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POSITION: Short Financials (XLF)

There really is no other way to summarize the US Equity market here. It’s bearish. Period.

I’ll be the first to concede that bear markets get immediate-term TRADE oversold (I made that call last Monday in note titled “Short Covering Opportunity” – time stamped 10:47AM on August 8th, 2011).

But, please, don’t confuse immediate-term TRADE oversold as anything other than what that is – immediate-term oversold.

Across our core 3 risk management durations (TRADE/TREND/TAIL), bearish is as bearish does: 

  1. Intermediate-term TREND resistance = 1314
  2. Long-term TAIL of resistance = 1256
  3. Immediate-term TRADE resistance = 1214 

Like 1192 and 1173, there are multiple short-term downside levels of TRADE support between 1214 and the YTD closing low of 1119 (establish August 8th, 2011), but since most people out there are still saying they are “long-term investors”, they probably don’t care about those. The long-term TAIL is bearish. So, “long-term investors” are probably going to become increasingly bearish too.

Bear markets bounce. This one just did. That’s yesterday’s news.


Keith R. McCullough
Chief Executive Officer

Bearish: SP500 Levels, Refreshed - 1