This note was originally published December 04, 2012 at 11:00 in Macro
POSITIONS: Long Consumer Discretionary (XLY), Short Industrials (XLI) and Utilities (XLU)
I have no idea what the next government catalyst is going to be, but those who begged for more government have no business whining about it.
The only thing I know is that if oil (and food) continues to deflate, consumers get a real-time tax cut. That’s bullish, for consumers. Period.
Across our core risk management durations, here are the lines that matter to me most:
- Intermediate-term TREND resistance = 1419
- Immediate-term TRADE support = 1404
- Long-term TAIL support = 1366
In other words, if 1404 holds, a re-test of 1419 on the upside is probable. A close above 1419 would be explicitly bullish. On the downside, if 1404 doesn’t hold, it’s a long way to 1366. But that long-term TAIL support is good to have underneath.
Keep moving out there,
Keith R. McCullough
Chief Executive Officer