Oct 1...As is often the case (check our historical daily data), the first day of the fourth quarter began with a bang.  The Dow was up 1.1% and Nasdaq 2.4%, but much bigger gains were available in the right places.

Semiconductors led the pack, up 5%.  Stocks with big-losses over the last three months and volatile stocks in general were also strong.

On the weak side, non-volatiles gained only .8%.  Stocks with big gains yesterday were relatively weak

The above trends are obviously bullish for next Monday.

Sep 30...We've got our third quarter data...the general market was down about 3.5%.

The top gainers were dominated by the sorts of stocks that are rather inflation-resistant, and relatively conservative as well.  Oils gained around 10%, and metals and mining weren't far behind.  The gains in oils occured entirely in the month of September, however.  REIT's gained 7%, bouncing back from a lousy 2nd quarter.  Banks and dividend-paying stocks in general also gained better than 3%.

On the losing side, semiconductors were picked on with a good deal of selectivity, losing better than 20%.  The second-worst group, cheap stocks, lost 15%.  Volatile stocks in general were weak.  Stocks that prospered in the third quarter of 2003 tended to lose in q3 2004.

Looking for historical matches, Q3 2002 seems a good one...weakness in semiconductors, relative strength in oils, REIT's, banks, etc.  Q4 2002, for what it's worth, was a wonderful period for bottom fishing...gains nearing 60% were available by loading up on stocks with large losses over the course of the last 12 months. 

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Looking at the month of September, the average holder of stocks walked away with about a 3.9% gain.

Strong groups included oils (up 11.3%), volatile stocks in general (8.5%), 3 month losers, 1 year gainers, and metals and mining.

Weak groups included retails (flat), non-volatiles, and REIT's.  The weakness in REIT's is in opposition to the broader trend for REIT's to gain in this year's third quarter.

It's a bit of a stretch, but Sep 1996 matches up decently with Sep 04.  Coincidentally or not, both Septembers fall in election years with an incumbent seeking a second term.  October of 1996 lost about .5%, with gains available in oils and non-volatiles, and losses in volatiles, biotechs, and yearlong losers.

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The second half of September was essentially flat.  As with the full month, oils (+5.6%), metals and mining (4%), and yearlong gainers were strong.  A number of retail groups were weak, losing as much as 3.5%.  Stocks with poor histories in the second half of September were again weak.

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The last trading day of the third quarter was surprisingly sedate...the Dow lost .55%, the Nasdaq gained .15%, and the separation between our best and worst groups was only 2.2%.

Stocks with a large high-close differential (at the end of the previous session) fared well, and those with a small differential were weak.  Fundamentally unsound stocks (as measured by profit margin) seemed to outperform.  Semiconductors outperformed.

Stocks with large 3 month or 1 year losses were weak.  This could be an omen that the group will reverse in the fourth quarter.  Selected retails and biotech were weak.

We've got a lot of number crunching to do, as it's the end of the quarter...we'll be letting you know exactly what happened in the last three months, one month, and half month in the next couple of days.

Sep 29...The Dow was up .6%, and Nasdaq 1.3%.

Strong groups included stocks with losses over the last few days (up 2.3%), semiconductors, volatile stocks in general, cheap stocks, and three month losers.

Oils lost around .7%.  Not surprisingly, then, stocks with big yearlong gains also lost.  Expensive stocks in general were weak.

The above trends are bullish for the next market session.

Sep 28...The Dow was up .9% and the Nasdaq .5%.

Strong groups included metals and mining (+2.5%), oil stocks, yearlong gainers, and yesterday's losers.  

On the weak side, semiconductors just slipped into negative territory (-.02%).  Large cap stocks in general were weak, despite the gains in the Dow.

The above trends are somewhat murky, so we'll refrain from guessing on the next session.

Sep 27...The Nasdaq was down 1% and the Dow was down .5%.  Separation between best and worst groups was a non-spectacular 2.4%.

The strongest and weakest groups were simply the least (-.2%) and most volatile groups (-2.6%).  REIT's, utilities, and oils held up well.  On the losing side, cheap stocks, those with losses last Friday or Wednesday, and those with strongly negative p/e ratios suffered.

The above trends are negative for the next session.

Sep 24...The Nasdaq was down .4%, while the Dow gained .1%.  We saw a nice separation between our best and worst performing groups (4.5%), thanks to a strong performance in the oil sector (up 1.8%) and weakness in the semiconductors (down 2.6%).  

The above two trends were "dominant" in the sense that they far outpaced other trends that we spotted.  Any other trends are likely to be mere side effects of these primary industry trends, but we'll mention a few anyway:  winners included stocks with strong 3 month to yearlong performances, as well as those that gained on Wednesday.  Losers included the opposite:  3 month and 1 year losers.  Given the losses in semiconductors, it's not surprising that volatile stocks in general were weak.

The above trends are negative for the next session, though we're heartened by the fact that the non-volatiles weren't among the day's leaders.

Sep 23...The Nasdaq was up .05%, while the Dow was down .70%.  When all is said and done, the broadest market lost money.  The split between our best and worst performing groups was quite small...less than 2%...a tedious market session.  On the other hand, we do find interest in the fact that despite the general losses, the worst stocks were the least volatile today.  Normally, one would expect to find the most volatile stocks losing the most in a negative session.

Semiconductors were relatively strong...up .7%.  Monday's and Tuesday's winners, yesterday's losers, and cheap stocks gained.  Losers included transportation-related stocks (-1%), and stocks with recent losses (as measured by our "momentum" indicator).

The activity in volatile/non-volatile stocks suggests the next session will be positive.

Sep 22...A thoroughly negative session, supposedly spurred on by rising oil prices, with the Dow down 1.3% and the Nasdaq down 1.8%.  Volatiles were burned, while non-volatiles resisted losses.

Utilities, a weak group yesterday, resisted losses...down .6%.  Oils were relatively strong, but they still lossed money.  Monthlong losers outperformed.

On the negative side, where the action was, semiconductors lost about 3%.  Cheap stocks and those trading well below their long-term resistance levels were weak as well.

The above trends are negative for the next session.

Sep 21...The Nasdaq was up .6% and the Dow .3%.  Despite the mediocre gains in both indices and a tendency for stocks to move in tandem (the gap between our best and worst groups today was only 2.1%), the general atmosphere was bullish...volatile stocks gained (as much as 2.1%), while non-volatiles lagged, losing just a smidgeon of a percent.

Oils were strong.  Short term losers regained ground, but monthlong winners were also strong.

Utilities lagged.  Outside this, and the aforementioned weakness in non-volatiles, nothing of great import emerged in our tables of losers.

The above trends are bullish for the next market session.

