The SPX advanced 10.93 points yesterday to close at 2723.99. At the poker table, the talk was about stocks and bitcoins. It reminded me of 1968, of 1999, and of 1987. Gee – what’s significant about those dates? Oh yeah; they were the times before the stock market got slammed. Hmm. Wonder if this time it’s different? Hmm.
What is different this time is that interest rates are extremely low. What’s different this time is that corporate income taxes are about to dive. What’s different this time is that the government is being run by a plutocracy; the Presidents in 1968, 1999, and 1987 did not think they were personally the cause of the stock market rising.
On the other hand, signs of distribution are not changing. For example (and yes, there are contrary examples also), Facebook opened at 184.90 and closed lower at 184.33. Google opened at 1097.09 and closed lower at 1095.78. Netflix opened at 206.20 and closed lower at 205.63. Cisco opened at 39.05 and closed lower at 38.99. And QQQ opened at 160.59 and closed lower at 160.31. The fact that many stocks closed lower than they opened is a clear-cut warning sign.
On the other hand (we’re running out of hands), the market’s momentum is positively awesome, and sentiment rarely changes on a dime.
And finally, the jobs report is coming out this morning, and that may flavor things today.
Since initiation of the Turov on Timing service on September 30, 1993, our daily trader recommendations have gained 17577.14 cumulative SPX points, compared to a gain of 2265.06 points in the index itself over the same period. That’s a ratio of 7.76 to one. (Please note that any day in which the daily trader recommendation fails to outperform the SPX by at least a ratio of +7.76 to one, since that’s the ratio of outperformance already achieved, that ratio will decline.)
(The commentary in this paragraph last updated August 1, 2017) The super long term perspective (a prediction, not a forecast!) for the stock market remains bearish (within the context of a medium term bull market). I believe that, adjusted for REAL inflation (not the funny numbers the Social Security Administration uses) the stock market may be lower in real dollars in 2020 than it was in 2000, although higher in nominal dollars. For a long time, I’ve been saying, “I also expect that our new 2016-elected President will have some very serious problems during his/her single term in office.” That belief stands, and we see it happening already.
(The commentary in this paragraph last updated November 6, 2017) The Intermediate Term model remains bullish. The odds favor the market drifting higher UNTIL something bad and unexpected occurs – and that can be tomorrow or three years from now. There have been LOTS of reasons for the market to decline over recent months, but it has remained stoically resistant to declining. I would much rather be bearish than bullish — because the market seems to be significantly overvalued — but the model disagrees (primarily as a result of continuing and historically low interest rates).
As was the case yesterday, the daily model is bullish, but the index models are forecasting only a modest advance. (We were right on direction yesterday, but wrong on magnitude.) We will stand aside at the get-go but we will update later today. (And if that sounds familiar, it is.)
Thanks for the opportunity to be of service, and I’ll email you again later today.
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