This note was originally published February 19, 2013 at 13:04 in Macro
POSITION: 10 LONGS, 6 SHORTS @Hedgeye
Overbought signals come and go. They are very short-term in nature. We’ll get another one > 1528 in the SP500. But Bullish Formations (bullish TRADE, TREND, and TAIL) that are making higher-highs are tough to sell until you get those signals.
Across our core risk management durations, here are the lines that matter to me most:
- Immediate-term TRADE overbought = 1528
- Immediate-term TRADE support = 1516
- Intermediate-term TREND support = 1458
In other words, higher-lows and higher-highs are bullish, until they are not – that’s why we are trying to dynamically measure exhaustion within this Bullish Formation. As volatility drops, exhaustion can get more exhausted than a classical technician thinks.
Long-term, as you can see in the 10yr chart there is no long-term resistance in the SP500 to the prior closing all-time highs (1565). The Russell2000 has been making higher-all-time-highs, every other day.
Keep moving out there,
Keith R. McCullough
Chief Executive Officer