This is Turov on Timing for Monday, June 26, 2006
The SPX declined 1.1 points Friday to close at 1244.50. TOT daily traders got hit with a really nasty whipsawed trading loss. The week as a whole generated the worst results in almost five months.
I have written often in Turov on Timing how much I dislike stops, but I recognize that the vast majority of investors and traders would simply not be comfortable trading without them (and therefore I use them). Rarely have I ever disliked them more than last week when twice we were whipsawed out of positions which closed virtually unchanged from where the positions were entered.
Note to managed accounts: I received several emails over the weekend from managed account clients who also subscribe to TOT and were worried about how we did last week in their account (because of the stop-generated whipsaws). Here I can report good news: Because I never use stops in managed accounts (as I have also stated several times in TOT), ALL Turov Investment Group managed accounts in all Programs were PROFITABLE last week – not by a lot, but profitable is profitable.
Since initiation of the Turov on Timing service on September 30, 1993, our daily trader recommendations have gained 8855.96 cumulative SPX points, compared to a gain of 785.57 points in the index itself over the same period.
The super long term perspective for the stock market remains bearish (as it has been since January 2000), and it’s unlikely anything will change that for several years.
Both the long and short term models remain bearish.
The daily model is bearish today, but in the aftermath of last week’s unpleasant experience, I would go short only into moderately significant weakness – something which the market doesn’t seem to “think” is all that likely with the overnight futures contract up several points as I prepare this report slightly before 3:00 a.m. Eastern time. TOT daily traders are advised to go 200% short at SPX 1236.45 stop. If you go short, use a protective buy stop at SPX 1248. The daily model is actually calling for a larger short position, but I would prefer to take a smaller position but with twice the leeway in the buy stop. This is a judgment call which, obviously, could just as easily end up being wrong as right, but I don’t want to use a tight stop. On the downside, if the SPX declines to SPX 1230, lower your stop to SPX 1240, and for each additional 5 point decline, lower your stop by an equivalent 5 points. If not stopped out, carry your position overnight and into tomorrow. HOWEVER, please note that, interestingly enough, if the market is down today, the odds of a significant follow-through tomorrow are rather small, and so if we do carry our position overnight, we will CERTAINLY tighten our stop significantly from the get-go on Tuesday.
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) 2006 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.