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POSITION: Long Healthcare (XLV), Long Consumer Discretionary (XLY)

The range we’ve been giving you for the last few weeks continues to hold. If 1232 breaks, that will change – and then, it will probably change again. Embrace Uncertainty. It’s not going away.

Across all 3 risk management durations in my model, here are the 3 that matter most right now: 

  1. Long-term TAIL resistance intact up at 1270
  2. Immediate-term TRADE resistance developing at 1248
  3. Immediate-term TRADE support = 1232 

Since the US Dollar Index is immediate-term TRADE overbought (within its Bullish Formation) today, I think the highest probability scenario is that my 1232 holds and we see a re-test on the upside of 1248. The more obvious observation is that it’s much less likely now that the SP500 gets back above its lower-long-term-high from October (1281) before year end.

Net net, today’s call is a Short Covering Opportunity. On the long side, we like Consumption stocks (Healthcare and Consumer) as a way to play Strong Dollar – not the Financials, Basic Materials, or Energy Sectors.


Keith R. McCullough
Chief Executive Officer

Short Covering Opportunity: SP500 Levels, Refreshed - SPX