POSITIONS: Long Healthcare (XLV), Shorting Industrials (XLI) and Basic Materials (XLB)
The process said Embrace Uncertainty at 1391 support into the employment event, so we did. Now the SP500’s immediate-term TRADE line of 1391 support is resistance and there’s plenty of risk to be managed.
Across all 3 of our core risk management durations, here are the lines that matter most:
- Immediate-term TRADE resistance = 1391
- Immediate-term TRADE support = 1370
- Intermediate-term TREND support = 1359
With Growth Slowing (absent another central plan that I have no edge on), I see no fundamental or quantitative risk management reason why mean reversion to the TREND zone of 1 doesn’t remain in play.
Remember, it was Qe3 itself on January 25thby Bernanke that provided the catalyst for oil price inflation to slow growth. So we don’t need to be begging for more of that. Deflating The Inflation, from a price (1359), should be better than bad.
Keith R. McCullough
Chief Executive Officer