The Breakout: SP500 Levels, Refreshed

POSITION: no position in SPY

I said this when I covered my SPY position on Friday. I said this yesterday when I chose to do nothing. And I’ll say it again - provided that both The President and The Ber-nank and sign off on a complete debauchery of the US Dollar, this market can go higher before it blows up.

Anyone who has studied the unintended consequences associated with inflation and currency crashes knows that trading the inflation associated with it works, to a point. And when that point comes, very few are positioned for the fall. Friday’s mini-me fall, hopefully, was a mini-reminder of that.

Higher-highs and higher-lows in the SP500 will be bullish in both the immediate and intermediate terms until they aren’t. From a long-term TAIL perspective however, the SP500 continues to make lower-highs. That, combined with a monstrous amount of immediate and intermediate term price momentum, sets us up for some serious TAIL risk.

Almost every other day on our the Hedgeye Macro Morning Call, I say something like this: “If they debauch the dollar, every day and every week, from this day until that, the SP500 could easily get to 1340… and then blow up.”

What was immediate-term TRADE resistance yesterday is now support at 1289. This moves my immediate term TRADE resistance line up to 1305. The US Dollar is now down for 5 out of the last 6 weeks. It’s sad to watch.

KM

Keith R. McCullough
Chief Executive Officer

The Breakout: SP500 Levels, Refreshed - 2