Sep 20...The Dow was down around .9%.  The Nasdaq, supported by another strong showing in semiconductors (up 2%) lost only .1%.

The gains in semiconductors were interesting in that they far exceeded the second best group (last Wednesday's losers...up .8%).  The market is really zooming in on semiconductors.  Oils were strong.

Banks (down 1.2%), selected retails, dividend-payers in general, and heavily shorted stocks were on the losing side of our tables.

The above trends are positive for the next market session.

Sep 17...Both the Dow and the Nasdaq were up around .35%.  Our own non-weighted sampling of the market had it down around .03%...that's because large-caps outperformed today.  As with yesterday, the gap between the best and worst performing groups was relatively small...around 2%.

Monday's gainers were up around 1%, with semiconductors tagging along just behind.  Oils, large-caps, and volatile stocks in general performed well.

On the losing side, heavily shorted stocks were weak (down .8%).  Publishers and advertisers, recent losers, and cheap stocks in general were weak.

The above trends don't offer any strong signals as to the direction of Monday's session.  Given the gains in tech stocks, we'd lean toward a positive market.

Sep 16...Nasdaq was up .4% and the Dow .1%.  Our own take of the market had it up .9%.  Separation between our best and worst groups was under 2%...stocks were moving in tandem today.

Recent trends held...volatiles, long term losers, low-caps, and cheap stocks gained better than 1.5%.  REIT's reversed and walked away with 1.7% gains.

Not a single group lost money, but large-caps, expensive stocks, transportation-related companies, and non-volatiles were weak.

The above trends are positive for the next session, though we'd like to see more separation between our best and worst groups.

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We've got our data for the first half of September.  Our own non-weighted sampling of the market had it up about 3%.

As anyone who has watched the market of late would guess, semiconductors, networking, and software stocks fared well...up about 5.5%.  However, the single best performing group was stocks that had a large "high-close" differential on the last day of August...up nearly 8%.  We've seen this sort of behavior quite frequently.

Other strong groups were 3 month and 1 month losers, stocks with large losses on August 31, and volatile stocks in general.

The only group that finished in negative territory was REIT's...down about 1%.  Other weak groups included dividend-payers, non-volatiles, and stocks with strong August finishes.

In terms of matching this period to historical periods, the first half of September 2003 offers some parallels, but h1 September 1998 is probably the closest...gains in volatiles, 3 month losers, and losses in REIT's.  Last year's period lost about 4%, with gains to be found nowhere (non-volatiles finished flat), while 1998 saw nice gains in mid-term losers, cheap stocks, biotechs, and a nice reversal in REIT's.  Retails were weak in h2 September 1998.

Sep 15...The Dow and Nasdaq were down around 1%.  

A number of recent trends reversed...tech stocks lost as much as 2.8%.  Stocks with strong "momentum" lost 3.1%, while those with weak "momentum" eked out gains.  Stocks with large 3 month losses continued to lose.

Dividend-paying stocks were strong.  Non-volatiles actually finished with gains...a rather bearish sign on an otherwise negative day, showing investors redistributing their holdings in preparation for a weak market.

Sep 14...More of the recent trends toward gains in tech stocks and volatiles, and losses in non-volatiles...in dampened form.  The gap between our best and worst performing groups was only 2% today.

Yearlong losers performed well.  Large-caps outperformed.  On the losing side of the ledger, REIT's were weak again (-1.3%).  Fundamentally weak stocks tended to lose.

The above trends are weakly positive for the next session.

Sep 13...Yet again, Nasdaq outperforms the Dow by a hefty margin....85% vs. .02%.  We'd call such trends bullish...money is actually flowing out of dowdy, non-volatile stocks into the types of issues that can soar in an honest-to-goodness bull market.

Semiconductors continued to lead the pack...up 2.2%.  Stocks with big three month losses were right behind, leaving one to wonder whether it would be more rightly deemed a bottom fishing rally or a high-tech rally.  Or a volatility rally.

REIT's (-.75%), healthcare, and banks were weak.  Non-volatiles actually lost money.  Dividend-payers were flat.

The above trends are obviously bullish for the next market session.

Sep 10...Again, Nasdaq was up quite a bit more than the Dow:  1.32% versus .23%. 

Given the gains in the Nasdaq, it's not surprising that semiconductors would again be strong...up 2.8%.  Actually, our most significant buy-side strategy was to go with stocks that were burned on Monday...this group gained 3.2%.  Going with 3 month losers or stocks trading well below prominent resistance levels also proved profitable.

On the losing side we find oils...down .8%.  Metals and mining stocks were weak.  Non-volatiles and dividend-payers also failed to partake in the upward action today.

The above trends are positive for the next session.

Sep 9...The Dow was down .25%, while Nasdaq was up 1.2%.  

No "follow through" for yesterday's trends.  In fact, the emphasis was on a reversal of those trends, with weak performance in REIT's and expensive stocks.

But the real news was in semiconductors, which gained 5.6%.  Volatiles in general were strong.

On the negative side, REIT's lost around 1% and a number of retails were rather weak as well.  Non-volatiles actually lost money.

The above trends are positive for the next session.  In addition to the trends associated with volatility, we also like the fact that there was a 6.6% split between our best and worst performing groups...such large splits, we note, are rather bullish.  In addition, they open up trading opportunities that don't exist when stocks are moving in tandem.

Sep 8...The Dow and Nasdaq were both down around .35%, but our own non-weighted sampling of the Russell 3000 had it down more like .90%.  That's because the market selectively punished small caps today.

Despite the minimal losses in the major indices, not a single group (out of around 1500 that we follow) managed to finish with gains.  About the best you could have done would be to buy REIT's (-.25%), large caps, or expensive stocks.

On the losing side, volatile stocks lost as much as 2.8%.  Cheap stocks, yearlong losers, monthlong winners, and fundamentally unsound stocks were also punished.  No industry groups were found on the losing side of our tables.

Today's focus on market-capitalization is something we haven't seen for a while.  It'll be interesting to see if this trend "follows through" tomorrow.

The above trends suggest a negative session tomorrow.

Sep 7...Markets moved very much in sync, with the Nasdaq and Dow both up about .8% and very minimal separation between groups of stocks (about 2% between our best and worst performing groups).

Last Thursday's gainers were strong (1.7%).  Transportation-related stocks gained around 1.5%, and yearlong gainers were up similarly.

Oils were the only category that dipped into negative territory...down .05%.  Last Thursday's weak groups were weak again today.  Three month losers lagged, as well as semiconductors.

The above trends do not give much indication for the direction of tomorrow's session, so we'll refrain from speculating. 

