POSITIONS: Long Utilities (XLU), Short Consumer Staples (XLP)
Today’s failure at our intermediate-term TREND line of resistance is very consequential.
Across durations here are my refreshed levels that matter most:
- TAIL = 1266
- TREND = 1231
- TRADE = 1189
I don’t think failing at 1231 means we crash right here and now. What I have been saying about crashing stock and commodity prices (20% declines from YTD peaks) is that the probability of crashes occurring goes up as market prices do (on low volume and negative skew).
If 1189 (TRADE support) holds, that will be a healthy signal in the immediate-term. If it doesn’t, it will be another bearish one. This is why earnings season hasn’t been this important in years.
In the very short-term, earnings should help take some of the headline burden off of European sovereign risks. The problem with that is that earnings like JPM and WFC have been negative catalysts too.
Keith R. McCullough
Chief Executive Officer