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This note was originally published November 16, 2010 at 13:52 in Macro

POSITION: no position in the SP500 here

These are the days that make you remember. Tops are processes, not points. Today is a better day than yesterday was to be covering shorts.

We are immediate term TRADE oversold anywhere under the 1179 line in the SP500. Immediate term TRADE resistance is now at a lower-high of 1210. This is the 6th day out of the last 7 that the SP500 has been in the red. This negative price momentum is new, and it should be respected from a risk management perspective. We’ve talked about the increasing probability of a compressed crash since mid-October.

The immediate term TRADE correlations between the US Dollar and everything else aren’t as strong as they were a month ago (that’s good). That said, the 3 fundamental factors that underpin our case for US JOBLESS STAGFLATION remain: 

  1.        Global growth is slowing
  2.        Global inflation is accelerating
  3.        Interconnected risk is compounding 

The VIX is busting out above both my TRADE and TREND lines of resistance today. The best strategy here is to trade (i.e. manage risk) proactively.

KM

Keith R. McCullough
Chief Executive Officer

Bear/Bull Battle: SP500 Levels, Refreshed - 1