The SPX advanced 13.66 points yesterday to close at 1622.56. TOT daily traders were having a great day as the market sold off, and then we were clobbered as the market bounced back sharply and stopped us out. We are currently flat.
Since initiation of the Turov on Timing service on September 30, 1993, our daily trader recommendations have gained 13666.51 cumulative SPX points, compared to a gain of 1163.63 points in the index itself over the same period. That’s a ratio of 11.74 to one.
(The commentary in this paragraph last updated June 6) 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). Since February 12th, I’ve said that I expect the 2009-2013 cyclical bull market to end in “Spring 2013”. It is too soon to know whether the May 22nd intraday high of 1687.18 marks that end or not.
(The commentary in this paragraph last updated June 6) Intermediate Term Model comment: The “wave” of trading that brought the market to new highs is unlike any pattern that has appeared during the 21st Century. It was unlike the blowoffs in either 2000 or 2007 or, for that matter, like anything else. To quote Art Cashin on CNBC in May: “This is a very different kind of market than we’ve ever seen.” The selloff since the May 22nd intraday high of 1687.18 does not negate those comments, but it is possible that the high of this bull market has already been seen.
As “everyone” knows, the jobs report is this morning. I have no idea whatsoever what to expect from it. I’ll have one additional comment about it in the penultimate paragraph.
The NEWS-NEUTRAL (as always) daily model is bearish today. TOT daily traders are advised to go 300% short at SPX 1621 stop. If the SPX advances to 1624 before reaching 1621, raise the entry sell stop to SPX 1622, and for each additional 2 point advance, raise the entry sell stop by an equivalent 2 points. Once short, use a 1% protective buy stop on the position.
Now, about the jobs report: In my opinion, the market reversed course yesterday and rallied for two reasons: (1) the SPX didn’t stay under 1600 for long, and when it didn’t, a flurry of short covering came in which persisted all day, and (2) short sellers tend to be more fearful of unknown future news than long holders, and there was more short covering than buying by those who didn’t want to have a position prior to the jobs report. That fact (if indeed it is a fact and not just my opinion) creates a temporary overbought imbalance in the market, and, all other things being equal (which they never are, of course), that imbalance is likely to correct itself after the news is announced. For example, in theory, if a bullish report is worth 10 positive points, and a bearish report is worth 10 negative points, then EQUIVALENTLY bullish or bearish news will see the market advance about 7 points on bullish news but decline about 10 points on bearish news. (Please note that those points are not predictions, but are used as ratios to explain the concept.) And of course, for those who want to take a position before the jobs report is released, there’s nothing to prevent you from doing so.
Thanks for the opportunity to be of service, and I’ll email you again in a few hours.
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