The SPX declined 20.62 points yesterday to close at 2078.58. TOT daily traders came into the session 300% long and were stopped out at SPX 2081.97.
Since initiation of the Turov on Timing service on September 30, 1993, our daily trader recommendations have gained 15744.63 cumulative SPX points, compared to a gain of 1619.65 points in the index itself over the same period. That’s a ratio of 9.72 to one. (Please note that any day in which the daily model fails to outperform the SPX by at least a ratio of +9.72 to one, since that’s the ratio of outperformance already achieved, that ratio will decline.)
(The commentary in this paragraph last updated November 5, 2015) The super long term perspective (i.e., it’s 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 expect that our new 2016-elected President will have some very serious problems during his or her single term in office.
(The commentary in this paragraph last updated November 5, 2015.) The Intermediate Term Model remains bullish.
I received an email from a subscriber, asking, “At what point will you admit that your system is broken?” I told him I’d answer on tonight’s email. Here goes:
The system is not broken, and what is happening now (using Turov on Timing daily trader recommendations as a benchmark) has happened before. For example, from early April 2004 through early May 2004, TOT daily trader forecasts had five consecutive losing weeks. Later that same year, from early August to mid-September, there were seven consecutive losing weeks. Yet from early December 2014 through the end of February 2015, there were eleven consecutive winning weeks. And although I didn’t look for other examples, I am certain that if I did I would find other examples of both consecutive losers and consecutive winners. My system is not the Holy Grail when it works well, and it is not broken when it works poorly. Rather, the success or failure of my system at any point in time is a function of three events:
(1) Random news, which over the long term evens out, but over the short term sometimes does and sometimes doesn’t. (2) Whether investors and traders, in the aggregate, are acting differently than investors and traders have acted under similar circumstances in the past. (3) The efficiency of my system.
The first is random, and nothing can be done about it. The second may or may not be random, but when it occurs outside of a normal expected statistical margin of error, I always research the internal factors of that day’s trading to determine whether there is any identifiable structural change in the market that could account for the discrepancy. The third is my system which I have spent over 100,000 hours developing and which I spend an additional 2-3 hours per day reviewing and refining. I don’t see any cracks in it, and it is not broken. If factors 1 and 2 were never extant, the system would generate average annual returns well in excess of 100%. But that’s never going to happen because of those first two factors, primarily the second one. The second factor is virtually guaranteed to result in lower returns, and the first factor will cause a higher variance of returns than would otherwise occur. They are also responsible for the appearance of both winning and losing streaks. Such streaks have occurred in the past, and I expect them to occur in the future. In the short term, I expect that losing streaks will cause emotional distress and winning streaks will cause emotional eustress; in the long term, in my opinion, factor 3 is sufficiently positive to probably generate positive results.
The daily model is bullish today. TOT daily traders are advised to go 300% long at SPX 2080 stop. If the SPX declines to 2076 before advancing to 2080, lower the entry buy stop to SPX 2078, and for each additional 2 point decline, lower the entry buy stop by an equivalent 2 points. Once long, use a 1% protective sell stop on the position. If not stopped out, I’ll update again within ½ hour of the close.
Thanks for the opportunity to be of service, and I’ll email you again later in today’s session if not stopped out, or prior to Wednesday’s session if we have been stopped out.
Turov on Timing is Copyright © 2015 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.