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POSITIONS: Short Industrials (XLI), Basic Materials (XLB), and Energy (XLE)

I just sold my long Utilities (XLU) position which has effectively gone straight up in the last month, so that makes me short 3 Sectors in the SP500. Fortunately, we covered our SPY position yesterday on red.

Where would I consider re-shorting SPY on green? 

  1. Immediate-term TRADE overbought = 1412
  2. Immediate-term TRADE support = 1391
  3. Intermediate-term TREND support = 1359 

In other words, shorting the SPY at a lower YTD high is definitely interesting on the way up here, but its more interesting to be short the aforementioned pro-cyclical Sectors provided that Growth Slowing remains our call.

Today’s ISM number (54.8 vs 53.4 last mth) was the only legitimate beat we’ve seen in our model in a month, so don’t expect me to change everything based on 1 data point. That would just look as emotional as the tape does right now on short covering.

Up next is jobs, jobs, jobs (ADP, Jobless Claims, and Unemployment). So we will have to see about that.

KM

Keith R. McCullough
Chief Executive Officer

Nice: SP500 Levels, Refreshed - SPX