As the data changes, we do. Or at least that’s what we aspire to do. In this business, changing your mind is sometimes characterized as a lack of conviction. That’s why I built my own firm. I can change my mind as quickly or slowly as the process instructs.
Being bullish because the market is going up is one thing. I get it. But being bullish and suggesting the economic data supports it is not truthful – at least not as of this week. Bernanke’s broken promise continues to deliver short-term, no-volume, asset price spikes – not economic growth.
Given how the stock market ramped, this morning’s Chicago PMI reading of 49.7 for September is flat out awful. So was a -7.2% y/y Durable Goods print for August. Our US GDP #GrowthSlowing call (intact since March) is now clocking a -68% sequential decline in GDP from Q411 (4.1% to 1.3%).
Across our risk management durations, here are the lines that matter to me most:
- Immediate-term TRADE resistance = 1451
- Immediate-term TRADE support = 1430
- Intermediate-term TREND support = 1419
In other words, 1430 support looks good until it doesn’t. If it breaks, we should see the more important level of 1419 tested during what will be the worst quarter for SP500 revenues and earnings since 2008.
Keep moving out there – markets wait for no one,
Keith R. McCullough
Chief Executive Officer