The SPX declined 20.45 points yesterday to close at 1077.09. The directional component of the daily model correctly identified the probable direction of yesterday’s market as down, but it didn’t rally high enough before selling off to enable us to execute our recommended short sale, and therefore TOT daily traders were on the sidelines for the session.
The super long term perspective for the stock market remains bearish.
Both the long and short term models remain neutral.
The market opened higher on strength in European markets following the IBM and Intel news, but then gave it all back and them some on news of the anthrax impact on the US Congress. Dr. Greenspan’s testimony arguing for a primarily short term impact from the terrorist attacks then brought the market back to neutral. (By the way, I view the Chairman’s commentary as completely political; there’s not a snowball’s chance in hell that the impact will be only temporary.) But as anthrax nervousness spread, the market gave way to further selling. Yesterday marked the fifth consecutive session that the market traded at some time during the day at the SPX 1088 level, indicating that while it’s been volatile, it’s also been flat. What’s also obvious is that it has no internal direction of its own, and it’s been slavishly following the winds of news. Consistent with that observation, even though the directional component of the daily model is slightly bearish today, and in the absence of news the market will likely drift lower, the potential for a massive jump higher if any key terrorists were to be killed or captured argues for standing aside again. Augmenting the risk further is that tomorrow is options expiration, traditionally the most difficult day of the month to predict.
Since initiation of this service on September 30, 1993, our daily trader recommendations have gained 6562.95 cumulative SPX points compared to a gain of 618.16 points in the index itself over the same period.
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