According to the Stock Trader's Almanac, October is known as a "jinx month" because of the crashes of 1929, 1987 and the 554 point drop in the DJIA on October 27, 1997. Well, it certainly didn't harm its reputation as a jinx month this year with catastrophic DJIA drops of over 100 points on four occasions, over 200 points on two occasions, over 300 points on three occasions, over 500 points on two occasions, over 600 points on one occasion and over 700 points on another occasion. But it also had several incredible up days. On October 13th, the DJIA soared 936.42 points and it also soared almost 900 points on October 28th.

The Mighty Dow is now completing its best week since 2001. Is this the October turn of the tide that has happened 11 times since WW II? If so, this October will also preserve its reputation of being a Bear Killer.

SHARING YOUR WISDOM.
I haven't written much about our User Groups lately, but we do have many wonderful User Groups throughout the country, including Alaska. We even have three groups in Canada and one in England. A new one is due to be formed in Australia. Several of these groups have been functioning for 10 years or more and new groups are being formed all the time. So what's the attraction?

As far as I can tell, people want to learn how to use VectorVest to make money in the stock market. Gee whiz, that's what our User Groups are all about. But where does one start? What does one do? Who does one call? No problem. Simply refer to the User Group section of these Views and find a User Group located near you. As a VectorVest subscriber, you're entitled to attend any Group anywhere, anytime. You don't have to call anyone. Just go to the meeting and see what's going on. Hopefully, you will find it to be both enjoyable and informative.

Had you been fortunate enough to attend Jim Mahoney's Lake Geneva, WI User Group last Saturday, you would have had a real treat. Jim is a long time VectorVest subscriber and a brilliant investor. Here's an unsolicited email of what Jim had to say about Saturday's meeting:

Hi Angel, Dr. D,

I just thought I would send you an email about our V. V. User Group Meeting this morning here in Lake Geneva, WI and you can share it with Dr. D.

After viewing the Home Page, I showed them a little technique that I use to view the Market Indexes. Thinking about why sometimes the 'newbies' didn't seem to understand, I suggested that they ask questions of themselves before they view the index charts in the Performance Graph Section.

Questions like: Is the Market Trending Upward or Downward? Which way is the VIX trending? Is the MTI below 1.00 or above 1.00? Is the BSR trending below 1.00 or above 1.00? Have either the MTI or BSR broken support or resistance? Once they prepared their mind by asking the above questions, they can now open the Performance Graph Charts and insert these symbols: SPX, DJX, IXIC, IWM, QQQQ and VIX. After determining that the five indexes were trending downward on 9-3-08, we then went to the VV Views and looked at the Strategy. Bingo. Now I had their undivided attention because I showed the results of the Ultra Short ETF's, MZZ, SCC, QID, TWM, SDS and DXD showing a return of 78% through 10-10.

I talked about the benefits of viewing ALL SECTOR CHART GRAPHS THREE TIMES A WEEK, IN DIFFERENT TIME FRAMES. I then showed them results of Sectors turning at precisely the time of the V V Calls or closely to it at turning points. From there I showed them some Industries within the Sectors and encouraged them to commit to learning as much as they could before the next meeting. Then I showed the results of doing it correctly. I also showed some ETF's to match the Sectors and the results.

I took them on a little journey showing opportunities within VectorVest on October 8-9-10-13 by first going the Sector Page, highlighting the DY column and highlighting Petroleum. Then before I moved on I said in the Petroleum Sector there 450 Stocks in a total of 10 Industries. One Industry where the treasures were found on the above dates is the Pipelines because the DY's are rich. Stocks like MMP, PAA, KMP, BPL and OKS allowed me to lock in double digit yields along with some quick gains. By now they are squirming in their seats will all kinds of questions. They are excited about the potential in Vector Vest.

I then went back and showed MTI charts and explanations of the Views around the turning Point bottoms along with the MTI of where we are now and "When will we know the bottom is in place conversation." We had a short discussion about why this Market is going to produce some amazing Profits within the next cycle up and they should prepare now to know what to do, how to do it and when to do it.

Around the close of the Meeting we discussed this week's comments and the Buffett Strategy and how you can find those types of stocks within VV. At closing I asked the attendees if they would commit to studying VectorVest like they never did before because they are the most fortunate people to come into VV at the bottom of the cycle. Many nodded their heads showing their intent. A couple of attendees came up and said it was the best $10 they ever spent. Hopefully we will see some follow through.

Today we had 26 enthusiastic people attend the Meeting. Some mentioned that they did not apply themselves to learning VV as they should have. Another long time user who I have known for quite a few years said, "Remember, the strength of the efforts are the measure of the results."

I don't care or wish to know what percent of the people that buy the trial actually buy the program, but I do have one suggestion. How about a 3-4 minute video like you find on U-tube, showing testimonials, graphs, results, testimonials where Users could go to upon purchase and see, hear and feel what it would be like to make 30% in a 2-3 month cycle. Would that help your closing ratio? I think it would. But then I am not always the sharpest nail in box.

What a wonderful program you have, Dr. D. VectorVest is doing an awesome job and what a vibrant, young dedicated group of employees VectorVest has. I am glad you came my way and I thank you for the gift of your friendship.

Jim.

