With the XLF (Financials) getting smoked for another -8.5% day, and XLI (Industrials) down another -5%, these are the crosses of leverage that this fine country still has to bear… The New Reality remains this: in an environment where the cost of long term capital continues to rise as the access to it (without government regulation attached) declines, companies geared to those P&L factors lose relevance…
Underneath all of this, after the 11AM refresh of prices, I come out with SP500 support at 670. Yes, that would be a lower low, and yes, that would make Obama just as wrong as every American is in their 401k right now. Lower lows are bearish.
In a raging bear market like this, bounces are to be sold. Unfortunately, for me at least, I did not do enough of that yesterday. In preparation for the next bear market bounce, I have the first line of SP500 resistance at 730 (dotted red line in the chart below).
Keith R. McCullough
CEO & Chief Investment Officer