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Bullish: SP500 Levels, Refreshed

Takeaway: The immediate-term TRADE overbought signal we issued last week didn’t last long.



The immediate-term TRADE overbought signal we issued last week didn’t last long, but the down -0.5% move we had the day after was the biggest down move in 10 days. We call these bear scraps within a very Bullish Formation.


Intraday Thursday was actually the 1st time I was net short (in #RealTimeAlerts) since November 29th, so I think the call got  some attention. But so should have my covering shorts and getting back to net long on Friday morning.


That Consumer Confidence reading (+10% m/m in May vs April was that good, and all support lines for SPY held).


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


  1. Immediate-term TRADE overbought = 1678
  2. Immediate-term TRADE support = 1647
  3. Intermediate-term TREND support = 1558


In other words, I listen to my wife and my machine (in that order). Overbought was as overbought did (for a day), as it will again (higher) and oversold will lower.




Keith R. McCullough
Chief Executive Officer


Bullish: SP500 Levels, Refreshed - SPX

WWW: Presentation Materials for 1pm Call

Takeaway: See attached link to presentation materials for today's 1pm conference call on WWW.

See attached link to presentation materials for today's 1pm conference call on WWW.


  • Date: Monday, May 20th at 1:00pm EDT
  • Toll Free Number:
  • Direct Dial Number:
  • Conference Code: 465419#
  • Materials:CLICK HERE



We are keeping our 15-20% growth forecast for the full month of May following another solid week in Macau.  Daily table revenue averaged HK$885 million the past 7 days, up 22% YoY.  Month to date ADTR has climbed 18% YoY.


In terms of market share, MPEL, our favorite stock in the group, was the significant mover from last week with share growing to 14.1%, right in-line with recent trend.  MGM and Wynn continue to track above trend, while SJM and LVS are below.





Daily Trading Ranges

20 Proprietary Risk Ranges

Daily Trading Ranges is designed to help you understand where you’re buying and selling within the risk range and help you make better sales at the top end of the range and purchases at the low end.

Weimar Nikkei

Client Talking Points

Weimar Nikkei

The Nikkei jumped another 1.5% overnight, and Japanese equities are up 77.3% since November. Wow. That’s what happens a country debases its currency. Yields on Japanese government bonds (JGBs) rose 5 basis points overnight, and now are above Keith’s long-term TAIL risk line of 0.81% to 0.85%.

Gold and Silver

Silver prices are down 4% this morning, the biggest percentage move this morning. Gold itself is immediate-term oversold now that consensus is starting to lean on the short side (74,432 short contracts in the CFTC futures/options data this morning is the highest since the data has been available in 2006.)

Asset Allocation


Top Long Ideas

Company Ticker Sector Duration

Decent earnings visibility, stabilized market share, and aggressive share repurchases should keep a floor on the stock.  Near-term earnings, potentially big orders from Oregon and South Dakota, and news of proliferating gaming domestically could provide near term catalysts for a stock that trades at only 11x EPS.  We believe that multiple is unsustainably low – and management likely agrees given the buyback – for a company with the balance sheet and strong cash flow as IGT.  Given private equity’s interest in WMS (they lost out to SGMS) – a company similar to IGT that unlike IGT generates little free cash – we wouldn’t rule out a privatizing transaction to realize the inherent value in this company.  


WWW is one of the best managed and most consistent companies in retail. We’re rarely fans of acquisitions, but the recent addition of Sperry, Saucony, Keds and Stride Rite (known as PLG) gives WWW a multi-year platform from which to grow. 


With FedEx Express margins at a 30+ year low and 4-7 percentage points behind competitors, the opportunity for effective cost reductions appears significant. FedEx Ground is using its structural advantages to take market share from UPS. FDX competes in a highly consolidated industry with rational pricing. Both the Ground and Express divisions could be separately worth more than FDX’s current market value, in our view.

Three for the Road


As volatility seeps into the Japanese government bond complex, the game of interconnected risk rolls on.”-- @KeithMcCullough


“If you’re going through hell, keep going.” – Winston Churchill


$1.1 billion, the price that Yahoo! Reportedly is paying for Tumblr

European Banking Monitor: Greece Inflects To The Upside

Below are key European banking risk monitors, which are included as part of Josh Steiner and the Financial team's "Monday Morning Risk Monitor".  If you'd like to receive the work of the Financials team or request a trial please email .




European Financial CDS - Major widening (+205 bps) at Greek bank EFG Eurobank caused the average European bank swap to widen by 2 bps, but the median was actually tighter by 6 bps. French, Italian and Spanish banks continued to post overall, steady improvement.


European Banking Monitor: Greece Inflects To The Upside - rr. banks


Sovereign CDS – Sovereign swaps were modestly tighter around the globe last week with the exception of Japan and Spain, where swaps widened by 6 and 1 bps, respectively. Despite the sharp increase, Japanese swaps remain 3 bps below their levels from one month ago.


European Banking Monitor: Greece Inflects To The Upside - rr. sov 1


European Banking Monitor: Greece Inflects To The Upside - rr. sov 2


European Banking Monitor: Greece Inflects To The Upside - rr. sov 3


Euribor-OIS Spread – The Euribor-OIS spread widened by 1 bps to 14 bps. The Euribor-OIS spread (the difference between the euro interbank lending rate and overnight indexed swaps) measures bank counterparty risk in the Eurozone. The OIS is analogous to the effective Fed Funds rate in the United States.  Banks lending at the OIS do not swap principal, so counterparty risk in the OIS is minimal.  By contrast, the Euribor rate is the rate offered for unsecured interbank lending.  Thus, the spread between the two isolates counterparty risk. 


European Banking Monitor: Greece Inflects To The Upside - rr. euribor


ECB Liquidity Recourse to the Deposit Facility – The ECB Liquidity Recourse to the Deposit Facility measures banks’ overnight deposits with the ECB.  Taken in conjunction with excess reserves, the ECB deposit facility measures excess liquidity in the Euro banking system.  An increase in this metric shows that banks are borrowing from the ECB.  In other words, the deposit facility measures one element of the ECB response to the crisis.  


European Banking Monitor: Greece Inflects To The Upside - rr. facility







Podcast: Keith Talks Bernanke, Weimar Nikkei and More


Keith gets fired up this morning, talking through a number of topics this morning ranging from the Fed to gold to the Nikkei.

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