THE BARRON'S

In Barron's this weekend:

Danger for the commodity longs as the commercials are more heavily short than ever before;

Generally bullish on the MO split up;

Dick Arms is bullish as he notes the big uptick in volatility-

"huge volatility is associated with market bottoms, not tops. When volatility spikes to the levels seen recently -- levels that have prompted even the nightly news anchors to wag their heads in disbelief -- it is usually time to buy, not sell.

Just how volatile is today's Dow? An elementary way to measure volatility is to calculate the daily percentage change, either positive or negative, in the price of the DJIA, using a moving average of this change to smooth the data. I used a 10-day moving average, which I called the Absolute Percentage Change indicator, or APC, and graphed the results since 2000, comparing them to a chart of the Dow over the same period. Then, to check the validity of my results, I charted the APC since 1940.

The peaks and troughs in all my charts tell an interesting story: Huge volatility isn't unique to today's market, and often occurs just ahead of a substantial rally.

The APC currently is at a five-year high of 1.63. Investors haven't been so apprehensive since driving it to 1.70 in March 2003, just before the start of the five-year bull run. Yet, while the Dow's recent moves may seem extreme because of the size of the numbers, the indicator hasn't come close in the past 18 years to matching its October 1987 peak of 7.08 (meaning the Dow swung more than 7% a day, on average, over a 10-day period). This, too, occurred as stocks reached a bottom.

Generally, any time the APC moves to the neighborhood of 1.5% it is time to start buying. In bear markets, the indicator tends to reach an extreme above 2%, while in bull markets a move above 1% usually is a rare and timely buy signal."