This is Turov on Timing for Wednesday, May 28, 2008.
Primarily because of sharply lower energy prices, the SPX advanced 9.42 points yesterday to close at 1385.35. The advance was only about half of Friday’s decline. Furthermore, the NYSE Common Stock Index (NYA) declined on the day, and the ten most active NYSE issues were flat at 5-5. TOT daily traders were on the sidelines for the session.
Over the past 47 weeks, TOT daily traders have outperformed the SPX 31 times and underperformed 16 times. That’s a ratio of 1.94 to 1.
Since initiation of the Turov on Timing service on September 30, 1993, our daily trader recommendations have gained 10449.85 cumulative SPX points, compared to a gain of 926.42 points in the index itself over the same period. That’s a ratio of 11.28 to one.
The super long term perspective for the stock market remains bearish (as it has been since January 2000), and it’s unlikely anything will change that for several more years.
The intermediate term model remains bearish. On Wednesday morning, I said, “I expect to see the SPX put up a gallant fight to stay above 1400, but when that level is breached to the downside, a waterfall decline is not out of the question.” We probably saw the beginning of that waterfall on Wednesday, and Friday’s decline added momentum to the cascade. Additional significant selling will probably have to wait until next week, although we may see some weakness on Friday.
For the first hour or so of trading today, I have no indication whether the market will advance or decline (i.e.; 50-50 odds). However once that time span is over, the odds are a very different 50-50. Specifically, the odds are equal whether the market will advance of decline for the balance of the session, but the potential MAGNITUDE of any advance positively dwarfs the potential MAGNITUDE of any decline – a rather rare situation. It’s sort of like having a fair coin with equal chances of a flip resulting in a head or a tail, BUT you’re able to win $60 on a head versus losing only $40 on a tail. I’ll flip coins all day long with those odds! Therefore, TOT daily traders are advised to go 300% long at the market at 10:45 a.m. After you go long, use a 1% protective sell stop on the position. If not stopped out, carry your position overnight and into tomorrow.
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 © 2008 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. Re-publication and distribution is strictly prohibited. No part may be reproduced without the permission of the Turov Investment Group Inc.