will re-short on the next Short-term SELL signal which may be a week or so away. If the BEAR market takes hold quickly, which it has done in the past, the next SELL signal may be much below current levels of the S&P.

Long-Term Investors End of Week update. The 200DMA (40 week moving average (40WMA)-Friday closes) of the S&P500 has finally shown a DECLINE week-over-week, and the S&P500 is below the 40WMA, signalling the START OF A BEAR MARKET! This may be seen on Long-Term Investors page, Table 4, which is updated weekly. The last entry in Table 4 shows a decline in the 40WMA, and that the S&P500 close today is below that average. Long-term Investors' Table 1 has been updated for the end of the 2003-4 BULL market. That move saw a total profit of 23.3%, or 15.3%/yr averaged over the 1.47 years of the BULL market. This reduces the annualized gain of the Long-Term System from 17.5%/yr to 17.3%/yr. Table 2 of the Long-Term System page was updated for the month of September, and that table shows we are still below the nine month (appx 200 DMA) MA line. The 9 month MA line is still advancing, but we expect it too will show a decline at month's end. To get a BEAR market signal (Long-term System) we need BOTH to be below the 200DMA (40WMA) line and for the 200DMA line to turn DOWN. Please see Glossary for any unfamiliar terms.  The Market State Page has been updated for the BEAR signal. Press Release #3 has been added to Press Release Pages.

10-14-04 Dear Readers:  The S&P500 closed down by 10 to 1103.  

The on-balance volume (OBV)(note 2) today was -603 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV actually rose from -500 to -472. We dropped a -744 from the average from six days ago, giving a positive bias to the 5DMA today. We will have a positive bias to the 5DMA for the next five days due to dropping a negative number from the 5DMA from six days prior. We are below 5DMA of -400, so we are over-sold, and should expect a rally in a day or so. The upturn in 5DMA, while below the lower threshold of -28, gives an ARM signal (first half of ARM & FIRE). An upturn in S&P500 tomorrow will be a FIRE signal that completes the BUY signal. Please see Glossary for any unfamiliar terms.

Short-sellers paragraph. Our short sales of 10/7/04 are still ok. No change in positions. We will cover them (buy back) with the next BUY signal. Please see Glossary for any unfamiliar terms.

10-13-04 Dear Readers:  The S&P500 closed down by 8 to 1114.

The on-balance volume (OBV)(note 2) today was -749 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV fell from -211 to -500. We dropped a +698 from the average from six days ago, giving a negative bias to the 5DMA today. We will have a positive bias to the 5DMA for the next five days due to dropping a negative number from the 5DMA from six days prior. We are now below the 5DMA lower threshold of -28 needed for a buy signal, so a simultaneous upturn in S&P and 5DMA will give a BUY signal. We are also below 5DMA of -400, so we are over-sold, and should expect a rally in a day or so. No signals today.

Short-sellers paragraph. Our short sales of 10/7/04 are still ok. No change in positions. We will cover them (buy back) with the next BUY signal. Please see Glossary for any unfamiliar terms.

10-12-04 Dear Reader:  The S&P500 closed down by 3 to 1122.

The on-balance volume (OBV)(note 2) today was -436 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV fell from -174 to -211. We dropped a -248 from the average from six days ago, giving a positive bias to the 5DMA today. We will have a negative bias to the 5DMA Wednesday due to dropping a positive number from the 5DMA from six days prior. We are now below the 5DMA lower threshold of -28 needed for a buy signal, so a simultaneous upturn in S&P and 5DMA will give a BUY signal. No signals today.

Short-sellers paragraph. Our short sales of 10/7/04 are still ok. No change in positions. We will cover them (buy back) with the next BUY signal. Please see Glossary for any unfamiliar terms.

10-11-04 Dear Reader:  The S&P500 closed up by 2 to 1124.

The on-balance volume (OBV)(note 2) today was -24 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV fell from -64 to -174. We dropped a +522 from the average from six days ago, giving a negative bias to the 5DMA today. We will have a positive bias to the 5DMA Tuesday due to dropping a negative number from the 5DMA from six days prior. We are now below the 5DMA lower threshold of -28 needed for a buy signal, so a simultaneous upturn in S&P and 5DMA will give a BUY signal. There was no buy signal today because the 5DMA did not turn up. No signals today.

Short-sellers paragraph. Our short sales of 10/7/04 are still ok. No change in positions. We will cover them (buy back) with the next BUY signal. Please see Glossary for any unfamiliar terms.

10-8-04 Dear Reader:  The S&P500 closed down again, by 9 to 1122.

