POSITION: Short SPY
I should have covered my SP500 short position on yesterday’s test of the 1 range. Should-haves are a poor hockey player’s excuse for staring down at the puck. I should not have had my head down when in Big Alberta’s trolley tracks…
With month and quarter end coming up (next week), there’s no reason why the bulls won’t do their best to defend the bottom end of this market’s newly established trading range. For both our TRADE and TREND durations, I see those ranges as follows:
- Immediate-term TRADE = 1
- Intermediate-term TREND = 1
One of the key reasons for the sustainability of this one-week rally from immediate-term TRADE oversold lows is that the VIX has backed off its long-term TAIL line of 22.03. The inverse relationship between the VIX and SP500 remains critical to respect. Currently, intermediate-term TREND support for the VIX holding around the 18 level keeps the intermediate-term TREND of lower-highs for the SP500 intact.
On a breakout above 1308, I’ll wait and watch to short the SP500 again at 1315-ish. Otherwise, I’m waiting for another Short Covering Opportunity at 1281. Manage your risk around the ranges.
Keith R. McCullough
Chief Executive Officer