POSITION: Short SPY
While it’s very tempting to short more SPY here, it’s even more tempting to Wait & Watch for a higher price. I have immediate-term TRADE upside in the SP500 to 1323 (see chart) and there’s no reason why it can’t get there. Volume is anemic.
One of the most tempting signals to short SPY is the VIX holding its intermediate-term TREND line of support this morning. That line = 17.89. That said, a breakdown through that line could easily put the high 16s in play for the VIX and there are plenty bulls left in this marketplace who would love to see those prints into month and quarter end.
Month and quarter end is on Thursday and from a US Macro Catalyst Calendar perspective, here what’s on tap in the immediate-term (this week):
- Monday – US Personal Income and Consumption (FEB)
- Tuesday – Conference Board Consumer Confidence (MAR) and Case-Shiller Home Prices (JAN)
- Wednesday – MBA Mortgage Applications (weekly) and II Bullish/Bearish Sentiment (weekly)
- Thursday – Month and Quarter End (MAR) and Producer Manufacturing Index (FEB)
- Friday – ISM Survey (FEB) and the Monthly US Employment Report (MAR)
While the sucker trade might be waiting for Thursday to start selling aggressively again, sometimes the most obvious play is the one to make. For now, I’m giving the bulls the better benefit of the doubt, expanding the net exposure of the Hedgeye Portfolio again today (17 LONGS, 13 SHORTS). On the short side, I want to Wait & Watch.
Keith R. McCullough
Chief Executive Officer