The on-balance volume (OBV)(note 2) today was -550 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV fell from +275 to -64. We dropped a +1146 from the average from six days ago, giving a large negative bias to the 5DMA today. We will have a negative bias to the 5DMA Monday due to dropping a positive number from the 5DMA from six days prior. We are now below the 5DMA lower threshold of -28 needed for a buy signal, so a simultaneous upturn in S&P and 5DMA will give a BUY signal. 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. The Long-Term Investors page, Table 4, is updated weekly and that table shows we are still above the 40 week MA line. Table 2 of the Long-Term System page was updated for the month of September, and that  table shows we are still below the nine month (appx 200 DMA) MA line. The important point is that the 40 week and 9 month MA lines are STILL advancing. To get a BEAR market signal (Long-term System) we need BOTH to be below the 200DMA (40WMA) line and for the 200DMA line to turn DOWN. No change in positions; we are 100% long in SPY and QQQ for the equity allocation of total assets (see ETF page for explanation of these symbols). The change in our position (based on S&P500) since the BULL market declaration on 4/25/03 is +24.8% (+29.4% using 50% S&P and 50% NASDAQ  Composite). Please see Glossary for any unfamiliar terms.

Short-sellers paragraph. Our short sales of 10/7/04 are behaving nicely. No change in positions.  Please see Glossary for any unfamiliar terms.

10-7-04 Dear Reader:  The S&P500 closed down hard, by 11 to 1131. Sold short today (see short-sellers paragraph below, if interested). Long term investors should sit tight. For those short-term traders who dont sell on System signals, we're sorry for your loss, but we are glad the System kept us out of today's decline.

The on-balance volume (OBV)(note 2) today was -744 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV fell from +501 to +275. We dropped a +285 from the average from six days ago, giving a negative bias to the 5DMA today. We will have a negative bias to the 5DMA Friday-Monday next due to dropping a positive number from the 5DMA from six days prior. The simultaneous downturn in S&P500 and 5DMA gives a sterile SELL signal; sterile because we have no positions on to sell. But see Short-sellers paragraph below.  Please see Glossary for any unfamiliar terms.  

Short-sellers paragraph. With the aforementioned (sterile) sell signal and seeing that the decline was at least four points, and that the Short-sale State was Clean (see Market State), we decided to sell short some QQQ and SPY on the close. We do not currently report results of short sales in the Results_History. The recent market action lends weight to an expectation that yesterday represents a near term high, and that the bear market is close enough that being short this market, with a small percentage of one's capital, may work out nicely. Please see Glossary for any unfamiliar terms.

10-6-04 Dear Reader:  The S&P500 closed up 8 to 1142.

The on-balance volume (OBV)(note 2) today was +698 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV rose from +419 to +501. We dropped a +285 from the average from six days ago, giving a negative bias to the 5DMA today. We will have a negative bias to the 5DMA Thursday-Monday next due to dropping a positive number from the 5DMA from six days prior. No signals today. It was not a BUY signal since the 5DMA was not below the lower threshold of -28 when today's upturn occurred. Also, since we did not do a notional (on paper only) short sale yesterday, then today's action in exceeding the minor high of  1135.2 set on 10/4/04 does not raise the Market State to Run-5. Please see Glossary for any unfamiliar terms.

Short-sellers paragraph. We see today the importance of the four point rule for short-sales. Today we easily exceeded the previous minor peak of 1135.2, set on 10/4/04; if we had sold short yesterday (even notionally), we would have to buy the shorts back today at a loss, since we never carry forward any short sales at a loss. Please see Glossary for any unfamiliar terms.

10-5-04 Dear Reader:  The S&P500 made a small decline today, closing down 1 to 1134. Short-term SELL signal today (see next paragraph).

The on-balance volume (OBV)(note 2) today was -248 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV fell from +576 to +419. We dropped a +540 from the average from six days ago, giving a negative bias to the 5DMA today. We will have a negative bias to the 5DMA Wednesday-Monday next due to dropping a positive number from the 5DMA from six days prior. The simultaneous decline in S&P and 5DMA, while the 5DMA was above the upper threshold of +19, gives a Short-term sell signal. We sold the SPY and QQQ purchased on 9/29/04 (please see EFT page for explanation of these symbols). The round trip net gain on these trades was +0.9%, bringing our net for the year to +2.1%, versus a +2.0% for the S&P500. The Market State Page and Results_History_04- page have been updated for today's action. Please see Glossary for any unfamiliar terms.

Short-sellers paragraph. Since we are in Oscillatory State and since the Short-sale state is Clean, we may sell short on today's signal, except the decline in the S&P500 was less than four points, so by the four point rule, we are not allowed to sell short today. Please see Glossary for any unfamiliar terms. We may be able to short tomorrow if we get a decline of at least 3+ points. The recent market action, see yesterday's column, lends weight to an expectation that yesterday represents a near term high, and that the bear market is close enough that being short this market, with a small percentage of one's capital, may work out nicely.

10-4-04 Dear Reader:  The S&P500 made another advance today, closing up 4 to 1135.

The on-balance volume (OBV)(note 2) today was +522 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV rose from +346 to +576. We dropped a -630 from the average from six days ago, giving a positive bias to the 5DMA today. We will have a negative bias to the 5DMA Tuesday-Monday next due to dropping a positive number from the 5DMA from six days prior. We are now above the +400 level on 5DMA, at which we declare the market over-bought, so a decline is very likely. Also any simultaneous decline in S&P and 5DMA will give a Short-term sell signal. No signals today.

