POSITIONS: 14 LONGS, 2 SHORTS @Hedgeye
Let me re-phrase that: Buy Consumption, Short Commodities (and proactively manage the risk of the range).
Strong Dollar is finally getting oil. That was the only big headwind we had left in our model for both Asian and US #GrowthStabilizing. We understand our models are different. And we are comfortable with that. This is only the 3rd oversold cover/buy day our models have signaled in the past 35 trading days.
Across our core risk management durations (TRADE, TREND, and TAIL), here are the lines that matter to me most:
- Immediate-term TRADE overbought = 1530
- Immediate-term TRADE support = 1502
- Intermediate-term TREND support = 1458
In other words, you buy securities that are signaling immediate-term TRADE oversold here, then you wait. If the Dollar was being debauched and Oil was ripping, the title of this note would probably say sellem. Not happening; neither is inflation.
Keith R. McCullough
Chief Executive Officer