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POSITION: Long Energy (XLE)

So I’m long inflation (Energy, Gold, etc) and that has a tough time on US Dollar up days. This we know.

What we don’t know is what central plan is coming down the pike next. Rather than pay people to sniff around Washington for me, I let the market tell me what the people that know think they know. That’s the best I can do.

Across my risk management durations, here are the lines that matter to me most right now (see chart): 

  1. Immediate-term TRADE resistance = 1360
  2. Immediate-term TRADE support = 1345
  3. Immediate-term TRADE support = 1329 

I have 2 different TRADE lines of support because I have been forced to measure a hyper short-term duration in order to solve for how extended the market is (standard deviations of risk) from my intermediate-term TREND zone.

In other words, if 1345 snaps, 1329 is in play, fast. If it doesn’t, I still think we keep making lower-highs versus the last Policy to Inflate lower long-term high of 1363 (April 2011). Inflation expectations rising slow growth.

Enjoy the chase,

KM

Keith R. McCullough
Chief Executive Officer

Lower-Highs: SP500 Levels, Refreshed - spx.02.14.12