I meant to comment on the VIX on Friday but forgot. The VIX, the CBOE (Chicago Board Options Exchange) volatility index is at a low not seen in more than 12 months. This indicates a very toppy market. Although the market is no where near the tops it made earlier this year, this indicator, which is part of our Intermediate Down Trend indicator, is very bearish now and lends additional weight to the remarks we made on Thursday, 9/30/04 and Friday, 10/1/04, about a possible BEAR market signal in the near future. The volatility index is inversely proportional to the "altitude" of the market on the theory that a low value of VIX indicates smaller premiums on puts compared to premiums on calls and implies that investors view the market as more bullish. Since not everyone can be right, the more investors go to an extreme in one direction, the more likely the trend is about to reverse. We have added VIX to the Glossary.

10-1-04 Dear Reader:  The S&P500 made a very handsome advance today, closing up 17 to 1132.

The on-balance volume (OBV)(note 2) today was +1146 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV rose from +137 to +346. We dropped a +102 from the average from six days ago, giving a negative bias to the 5DMA today. We will have a positive bias to the 5DMA Monday due to dropping a negative number from the 5DMA from six days prior. We are now above the 5DMA upper threshold of +19 for a sell signal, so any simultaneous decline in S&P and 5DMA will give a Short-term sell signal. No signals today. We are very close to a BEAR market signal. You can see this on our Long-term System page, where we have a weekly and monthly 40 week (200DMA) MA. In the weekly Table 4, counting back the 41st week ago, the S&P closed at 1088.7 (no problem this week). The 40th week ago the S&P closed at 1095.9 (no problem next week), the 39th week ago, the S&P closed at 1121.9---this is a problem. If the S&P closes lower than 1121.9 on 10/15/04, a BEAR market will be declared by our Long-term System. Today's action is what we need to keep out of the BEAR trap. Watch this space regularly.

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. The Long-Term Investors page, Table 4, is updated weekly and that table shows we are still above the 40 week MA line. Table 2 of the Long-Term System page was updated for the month of September, and that  table shows we are still below the nine month (appx 200 DMA) MA line. The important point is that the 40 week and 9 month MA lines are STILL advancing. To get a BEAR market signal (Long-term System) we need BOTH to be below the 200DMA (40WMA) line and for the 200DMA line to turn DOWN. No change in positions; we are 100% long in SPY and QQQ for the equity allocation of total assets (see ETF page for explanation of these symbols). The change in our position (based on S&P500) since the BULL market declaration on 4/25/03 is +25.9% (+30.7% using 50% S&P and 50% NASDAQ  Composite). Please see Glossary for any unfamiliar terms.

October 2004 Columns

10-29-04 Dear Readers: The market was up and down near the close, but at the end the S&P500 was ahead again, this time by 3 to 1130. BEAR MARKET SIGNAL WEEK AGO FRIDAY. LONG TERM INVESTORS SHOULD HAVE SOLD EVERYTHING AND GONE TO 100% CASH EQUIVALENTS (meaning one year or less treasury securities or CD's). (see column 10/15/04).  Next week is a make or break week for the market. If S&P can power ahead into the 1132-1140 range by week's end, the 40 Week Moving Average will again turn up and the BULL market will be back. This (a BEAR market turnaround to BULL resumption after a short time) has happened only once in the last 20 years (see Long-term Investor's page, Table 1, 8/12/94 to 11/22/94).

The on-balance volume (OBV)(note 2) today was +296 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV rose from +274 to +442. We dropped a -542 from the average from six days ago, giving a positive bias to the 5DMA today. We will have a positive bias to the 5DMA Monday due to dropping a negative number from the 5DMA from six days prior. The 5DMA moving above 400 gives an over-bought signal; a decline could ensue at any time. Today's rise in S&P cancels the ARM & Fire sell signal that was set-up yeaterday. No buy-sell signals today. Please see Glossary for any unfamiliar terms.

Long-Term Investors End of Week/End-of-Month update. The 200DMA (40 week moving average (40WMA)-Friday closes) of the S&P500 continues to show a DECLINE week-over-week, but the S&P500 has risen above the 40WMA, indicating not only that the BEAR market continues, but this is an opportune time to SELL and SELL short (when we get a Short-term SELL signal, and if you are inclined to accept the risks of short-selling). This may be seen on Long-term Investor's page, Table 4, which is updated weekly. The last entry in Table 4 shows a decline in the 40WMA, and that the S&P500 close today is above that average. Long-term Investors' Table 1 has been updated for the end of the 2003-4 BULL market. That move saw a total profit of 23.3%, or 15.3%/yr averaged over the 1.47 years of the BULL market. This reduces the annualized gain of the Long-Term System from 17.5%/yr to 17.3%/yr. Table 2 of the Long-Term System page was updated for the month of October, and that table shows for the first time in a couple years, a decline in the nine month moving average. We are above the nine month (appx 200 DMA) MA line, but the 40 weeks MA is what we use for the BEAR signals. To get a BEAR market signal (Long-term System) we need BOTH to be below the 200DMA (40WMA) line and for the 200DMA line to turn DOWN. If the S&P then climbs above the average, no signal is given, but it is generally considered to be an opportune time to sell, as aforesaid. Please see Glossary for any unfamiliar terms.  

