POSITION: Short SPY
After seeing the SP500 close higher for 3 consecutive days, my bearish position in the SP500 goes from being right to wrong. In the very immediate term, we are bumping up against significant TREND line resistance (1225 is the prior YTD closing high) and our immediate term TRADE line of resistance is just north of that up at 1229.
It’s usually easier to see macro catalysts in the rear-view mirror. The market hammering the US Dollar lower on Friday (unemployment report) helped support the bullish bid to stock and commodity markets. I personally wasn’t aware that rock star of the Fiats was going to be on national TV on Sunday night pushing his inflation book, but my lack of awareness certainly doesn’t mean Bernanke appearing on 60 Minutes was going to cease to exist.
Today, the US Dollar Index is well bid. That could change with one fell swoop of Big Government Intervention. Remember, as Ludwig von Mises said, it’s always easier for conflicted and compromised politicians to print money than impose taxes on their political careers.
Immediate term downside support is down at 1201. If that holds this week, that’s bullish in the immediate-term.
Keith R. McCullough
Chief Executive Officer