POSITION: no position in SPY
This morning’s early morning selloff is another bearish signal that we may very well be in the process of establishing lower-IMMEDIATE-term highs.
For the last few weeks I have been talking about lower-LONG-term highs (vs OCT 2007), so this brings an entirely different (and more volatile) duration into risk management play.
I wrote about my core 3-factor model (PRICE, VOLUME, and VOLATILITY) in this morning’s Early Look, but it’s worth repeating – this immediate-term TRADE breakdown in the SP500’s PRICE is now being confirmed by both my intermediate-term term VOLUME and VOLATILITY readings.
While mixing durations in the same sentences may sound like a mouthful, markets aren’t exempt from operating with all durations in mind. Markets really couldn’t care less what our personal risk tolerances are – markets are going to do what they are doing.
In terms of the lines, I’m pretty comfortable that the immediate term TRADE line of support at 1307 holds. That’s why I have been, on balance, covering shorts in the Hedgeye Portfolio this morning with a plan to re-populate my shorts on the next bounce.
If 1307 holds, we can rally all the way back up to the immediate-term TRADE lower-high of 1330 and no part of this strategy will change.
Buy red, sell green – and manage your immediate-term risk proactively,
Keith R. McCullough
Chief Executive Officer