Sep 6...Here's a link to a very nice article at the Economist.  The article covers a number of bases, but the focus is on rational prediction of markets, particularly market crashes.

Since the link is likely to die in the future, I'll quote liberally from the article: 

Although standard financial-market theory assumes that it is impossible to tell anything about the future direction of a market by looking at what has happened in the past—so that markets follow a “random walk”—most investors are seeking to do just that. When both real market data and random simulations of such data are put before traders, they claim to see patterns. This is no surprise. People see patterns, where there are none, all the time—in clouds, in lotteries, in mountains on the surface of Mars, and even in root vegetables. Predicting a number in a lottery based on such a spurious pattern cannot, of course, have any effect on whether that number is actually drawn. But the same is not necessarily true of the stockmarket. When many traders think they see the same pattern, they may respond in the same way. They may thus, collectively, create a real pattern.

And not only real, but unstable. For, paradoxically, the more orderly a market appears, the less stable it is. (Think of dominoes up-ended on a table. If they are distributed at random, knocking one over causes little damage. If they are in a line, the whole lot will come down.) 

Now, we haven't done any testing, but it would seem that we have excellent gauges of market "orderliness" here on our own website.  Looking at our various short, mid, and long-term data tables, it's relatively easy to see which the extent to which various trends have persisted.  One can also judge the extent to which various groups of stocks deviate from average groups.  To what extent are various groups "taking off" or "diving"?  To what extent are stocks moving in tandem?

The "feeling" I get from the current market is far from one of "orderliness".  No particular trend has been taking hold this year, except perhaps for the tendency of oils to gain (which may be a very logical response to events in the Mideast and predictions of peaking oil supply in the next 5 to 10 years).  If this feeling and the above quotes are "correct", one would assume that a market crash is certainly not imminent.

The researchers in question employed a market simulation involving computer "agents" with various tendencies.  In the real world, you've got momentum guys, bottom-fishers, fundamentalists, technicians, conservatives, speculators, the shorts, the hedgers, rationalists, the superstitious...even a smattering of seasonal investors...and more.  Some investors are more driven by fear...others by greed.  Glom them all together, with their differing and sometimes contradictory propensities, and you get the market.  

It's an interesting approach to market prediction, and we've sometimes thought in the same terms.  Problem is, the simulations would be quite complicated from a programming angle, and I'm a bit dubious about how one would arrive at "realistic" distributions of, say, momentum guys versus bottom fishers.

Sep 3...The Dow was down fractionally, while the Nasdaq erased yesterday's gains.  It's as if the market rebelled against the fact that the Dow and Nasdaq had similar performances yesterday.

Losses were focused quite selectively on semiconductors...down 3.7%.  Volatile stocks in general, and those with large yearlong or three month losses were also weak.

Apparel stocks came back from several poor performances recently, gaining .5%.  REIT's and oils were also relatively strong.  Expensive stocks and non-volatiles gained a tad.

The above trends are negative for the next session.

Sep 2...Both the Dow and Nasdaq were up 1.2%.  Separation between our best and worst groups was a mere 2% today, with no groups actually losing money...for whatever reason, stocks moved very much in tandem.

Our best performing group (+2.5%) was that of stocks with poor recent performances, as measured by a short term moving average.  However, last Friday's big gainers tended to gain today.  Retails came back.

The weakest groups were simply the most non-volatile, gaining a mere .4%.  Oils and REIT's lagged.  Stocks with recent volume increases were also weak...increasing volume doesn't always mean big gains.

The above trends are positive for the next session, though we wish we'd seen greater separation between winning and lagging groups, and more emphasis on gains in volatiles and semiconductors.  Tomorrow's market will likely be influenced by a jobs report as well, potentially dampening any sort of "momentum" generated today.

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We came across an interesting article on the subject of the historical tendency for September to be a lousy month for the general market.  Unfortunately, the URL is impossibly long and we can't offer a link for technical reasons.  Just go to www.cbsmarketwatch.com  and look for Mark Hulbert's columns.  In the article,  Hulbert points out that September has been THE worst performing month in 6 out of 10 decades since 1900. What's more, in only one decade (1911-1920) did the market perform better than average in September. 

He then goes on to say that he wouldn't advise taking any action based on this historic trend. Why? Because no one has identified a reasonable-sounding cause for this phenomenon. Here, we find ourselves in the rare position of chastising a market analyst for being overly skeptical. 

Skepticism takes many forms. One that we and Hulbert endorse is that directed at false or questionable causes. For example, one might find that the stock market tends to peak when sunspot activity is highest. It's awfully hard to imagine how sunspot activity could be relevant to that of the stock market. What's more, it's difficult or impossible to know how many different phenomenon were examined before noting that sunspots and the market have some sort of correlation. This, as Hulbert knows, falls into the category of "data mining". 

But that's not what we're seeing with respect to the "September effect". Here, we've identified a phenomenon but haven't posited a cause. Should our lack of imagination, or perhaps our inability to grasp complex, chaotic, multi-variable causes, be cause enough to dismiss a phenomenon that certainly does fall inside the usual definitions of statistical significance? 

Given his writings on the subject, it does appear that Hulbert endorses the "sell in May" philosophy. The difference is that there are ready-made explanations for the tendency for the market to be weak from May to late October, whereas it's more difficult to explain the "September effect". 

If a drug works well within the usual measures of statistical significance, but scientists don't understand the chemical basis for its activity, should the FDA refrain from approving it? Certainly not! Consumers take the medicine and scientists do further studies. 

Exactly how significant is the September effect? Well, it all depends on precisely how you ask your question. If we take Hulbert's own decade-to-decade data, we calculate there's about a 0.15% chance that this effect is a fluke. You simply generate a list of 10 random numbers from 1 through 12 (1 being the best month in a decade of data), sum the 10 numbers, go through the above exercise repeatedly, and see with what frequency the sum equals or exceeds Hulbert's sum (101). You could do the same exercise with averages, instead of sums, but the result would be the same. 

One could argue that recent decades should be given extra weight. After all, we're living in an era where ordinary people have cars and telephones and rapid access to information. In that case, the numbers should become even more significant, since September has been the worst month in each of the last three decades. 

You could simplify things to make it a bit more intuitive. If a decade of Septembers outperforms, you call that a "white" September. A decade of underperforming Septembers is "black". Now, what are the odds that, given an unlimited supply of black and white marbles (in a 1:1 ratio), you could randomly pick 10 marbles and get one or zero white marbles? The answer is 11/1024...about 1%. 

To complicate the above result a bit, it goes without saying that six months HAD TO underperform in the 1901-1910 time frame. So it might be better to ask "what are the odds of a repeat performance" in 8 out of 9 of the next decades? Then the answer becomes 10/512...about 2%. 

