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POSITION: Short Consumer Staples (XLP)

Long-term investors: from a long-term TAIL perspective, much like Japan’s Nikkei, the SP500 remains in a bear market.

The reason why we make that analogy isn’t because Japan doesn’t have the New York Yankees. Japan simply has had the same Keynesian money printing policy of the Princeton/Keynesian school of economics. Every new centrally-planned policy to inflate has inflated asset prices to lower-long-term highs.

That’s the long-term.

In the immediate-term, we aren’t yet dead.

Tomorrow is the immediate-term. So are the first few weeks of October (potentially, the start of one of the worst earnings seasons we’ll have in the last 2 years). Tomorrow is also month-end.

We made this call when I moved the Hedgeye Portfolio to net short on August 30th and, since I moved back to net short on Tuesday, September 27th, I think it’s worth considering that same call again – the last 6 days of the month vs the first 6 days of the month (see table below):

Month-End: SP500 Levels, Refreshed - 3

It’s just price momentum data with a career risk management overlay.

Immediate-term TRADE support and resistance for the SP500 are now 1117 and 1182, respectively.


Keith R. McCullough
Chief Executive Officer

Month-End: SP500 Levels, Refreshed - SPX