POSITIONS: Long Consumer Discretionary (XLY), Long Utilities (XLU), Short Russell2000 (IWM)
This melt-up scores very differently versus the ones we’d short on strength in 2011. This one is backed by our Fundamental Macro Modeling process (Growth, Inflation, Policy), with all 3 factors working in bullish favor of stocks (bearish for bonds).
As Growth Expectations rise, so will multiples people pay for US Equities. Growth Expectations should also pressure Ben Bernanke to be less dovish. Imagine the man ends up talking rate hike by Q3?
Don’t choke on your water bottle – no one else thinks he’d do that either – which is why we are thinking about it.
Across all 3 of my risk management durations, here are the lines that matter most to me right now:
- Immediate-term TRADE resistance = 1325
- Immediate-term TRADE support = 1302
- Long-term TAIL support = 1267
I’ve been saying this since the beginning of the year and I’ll say it again – the US stock market now has a Bullish TAIL.
Keith R. McCullough
Chief Executive Officer