POSITION: Short SPY
In the last 2 trading days the SP500 has sold off towards, but held, our immediate-term TRADE line of support (1173). That, not surprisingly, has my inbox ringing with questions as to why I’m not covering my short position in the SPY. Fair questions.
The answer relies heavily on 3 core-factors in my risk management model – PRICE, VOLATILITY, and VOLUME:
- PRICE – both immediate and intermediate-term TRADE and TREND lines (TRADE = 1196, TREND = 1206) are stiff levels of new resistance.
- VOLATILITY – the VIX is up another +6% today and won’t calm down; it’s moved to bullish TRADE and TREND with no resistance to 23.89.
- VOLUME – on the intraday rallies, volume is almost laughably low; with month end (today), people haven’t capitulated selling, yet…
Ultimately I think I’ll see my 1173 and that’s why I am patiently waiting and watching to see the river card.
Yours in risk management,
Keith R. McCullough
Chief Executive Officer