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POSITIONS: Long Utilities (XLU) and Financials (XLF); Short Industrials (XLI)

Growth Slowing, globally, includes the USA. I should have told myself that 100 more times over before I bought the Financials late last week. There’s obviously massive mean reversion risk in just about everything that’s mean reverting today.

Across my risk management durations (TRADE, TREND, and TAIL) here are the lines that matter most: 

  1. Immediate-term TRADE resistance = 1391
  2. Immediate-term TRADE support = 1374
  3. Intermediate-term TREND support = 1331 

In other words, now that we have snapped both my hyper-immediate-term TRADE support line of 1406 and immediate-term support line of 1391, people are snapping.

Oh snap. Provided that Growth Slowing continues, there’s no reason why the pro-cyclical Sectors (Industrials, Basic Materials, Energy) don’t continue to map those growth expectations.

From a price, US Consumption Growth should stabilize, if the US Dollar does. That’s a big if – people are already out there early today begging for Bernanke and some more QE (i.e. more of what got growth to slow in February/March).



Keith R. McCullough
Chief Executive Officer

Bearish Break: SP500 Levels, Refreshed - SPX