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We have been pounding the desk over correlation risk for some time now. The US dollar goes up and commodities and everything else go straight down. If you get growth and the dollar right, you’re going to get a lot of things right. This has proven particularly true after Wednesday’s Federal Reserve meeting and subsequent (lack of) announcements on monetary easing.

After our bold call to go 100% cash yesterday, we took it down to 94% and entered into some equities in the Hedgeye virtual portfolio. We will not overly short the market and nor will the retail crowd after three consecutive weeks of rallying – even after today’s selloff.

Goldman Sachs came out on Thursday and said that they are issuing a downside target of 1285 in the S&P 500. That’s their call. As Keith (McCullough, CEO of Hedgeye) said on CNBC’s Fast Money: “I don’t look to Goldman Sachs to tell me what to do.” What lies ahead for the market is not certain and until our levels, qualitative and quantitative analysis sync up, we are perfectly fine with our current asset allocation.