POSITION: no position in the SPY
Not surprisingly, with the Hedge Fund Industry running with its highest net leverage since October of 2007 (all time high for SP500), price volatility is back.
As Fed fans will recall, the game in late 2007 was a gigantic game of chicken as to when the Fed was going to cut rates. Today, the causal factor remains the same (the Fed daring people to chase yield), but we’re gaming the probability of QG’s instead of rate cuts. After you cut to zero, that’s all you have left.
I haven’t made any sales yet today because I think the probability just went straight up of a test of the prior closing YTD high (1343). The better than expected fundamental (jobless claims of 368,000) supports that probability. Whether or not it sustains itself and trumps $101 oil is the game that we’ll be playing next week.
In the chart below you can see my immediate term TRADE line of resistance (1341) sits just inside of my intermediate and long-term TREND and TAIL lines of resistance (1343 and 1346).
So, if you didn’t know why we have price volatility back in the game, now you know. The Street is finally levered long bullish.
Keith R. McCullough
Chief Executive Officer