You can argue with my methodology. But you'd be hard-pressed to make a case that the September numbers are simply a fluke, falling outside the usual standards of statistical significance (p>5%). 

Suppose that September had been a negative investment month in the 1911-1920 time frame. Or, suppose that September was the worst month in EVERY decade. Or, suppose that September was the worst investment month in every year of every decade. At what point does one think in terms of investing with the "September effect" in mind? It appears that Hulbert would say "never". 

Having said all that, we've got a lot of respect for Mark Hulbert. He's one of the few prime-time financial writers who pay any attention to statistics and probabilities and reason when dissecting the market. 

But what should an investor do? Well, we've identified several areas of the market that tend to fare well in September. So we'd argue that one needn't move into cash...one should simply place additional emphasis on certain sectors. However, just as we can't promise that any particular September will be negative for the most general market, we can't promise that any particular sector will be positive...diversification remains important. Goes without saying, of course.

Sep 1...The Dow was flat, while Nasdaq gained about .6%.

Our strongest group was last Friday's big gainers, up 2.1%.  Volatiles, oils, cheap stocks, 3 month losers, and yesterday's losers were also strong.

REIT's, August's strongest group, were one of the few losing groups, down 0.1%.  Banks and non-volatiles were also weak.

The above trends are positive for the next session.

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We've got our data for the month of August.  The average stock lost about 0.5%, but as usual, selected groups walked away with sizeable gains and losses.

On the winning side, REIT's gained 6.5%.  The next closest group (stocks with high dividends...a group that includes numerous REIT's) was up only 4.2%, showing how the market singled out REIT's for gains.  Investment services, life insurance, and banks also fared well.  Stocks that closed near their daily lows on the last day of July also fared well...a recurring theme.

Losers were topped by semiconductors, down 7.1%.  Not to harp on the theme, but stocks that gained nicely on the last day of July were punished.  Volatile stocks in general, and those that prospered in August of last year were also hurt.

Its interesting to note that our risk-adjusted data for the month shows slight gains in the market as a whole.  Non-volatiles tended to gain, while volatiles lost...not the most common scenario in the market.

Looking for historical Augusts that match up with this one, August of 2001 fits reasonably well.  Given the extraordinary events of 9/11/2001, however, it wouldn't make much sense to expect this September's market to play out in a fashion similar to 9/2001.  For those looking at the election year angle, September of 2000 was a tad negative, with decent profits to be made in various conservative issues...banks, utilities, etc....and losses in semiconductors.  Long term losers (3 month, 1 year) continued to lose.

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The last ten days of the month had quite a different flavor than the first ten, or for that matter, the month as a whole.  Here, we saw gains of around 3% for the average stock.

Strong stocks included those with big losses over the previous 3 months, up around 5.5%, oils, and biotechs.  Weak stocks included apparel manufacturers (-0.6%) and a number of other retails.  The period doesn't match up particularly well with other historical second halves of August, so we'll refrain from going through that exercise.

Aug 31...The Dow gained .5%, while the Nasdaq was flat.

Oils (+1.7%) came back today...the first time in a couple weeks we've seen this group at the top of our tables.  Volatile stocks in general, Friday's winners, and metals and mining stocks were also relatively strong.

The losing side of the tables was topped by stocks with weak 20 day moving averages (-.9%).  Semiconductors and a wide spectrum of retails were also weak.  The losses in semiconductors are a bit odd because volatile stocks in general fared well today.  

Today's winners and losers are worth some extra attention, since the groups that fare best and worst on the last day of a month often reverse in the upcoming month.

Given the mixed signals above (volatiles vs. semiconductors), we'll refrain from a prediction on tomorrow's market.

We'll have a breakdown of August's behavior before the next trading session.

Aug 30...Fairly bearish action in the market, with the Dow down .6% and the Nasdaq 1.3%, despite another decline in oil prices.

The only group with a gain, out of about 1500, was REIT's, with a .2% gain.  Stocks with high profit margins, high dividends, low volatility, or a short term moving average well above longer term averages resisted losses well.

Stocks with poor 3 month performances (-2.8%), cheap prices, high volatility, or gains on Friday suffered.  No industry groups were featured on the losing side of our tables.

The above trends are negative for the next session.

Aug 27...The major indices were up around .5%.  Historically, the end of August/beginning of September period has been one of low volume, and that was certainly true today.  Look for market analysts to proffer any number of grandiose theories about the meaning of this weak volume, unaware that it happens year after year after year.

Separation between our best and worst groups was modest...about 2%.  Nevertheless, there was a generally bullish tone to trading...volatile stocks prospered, and non-volatiles were weak.  There was a hint of continued bottom fishing, with stocks trading below prominent resistance levels gaining 1.6%.  Biotechs were strong.

On the negative side, transportation-related stocks were weak.  Stocks with a low number of institutional holders lagged.  Stocks whose short-term averages are well above the longer term averages were flat.

The above trends are positive for the next trading session.

Aug 26...The Dow was flat, and Nasdaq lost .4%.

Oils made a minor comeback, gaining .5%.  Metals and mining, yearlong gainers, expensive stocks, and stocks with low PE ratios also were relatively strong.

On the losing side, where the real action was, cheap stocks lost 2%.  Volatile stocks, yearlong and three month losers, and semiconductors were all hurt.  At least for today, the recent trend toward bottom fishing reversed.

The above trends are negative for the next session.

Aug 25...The major indices were up around 1%.  The trend was toward gains in volatile issues (+2.4%), and slight losses in REIT's and raw material refiners.

The trend toward gains in 3 month losers continued...bottom fishing is definitely "in" at the moment.  It's also interesting to note that, once again, no industry groups were to be found in our tables of top gaining groups.

The above trends are positive for the next session.

Aug 24...The major indices were flat today, with the Nasdaq underperforming the Dow because of losses in tech stocks.  Our own read of the market had it up about .25%.

REIT's led the way today with 1.3% gains.  Small caps were strong.

On the negative side, semiconductors were selectively victimized...they took a 2% loss, while the next worse group (Monday's winners) was down only .9%.  Other weak groups include recent winners and volatile stocks in general.

The above trends suggest negativity in the next session.

Aug 23...The Dow lost .3%, the Nasdaq was flat, and our own unweighted look at the Russell 3000 had the market down .6%.

Trading was a bit odd in that semiconductors  (+.7%) were our strongest group in a session that was generally negative.  Trading was sedate...the separation between our best and worst groups was only about 2.2%.

Other strong groups include losers of every variety...last Friday's, one month, and one year...and lightly shorted stocks.  Losing groups included oils, low caps, and Friday's winners.  Volatile stocks in general were weak...rather odd, given the gains in tech stocks.

