This is a 10:59 a.m. intraday update of Turov on Timing for Wednesday, October 31, 2007.
TOT daily traders are currently 300% long. However, I am looking for a sharp reversal to the downside before the day is over – regardless of what the Fed does this afternoon The SPX is currently about 1540. Raise your stop to SPX 1539. If the SPX rises to 1542, raise the stop again to SPX 1540, and for each additional one point advance in the SPX, raise your stop by an additional one point. FURTHERMORE, at the same time you liquidate your long position, go 300% short. Alternatively, if you are still long at 2:10 p.m., then liquidate the long position and go short at that time, at the market.
Now, here’s were the Fed decision makes it dicey. First, without the Fed announcement, I’d be recommending a 400% short position. So we are being a bit more cautious because of the Fed. Second, the placement of a stop on the short position is tricky, since Fed announcements often cause 5 to 15 point rapid SPX price gyrations, with the first movement usually not the last. So… I’m recommending a wider berth than usual: a 15 point protective buy stop on the short position. Furthermore, if we get stopped out of the short position, I’ll have another intraday update within 10 to 15 minutes of that event.
If not stopped out of the short position, cover your short on the close and go overnight flat.
And finally, there is a 100% certainty that the daily model will be bullish tomorrow. The only question is how large a position we will be taking and at what price. UNOFFICIALLY, I would not argue with any sophisticated trader who wanted to establish the long position on today’s close, but OFFICIALLY, we will go overnight flat.
Thanks for the opportunity to be of service, and I’ll email you again in a few hours.
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