The SPX declined 36.87 points yesterday to close at 2037.41. After being on the sidelines during Friday’s big decline, TOT daily traders were unleveraged long yesterday and took a loss of 25 points. We are currently flat.
Since initiation of the Turov on Timing service on September 30, 1993, our daily trader recommendations have gained 16684.83 cumulative SPX points, compared to a gain of 1578.48 points in the index itself over the same period. That’s a ratio of 10.57 to one. (Please note that any day in which the daily model fails to outperform the SPX by at least a ratio of +10.57 to one, since that’s the ratio of outperformance already achieved, that ratio will decline.)
(The commentary in this paragraph last updated April 15, 2016) The super long term perspective (a prediction, not a forecast!) for the stock market remains bearish (as it has been since January 2000 after having been bullish for over 25 years, from December 1974 until then). I believe that, adjusted for REAL inflation (not the funny numbers the Social Security Administration uses) the stock market will be lower in real dollars in 2020 than it was in 2000. I also expect that our new 2016-elected President will have some very serious problems during his/her single term in office.
(The commentary in this paragraph last updated today.) The stock market will probably go a lot lower – but not right now. The Intermediate Term Model (which turned bearish at SPX 2077.99) has upticked to bullish, meaning that the next 50 SPX points are more likely to be up than down. Yes, I am aware that charts look awful, that the 200 day moving average has been breached, and that the fundamentals of Brexit are significant. And yes, these are bearish factors – but not of primary significance right now. Repeating, the Intermediate Term Model is now bullish.
Candidly, I was surprised to see the magnitude of yesterday’s weakness. It speaks of a possibly significant change in market participants’ long term perspective. Yet, with interest rates historically extremely low and with the Fed seemingly out of the tightening game for this year, the US market does not seem ready for a meltdown – yet. That is more likely next year when a worldwide recession (IMHO) will likely make life difficult for all countries, especially if a worldwide deflation metastasizes.
As I have explained before in Turov on Timing, the short term is significantly disconnected from the long term, and even during primary bear markets, there are many individual advancing days. Indeed, the ten biggest individual gaining days during bear markets are significantly larger than the ten biggest individual gaining days during bull markets. So there is no discrepancy when I say that the daily model is bullish for today.
TOT daily traders are advised to go 300% long at SPX 2002 stop. If the SPX declines to 1998 before reaching 2002, lower the entry buy stop to SPX 2000, and for each additional 2 point decline (if it occurs), lower the entry buy stop by an equivalent 2 points. Once you go long, use a 1% protective sell stop on the position. If not stopped out, carry the position overnight and into Wednesday.
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 © 2016 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 including the fact that past performance is not a guarantee of future performance. Re-publication and distribution is strictly prohibited. No part may be reproduced without the permission of the Turov Investment Group Inc. All recommendations are based on the Standard & Poor’s cash index (SPX) which cannot be directly traded and Turov Investment Group Inc. makes no recommendation or suggestion to readers as to how SPX-based recommendations should be traded but rather leaves that to the discretion of each individual reader. The “official” price of the opening and closing SPX is as reported at www.bigcharts.com and may not be consistent with futures or ETF prices. All stop recommendations are based on that “official” price. Any recommendation that is to take place at a specific time is basis the “opening” on a one minute bar chart beginning at that time and ending one minute later. All times mentioned are Eastern. Questions related to this service should be directed to InvestmentAdvice@aol.com.