This note was originally published March 11, 2013 at 10:47 in Macro
POSITIONS: 11 LONGS, 9 SHORTS @Hedgeye
I sold the open this morning (sold 2 LONGS, added 2 SHORTS) because the bottom up signals in each security told me too. The SPY didn’t register a sell signal (it usually doesn’t until after stocks do). The market has been up for 9 of the last 10 weeks; certain stocks are getting exhausted.
Exhaustion can last (think the 1995 US stock market), particularly if the research fundamentals support it (they do). So don’t expect me to get too cute here. This remains a market we want to be risk managing with a bullish bias, until something (signal or research) changes.
Across our core risk management durations, here are the lines that matter to me most:
- Immediate-term TRADE overbought = 1565
- Immediate-term TRADE support = 1532
- Intermediate-term TREND support = 1477
In other words, the all-time highs remain in play, but so does some very short-term mean reversion (to 1532). So we want to be flexible here. Keep moving and don’t get plugged buying on overbought signals.
Keith R. McCullough
Chief Executive Officer