10-28-04 Dear Readers: Today the S&P500 was ahead again, this time by 2 to 1127. BEAR MARKET SIGNAL WEEK AGO FRIDAY. LONG TERM INVESTORS SHOULD HAVE SOLD EVERYTHING AND GONE TO 100% CASH EQUIVALENTS (meaning one year or less treasury securities or CD's). (see column 10/15/04).  

The on-balance volume (OBV)(note 2) today was +93 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV fell from +357 to +274. We dropped a +506 from the average from six days ago, giving a negative bias to the 5DMA today. We will have a positive bias to the 5DMA Friday-Monday due to dropping a negative number from the 5DMA from six days prior. Today's decline in 5DMA, while the 5DMA was above the upper threshold of +19, gives an ARM signal (first half of ARM & FIRE). Any decline in S&P500 tomorrow will complete the FIRE for a SELL signal. Please see Glossary for any unfamiliar terms.

10-27-04 Dear Readers: Today the S&P500 was ahead again, this time by 14 to 1125. BEAR MARKET SIGNAL WEEK AGO FRIDAY. LONG TERM INVESTORS SHOULD HAVE SOLD EVERYTHING AND GONE TO 100% CASH EQUIVALENTS (meaning one year or less treasury securities or CD's). (see column 10/15/04).  

The on-balance volume (OBV)(note 2) today was +813 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV rose from +199 to +357. We dropped a +26 from the average from six days ago, giving a neutral bias to the 5DMA today. We will have a negative bias to the 5DMA Thursday due to dropping a positive number from the 5DMA from six days prior. No signals today.

10-26-04 Dear Readers: Today the S&P500 boomed ahead by 16 to 1111. Short-term BUY signal today (please see next paragraph); Long-term Investors stay in 100% cash equivalents. BEAR MARKET SIGNAL WEEK AGO FRIDAY. LONG TERM INVESTORS SHOULD HAVE SOLD EVERYTHING AND GONE TO 100% CASH EQUIVALENTS (meaning one year or less treasury securities or CD's). (see column 10/15/04).  

The on-balance volume (OBV)(note 2) today was +1041 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV rose from -154 to +199. We dropped a -725 from the average from six days ago, giving a positive bias to the 5DMA today. We will have a negative bias to the 5DMA Wednesday-Thursday due to dropping a positive number from the 5DMA from six days prior. The simultaneous upturn in S&P and 5DMA, while the 5DMA was below the lower threshold of -28, gives a Short-term BUY signal. Since the Long-Purchase state is Dirty, we buy with 50% of available funds. We bought equal amounts of SPY and QQQ. Please see ETF page for meaning of these symbols. Please read column 10/15/04. Please see Glossary for any unfamiliar terms. Since the BEAR market signal has priority over the Intermediate Downturn Signal (IDT), the Long-purchase state will now stay at Dirty, meaning we always scale-in purchases, starting with 50% on first buy signal, 25% on second buy, etc. The Market State page has been updated for these events today.

We have a rare ambiguity today, since the violation of the upper bogey (set at S&P 1106.5 on 10-21-04) by today's close should raise the Market State from OSCILLATORY to Run-5. However, we have history that says a Run-5 has never occurred in a BEAR market. Short sales are not allowed in Run-5. We will know by market action over the next week or so, which rule is dominant here. We like to say the Field Systems have almost NO ambiguity--you always know what to do to maximize profit or minimize risk.

Short-sellers paragraph. The shorts are covered with the short-term BUY signal. We dont include results from short sales in our history tables at this time. Please see Glossary for any unfamiliar terms.

10-25-04 Dear Readers: The S&P500 closed down less than a point to 1095. BEAR MARKET SIGNAL WEEK AGO FRIDAY. LONG TERM AND SHORT-TERM INVESTORS SHOULD SELL EVERYTHING AND GO TO 100% CASH (meaning one year or less treasury securities or CD's). (see column 10/15/04).  

The on-balance volume (OBV)(note 2) today was -35 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV fell from -121 to -154. We dropped a +131 from the average from six days ago, giving a negative bias to the 5DMA today. We will have a positive bias to the 5DMA Tueday due to dropping a negative number from the 5DMA from six days prior. No signals today. Please read column 10/15/04.

Short-sellers paragraph. Short positions are OK. No changes. Please see Glossary for any unfamiliar terms.

10-22-04 Dear Readers:  The S&P500 closed down hard by 11 to 1096. BEAR MARKET SIGNAL LAST FRIDAY. LONG TERM AND SHORT-TERM INVESTORS SHOULD SELL EVERYTHING AND GO TO 100% CASH (meaning one year or less treasury securities or CD's). (see column 10/15/04).  