The contradictory nature of today's data...gains in techs, losses in volatiles...means we'll refrain from a prediction on tomorrow's session.

Aug 20...Nice positivity, with the major indices up .5-1%.  Our own non-weighted sampling of the market had it up more like 1.6%.

The basic trends we've seen in the last week or so were sustained...volatile stocks (up 4%) and mid-term losers prospered, while non-volatiles lagged, with no special emphasis on particular industry groups.  Other strong groups included yesterday's losers, Wednesday's winners, and stocks trading well below prominent resistance levels.  A number of retails performed weakly...up a mere .4%.

The above trends suggest another positive session on Monday.

Aug 19...It looks like the longer term trend toward rising oil prices quashed yesterday's very bullish short term trends.  The major indices were down about .5% today.  Oils gained around .8%.

Other strong groups included stocks that trade significantly above their predominant resistance levels, and recent losers.  Particularly weak groups included Monday's winners (-2.1%), volatiles, 3 month losers, REIT's, semiconductors, and recent winners.

The above trends are weakly negative for the next session.

Aug 18...About as bullish as a trading session can be...the general indices traded between 1 and 2% higher, with volatiles gaining (4.8%) and non-volatiles lagging (up .8%).

Other strong groups included 3 month losers, stocks trading well below predominant resistance levels, and semiconductors (4.5%).  The semis, in fact, were the only industry group to be seen in our tables today.

Lagging groups included expensive stocks and those with short term moving averages well above longer term moving averages.

The above trends give tomorrow's market a 60%+ chance of continuing the positivity...good odds in a game where 51% can mean nice profits over the long haul.

Aug 17...Decent gains in the major indices...those with an emphasis on tech stocks were up better than .5%.

We saw more evidence of bottom fishing today...stocks with large 3 month losses were up about 2.4% today.  Other winners included semiconductors, assorted retail, and stocks with recent losses.

The losing side of the tables was dominated by oils, which lost over 2%.  Stocks in the highest decile of three month gains lost as well.

The above trends bode well for the next session, though they're not quite as forceful as yesterday's.

Aug 16...Very positive action today, with the general indices up around 1.5%.  Our own look at the market had it up closer to 2%.  Volatile stocks gained most strongly (3.6%), while non-volatiles finished with only minor (around 0.4%) gains.  Interestingly, not a single industry group appeared in our tables today..the real action was elsewhere.

Other winners include stocks that lost on Friday (up as much as 4.2%) or Thursday, those that were strong last Tuesday, and stocks with large 1 and 3 month losses.  Weak groups included those with nice gains over the last 5 to 20 days.

The above trends bode well for tomorrow's session, though the market has been loathe to sustain trends of late.

Aug 13...Very sedate trading today.  The major indices finished flat, as well as our own unweighted sampling of Russell 3000 stocks.  The separation between our best and worst performing groups was also uninspiring...about 2%.

Oils gained about 1.1% today.  Semiconductors made a minor comeback from massive recent losses, gaining .7%.  Stocks with large yearlong gains fared well.

On the losing side, stocks with low book value got burned to the tune of 1%...we're not sure what this means, but there was a good degree of statistical significance there.  Recent winners reversed.  Biotechs lost about .9%.

The above trends give little indication for the next session.  If anything, we'd guess that it would be positive, based on the performance of tech stocks.

*********************

Here's the dope on the first half of the month...the average stock lost about 6%.  The best place to be was simply in non-volatile stocks:  banks and utilities lost less than 1%, and REIT's weren't far behind.  We were surprised to see that oils managed to lose around 3%, despite all the ballyhoo surrounding rising oil prices.  Fundamentally sound stocks with high profit margins fared well.

On the losing side, where the action was, were semiconductors, (-14%), volatiles, stocks with large losses in July, and stocks with nice gains on the last day of July (-13%).

Looking to historical matches, the first half of August 2002 fits rather nicely.  For what it's worth, the second half of August 2002 saw slight gains in the average stock, but very nice gains (as much as 19%!)  in stocks that had been beaten up over the previous 1 month to 1 year.  Stocks with strong gains over the last month to year were weak.  It was a time of reversals and bottom fishing.

Aug 12...The major indices lost 1-1.5% today.  Textbook bearishness predominated, with non-volatiles resisting losses, and volatiles (-3.8%) and tech stocks succumbing.  No groups, however, finished in positive territory.

Small caps, utilities, and banks held up well.  On the losing side, stocks with one month losses were burned.  Cheap stocks were also hurt...interesting, given the fact that low-caps in general actually resisted losses nicely.

Looking at yesterday's interesting split between semiconductors and biotechs, the semis held up their end of the bargain, losing 3.3%.  Biotechs, however, performed in line with the general market.

The above trends are quite negative.  The only glimmer of hope for the next session would be that it's a Friday, when trends have a way of reversing.

Aug 11...The Dow was down marginally, as was the Russell 3000, while tech-heavy indices were burned to the tune of 1.5% losses.

The interesting development today was the split between biotechs and hi-techs...the NBI biotech index gained 2%, while the SOXX semiconductor index lost 5%.  In the end, we saw a 6%+ split between the best and worst groups in our tables.  This market has been loathe to sustain trends, but we'd definitely keep our eyes on the biotechs.

Healthcare and pharmacetical stocks in general were strong...up around 1%.  Stocks with recent volume increases gained, as well as expensive stocks and non-volatiles..  Transportation-related stocks were positive.

On the negative side, the losses in semiconductors were off the charts in terms of statistical significance...the market really ganged up on this group.  Cheap stocks and volatile stocks in general were weak.

The above trends would tend to indicate further negativity in the next market session.

Aug 10...A nicely positive session, with the general indices up around 1%.  The data from our daily tables is quite positive as well...volatile stocks prospered to the tune of nearly 4%, while non-volatiles gained less than 1%.

Other strongly positive groups include 1 and 3 month losers, as well as those that have taken big losses over the last five days.

Weak groups include yesterday's winners, oils, and REIT's.

The above trends give the next session a 60%+ chance of continuing the positivity.

******************

If you subscribe to this service, you probably have some faith in the wisdom of trend-following.  It's fairly obvious that some trends tend to persist far longer than a "random-walk" philosophy would.  Of course, there are numerous kinds of trends...we take pride in the fact that we follow some potentially important trends that most, if not all, other services neglect.  For example, we follow groups of stocks that have won or lost to large extents over the course of the year.  We can compare fundamentally sound stocks against weak stocks, heavily shorted stocks against lightly shorted stocks...and on and on.

