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POSITION: Short Financials (XLF)

Nothing has changed in either our Fundamental Research View (Growth and Inflation trends = Stagflation) or our Quantitative Risk Management view (price, volume, volatility signals are all broken TAILs at this point). 

  1. Long-term TAIL resistance remains 1256
  2. Immediate-term TRADE line of support was 1172 this morning, now 1166 is resistance
  3. No immediate-term downside TRADE support to 1107 

Stagflation, as we define it (we don’t do Keynesianism) is when Real-GDP Growth < Headline Inflation Growth. While this week’s PPI and CPI prints of +7.2% and +3.6% year-over-year growth are, to a degree, lagging indicators – it doesn’t change the economic reality that headline inflation growth is running significantly above real economic growth. Periods like this earn much lower SP500 multiples.


Keith R. McCullough
Chief Executive Officer

Bearish: SP500 Levels, Refreshed - SPX