The on-balance volume (OBV)(note 2) today was -542 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV fell from +56 to -121. We dropped a +341 from the average from six days ago, giving a negative bias to the 5DMA today. We will have a negative bias to the 5DMA Monday due to dropping a positive number from the 5DMA from six days prior. The simultaneous downturn in S&P and 5DMA, while the 5DMA was above the upper threshold of +19, gives a SELL signal, but it is sterile since we have no long positions on. We take this signal to put out short sales (please see next paragraph).  Please read column 10/15/04.

Short-sellers paragraph. With the aforementioned SELL signal, and since today's decline was more than four S&P points, we sold short positions in SPY, QQQ and DIA, in equal amounts, totalling 50% of available funds (only 50% because we are just being cautious...we have no particular "less than 100% rules" for short sales like we have for long purchases). Please see ETF page for meaning of these symbols and please see Glossary for any unfamiliar terms.

Long-Term Investors End of Week update. The 200DMA (40 week moving average (40WMA)-Friday closes) of the S&P500 continues to show a DECLINE week-over-week, and the S&P500 is below the 40WMA, indicating the BEAR market continues. This may be seen on Long-term Investor's page, Table 4, which is updated weekly. The last entry in Table 4 shows a decline in the 40WMA, and that the S&P500 close today is below that average. Long-term Investors' Table 1 has been updated for the end of the 2003-4 BULL market. That move saw a total profit of 23.3%, or 15.3%/yr averaged over the 1.47 years of the BULL market. This reduces the annualized gain of the Long-Term System from 17.5%/yr to 17.3%/yr. Table 2 of the Long-Term System page was updated for the month of September, and that table shows we are still below the nine month (appx 200 DMA) MA line. The 9 month MA line is still advancing, but we expect it too will show a decline at month's end. To get a BEAR market signal (Long-term System) we need BOTH to be below the 200DMA (40WMA) line and for the 200DMA line to turn DOWN. Please see Glossary for any unfamiliar terms.  The Market State Page has been updated for the BEAR signal. Press Release #3 has been added to Press Release Pages.

10-21-04 Dear Readers:  The S&P500 closed up by 3 to 1107. BEAR MARKET SIGNAL LAST FRIDAY. LONG TERM AND SHORT-TERM INVESTORS SHOULD SELL EVERYTHING AND GO TO 100% CASH (meaning one year or less treasury securities or CD's). (see column 10/15/04).  

The on-balance volume (OBV)(note 2) today was +506 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV rose from -316 to +56. We dropped a -603 from the average from six days ago, giving a positive bias to the 5DMA today. We will have a negative bias to the 5DMA Friday due to dropping a positive number from the 5DMA from six days prior.  No signals today. Please read column 10/15/04.

10-20-04 Dear Readers:  The S&P500 closed up by less than a point to 1104. BEAR MARKET SIGNAL LAST FRIDAY. LONG TERM AND SHORT-TERM INVESTORS SHOULD SELL EVERYTHING AND GO TO 100% CASH (meaning 1 year or less CD's or T-bills). (see column 10/15/04).  

The on-balance volume (OBV)(note 2) today was -725 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV fell from -264 to -321. We dropped a -436 from the average from six days ago, giving a positive bias to the 5DMA today. We will have a positive bias to the 5DMA Wednesday-Thursday due to dropping a negative number from the 5DMA from six days prior. No signals today, but please read column 10/15/04. You may also want to read our Press Release #3, which has been added to Press Release Pages.

10-19-04 Dear Readers:  The S&P500 closed down hard by 11 to 1103. BEAR MARKET SIGNAL LAST FRIDAY. LONG TERM AND SHORT-TERM INVESTORS SHOULD SELL EVERYTHING AND GO TO 100% CASH. (see column 10/15/04).  

The on-balance volume (OBV)(note 2) today was -725 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV fell from -264 to -321. We dropped a -436 from the average from six days ago, giving a positive bias to the 5DMA today. We will have a positive bias to the 5DMA Wednesday-Thursday due to dropping a negative number from the 5DMA from six days prior. No signals today, but please read column 10/15/04. You may also want to read our Press Release #3, which has been added to Press Release Pages.

Today the market started out to the upside, but closed down. Hate to say it, but the market may be confirming our BEAR market signal. The previous low of 1103 was set on 10/14/04. The close today matched that. A close even one point below that will give some additional credence to the BEAR signal. Not that we need any confirmation, the signal comes from the definition of BULL and BEAR markets (please see Glossary>BEAR). When the market action meets the definition of a BEAR market, we get a BEAR market signal. No amount of arm waving or talk about the economy, the election, etc. will change that. Isnt that what doctors do, if symptoms are this, the disease may be that. And many sciences are the same, meteorology, petroleum geology, etc. Only in stocks do we have the arm wavers and the TV talking heads who dont want to recognize ANY definition for these things and thus they ignore the signals . It could be because they will earn less commissions if their customers go to cash and pull the money away. You have only to look at the record of the Long-term System, Table 1, to see the efficacy of the definitions for BULL and BEAR market and of acting on the signals. Some people use a rule that a 20% decline in the market from its high represents the beginning of a BEAR market; they like this rule because it is easy for the public to understand. You may once again have the opportunity to see the effectiveness of that rule, because a 20% decline from the 1156 high of S&P on 3/1/04 would take us to 925 on the S&P. Do you want to own stocks during a fall from 1103 (today) to 924?

