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POSITION: Long Utilities (XLU)

Keith is on the road today in beautiful Kansas City, but, as always, the global macro grind goes on back at Hedgeye Headquarters in New Haven, CT.  The short covering opportunity we called for yesterday is further manifesting itself today with the SP500 up +0.8% to 1,129.  Our “Trade the Range” mantra continues, as we are seeing higher-lows of immediate-term TRADE support and lower-highs of intermediate-term TREND resistance. The current TRADE range is 1,093 to 1,139.

In the last couple of days, the global macro news has been better than bad, but we should be clear, our fundamental concerns have not changed. In that vein, an interesting new negative catalyst that is emerging is the “Occupy Wall Street” protests.  The most recent rumor suggests that group may attempt to erase the NYSE from the internet on October 10th.  We aren’t exactly sure what that means, but it is potentially a leading indicator for this group to disrupt financial markets, or at least attempt to do so.

Aside from the opportunity to cover shorts, make no mistake about it though, the SP500 remains broken on both a TREND and TAIL basis with those resistance lines up at 1,237 and 1,266, respectively.  In fact, according to some recent analysis from Ned Davis:

“The average bear since 1900 has lasted 410 days and seen a decline in the major averages of -31.5%. So far, the 2011 version has lasted 158 days and the decline just under -20%. To reach the average, the DJIA would have to fall to 8,775.”

It is unlikely this bear is done growling.  Trade the range.

Daryl G. Jones

Director of Research

Occupy Hedgeye: SP500 Levels, Refreshed - SPX