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This is the 4th consecutive down day for the SP500, virtually every sell-side strategist is cutting their US GDP Growth estimates, and the market is now down for the month-to-date. These shouldn’t be surprises. So don’t freak-out here – this is where you get paid to manage risk.

One of the hallmarks to effective risk management isn’t having it in you to short things when they are up – it’s to cover them when they are down. We did that on March 16th and I think it’s a good idea to do that again right here and now. Don’t worry about your cost basis – the market doesn’t care about your cost basis. Worry about what isn’t happening yet - the bounce.

Short Covering Opportunities aren’t raging bull calls to action. In this case I see every opportunity for the SP500 to bounce to another lower-long-term-high and lower-immediate-term high up at 1329. Then you start making sales again.

If 1310 breaks and the VIX breaks out above $18.26 (intermediate-term TREND line resistance), this call to cover shorts will likely be a bad one. Don’t dismiss that the world’s reserve currency has gone no bid. This game of gaming The Bernank is going to be volatile.


Keith R. McCullough
Chief Executive Officer

Short Covering Opportunity: SP500 Levels, Refreshed - 1