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POSITION: No Position SPY

Both the TRADE and TREND lines for the SP500 are currently broken. That’s not good.

Across durations, here’s the SP500 setup (it’s a Bearish Formation – bearish TRADE, TREND, and TAIL): 

  1. TAIL = 1377
  2. TREND = 1319
  3. TRADE = 1301 

At the same time, the VIX has broken out into what we call a Bullish Formation (bullish TRADE, TREND, and TAIL): 

  1. TRADE = 18.98
  2. TREND = 17.59
  3. TAIL = 19.39 

So what do you do with that? I usually start with what you don’t do – don’t start playing the “valuation” game. Valuation isn’t a catalyst in a Bearish Formation. In many cases, it sucks you in early. Being early can be painful.

In the immediate-term, I have a loose TRADE line of support for the SP500 at 1291 and a VIX level of resistance of 22.93. Stay hedged.

KM

Keith R. McCullough
Chief Executive Officer

Breakdown: SP500 Levels, Refreshed - 1