POSITION: no position in SPY
Intermediate-term tops are processes, not points. This one has been perfectly confusing to time – that’s why we currently don’t have a position in the SPY.
That said, I’ve been talking and writing about this 1340 line as my 3 standard deviation overbought line (using my intermediate-term TREND duration model) for the past month and I still think that, given VIX 15 has held again, it’s as good as any reference lines I can find in my probability analysis.
From a long term TAIL perspective, yesterday’s higher-intermediate-term-high was simply another lower-long-term-high. How’s that for a mouthful! That’s about as loaded a sentence as this US stock market is with intermediate-term mean reversion risk (see the drawdown risk line of -7.2% in the chart below).
My immediate term support and resistance lines for the immediate-term TRADE are 1327 and 1338, respectively. Until 1327 breaks I’ll continue to trade risk around my long and short positions with a bullish bias. Given the drawdown risk, that doesn’t make me feel comfortable. That’s just the game I see in front of me.
Keith R. McCullough
Chief Executive Officer