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The SPX advanced 13.14 points Friday to close at 1203.03. TOT daily traders were on the sidelines yesterday.
Since initiation of this service on September 30, 1993, our daily trader recommendations have gained 8479.31 cumulative SPX points compared to a gain of 744.10 points in the index itself over the same period.
The super long term perspective for the stock market remains bearish, and it’s unlikely anything will change that for several years.
Both the long and short term models remain bullish.
To quote today’s Wall Street Journal, “The stars aligned Friday and everything from the dollar to bonds to stocks went up, up and away.” I had indicated on Friday’s hotline that risk was extremely high, and, as I’ve explained numerous times in TOT, I use the term “high risk” to mean a higher level than usual potential responsiveness of the market to any significant news, bullish or bearish. Worded another way, it means that if there is substantive news, the day’s volatility will likely be higher than it would be on a day that was not categorized as “high risk.” Such high volatility potential days become risky inasmuch as stops would get hit (and possibly whipsawed) more easily, thereby lowering the potential of a profitable trade. Furthermore, such potential enhanced responsiveness to news implies that the internal direction of the market as forecast by the daily model is less reliable than it otherwise would be.
Indeed, the news on Friday was everything the market would have wanted. Quoting again from today’s WSJ, “Stocks gained momentum Friday after a sluggish start amid speculation the Fed may ease up on the interest-rate pedal due to a report that nonfarm payrolls grew by 146,000 in January, much less than the 200,000 target forecast. Most economists expect the Federal Open Market Committee to raise rates at its next two meetings in March and May. But ‘the chance of a third rate increase [in June] have gone down,’ said Brian Williamson, an equity trader with Boston Company Asset Management. That sparked the rally. The market ‘took what seemed to be defeat and snatched victory from it,’ said Larry Wachtel, a market analyst with Wachovia Securities. ‘It shows the real fear is the fear of rising rates.'”
Then, in the afternoon, just as the market was getting a bit tired, a Federal Appeals Court ruling that past profits won’t be part of the government’s racketeering case against the tobacco industry lit a match under Altria, parent of Philip Morris, and the rest of the market followed suit as short covering pushed the market past perceived resistance levels.
Despite the fireworks on Friday, the daily model remains neutral today, BOTH because of a high degree of balance between bullish and bearish directional component indicators of the model AND high risk. I know it’s “fun” to be in the market when it soars, but it’s more fun to make money. And avoiding high risk is the best way of accomplishing that over the long run.
Thanks for the opportunity to be of service, and I’ll email you again in 24 hours – or sooner if circumstances warrant.
Turov on Timing is Copyright (c) 2005 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.