This is a 2:05 p.m. intraday update of Turov on Timing for Tuesday, August 8, 2006.
TOT daily traders went 200% long at SPX 1277 this morning. The SPX is currently just a tad above that level. I’m seeing no divergence, either bullish or bearish, in my intraday model, indicating that the ‘smart’ money doesn’t have a clue what’s going to happen this afternoon any more than the ‘dumb’ money does.
As you know, in about ten minutes, the Federal Reserve is scheduled to announce their decisions about interest rates. I say “decisions” in the plural because what they say in their commentary may well be more important than what change they make or don’t make in current interest rates. Respecting the caveat I stated in August’s monthly TOT, that “neither my belief as to what the news will be (nor that of any of TV’s talking heads) is worth very much,” my best guess is that the market will advance on the initial announcement (assuming the Fed doesn’t raise rates) and then sell off on the statement, and then advance again. If they do raise rates, I think a sharp decline would almost be a given – unless, of course, the accompanying statement is very dovish! All that I’m fairly certain of is that the market will be very volatile from the time of the announcement until at least ½ hour afterwards.
I want to get out of our existing position on the first sign of weakness or on the first pop upwards. Staying in for any length of time after the announcement is simply too risky, as the market’s oscillations will likely look like the EKG of a person having palpitations. Therefore, TOT daily traders are advised to liquidate their position on any pop up or on any break below yesterday’s close. So, on the upside, liquidate at SPX 1286. Alternatively, we’ll use a sell stop level of SPX 1275. If neither level is reached, liquidate on the close and go home flat.
Thanks for the opportunity to be of service, and I’ll email you again six hours before the start of tomorrow’s session.
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