POSITION: Long Consumer Discretionary (XLY), Long Utilities (XLU), Short Russell2000 (IWM)
If you know me and my model well enough, you knew this message was coming. In the 1 range, US Equities are immediate-term TRADE overbought within this newly established Bullish TAIL Formation. That’s why I finally have a US Equity Index/ETF short position. It’s time to hedge.
Hedging for a potential 2.5% drawdown to test the 1267 TAIL is all I am thinking about here (see chart). I’d consider that probable. If it doesn’t happen, it was still probable by my definition. In order to prevent the probable, 1280 needs to hold (immediate-term TRADE support). And in order for that to happen, I think Jaime Dimon now has to deliver on what have become heightening expectations into his conference call tomorrow (JPM).
We do not think the quality of the Money-Center Banks earnings is going to be healthy. No that’s not an genius statement – but neither is assuming that risk isn’t priced dynamically ignoring the markets time and price.
Keith R. McCullough
Chief Executive Officer