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:
- Immediate-term TRADE overbought = 1566
- Immediate-term TRADE support = 1538
- 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.
Keith R. McCullough
Chief Executive Officer