This is Turov on Timing for Monday, December 20, 2010.
The SPX advanced 1.04 points Friday to close at 1243.91. Officially, TOT daily traders were on the sidelines for the session. However, our unofficial suggestion to go “long the Russell and short the SPX” went well, with the Russell up .39% and the SPX up only .08%.
Since initiation of the Turov on Timing service on September 30, 1993, our daily trader recommendations have gained 12149.84 cumulative SPX points, compared to a gain of 784.98 points in the index itself over the same period. That’s a ratio of 15.48 to one.
The super long term perspective for the stock market remains bearish (as it has been since January 2000 after having been bullish from December 1974 until then). When the current cyclical bull market ends, expect another nasty crash to perhaps finally bring an end to the long term bear market that began in 2000.
Despite the Intermediate Term Model having clearly been premature in turning bearish, the model still remains bearish. Although excessive bullish sentiment was not a factor in its turning bearish, it now is a significant reason for its remaining bearish. However, if the market doesn’t crack to the downside this week, then Christmastime seasonality will seriously mute the bear’s chances of gaining the upper hand.
The daily model is neutral today, indicating that neither the bulls nor the bears have any edge coming into today’s session. However, my NASDAQ model, which breaks the day into two time components, indicates that there is about a 60:40 probability that IF the NASDAQ 100 declines through the 10:45 breakpoint, then the NDX is likely to rally into the close. And if the NASDAQ rallies, it is probable that the SPX will do so also. Therefore, my recommendation is to stand aside in the early going, but IF the NDX is in negative territory at 10:45, to go 200% long, basis the SPX, at the market at that time. If you go long, use a 1% sell stop on the position. If still long as we approach the close and the SPX is down on the session, then hold the position overnight. If still long as we approach the close and the SPX is up on the session, then sell the position on the close and go overnight flat. And am I aware that that is contrary to “conventional wisdom”” (sic)? Of course.
Thanks for the opportunity to be of service, and I’ll email you again six hours before the start of tomorrow’s session – or sooner if circumstances warrant.
Turov on Timing is Copyright © 2010 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 Turov Investment Group Inc.