This note was originally published November 26, 2012 at 11:33 in Macro
POSITIONS: Long Bonds (TLT and FLAT), Short Industrials (XLI)
I sold our long Utilities (XLU) position this morning because it was up. When something is up, but fails to re-capture TREND support, I sell it. That discipline holds for the US stock market post last week’s no-volume bounce to lower-highs too.
Across our core risk management durations, here are the lines that matter to me most:
- Intermediate-term TREND resistance = 1419
- Immediate-term TRADE resistance = 1406
- Immediate-term TRADE support = 1379
In other words, as we make lower-highs, the probability of the YTD highs for US stocks for 2012 being in (September 14th) are rising.
As a result, with the TREND bearish, you’ll likely get paid to risk manage the range between 1364 (TAIL support) and 1419 (TREND resistance) proactively. In the meantime, the bond bull driven by #GrowthSlowing rages on.
Keith R. McCullough
Chief Executive Officer