POSITION: Short SPY
If you didn’t know The Bernank is whispering dovishly in these FOMC meetings right now, now you know...
We’ve been making this call for the last 2 weeks, but it’s worth repeating - he will remain Indefinitely Dovish through June. US Dollar crash helmets on. The Inflation trade up into the right. Central planners, unite!
I didn’t and won’t say this will end well, but I will say that higher-intermediate-term highs in the SP500 (on a close above 1343) are going to be bullish for the very immediate-term TRADE (into the actual Fed decision and press conference – yes, press conference tomorrow, Euro style). That’s why I have cut back the gross short exposure in the Hedgeye Portfolio to 9 shorts this morning (14 LONGS, 9 SHORTS).
For the first time since mid-February I am registering what I’ve called the danger zone for US stocks (1) – as in danger that the market pins that price on the donkey, and falls, hard...
Interestingly, but maybe not surprisingly, given that a there is a career risk management exercise at work in the institutional performance chasing game associated with higher-highs, I am registering less than a 2.5 standard deviation overbought zone that’s above my prior 1 zone up at 1.
So, I’ll wait and watch for 1 Short Selling Opportunity prices (those will still be lower-long-term highs). If I don’t get them, I don’t mind. Patience in the face of a US government sponsored Currency Crash (like Q2 of 2008) is required.
Keith R. McCullough
Chief Executive Officer