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POSITIONS: Long Healthcare (XLV), Short Industrials (XLI)

Friday morning’s bounce was a Selling Opportunity (see 11:44AM EST note 5/11). Today is a wait and watch.

There is no immediate-term support to 1329 and, over the intermediate-term, the mean reversion zone we have been focused on is the long-term TAIL of support down at 1282.

Here are the lines across risk management durations that I am focused on: 

  1. Intermediate-term TREND resistance = 1369
  2. Immediate-term TRADE support = 1329
  3. Long-term TAIL support = 1282 

I see zero irony in this market giving back essentially its entire gain from the January 25thPolicy To Inflate day (where Bernanke arbitrarily pushed 0% policy to 2014).

Quantitative Easing, from here, only spikes oil and slows real consumption growth further. The only way out of this is to Deflate The Inflation in food, energy, etc. so that the 71% (US Consumption as a % of US GDP) can stop slowing and solidify itself (like it did in December and January).

Letting free-market prices clear – I know – the horror of the idea.

KM

Keith R. McCullough
Chief Executive Officer

Gnarly: SP500 Levels, Refreshed - SPX