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POSITION: no position in the SPY here

As of 11AM EST, 2 critical lines of resistance have been registered in my risk management model: 

  1.        Lower-high of Intermediate term TREND resistance = 1222
  2.        Breakdown of the Immediate term TRADE line = 1197 

Any time my model whips around like this (from bullish to bearish) it’s a signal to take down gross long exposure. The next question is when to make short sales? What’s interesting is that my immediate term TRADE line of support is also the 50-day moving average.

I don’t use one-factor models like moving averages to make risk management decisions, but I do observe the big ones for behavioral factoring. This may be the first time in a month that both the bulls and I are going to wait on the same immediate term TRADE line of support (1171).

We have 3 immediate term bearish catalysts coming down the macro pike on the catalyst calendar: 

  1. Existing home sales (OCT) = tomorrow
  2. New home sales (OCT) = Wednesday
  3. Fed Minutes = Wednesday (reaction may shift to some of the incrementally hawkish comments against Bernanke’s view) 

For our long term TAIL call on housing titled “Housing Headwinds” see Josh Steiner’s 101 slide page report.

Yours in real-time risk management,


Keith R. McCullough
Chief Executive Officer

Breakdown: SP500 Levels, Refreshed... - 1

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