The SPX advanced 16/100 of a point yesterday to close at 1109.64. TOT daily traders went 300% long at SPX 1097 on Friday and have carried the position into today.

Since initiation of this service on September 30, 1993, our daily trader recommendations have gained 8179.98 cumulative SPX points compared to a gain of 650.71 points in the index itself over the same period.

The super long term perspective for the stock market remains bearish, and it’s unlikely anything will change that for several years.

Both the long and short term models remain bearish - despite the favorable seasonality of the year end period.

The market held its own pretty well yesterday, despite disappointing Chicago Purchasing Managers’ Business Index and Consumer Confidence Index numbers and lower than expected existing home sales data. A market that doesn’t go down when news is bad is often a market that can then advance - but possibly not today.

The directional component of the daily model is modestly bullish today, but the risk component is very high. Furthermore, one of the component indicators of the risk component is generating a dangerous signal. Specifically, the potential MAGNITUDE of a decline on unexpected negative news is far greater today than the potential MAGNITUDE of an advance on unexpected positive news. Worded differently, while the likely direction of the market is up today in the absence of substantive news, when the risk of unexpected news is factored in, the expected value of the SPX is lower than the current price. And that presents an interesting trading conundrum - since we have no way of knowing ahead of time what news might occur today. I suggest the following:

TOT daily traders come into today’s session 300% long. Raise the sell stop substantially to SPX 1105. If the SPX gets to 1111, raise the stop further to 1108. And if the SPX gets to 1115, take your profit. If neither stop nor limit is elected, AND if the SPX is closing up on the day, carry the position over the holiday and into Friday. If neither stop nor limit is elected, AND if the SPX is closing down on the day, then liquidate the position on the close and go overnight flat.

Have a very safe New Year’s eve, thanks for the opportunity to be of service, and I’ll email you again in 48 hours - or sooner if circumstances warrant.

Turov on Timing is Copyright (c) 2003 by Turov Investment Group Inc. All rights reserved. Turov on Timing is for personal use only. All caveats and advisories that appear in the monthly Turov on Timing apply equally to this email. Re-publication and distribution is strictly prohibited. No part may be reproduced without the permission of the publisher.