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POSITION: no position in SPY


“A hard fall means a high bounce... if you're made of the right material.”


There be bulls in these parts. This bounce is made of what’s made the last 2.5 months so bullish – higher prices.

But make no mistake, these be lower-highs – both on a long-term TAIL and immediate-term TRADE basis. And while an immediate-term breakout above the 1308 line of resistance was proactively predictable, we don’t want to mistake today’s low-volume bounce for something that we should chase. A close above my refreshed immediate-term TRADE line of resistance of 1325 would change that, potentially.

Here are a few other things to think about in the immediate-term: 

  1. Monday is month-end, so there’s plenty of reason to believe we could see 1325 with month end markups
  2. Monday is after the weekend, so anything priced into oil risk premium can change
  3. Volatility (VIX) remain well above my TRADE (15.59) and TREND (18.11) lines of support (bearish for US Equities, from a price) 

No one said hard falls can’t be proactively prepared for (last Friday I had 14 LONGS and 15 SHORTS). No one said you should short-and-hold after hard falls either (this Friday I have 14 LONGS and 7 SHORTS). I’m just saying that the best strategy from here is to keep managing your gross and net exposures aggressively as Big Government Intervention perpetuates price volatility.


Keith R. McCullough
Chief Executive Officer

The Bounce: SP500 Levels, Refreshed... - 1