The SPX advanced 4.9 points Friday to close at 2476.55. TOT daily traders went 100% long on the opening and took profits on the close.
Since initiation of the Turov on Timing service on September 30, 1993, our daily trader recommendations have gained 17489.63 cumulative SPX points, compared to a gain of 2017.62 points in the index itself over the same period. That’s a ratio of 8.67 to one. (Please note that any day in which the daily trader recommendation fails to outperform the SPX by at least a ratio of +8.67 to one, since that’s the ratio of outperformance already achieved, that ratio will decline.)
(The commentary in this paragraph last updated August 1, 2017) The super long term perspective (a prediction, not a forecast!) for the stock market remains bearish (within the context of a medium term bull market). I believe that, adjusted for REAL inflation (not the funny numbers the Social Security Administration uses) the stock market may be lower in real dollars in 2020 than it was in 2000, although higher in nominal dollars. For a long time, I’ve been saying, “I also expect that our new 2016-elected President will have some very serious problems during his/her single term in office.” That belief stands, and we see it happening already.
(The commentary in this paragraph last updated August 1, 2017 with the SPX at 2470.30.) Despite the 1999 feel to the market, the Intermediate Term Model remains bearish. While the market could certainly move higher in the short run, by Labor Day I expect to see it lower than it is now. I do not believe such a decline will be the death knell for this medium term bull market, and it could well offer an opportunity for us to partake of the last phase of the bull market. (Note: This paragraph will be updated in our report tomorrow.)
The big news over the weekend was the hydrogen bomb detonation in North Korea. It’s no surprise that stock futures have been down in overnight trading. But the last time that futures declined in response to unexpected North Korean actions (the fly-over Japan), the market bounced back, closing higher on the day. With the daily model modestly bullish today, the odds favor that bounce-back happening again – but unlike the famous saying, history rarely repeats itself. Acknowledging that news will be more important than the daily model, and acknowledging that we don’t know what that news will be, we will stand aside.
POLITICAL COMMENTARY ON HOW TO END THE NORTH KOREAN CRISIS:
In the aftermath of the probable development of a North Korean hydrogen bomb, President Donald Trump tweeted that the U.S. is considering “stopping all trade with any country doing business with North Korea” and Treasury Secretary Steve Mnuchin is reportedly drafting a harsher sanctions package. If Trump follows through, the economic damage to China and its banking system could be massive. The health of the Chinese financial system is closely-watched by the so-called Chinese Communist Party as Chinese banks hold more than 90 percent of the country’s total assets. All big four state-owned banks in China have continually increased their presence in the U.S., where their operations now include providing loans, issuing bonds and financing trade activities. Bilateral trade between China and the U.S. could screech to a halt.
China’s primary concern is of a unified Korea, an ally of the United States, directly on its border. Its secondary concern is a flood of North Korean immigrants flooding into China.
Imagine if the “great negotiator”, Donald Trump, could convince the Chinese to topple the Kim regime without letting it be known that the U.S. has any part in their decision. The Korean nuclear program would stop, China would move fissionable material to China, and China would agree to “protect” North Korea from all outsiders, including the United States. The North Korean people would be protected from invasion, the Korean peninsula would become nuclear-free, the Chinese would have a puppet communist regime in power, the U.S. would end its sanctions on China (or not put them in effect, depending on timing), and everybody would sleep better.
The key: convincing the Chinese government that a Chinese take-over of North Korea would be in their best interest. It is, but can they be convinced? That strikes me as the greatest negotiating test of all time. Are you listening, Mr. Trump?
Thanks for the opportunity to be of service, and I’ll email you again prior to the beginning of Wednesday’s trading session.
Turov on Timing is Copyright © 2017 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 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.