The SPX declined 5.99 points yesterday to close at 2474.92 on the pretentious prattling of the children who lead North Korea and the United States. IMHO, the more President Trump indignantly displays his anger at Kim without doing anything substantive, the more it emboldens Kim. Indeed, shortly after President Trump, in effect, threatened North Korea with a nuclear attack if Kim merely keeps up the rhetoric, the North Koreans raised the possibility of an attack on US troops in Guam. After criticizing former President Obama for his impotent Syrian “line in the sand,” Trump, in effect, has drawn his own “line in the sand” that will be difficult to either honor or ignore. Trump appears to have painted himself into a corner: He must now follow up on his pledge of hitting North Korea with “fire and fury,” or he risks further blowing U.S. credibility. The late Chinese dictator, Chairman Mao, regularly criticized the U.S. as being a “paper tiger;” perhaps Kim has read Mao’s “Little Red Book.” The Roman Senator, Cato the Elder, regularly exclaimed, “Carthage must be destroyed.” The Roman Empire did it during the third Punic War; Carthage never threatened Rome again. In 1939, England told Hitler that an invasion of Poland would be its line in the sand, and the British had the integrity to follow through. IMHO, North Korea’s nuclear capabilities must be destroyed, as surely as the Empire of Japan needed to be destroyed. I understand all the arguments against a first strike; nevertheless, it must happen. Unlike during the Cold War, where the USSR and the US both played a game of “Chicken on the Yellow Line,” both were aware of the concept of “Mutually Assured Destruction” (MAD), and that prevented a hot war. Kim is so sure that the US will not initiate a first strike, a blitzkrieg if you will, that he continues to build up his nuclear capacity with impunity. IMHO, there is a time to say, as Stalin did during the Nazi invasion of Stalingrad, “Ни шагу назад!”, “Not one step back!” Even without a xenophobe in the White House, it IS the primary responsibility of the Commander in Chief to protect the country from attack. I don’t see an alternative that protects the United States. A threat to attack American troops on Guam with an ICBM is an act of war. And as much as I respect the people of South Korea, I’d rather have Seoul on the front line than Guam or Honolulu or Anchorage or Seattle. I dislike war. We should have avoided the wars in Afghanistan, Iraq, and Libya. We never should have been in Vietnam without the whole-hearted support of the Vietnamese people (which we did not have). But Kim and his fellow travelers need to be eliminated as a risk to the United States before it is too late. However, there are time and logistical obstacles to a conventional US assault on North Korea, and they are spelled out clearly at http://www.cnn.com/2017/08/09/politics/us-north-korea-war-signals/index.html. If President Trump is thinking of a “conventional assault,” it’s time to get started on preparations. If he is thinking of a nuclear assault, he won’t need as much logistical preparation, but he had better be damn sure the whole war is over within an hour.
TOT daily traders had a breakeven on my recommendation yesterday and are currently flat.
Since initiation of the Turov on Timing service on September 30, 1993, our daily trader recommendations have gained 17300.08 cumulative SPX points, compared to a gain of 2015.99 points in the index itself over the same period. That’s a ratio of 8.58 to one. (Please note that any day in which the daily trader recommendation fails to outperform the SPX by at least a ratio of +8.58 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.) 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.
In a news-neutral environment, the daily model is bullish today, but we are not facing a news-neutral environment. All Turov Investment Group clients went long US bonds on the close yesterday, and Turov on Overnight Possibilities were advised to do so also (by buying TLT). Stocks are down modestly in overnight trading, probably because the risk of war is not being taken very seriously by most market participants. I believe the risk is greater than the market currently is indicating. TOT is an SPX-related service, and without a crystal ball to know the military future (I have my opinion but the decisions will be made, not by me, but by the President and his advisors), standing aside for the time being seems prudent.
Thanks for the opportunity to be of service, and I’ll email you again in 22 hours – or sooner if circumstances warrant.
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.