Bearish: SP500 Levels, Refreshed

POSITION: Short SPY

 

At -6.2% downside versus +0.5% upside, there is a considerable amount of immediate-term TRADE risk in the US Equity market right here. Remember, tops are processes, not points.

That doesn’t mean we’re bearish on everything US Equities (we’re long Healthcare, Energy, and Inflation), but we are bearish on the Russell 2000 (IWM) and the SP500 (SPY).

What would have me cover my short position in SPY? 

  1. A US Dollar Index resuscitation above the intermediate-term TREND line of $78.66
  2. A breakdown of the VIX, below its immediate-term TRADE line of 16.95
  3. A breakout of the RUT (Russell2000) back above its immediate-term TRADE line of resistance of  789 

Realizing full well that the “flows” can trump the fundamentals on a Monday after a +91% stock market move that most index chasers are chasing, that won’t shake me from what I continue to see in both Emerging Markets and Bonds. I see inflation (that’s why these markets are going down) and so does the US Consumer or the XLY and XLP wouldn’t be dead in the water so far for 2011 YTD (2 of the 3 worst performing S&P Sectors).

My immediate-term TRADE lines of support and resistance are now 1273 and 1295, respectively.

KM

Keith R. McCullough
Chief Executive Officer

Bearish: SP500 Levels, Refreshed - 1