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POSITION: Long Energy (XLE), Short SP500 (SPY)

Am I a day, week, or month early? I don’t know. Being early is called being wrong. Been there, done that.

If you’re not right and the fundamental framework of your position changes, you should change. Today’s lagging indicator (US Employment Report) is a January number that reflects a lot of why I was bullish for the 6 weeks running into last week’s US Dollar Debauchery.

From here, I think inflation expectations continue to rise and growth expectations continue to slow. If that changes, I will. But like February of last year when I made this call, you don’t get the February slowdown data in the January numbers.

Across all 3 risk management durations, here are the lines that matter to me most right now: 

  1. Immediate-term TRADE overbought = 1343 (that’s where I shorted SPY again this morning)
  2. Immediate-term TRADE support = 1321
  3. Long-term TAIL support = 1267 

With the long-term TAIL intact, you should naturally be asking me why Newt and the SP500 can’t fly from here to the moon from here. I tend to get these questions after rallies, not before them. It’s just human nature.

Provided that the US Dollar’s immediate-term TRADE remains bearish and we keep making lower long-term highs on lower and lower volume studies in the SP500, I’ll stay with this call.

Long inflation, short growth.


Keith R. McCullough
Chief Executive Officer

Short Selling Opportunity II: SP500 Levels, Refreshed - SPX