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Takeaway: Bearing bearish because we are at a certain price level isn’t a catalyst.

POSITIONS: 12 LONGS, 6 SHORTS @Hedgeye

I’ve been on the road all week seeing clients in California. I’ve been told, multiple times, “you are the most bullish firm we pay right now.” That’s kind of weird to hear. But I kind of like it.

Bearing bearish because we are at a certain price level isn’t a catalyst. Neither is trying to call tops or managing career risk associated with not wanting to make the mistakes that were made the last time we were at these levels (i.e. the 2007 top). That’s called baggage.

The career risk (draw-downs) we think will be in missing growth stabilizing and accelerating (draw-downs in being long Gold, Treasuries, Yen, etc.). Strong Dollar (6 weeks in a row to a YTD high) is perpetuating Commodity Deflation (6 down weeks in a row). That’s an explicit pro-growth signal; especially for Consumption Growth.

Across our core risk management durations, here are the lines that matter to me most:

  1. Immediate-term TRADE resistance = 1565
  2. Immediate-term TRADE support = 1527
  3. Intermediate-term TREND support = 1468

In other words, there is no resistance to the all-time closing high for the SP500. This market continues to make higher-lows and higher-highs, as the US economic growth picture continues to improve.

Enjoy your weekend,

KM

Keith R. McCullough
Chief Executive Officer

Still Bullish: SP500 Levels, Refreshed - SPX