However, it's obvious that trends in industry groups are often the most significant.  Once semiconductors get on a winning streak, the streak can last months, with investors reaping major profits.  And when they start losing, the losses can be vast.  

One has to wonder if occasionally there hasn't been some sort of "conspiracy" on the part of brokerages to light a fire under certain industry groups.  It doesn't seem to make much sense to offer a new "strong buy" opinion when everyone else is refraining from offering such opinions on a particular industry.  What's needed is a gang of analysts to stoke things up.  One wonders to what extent such behavior occurs, and whether it takes the form of a simple herd instinct, or is more conspiratorial in nature.

Aug 9...All the general indices finished a tad negative today.

Oils were the single strongest performing group today...no surprise there, given recent trends.  The group gained about 1.4%.  Stocks with strong yearlong or 3 month gains also finished well...the opposite applied to our weakest groups...yearlong or 3 month losers lost as much as 1.6%.

Other losers included biotechs, volatiles, cheap stocks, and stocks with weak fundamentals.

Given the losses in volatile stocks, tomorrow's outlook is slightly negative.

Aug 6...More of yesterday's negativity, spurred by a surprisingly poor jobs report.  The major indices were all down around 1.5%.

Interestingly, not a single industry group found itself on the losing side of the tables.  The biggest losers were the most volatile, down as much as 4%.  Other losers included yearlong gainers, monthlong losers, and fundamentally weak stocks.

None of our groupings broke into positive territory.  REIT's lost about .3%.  Banks and utilities didn't do much worse.  Non volatiles in general held up well.

The above trends are clearly negative for the next session.  A glimmer of positivity can be found in the facts that semiconductors weren't selectively punished, and that Monday has a stronger tendency to reverse course than other days.

Aug 5...A thoroughly negative environment today.  Our best grouping of stocks (those of low capitalization), out of over 1500 such groups (of about 80 stocks apiece) still lost about .8%.  The general indices were down about 1.5%.

Stocks with recent losses were particularly weak, losing as much as 3.4%.  Interestingly, it wasn't high-techs that were the target of industry-based selling...it was retails, losing around 3%.  We'll take the fact that tech stocks weren't beaten excessively as a bright spot in today's market.

Stocks that resisted losses included banking stocks, those with high insider ownership, and non-volatiles in general (despite the losses in retails).

The above trends are obviously bearish for the next session, but not overwhelmingly...volatile stocks weren't beaten up to the extent you'd ordinarily expect given a 1.5% loss in the general market...a good sign.

Aug 4...The general indices were slightly negative today, but we saw some interesting breaks from recent trading patterns today.  Stocks with high institutional ownership relative to capitalization fared well (up .6%), as well as low-cap stocks in general.  Semiconductors fared well.  REIT's continued to outperform.

On the losing side of the ledger, where the real action was, we find oils, which lost around 2.3%.  Yearlong winners (e.g. oils) were weak.  Biotechs underperformed.

The above trends don't leave any major clues as to the direction of tomorrow's market...if someone were to put a gun to our heads, we'd guess "up" given the gains in semiconductors.

Aug 3...More of a recurring theme, of late...relatively large general losses, with gains in oils (.8%), and losses in volatile stocks (down nearly 4%).  REIT's held up fairly well.  Cheap stocks were hurt.  Stocks with nice gains on last Thursday (the second to last day of July) were burned.

The recent nastiness in the market has us believing that October, two months away, could be setting up for a nice reversal, with big gains available for bottom fishers.

The above trends are bearish for the next session.

Aug 2...August opened with the major indices up slightly.  

Despite the gains, stocks of low volatility were amongst our strongest groups (up nearly 1%), and volatile stocks lost as much as 1.3%.  With the exception of REIT's, which gained nicely, industry groups were not featured.  As is often the case at the beginning of a month, stocks with recent gains lost, and those with recent losses reversed.  

Stocks with weak fundamentals (negative profit margins or p/e ratio) were hurt.

The above trends are a tad bearish for the next session.  One should note, however, that today's trading was a bit unusual...the general market gained, yet it was stocks of low volatility that prospered to the greatest degree.

Jul 30...We've generated our summaries for the month of July.  Our own non-weighted sampling of the Russell 3000 had a decline of about 6%.  Virtually all the losses occured in the first half of the month.

Only one group, out of over 1500, finished in positive territory:  oils.  This group gained almost 2%.  Banks, REIT's, and metals and mining finished with minimal losses.  Stocks with a high "leadership" ranking, low volatility, or high profit margins also resisted losses well.

On the losing side, where the action was, semiconductors lost about 17%...this on the heels of a similarly negative June performance.  Software stocks didn't fare much better.  Cheap stocks and 1 and 3 month losers were also weak...they would have finished quite a bit weaker if not for a minor rally in these groups toward the end of the month.  Volatile stocks in general were weak.

In terms of resemblances to historical July periods, July of 2002 is a decent match.  For what it's worth, August of 2002 was essentially flat, with gains in 1 and 3 month losers and cheap stocks in general.  Losing groups in August 2002 included low-caps, semiconductors (!), 1 month gainers, and stocks with strong end-of-July gains. 

****************

The second half of the month was decidedly more mellow than the first, with gains to be found in any number of groups.  On the other hand, as is often the case at this time of the year, the market meandered a good deal, making it difficult to profit via any sort of trend-spotting strategy.  Nothing of great significance emerged in either the long or short side of the market.  The period itself was down about .75%.

1 month losers reversed and finished up about 2% for this 10 day period.  Moderately volatile (in the 70-80% decile) stocks fared well.  On the losing side, stocks with strong histories in the second half of July lost as much as 4%.  Those with heavy insider ownership also lost...the trend was only weak significant, but one has to wonder if this isn't a tad ominous.  Yearlong losers continued to lose.  Healthcare stocks were weak.

*****************

Just about every major index (and our own, not-so-major one) had the market with a slight positive tinge.  

The bullish tone of the last couple days remains in place, with volatile stocks, 1 and 3 month losers, and cheap stocks outperforming the average stock. Wednesday's losers were strong. Nothing of great interest emerged on the negative side...banks and insurance stocks finished with a slight loss.

Yesterday's forecast for a somewhat bullish session panned out.  We're not patting ourselves on the back...we've been wrong more than right this month.  Hopefully, with July finished, the market can return to its usual semi-predictable ways, and stop acting so contrary.  The last few session have indeed witnessed the formation of a few minor trends...cheap stocks prospering, an emphasis on bottom-fishing...hopefully, these trends can carry over into August.

We'll have our complete dissection of the month of July shortly.

Jul 29...The Nasdaq index was up nicely, the Dow marginally, and our own non-weighted view of the market more so than either (1.4%).

