Booking Gains: SP500 Levels, Refreshed

Takeaway: We'll continue to risk manage the range, booking gains on the way up to 1,603.

Positions: 12 longs, 7 shorts @hedgeye

 

In our real-time alerts product, the last ten booked positions have been gains. Certainly, that is better than bad and has been in-line with our market call this year that with #GrowthStabilizing equities in the U.S. should outperform.  Increasingly, our view is that stabilizing growth is morphing into accelerating growth domestically.

 

Admittedly, the Dallas Fed Manufacturing Index coming in this morning at -15.6 versus +5.0 expected was a soft reading and certainly a data point to consider.  That said, and more important to our thesis was pending home sales, which were up +1.5% versus +0.7% expected and saw a sequential acceleration from -0.4% in the prior month.

 

As we saw in last week’s GDP report, consumption was up +3.2% last quarter and is the key factor driving U.S. GDP recovery.  In fact, consumer spending contributed +2.24% of the total growth of GDP last quarter.  To the extent that housing demand remains strong and inventory continues to tighten, this will be positive for home prices, the consumer balance sheet and discretionary consumption.

 

This morning we have made three key changes in our Real-Time Alerts:

1)      Sold Budwesier (BUD)

2)      Covered Gold Miners (GDX)

3)      Bought Restoration Hardware (RH)

 

Currently, as outlined in the chart below, the TRADE range for the SP500 has immediate term support and resistance at 1567 and 1,603, respectively.  We'll continue to risk manage the range, booking gains as we move towards the high end. 

 

Daryl G. Jones

Director of Research

 

Booking Gains: SP500 Levels, Refreshed - SPX


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