2007's Lessons: SP500 Levels, Refreshed

Takeaway: Dips turn into draw-downs when the least amount of people are positioned for them.

POSITIONS: none on the SPY or Sector ETF side of the idea ledger        

 

We came into today long defensive (Consumer Staples, XLP) for the bounce in the US Dollar. Dollar up pounds the beta trade (Oil, Energy Stocks, Financials, etc). That’s why we call it the Correlation Risk. In the immediate-term, it matters, both ways.

 

I sold XLP and made a few short sales that were research driven (HSIC and TXRH) because there is a rising probability that the SP500’s immediate-term TRADE line of 1451 snaps. If and when immediate-term performance chasing snaps in Equities, you’ll see the kind of selling we saw yesterday in Oil. It happens fast.

 

Across our core risk management durations (TRADE, TREND, and TAIL), here are the lines I am focused on:

 

  1. Immediate-term TRADE resistance = 1474 (Friday’s Bernanke short squeeze high)
  2. Immediate-term TRADE support = 1451 (under attack)
  3. Intermediate-term TREND support = 1419

 

In other words, if Growth and Earnings Slowing weren’t a fundamental reality at this point, I’d be buying this dip. But they are, and dips turn into draw-downs when the least amount of people are positioned for them.

 

2007’s Lessons remain crystal clear in my mind. Eventually, hope for central planners to “smooth” the gravity of the economic cycle slowing runs out of catalysts. That’s why long-term tops are processes, not points.

 

KM

 

Keith R. McCullough
Chief Executive Officer

 

2007's Lessons: SP500 Levels, Refreshed - 9 20 2012 11 34 15 AM


Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

read more

People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

read more

UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

read more

Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

read more

Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

read more

An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

read more

Got Process? Zero Hedge Sells Fear, Not Truth

Fear sells. Always has. Look no further than Zero Hedge.

read more

REPLAY: Review of $EXAS Earnings Call (A Hedgeye Best Idea Long)

Our Healthcare Team made a monster call to be long EXAS - hear their updated thoughts.

read more

Capital Brief: 5 Things to Watch Right Now In Washington

Here's a quick look at some key issues investors should keep an eye on from Hedgeye's JT Taylor and our team of Washington Policy analysts in D.C.

read more

Premium insight

[UNLOCKED] Today's Daily Trading Ranges

“If I could only have one thing of the many things we have it would be my daily ranges." Hedgeye CEO Keith McCullough said recently.

read more

We'll Say It Again: Leave Your Politics Out of Your Portfolio

If your politics dictates your portfolio positioning, the Democrats and #NeverTrump crowd out there have had a hell of a week.

read more

Cartoon of the Day: 'Biggest Tax Cut Ever'

President Donald Trump's economic team unveiled what he called last week, "the biggest tax cut we’ve ever had.” Before you get too excited about that hang on a sec. "Trump Tax Reform ain’t gettin’ done anytime soon," Hedgeye CEO Keith McCullough wrote in today's Early Look.

read more