What's more, we saw the sort of trading that usually (around 60% of the time) signals continued bullishness:  volatile stocks fared well (up 4%), non-volatiles were flat.  Other strong groups included semiconductors, cheap stocks (an indicator that has been strangely quiet this year), and 1 month losers.  Weak groups included REIT's, and stocks with weak cash positions.

The above trends are bullish for Friday's session.

Jul 28...The Dow was flat, the Nasdaq dipped about .5%, but our own non-weighted dissection of the market had it down still a tad more.

Metals and mining stocks gained around .8%.  Oils were strong.  Stocks with nice dividends outperformed.  Three month and one year winners fared well.  

On the losing side, semiconductors lost around 2.3%.  Volatile stocks in general were weak.  Three month and one year losers lost around 1.6%.

Based on the losses in semiconductors and volatile stocks, the above trends are bearish for the next session.

Jul 27...Nice positivity today.  Our own take on the market had it up about 1.7%.

On the positive side, volatile stocks and those with large 1 day, 1 month, and 3 month losses were up nicely...as much as 4%.  Industry groups did not appear on our list of winning groups.  One the lagging side, non-volatile stocks were essentially flat (up about .2%).  Other laggards included insurance stocks (strong yesterday) and REIT's.

The trends above signal continued positivity tomorrow, though we've been wrong quite often of late.  We're not being particularly self-critical here (nor do we intend to heap praise on ourselves when we get it right)...we simply look for a few basic indicators that have, historically, done a good job of predicting the following day's activity.  These indicators have been malfunctioning of late...a potentially useful observation in itself.

Jul 26...Though the general indices had minor losses, our own non-weighted sampling of the Russell 3000 showed a loss of nearly 1%.  

Looking at our daily tables, the general tone was negative as well...the strongest stocks were the least volatile, and the weakest were the most volatile.

Other strong groups included insurance and regional banks.  Losing groups included semiconductors, biotechs, stocks with large 1 to 3 month losses, and stocks with large 1 year gains.

The above trends are bearish for tomorrow's market, though we've been wrong quite a bit of late.

Jul 23...Not a single grouped eked into positive territory today, with the broad indices dropping rather substantially.  

Transportation-related stocks, banks, non-volatiles, low-caps, and yesterday's losers held up well.  On the losing side, where the real action was, yesterday's winners dropped as much as 4%.  Semiconductors lost 3.6%.  Volatile stocks, Wednesday's losers, and 3 month losers were also quite weak.

The above trends signal another negative session on Monday, though the market has been awfully topsy-turvy of late, proving our predictions wrong time after time. 

Jul 22...Something we haven't seen for a while...solid profits (around 2%) were available on both the long and short sides today.  For longs, buying semiconductors would have worked nicely, following yesterday's beating.  For shorts, REIT's were hurt.

Bottom fishing was evident today...stocks with large 1 to 3 month losses bounced back.  Conversely, those with large 1 to 3 month gains suffered 

The gains in computers and the bottom-fishing atmosphere today should be taken as positive signs for the next session.  On the other hand, our market predictions have been wrong all week...there seems to be a real tug-of-war between the bulls and bears, manifesting as alternating up and down days, AND strong separation between the winning and losing groups in our tables.

Jul 21...OK, forget yesterday's comments about Alan Greenspan's words "resetting" the market.  After a lousy session today, it feels more like his words offered a respite, with little changing in the general negative atmosphere.

The Nasdaq index was down more than 2% today, but you could have done far worse than that if you were invested in semiconductors (-5.6%!), the most volatile stocks (-5.2%), or yesterday's big gainers (-4.3%).  Fundamentally unsound stocks were again picked on.

No groups wandered into positive territory.  Predictably, the groups that fared well were the least volatile ones.  A number of low tech producers (e.g. food processors) held up reasonably well. 

The above is clearly negative for the next session.  Then again, we said that yesterday's session was clearly positive for today's session.

Jul 20...any way you want to slice it, the market was up today, fueled by relatively soothing comments by Alan Greenspan, whose words can have the effect of "resetting" the market.

Bottom-fishing dominated our tables of winning strategies today.  Stocks with weak five day moving averages popped as much as 4.1% today.  Yesterday's losers, 1 month losers, 3 month losers...they all appeared in our winning tables.

Not a single group out of more than 1500 slid into negative territory.  Relatively weak stocks included oils, non-volatiles, recent winners, 1 month winners, and expensive stocks.

The trends above are clearly positive for the next session.

Jul 19...the broad indices showed mixed results today.  Our own unweighted take on the market had it declining about .25%.

Something of a schizoid market today...we saw the biggest losses in the most volatile stocks (which almost always occurs in conjunction with a negative market), but we also saw some hints of bottom fishing in the last session's losers...a somewhat bullish sign.  

Another oddity...the 4% highest AND lowest yearlong gainers both made it into the loss column, down around 1.1%.

Banks and REIT's were strong.  Lightly shorted stocks fared well.

Fundamentally unsound stocks were weak, losing as much as 1%.

The above trends are somewhat bearish for the next session.

Jul 16...Despite relatively large losses in the general market (around 1.5%), oils still managed to gain nearly 1%.  Utilities also finished up a tad.

The motivation behind the market was fairly simple today:  burn volatile and fundamentally-unsound stocks (down as much as 3.5% and 2.9%, respectively), and buy their opposites.  3 month gainers continued to gain, while 3 month losers suffered.

The above trends are certainly bearish for the next market session.  The only glimmers of hope would be the facts that semiconductors weren't selectively punished today and that the next session is a Monday...a day with a tendency to reverse Friday's action.

Jul 15...We've got our data for the first half of July.  Our non-weighted sampling of the Russell 3000 has the market down about 4.6% for the period.

The attention-grabbing trend...losses in semiconductors.  The group fell as much as 17.5% in this 10 day span.  Other losers included stocks with strong performances this time last year, volatile stocks in general, and those with negative profit margins.

Still, some stocks finished in positive territory.  These include REIT's (up about 2%...quite strong after risk-adjustment), oils, and metals.  Dividend-payers and stocks of low-volatility performed well.  Stocks that were weak this time last year reversed.

The period has some fairly strong parallels to early July 1996.  For what it's worth, the second half of July 1996 favored semiconductors and recent losers...a clear reversal of trends in the first half.

*******************

The major indices were down a bit today, but our own non-weighted sampling of the Russell 3000 showed a small gain.

For the first time in a while, we saw some bottom-fishing.  Stocks with big losses on a scale of anywhere from 5 days to 3 months were the ones with nice gains...as high as 2%.  Semiconductors were strong, having been pummeled incessantly over the last few weeks.