10-18-04 Dear Readers:  The S&P500 closed up by 6 to 1114. BEAR MARKET SIGNAL LAST FRIDAY. LONG TERM AND SHORT-TERM INVESTORS SHOULD SELL EVERYTHING AND GO TO 100% CASH. (see column 10/15/04).  

The on-balance volume (OBV)(note 2) today was +131 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV rose from -295 to -264. We dropped a -24 from the average from six days ago, giving a neutral bias to the 5DMA today. We will have a positive bias to the 5DMA for the next three days due to dropping a negative number from the 5DMA from six days prior. No signals today, but please read column 10/15/04. This rally is a good time to get out.

10-15-04 Dear Readers:  The S&P500 closed up by 5 to 1108. BEAR MARKET SIGNAL TODAY. LONG TERM AND SHORT-TERM INVESTORS SHOULD SELL EVERYTHING AND GO TO 100% CASH. (see LONG-TERM INVESTORS paragraph below).  

The on-balance volume (OBV)(note 2) today was +338 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV rose from -472 to -295. We dropped a -550 from the average from six days ago, giving a positive bias to the 5DMA today. We will have a positive bias to the 5DMA for the next four days due to dropping a negative number from the 5DMA from six days prior. Notwithstanding that we got a Short-term BUY signal, the BEAR market signal over-rides that and we ignore the BUY signal. Please see Glossary for any unfamiliar terms. The Market State Page has not been updated for the BUY.

Short-sellers paragraph. With the aforementioned BUY signal, we covered the short positions for a nice profit of about 2% on the funds invested. We do not include these gains in any of the tables here. Please see Glossary for any unfamiliar terms. Since we dont study or attempt long-term short positions, we closed out this month's short sales today. We will re-short on the next Short-term SELL signal which may be a week or so away. If the BEAR market takes hold quickly, which it has done in the past, the next SELL signal may be much below current levels of the S&P.

Long-Term Investors End of Week update. The 200DMA (40 week moving average (40WMA)-Friday closes) of the S&P500 has finally shown a DECLINE week-over-week, and the S&P500 is below the 40WMA, signalling the START OF A BEAR MARKET! This may be seen on Long-Term Investors page, Table 4, which is updated weekly. The last entry in Table 4 shows a decline in the 40WMA, and that the S&P500 close today is below that average. Long-term Investors' Table 1 has been updated for the end of the 2003-4 BULL market. That move saw a total profit of 23.3%, or 15.3%/yr averaged over the 1.47 years of the BULL market. This reduces the annualized gain of the Long-Term System from 17.5%/yr to 17.3%/yr. Table 2 of the Long-Term System page was updated for the month of September, and that table shows we are still below the nine month (appx 200 DMA) MA line. The 9 month MA line is still advancing, but we expect it too will show a decline at month's end. To get a BEAR market signal (Long-term System) we need BOTH to be below the 200DMA (40WMA) line and for the 200DMA line to turn DOWN. Please see Glossary for any unfamiliar terms.  The Market State Page has been updated for the BEAR signal. Press Release #3 has been added to Press Release Pages.

10-14-04 Dear Readers:  The S&P500 closed down by 10 to 1103.  

The on-balance volume (OBV)(note 2) today was -603 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV actually rose from -500 to -472. We dropped a -744 from the average from six days ago, giving a positive bias to the 5DMA today. We will have a positive bias to the 5DMA for the next five days due to dropping a negative number from the 5DMA from six days prior. We are below 5DMA of -400, so we are over-sold, and should expect a rally in a day or so. The upturn in 5DMA, while below the lower threshold of -28, gives an ARM signal (first half of ARM & FIRE). An upturn in S&P500 tomorrow will be a FIRE signal that completes the BUY signal. Please see Glossary for any unfamiliar terms.

Short-sellers paragraph. Our short sales of 10/7/04 are still ok. No change in positions. We will cover them (buy back) with the next BUY signal. Please see Glossary for any unfamiliar terms.

10-13-04 Dear Readers:  The S&P500 closed down by 8 to 1114.

The on-balance volume (OBV)(note 2) today was -749 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV fell from -211 to -500. We dropped a +698 from the average from six days ago, giving a negative bias to the 5DMA today. We will have a positive bias to the 5DMA for the next five days due to dropping a negative number from the 5DMA from six days prior. We are now below the 5DMA lower threshold of -28 needed for a buy signal, so a simultaneous upturn in S&P and 5DMA will give a BUY signal. We are also below 5DMA of -400, so we are over-sold, and should expect a rally in a day or so. No signals today.

