This is a 2:50 intraday update of Turov on Timing for Monday, August 1, 2011.
As expected, the market gap opened on the President’s announcement regarding a debt deal. As I would have expected, the market then sold off a bit on profit taking. And then, at 10:00 Eastern time, the Institute for Supply Management announced that its index of national factory activity fell to 50.9 in June, the lowest level since July 2009. Considering that the consensus of economists had expected a reading of 54.9, this was a major blow, and the stock market responded by going into free fall. At 10:00, the SPX was at 1296. Five minutes later, it was 1280! And since then, it has meandered slightly above and slightly below that 1280 area. The entire decline in the SPX today is because of that five minute meltdown, NOT because of what’s happening regarding the debt debate. On that issue, there’s a standoff emotionally between what the President has announced and what Congress might or might not confirm.
Regardless what the market does during the balance of the day, the news-neutral daily model will be bullish tomorrow, and regardless what the market does during the balance of the day, my news-neutral NASDAQ model will be bullish for the period 4:00 p.m. today through 10:45 a.m. tomorrow. Of course, in reality, the market won’t be news-neutral, as Congress votes or considers voting. Those with nerves of steel should go long; those with nerves of spaghetti should stand aside. Officially, although I ignore my nerves completely when making investment decisions, we will stand aside, but unofficially, I like the long side here.
Thanks for the opportunity to be of service, and I’ll email you again in about ten hours – or sooner if circumstances warrant.
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