POSITION: No Position SPY
Hope, as we like to say at Hedgeye, is not a risk management process.
Growth Slowing has no immediate-term catalyst to slow it being priced into consensus either. The stock market is down for 6 consecutive weeks (6% correction versus the April 29th peak) because the pricing process is in motion.
While there was an immediate-term TRADE line of support yesterday at 1285 where we covered our Energy (XLE) short, that equivalent line for the SP500 is now down at 1279. The risk now is that the bulls hope for 1314 (immediate-term TRADE resistance), and hope fails.
Across durations (TRADE, TREND, and TAIL), Mr. Macro Market is growling:
- TAIL resistance = 1377 (long-term lower-high)
- TREND resistance = 1323 (below the Moving Monkey line (50 day) of 1330)
- TRADE resistance = 1314
Our long-term TAIL support line is all the way down at 1219, so I wouldn’t get too cute with the hope stuff here. Keep your net exposure tight and manage risk (trade) aggressively.
Keith R. McCullough
Chief Executive Officer