Oversold: SP500 Levels, Refreshed

POSITIONS: 9 LONGS, 4 SHORTS @Hedgeye

I was a busy little beaver this morning. I came into the 10AM swoon running net short (only the 3rd day I have had more shorts than longs since November 29th), so covering on my oversold signal was a relatively easy decision. Buying aggressively here is less easy (maybe that’s why I should).

Here’s how I think about that in terms of key levels:

  1. Inside of 1637, the SP500 is immediate-term oversold
  2. But immediate-term TRADE resistance (1657) is the 1st signal for lower-highs I’ve had all month
  3. The broader TREND of support is down at 1558

This week’s 50 point SPY selloff (in 48 hours from Wednesday morning’s highs to Friday morning’s lows) came on central planning risks in the US and Japan; not economic fundamentals. #BernankeRisk is real – the market has already reminded you of as much. The risk is his forecast is too bearish.

It’s perverse really. Bernanke vs The People. And the bond market (long-term Treasuries) is betting that real (inflation adjusted) growth wins.

This week’s jobless claims surprised again on the downside, New Home Sales of 454,000 were fantastic, and this morning’s Durable Good print showed #GrowthAccelerating too.

Now all we need is a bigger #StrongDollar Tax Cut at the pump. Oil down hard on the week will help.

Enjoy your long weekend,

KM

Oversold: SP500 Levels, Refreshed  - SPX