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POSITION: Long Consumer Discretionary (XLY)

For the 2nd time in the last 3 months, the SP500 is making a valiant effort to close above my long-term TAIL line of 1268. The last time this happened, I shorted the SPY (October 28th). This time I’m not.

Everything that really matters in our Macro Model occurs on the margin. And, on the margin, the high-frequency data points out of the 3 major regions (Asia, Europe, USA) are more bullish today than they were in October. In December, Asian Growth appears to have slowed at a slower rate; European monthly data was better than toxic; and the USA’s confidence/employment data is being empowered by a Strong Dollar.

Across all 3 durations in our risk management model, here are the lines that matter most: 

  1. TAIL support = 1268
  2. TRADE support = 1258
  3. TREND support = 1213 

To be clear, this Bullish Formation (bullish TRADE/TREND/TAIL) can turn bearish (on a drop back below 1258) as fast as it turned bullish. But until that happens, the market’s last price is the right price to manage your risk around.

If it doesn’t happen, I’ll keep sending emails titled Bullish TAIL.


Keith R. McCullough
Chief Executive Officer

Bullish TAIL: SP500 Levels, Refreshed - SPX