Bearish TRADE: SP500 Levels, Refreshed

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

Day 2 of the bounce doesn’t matter so much as the price level does. The SP500 needs to recapture its immediate-term TRADE line of 1391, and soon, or this market’s immediate-term price momentum is broken.

Volume is already broken, across durations, as fund flows are nowhere to be found. Volatility (VIX) just reminded people of the 2008, 2010, and 2011 moves from the Q1 VIX lows to the Q3 VIX highs.

Across my core risk management durations, here are the lines that matter most: 

  1. Immediate-term TRADE resistance = 1391
  2. Immediate-term TRADE support = 1352
  3. Intermediate-term TRADE support = 1331 

In other words, correcting to 1331 would be proactively predictable from this price since Growth Slowing has gone global.

Meanwhile, a close > 1391 = very bullish, and a close < 1331 = very bearish.

KM

Keith R. McCullough
Chief Executive Officer

Bearish TRADE: SP500 Levels, Refreshed - SPX