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POSITIONS: Long Financials (XLF), Short Consumer Discretionary (XLY) and SP500 (SPY)

The Greek stuff is out of the way. Now what?

Today’s green team is being led by Inflation Expectations Rising (Basic Materials, Energy, and Gold), while the red team is being led by Growth Expectations Falling (Asia, Transports, Consumer).

This isn’t my first rodeo riding against the rail. The risk, as always, is that this time is different – and inflation doesn’t slow growth. Most people thought it was different this time with Wal-Mart (WMT) until today too.

Here are the lines that matter most across all 3 core risk management durations in my model: 

  1. Immediate-term TRADE overbought = 1363
  2. Immediate-term TRADE support = 1352
  3. Intermediate-term TREND support = 1271 

Could we go up, up, and up from here? Sure. Will we ever have a -1% down day again (we haven’t in 2012)? Sure. That’s what makes this a tightrope of expectations up here. It’s a long way to 1271 from 1352.

I’m sure I sounded as wrong about this on green days in February of 2011.


Keith R. McCullough
Chief Executive Officer

Now What? SP500 Levels, Refreshed - SPX