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Suffice to say, Obama and Geithner dropped the American confidence ball over the course of the last 24 hours, and now the US market is paying the price. What is good for the buck is bad for Obama’s scorecard. He’ll figure this out, I hope, soon…

Markets are built and blown up on confidence. Without the confidence to invest, people save. Hoarding cash and gold are what you are seeing today (both the GLD and UUP etfs are up). What else is a man/woman without confidence in his/her government to do?

Below are both the Trend and Trade lines of SP500 resistance. Intermediate term Trend resistance (sold red line) is now 881, while immediate term Trade resistance, which we flashed this morning as support, becomes resistance (dotted red line) at 862.

I don’t see any lines of credible support until 811. This is a line that we have been paid handsomely to buy/cover for the better part of 2009. This market is to be traded, not owned until the US Government either lets the free market reign, or establishes some credibility/confidence in their process.

Keith R. McCullough
CEO & Chief Investment Officer