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As of 2PM EST the SP500 cash level of 1221 is: 

  1. -21.98% below its 2007 all-time-high
  2. +80.62% above its 2009 cycle-low 

Now what? With the US Dollar Index up on the day and correlation risk running this high, you’d think the stock market would be down more. Think again… and again… and again… because that’s what you should be doing if a topping process is underway. These are the times that you think the market will never go down again.

That’s obviously as silly as thinking that the US stock market would never go up again in March of 2009. I don’t want to be silly. I just want to be right from now until whenever I make my next move. Currently my position is to stay short this market. That’s despite registering another higher-high of resistance up at 1234. That’s despite getting hundreds of emails reminding me not to “fight the Fed.” That’s despite people saying its different this time.

The global macro calendar this week is going to be as hawkish as we’ve seen it in months: 

  1. Wednesday = US Import Prices for October (inflation)
  2. Thursday = G20 meetings begin (US Dollar bullish)
  3. Thursday = Chinese inflation data for October (inflation) 

I know, I know… “they” say what they said in late 2007. The world is “awash with liquidity” and inflation in the US is not a concern - chase yield.

Immediate term TRADE support is -1.8% lower at 1199.


Keith R. McCullough
Chief Executive Officer

Bear/Bull Battle: SP500 Levels, Refreshed...  - 1