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Sunday, July 02, 2006

 

Market trend still lower

When you have the market seeming to tread water, as it did last week, you can lose the handle on the current trend. One thing I've noticed is that unlike the bull markets that seemed to have the occasional downdraft day, with the market ultimately grinding out enough gains to set new highs, lately we have had one day upside fireworks. These one day big moves, without any adequate follow through, are usually counter to the trend. That tells me we are still in some kind of bear phase.

In my system, the market dictates what to do, I don't rely on predictions. I guess they would call it a market follower's system. I have had a lot of recent buys as a result, since I sold all spring, culminating in the takeover of Stewart and Stevenson (SVC) which put me well over my cash target. When the market tanked, that meant I had to keep buying to bring my cash down. Now we're back in equalibrium, so there should be a more normal mix of buys and sells, unless we get another big lurch one way or the other. If it happens, my guess is the market might work lower, but we'll get to enjoy some occasional big up days like Thursday.

On the 28th, I added to my ANDW position, buying 300 shares at 8.73 for my IRA. For a company that's being taking over, the stock is sure acting miserably.

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