Short-sellers paragraph. Our short sales of 10/7/04 are still ok. No change in positions. We will cover them (buy back) with the next BUY signal. Please see Glossary for any unfamiliar terms.

10-12-04 Dear Reader:  The S&P500 closed down by 3 to 1122.

The on-balance volume (OBV)(note 2) today was -436 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV fell from -174 to -211. We dropped a -248 from the average from six days ago, giving a positive bias to the 5DMA today. We will have a negative bias to the 5DMA Wednesday due to dropping a positive number from the 5DMA from six days prior. We are now below the 5DMA lower threshold of -28 needed for a buy signal, so a simultaneous upturn in S&P and 5DMA will give a BUY signal. No signals today.

Short-sellers paragraph. Our short sales of 10/7/04 are still ok. No change in positions. We will cover them (buy back) with the next BUY signal. Please see Glossary for any unfamiliar terms.

10-11-04 Dear Reader:  The S&P500 closed up by 2 to 1124.

The on-balance volume (OBV)(note 2) today was -24 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV fell from -64 to -174. We dropped a +522 from the average from six days ago, giving a negative bias to the 5DMA today. We will have a positive bias to the 5DMA Tuesday due to dropping a negative number from the 5DMA from six days prior. We are now below the 5DMA lower threshold of -28 needed for a buy signal, so a simultaneous upturn in S&P and 5DMA will give a BUY signal. There was no buy signal today because the 5DMA did not turn up. No signals today.

Short-sellers paragraph. Our short sales of 10/7/04 are still ok. No change in positions. We will cover them (buy back) with the next BUY signal. Please see Glossary for any unfamiliar terms.

10-8-04 Dear Reader:  The S&P500 closed down again, by 9 to 1122.

The on-balance volume (OBV)(note 2) today was -550 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV fell from +275 to -64. We dropped a +1146 from the average from six days ago, giving a large negative bias to the 5DMA today. We will have a negative bias to the 5DMA Monday due to dropping a positive number from the 5DMA from six days prior. We are now below the 5DMA lower threshold of -28 needed for a buy signal, so a simultaneous upturn in S&P and 5DMA will give a BUY signal. 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. The Long-Term Investors page, Table 4, is updated weekly and that table shows we are still above the 40 week MA line. Table 2 of the Long-Term System page was updated for the month of September, and that  table shows we are still below the nine month (appx 200 DMA) MA line. The important point is that the 40 week and 9 month MA lines are STILL advancing. To get a BEAR market signal (Long-term System) we need BOTH to be below the 200DMA (40WMA) line and for the 200DMA line to turn DOWN. No change in positions; we are 100% long in SPY and QQQ for the equity allocation of total assets (see ETF page for explanation of these symbols). The change in our position (based on S&P500) since the BULL market declaration on 4/25/03 is +24.8% (+29.4% using 50% S&P and 50% NASDAQ  Composite). Please see Glossary for any unfamiliar terms.

Short-sellers paragraph. Our short sales of 10/7/04 are behaving nicely. No change in positions.  Please see Glossary for any unfamiliar terms.

10-7-04 Dear Reader:  The S&P500 closed down hard, by 11 to 1131. Sold short today (see short-sellers paragraph below, if interested). Long term investors should sit tight. For those short-term traders who dont sell on System signals, we're sorry for your loss, but we are glad the System kept us out of today's decline.

The on-balance volume (OBV)(note 2) today was -744 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV fell from +501 to +275. We dropped a +285 from the average from six days ago, giving a negative bias to the 5DMA today. We will have a negative bias to the 5DMA Friday-Monday next due to dropping a positive number from the 5DMA from six days prior. The simultaneous downturn in S&P500 and 5DMA gives a sterile SELL signal; sterile because we have no positions on to sell. But see Short-sellers paragraph below.  Please see Glossary for any unfamiliar terms.  

Short-sellers paragraph. With the aforementioned (sterile) sell signal and seeing that the decline was at least four points, and that the Short-sale State was Clean (see Market State), we decided to sell short some QQQ and SPY on the close. We do not currently report results of short sales in the Results_History. The recent market action lends weight to an expectation that yesterday represents a near term high, and that the bear market is close enough that being short this market, with a small percentage of one's capital, may work out nicely. Please see Glossary for any unfamiliar terms.

10-6-04 Dear Reader:  The S&P500 closed up 8 to 1142.

The on-balance volume (OBV)(note 2) today was +698 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV rose from +419 to +501. We dropped a +285 from the average from six days ago, giving a negative bias to the 5DMA today. We will have a negative bias to the 5DMA Thursday-Monday next due to dropping a positive number from the 5DMA from six days prior. No signals today. It was not a BUY signal since the 5DMA was not below the lower threshold of -28 when today's upturn occurred. Also, since we did not do a notional (on paper only) short sale yesterday, then today's action in exceeding the minor high of  1135.2 set on 10/4/04 does not raise the Market State to Run-5. Please see Glossary for any unfamiliar terms.