On the weak side were a number of retails, losing about .8%.  Biotechs also underperformed.  Large caps and non-volatiles were weak, but stocks of the lowest capitalization didn't fare well either.

The above trends would tend to signal a positive market tomorrow.

We'll have our data for the first half of the month in a few hours.

Jul 14...All the major indices were down.  By far, the best place to be was oils, with 1.2% gains.  On the other side of the ledger, semiconductors continued to get hurt, losing 2.7%.

In typical July style, yearlong gainers continued to gain, while 3 month losers got burned further.  Dividend paying stocks finished with gains...volatile stocks in general got burned.

The above trends are bearish for the next market session.

Jul 13...More flat, mixed markets.  

The general trends stayed in place...fundamentally sound stocks were strongest...retails with small dividends fared well.  Expensive stocks outperformed.  Meanwhile, on the losing side, yearlong losers continued to lose.  Computer stocks, particularly software, were weak.

One switcharoo of note, though...REIT's were weak.

The above trends are slightly bearish for the next session.

Jul 12...The general markets were mixed today (Dow up a bit, Nasdaq down a bit), hiding the fact that semiconductors got beaten up to the tune of a 2.5% loss.

Stocks with a low current ratio topped our list of winning stocks, up nearly 1%.  That might seem an odd predictor of gains until one notices that just below this group are banking stocks and REIT's...the sorts of industries that trade with low current ratios.  Stocks with a high profit margin also fared well today.  

On the negative side, 3 month losers continued to lose...July is not normally a good time for bottom fishing, and that certainly has been the case for the last few weeks.

The losses in semiconductors offer a weak indication that the next session could also see losses.

Jul 9...the general markets were weakly positive today.  We have a mixed bag of best and worst predictors of gains today...on one hand, the most volatile stocks fared well, gaining as much as 1.7%.  On the other hand, normally volatile biotechs lost to the tune of -.2%.

Bottom-fishing won out over momentum, with recent losers gaining nearly 2%.  1 month and 3 month losers were also strong.  Cheap stocks fared well.  

The losing side of our tables was topped by stocks with large dividends, followed by biotech, healthcare, banks, and non-volatile stocks.

The above trends are bullish for the next session.

Jul 8...Classic negativity...volatile stocks were the worst performing group, while non-volatiles best held their ground.

Stocks with large capitalization or high insider holdings resisted losses.  Cheap stocks, fundamentally unsound stocks, biotechs, and 3 month losers lost ground.

This market session would tend to predict yet another losing session on Friday.

Jul 7...The general market, as well as our own non-weighted sampling of it, was flat.  The separation between best and worst groups in our tables was a bit over 2%...quite a change from yesterday's 5.5%.

Still, our daily data tables are interesting in that short term gainers were our best single group of stocks (up over 1%), while stocks with large 3 month losses suffered to a 1% loss...this combination is not often found in our tables.

REIT's, metals, and mining, were strong.  Software and communication-related industries were weak.

The above trends do not aid in predicting tomorrow's session...so we'll refrain from making a prediction.

Jul 6...classic negativity, with non-volatile stocks resisting losses and volatile stocks getting hurt.  In fact, our most volatile group (of about 80 stocks) lost an average of 5.5% today.

On the winning side, we find one group eeking out a gain...oils.  REIT's and non-volatile stocks held up well.

On the losing side, where the action was, were Thursday's losers, semiconductors, recent losers, and three month losers.

The above trends are bearish for the next session.

Jul 2...Though the general market was flat, we saw nice separation between our best and worst performing groups...around 4%.

REIT's gained nearly 2%.  Banks were also strong.  Small caps and stocks with low institutional coverage also fared well.

On the losing side, semiconductors were weak yet again, down nearly 2%.  1 month and 3 month losers were also weak.

Given the absence of volatility data in today's tables, we'll refrain from a prediction for the next session.  On one hand, it follows a holiday (a positive sign), but on the other, today's continued weakness in semiconductors should be taken as a negative sign.

*************

We've crunched our data for the second half of June.  Our own non-weighted look at the bulk of the Russell 3000 index shows a gain of about 1.6% for the period.

Contrary to the results for June as a whole, high-volatility stocks fared well during this period, while low-volatility stocks were weak.  Stocks with nice yearlong gains were strong, in keeping with standard June seasonality.  Metals and mining stocks were strong, as well as scientific instruments.  Transportation-related stocks were strong after risk-adjustment.

On the losing side, large-cap stocks were weak.

Jul 1...The general market was down around 1.5% today.  The really noteworthy observation today is that semiconductors were slaughtered to the tune of better than 4% on negative news concerning Intel.  

Only one group out of around 1500 finished in positive territory...oils, with a gain around .15%.  REIT's, non-volatile stocks, and Tuesday's losers were relatively strong.

Other losers included volatile stocks, cheap stocks, and recent winners.

The above observations enhance the probability of tomorrow's session being negative as well.

*************

Our quarterly data is in.  According to our non-weighted selection of stocks, the second quarter was flat (up about .1%).

The best place to be:  oils, up around 9%.  Healthcare, metals and mining, and transportation-related stocks also fared well.  Interestingly, stocks that were weak in Q2 2003 fared well (and, conversely,  those that were strong in Q2 2003 were weak in Q2 2004).

On the losing side, semiconductors were down around 11%.  Volatile stocks, cheap stocks, and those with losses over the previous 1 to 3 months all lost better than 7%.  REIT's were weak, especially on a risk-adjusted basis.

*************

We've got our data for the month of June.  The average stock in our non-weighted universe of Russell 3000 stocks gained a bit over 3%.  The best performers fell into the "dowdy, staid, low-tech" categories...metals, mining, oils, and transportation-related industries were all up around 8%.  Conversely, semiconductors and biotech were weak, losing better than 2%.

In typical June fashion, long term gainers outperformed long term losers...stocks trading well over their most prominent resistance levels gained nearly 7%, while those trading well under these levels were essentially flat.  Small caps fared well.  Stocks with weak fundamentals were punished.

Jun 30...Today was the end of the month, end of the quarter, end of the first half of the year, and the day on which the Fed finally raised interest rates (.25%).  One might have expected some fireworks...instead, equities moved in lockstep, with a "separation" between our best and worst groups of around 1.65%...very low.

Oils gained better than 1.5%.  Cheaply priced stocks, 3 month and 1 month losers, and those with weak volume (!?) over the last 10 days also fared well.

On the losing side, nothing of much statistical significance emerged.  Stocks with low institutional ownership were weak.

The above trends don't offer many clues as to tomorrow's market.  Bottom-fishing is often featured in the opening days of a month, however.

We'll be summarizing the second quarter, June, and the second half of June shortly...

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