Lower-Highs: SP500 Levels, Refreshed

POSITION: No position in SPY


Consolidation or correction? Well the correction part has been solved for – at least the first 3% of one. Since the hyped-up highs that we established in the SP500 on February 18th, the US stock market looks a lot like Japan’s – struggling to convince itself that this time is different.


The best way to answer how something isn’t different is to look at what is actually happening: 

  1. Inflation is slowing global economic growth – that’s happened many times before , across many economic cycles
  2. The US Dollar Debauchery and correlation risk associated with it isn’t any different than France, Britain or Japan trying the same
  3. Asset Prices, whether they be US Homes or US Stocks, are making lower long-term highs in terms of prices 

Obviously between all of the correlation risk and storytelling about growth, no matter where you stand on the “fundamentals”, you’ll have to agree with one major birth child of all this US Government Intervention and Central Planning – volatility. Price volatility is back – and the VIX has moved back to a bullish position on both our TRADE and TREND durations with considerable support around the 18 level.


Getting above the 1316 line this morning in the SP500 has been inspirational, but we think this low-volume rally associated with dollar UP/oil DOWN will run out of steam at another lower immediate-term high of 1333.


In the immediate-term, the best way to play price volatility is to trade it. Use 1 as your intermediate-term risk management range. In the Hedgeye Portfolio, I am leaning long (15 LONGS, 9 SHORTS), but I’ll keep that exposure on a short leash.



Keith R. McCullough
Chief Executive Officer


Lower-Highs: SP500 Levels, Refreshed - 1

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