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Takeaway: As Cyprus fear abates, I expect to see higher-highs in stocks and lower-lows in volatility.

POSITION: 15 LONGS, 5 SHORTS @Hedgeye

Unless you think the end of the world call is real this time, this is right where you buyem. My signals just registered immediate-term TRADE oversold and overbought on both the SPY and VIX, respectively, at the same time.

For the last 4 months consensus bears have been looking for a crisis (Congress in late DEC, Italy in late FEB, and now Cyprus, yes Cyprus!, in late MAR). All the while, the fundamental growth outlook continues to improve – instead of down stocks, you get a Stronger Dollar, Down Oil, and Down VIX.

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

  1. Immediate-term TRADE overbought = 1566
  2. Immediate-term TRADE support = 1538
  3. Intermediate-term TREND support = 1486

In other words, as Cyprus fear abates, I expect to see higher-highs in stocks and lower-lows in volatility.

KM

Keith R. McCullough
Chief Executive Officer

Buyem: SP500 Levels, Refreshed - SPX