POSITION: Short SPY
Unless the SP500 can overcome today’s weakness and rally and close above my immediate term TRADE line of 1197, I think being on the short side of this market will continue to be the right place to be.
Next week’s bearish macro catalyst is the Case/Shiller US Home Prices Report which comes out on Tuesday. Prices should be very weak as it will be the first month in which April activity falls out of the data series entirely. Like the SP500, both the Homebuilders (XHB) and the Financials (XLF) are broken from an immediate term TRADE perspective, foreshadowing Josh Steiner being right on this Housing call ahead of the “news”…
In addition to the PRICE and EVENT (calendar) risks, VOLATILITY (VIX) continues to have a very high intermediate-term inverse correlation to the price of US Equities. The immediate-term TRADE line for the VIX = 19.81 and we’re seeing the SPY break down as the VIX breaks out above that line.
My most immediate-term TRADE line of support for the SP500 is 1173 and the intermediate term TREND zone of support is closer to 1130.
Yours in risk management,
Keith R. McCullough
Chief Executive Officer