TAIL Risk: SP500 Levels, Refreshed

POSITION: Long Utilities (XLU), Short Industrials (XLI) and Energy (XLE)

Our fundamental research view has not changed = #GrowthSlowing. Our quantitative risk management view has.

What’s new (as of now) is that our immediate-term TRADE line of 1335 broke. That puts out long-term TAIL line of 1286 back in play. And when I say that, I mean over the intermediate-term (because the intermediate-term TREND remains broken too).

Across risk management durations, here are the lines that matter to me most: 

  1. Intermediate-term TREND resistance = 1365
  2. Immediate-term TRADE resistance = 1335
  3. Long-term TAIL support = 1286 

After 6 consecutive down days (50 point SP500 drop), you don’t want me to tell you what happens if 1286 breaks. We can only digest so much bad news at once.

In the meantime, keep managing the risk of the intermediate-term range with a bearish bias. There’s a loose TRADE line of support at 1324 that should insulate trading 1, for today/tomorrow.

KM

Keith R. McCullough
Chief Executive Officer

TAIL Risk: SP500 Levels, Refreshed - SPX