POSITIONS: Long Consumer Staples (XLP), Short SPY
It’s not my 1st rodeo being squeezed by a central planner. I highly doubt it will be my last. With the squeezage having run its course, now we can go right back to managing the risk of the market’s multiple ranges, across durations:
- Immediate-term TRADE = 1
- Intermediate-term TREND support = 1419
- Long-term TAIL resistance = 1565
In other words, you can try to threat the needle and buy high, but that didn’t work buying on Friday at 1473 inasmuch as it didn’t work on the way down in 2008. So I think you really have to take a step back here and make a call on what growth and earnings do next.
Our core Global Macro research call, since March, has been Global #GrowthSlowing. What Bernanke did last week only heightens the probability that real (inflation adjusted) global growth slows further.
Unless they ban the reporting of Q3 earnings season (could happen, you never know), I think you have plenty of opportunity to cover shorts and/or buy on red in that 1 range. In the meantime, from here, keep your gross low and net tight.
Keith R. McCullough
Chief Executive Officer