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POSITION: Long Healthcare (XLV)

After covering our US Housing short (ITB) this morning, that makes me long-only on US Equity Index and Sector ETFs. To be clear however, I’m seeing this as another immediate-term Short Covering opportunity – nothing more.

Here are the lines that matter most right now across the 3 durations on our risk management model: 

  1. Immediate-term TRADE oversold = 1187
  2. Intermediate-term TREND = 1203
  3. Long-term TAIL = 1270 

If this market fails to recapture its TREND level (1203) this week, I’ll be giving you lower-lows of immediate-term TRADE support. But, for now, 1187 is the line and we want to be managing our net exposure accordingly. On the bounce we re-hedge.

The highs for both 2011 and Q4 look likely to be in. Bad Santa.


Keith R. McCullough
Chief Executive Officer

Short Covering Opportunity: SP500 Levels, Refreshed - SPX