This is a 9:00 a.m. pre-opening update of Turov on Timing for Thursday, November 11, 2010.
On the overnight hotline, I said: “The news-neutral daily model is bullish today. Unfortunately, there is substantial news overnight, and it came in the earnings forecast from Cisco. The Cisco news drove that stock down 12% in after hours trading, and that dragged down most technology issues. As I write this, NASDAQ futures are implying an opening for the NASDAQ 100 about 1.5% lower, and S&P futures are implying an opening for the SPX about 0.5% lower. It will be CRITICAL to see if the market can bounce back QUICKLY.”
Unfortunately, little has changed since I wrote that; in fact, futures are even a tad worse. While the SPX Index is likely to “officialy” open just a few points lower, the SPY and the SPX futures will have the full force of the decline on the opening, and the SPX Index will catch up in the ensuing two or three minutes. After that, the real test will resume.
Right now, the SPY is implying a value to the SPX of 1209, about 10 points below where it closed and just above our cost of 1208.10. But a more significant level is yesterday’s low of 1204.33. Normally, a stop of 1203 versus a close yesterday of 1218.71 would be too far, but, in essence, the SPX is already at 1209. So use a disaster only protective stop at SPX 1203. I do expect to see the market rally from shortly after the opening; the main question is “how much?”
The key to the day will be the NASDAQ 100, which is filled with tech stocks – like Cisco. In the unlikely event that the NASDAQ 100 Index (NDX.X) is above 2188 at 10:45, then I’ll update again at 10:50. If it is not above that level, then there will be no intraday update, and I recommend selling our SPX-based position at 10:45 and moving to the sidelines for the balance of the session.
Thanks for the opportunity to be of service, and I’ll email you again as per the previous paragraph.
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