Wow, what can I say, except thank you Jim for Sharing Your Wisdom.

If I've heard it once, I've heard it a hundred times. "Has the market bottomed?" CNBC commentator, Mr. Mark Haines, believes it bottomed last Monday. His colleague, Mr. Joe Kiernan, isn't so sure. Both of these gentlemen have logged thousands of hours watching the market and listening to stock market experts present their views, and yet they can't agree on whether or not the market has bottomed.

Of course they can't. Neither of them is paid to interpret the market and they don't have the tools to help them do so. To make matters worse, they are required to listen to an endless parade of ill-informed, biased guests who do little more than confuse everyone. So we can't pay much attention to CNBC. We need a fact-based system to analyze the market and one that has been shown to work. Fortunately, we have one.

Last week I said we were going to let this downturn play itself out and watch our Market Timing Indicator, MTI, and Buy/Sell Ratio, BSR, very carefully. Now if one looks at a five-year display of our Market Timing Graph, they could easily see that the MTI goes down to or below 0.60 at the bottom of every major downturn. It hit 0.69 last Monday. That isn't low enough to make me feel comfortable that we have seen the bottom of this downturn. Furthermore, I have stated on a number of occasions that a downturn is essentially completed when the BSR goes below 0.20. It closed at 0.38 last Monday. This, too, is not low enough to say the bottom has been reached.

Ah ha, you say. Everyone has gotten bullish since Monday and stock prices have been moving sharply higher. What do you have to say about that, smart guy? Well, no downturn goes straight down from peak to valley. Just look at last May, for example. The Price of the VectorVest Composite fell sharply for eight of eleven days before rebounding. Then it fell for seven straight days to the low point on June 13th, when the BSR hit 0.10. Similar patterns have been seen in virtually every major downturn in the past. So I'm not going to feel comfortable going long until I see the BSR go below 0.20. It's the key to Calling A Bottom.

P.S. Mr. Gordon White will illustrate how to call a bottom by using the Market Timing Graph in this week's "Strategy of the Week" presentation.

It is a well documented fact that the stock market performs better from November to May than it does during the rest of the year. A significant part of this performance is the much heralded year-end rally. Will we have a year-end rally this year?

The year-end rally has become so entrenched on Wall Street that it often is spoken of as a sure thing. Of course, it's not. However, it has happened seven times out of the last ten years, so the odds are in favor of it happening again. But when is it more likely to happen? It appears that the odds of a year-end rally increase substantially when the market hits a bottom in September or October. Our Market Timing graph shows that year-end rallies occurred in 1998, 1999, 2001 and 2002 after September/October lows. In 1996, the Price of the VectorVest Composite bottomed on July 26th and the ensuing rally, wobbly as it was, carried through to February 14, 1997. The Bull market rally of 2003 began from a March 12th low and sailed clear through to March 5, 2004. Last year, the year-end rally was launched from an interim October low which was actually part of a major rally started from an August bottom.

After a great eight month rally, there was no year-end rally in 1995, as the market fell from September into the final week of January 1996. In 1997, the market peaked on 10/10/97 and failed to rally into the year-end, due to the Asian Currency Crises. The Bear market appeared in 2000 and attempts at a year-end rally were consistently defeated by acrimony over the Bush/Gore Presidential election.

So here we are on October 21, 2005 looking at what appears to be an October bottom. If this is true, we should be contemplating a year-end rally. So what makes me think the market appears to be making a bottom? First of all, our Market Timing Indicator, MTI, hit 0.59 on 10/13/05. It had not been that low since 05/20/04, just as the market was beginning a summer rally. The low prior to that was 0.61 on 03/12/03, the day before the awesome Bull market rally of 2003 began. In fact, the only time the MTI has spent more than a week below 0.60 was during the low points of the Bear market of 2000-2002. It was also encouraging for me to see the MTI not go below 0.60 yesterday, Thursday, the 20th, even though the Price of V V C closed lower than it did on Thursday, the 13th.

Another encouraging sign of a bottom, as indicated in last week's Strategy Section, was that the Buy, Sell Ratio, BSR, went below 0.20 on 10/13/05. This event always indicates that the market is oversold and near a bottom. Finally, the Primary Wave, (see Views 06/04/2004), turned to Up last Wednesday, the 19th. While yesterday's sell-off made the Primary Wave turn to Dn again and even though today's rally wasn't strong enough to move the Primary Wave to an Up signal, I believe it's a good bet that we are embarking upon a Year-End Rally.

THE AUTOTESTER IS ONLINE.
I first wrote about the AutoTester on November 19, 2004. The AutoTester is a wonderful tool that makes back-testing a piece of cake. When it was released last January, it could, unfortunately, be used only with our desktop software, VectorVest ProGraphics v6.0. Now, I'm happy to say, it is available on the internet with VectorVest OnLine.

If you're into back-testing and want to see how well the AutoTester works, you may see a demonstration at The VectorVest University. Simply go to www.vectorvest.com/vvuniversity. Once you have logged on, click on the box labeled "Recorded Classes." Click on "Introduction to the AutoTester" at the bottom of the list of classes and you're on your way.

Incidentally, if you have not attended The VectorVest University, please do. You will be delighted with the quality of the courses and I'm sure you will also enjoy seeing The AutoTester OnLine.