Short-sellers paragraph. We see today the importance of the four point rule for short-sales. Today we easily exceeded the previous minor peak of 1135.2, set on 10/4/04; if we had sold short yesterday (even notionally), we would have to buy the shorts back today at a loss, since we never carry forward any short sales at a loss. Please see Glossary for any unfamiliar terms.

10-5-04 Dear Reader:  The S&P500 made a small decline today, closing down 1 to 1134. Short-term SELL signal today (see next paragraph).

The on-balance volume (OBV)(note 2) today was -248 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV fell from +576 to +419. We dropped a +540 from the average from six days ago, giving a negative bias to the 5DMA today. We will have a negative bias to the 5DMA Wednesday-Monday next due to dropping a positive number from the 5DMA from six days prior. The simultaneous decline in S&P and 5DMA, while the 5DMA was above the upper threshold of +19, gives a Short-term sell signal. We sold the SPY and QQQ purchased on 9/29/04 (please see EFT page for explanation of these symbols). The round trip net gain on these trades was +0.9%, bringing our net for the year to +2.1%, versus a +2.0% for the S&P500. The Market State Page and Results_History_04- page have been updated for today's action. Please see Glossary for any unfamiliar terms.

Short-sellers paragraph. Since we are in Oscillatory State and since the Short-sale state is Clean, we may sell short on today's signal, except the decline in the S&P500 was less than four points, so by the four point rule, we are not allowed to sell short today. Please see Glossary for any unfamiliar terms. We may be able to short tomorrow if we get a decline of at least 3+ points. The recent market action, see yesterday's column, lends weight to an expectation that yesterday represents a near term high, and that the bear market is close enough that being short this market, with a small percentage of one's capital, may work out nicely.

10-4-04 Dear Reader:  The S&P500 made another advance today, closing up 4 to 1135.

The on-balance volume (OBV)(note 2) today was +522 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV rose from +346 to +576. We dropped a -630 from the average from six days ago, giving a positive bias to the 5DMA today. We will have a negative bias to the 5DMA Tuesday-Monday next due to dropping a positive number from the 5DMA from six days prior. We are now above the +400 level on 5DMA, at which we declare the market over-bought, so a decline is very likely. Also any simultaneous decline in S&P and 5DMA will give a Short-term sell signal. No signals today.

I meant to comment on the VIX on Friday but forgot. The VIX, the CBOE (Chicago Board Options Exchange) volatility index is at a low not seen in more than 12 months. This indicates a very toppy market. Although the market is no where near the tops it made earlier this year, this indicator, which is part of our Intermediate Down Trend indicator, is very bearish now and lends additional weight to the remarks we made on Thursday, 9/30/04 and Friday, 10/1/04, about a possible BEAR market signal in the near future. The volatility index is inversely proportional to the "altitude" of the market on the theory that a low value of VIX indicates smaller premiums on puts compared to premiums on calls and implies that investors view the market as more bullish. Since not everyone can be right, the more investors go to an extreme in one direction, the more likely the trend is about to reverse. We have added VIX to the Glossary.

10-1-04 Dear Reader:  The S&P500 made a very handsome advance today, closing up 17 to 1132.

The on-balance volume (OBV)(note 2) today was +1146 (million shares). The 5 day moving average (5DMA)(note 1) of  the OBV rose from +137 to +346. We dropped a +102 from the average from six days ago, giving a negative bias to the 5DMA today. We will have a positive bias to the 5DMA Monday due to dropping a negative number from the 5DMA from six days prior. We are now above the 5DMA upper threshold of +19 for a sell signal, so any simultaneous decline in S&P and 5DMA will give a Short-term sell signal. No signals today. We are very close to a BEAR market signal. You can see this on our Long-term System page, where we have a weekly and monthly 40 week (200DMA) MA. In the weekly Table 4, counting back the 41st week ago, the S&P closed at 1088.7 (no problem this week). The 40th week ago the S&P closed at 1095.9 (no problem next week), the 39th week ago, the S&P closed at 1121.9---this is a problem. If the S&P closes lower than 1121.9 on 10/15/04, a BEAR market will be declared by our Long-term System. Today's action is what we need to keep out of the BEAR trap. Watch this space regularly.

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. The Long-Term Investors page, Table 4, is updated weekly and that table shows we are still above the 40 week MA line. Table 2 of the Long-Term System page was updated for the month of September, and that  table shows we are still below the nine month (appx 200 DMA) MA line. The important point is that the 40 week and 9 month MA lines are STILL advancing. To get a BEAR market signal (Long-term System) we need BOTH to be below the 200DMA (40WMA) line and for the 200DMA line to turn DOWN. No change in positions; we are 100% long in SPY and QQQ for the equity allocation of total assets (see ETF page for explanation of these symbols). The change in our position (based on S&P500) since the BULL market declaration on 4/25/03 is +25.9% (+30.7% using 50% S&P and 50% NASDAQ  Composite). Please see Glossary for any unfamiliar terms.