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Selling: SP500 Levels, Refreshed

Takeaway: The signal says sell, so I have been selling again all morning. The fundamental research view also says sell, which is very new.

This note was originally published June 14, 2013 at 11:07 in Macro

The signal says sell, so I have been selling again all morning. The fundamental research view also says sell, which is very new.

 

Selling: SP500 Levels, Refreshed - buy sell gold stock

 

Dollar Down, Up Oil = not good. Or at least it may not be as good as yesterday’s employment and consumption #GrowthAccelerating data (Jobless Claims and Retail Sales) was. It’s been a heck of a 6 month run, and no one ever went broke locking it in.

 

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

 

  1. Immediate-term TRADE resistance = 1653
  2. Immediate-term TRADE support = 1601
  3. Intermediate-term TREND support = 1583

 

In other words, SPY is still signaling lower-highs in my model as front-month VIX signals higher-lows. That’s the immediate-term, and to be clear, selling up here is an immediate-term TRADE call.

 

I’ll likely gross up US Equity exposure between 1583-1601 again – but the US Dollar needs to recover it’s TREND line ($81.21) for me to buy as aggressively as I have throughout the 2013 US growth recovery.

 

Happy Father’s Day to all the Dad’s out there and enjoy your summer weekend,

KM

 

Keith R. McCullough
Chief Executive Officer

 

Selling: SP500 Levels, Refreshed - SPX large


THE WEEK AHEAD

The Economic Data calendar for the week of the 17th of June through the 21st is full of critical releases and events.  Attached below is a snapshot of some (though far from all) of the headline numbers that we will be focused on.

 

THE WEEK AHEAD - WeekAhead


Top-7 Tweets to Keith Today

Takeaway: It was another lively day on Twitter. Here's a look at some of the top tweets to Keith.

Twitter war going on between @KeithMcCullough and @jimcramer should get really interesting, have to side with @KeithMcCullough right now

@manufan96 4:17 PM

 

Top-7 Tweets to Keith Today - tweet2

 

what I wouldn't give to hear Howard Cosell scream "Down Goes Cramer!"

@yoshfriedman 4:15 PM

 

$LINE is down 18% since @KeithMcCullough called it a Short on 3/22 #toptrade

@MadFastStreet 1:33 PM

 

Have to say, you were particularly uncanny in your calls this week - you'd better treat the staff tonight!

@rraydar 4:02 PM

 

Keith - you're either a psychic or you are controlling the computers at the NYSE . Either way you are the ultimate SPY Ax !

@bdlefan 10:50 AM

 

@KeithMcCullough needs to be investigated by the SEC how can he be so right

@FreemanGanyo 11:03 AM

 

actually, the Hedgeye team is not always right they are just less wrong than most on Wall St., a good thing

@jacobmiller860 11:42 AM


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Trade of the Day: IGT

Takeaway: We sold International Game Technology (IGT) at 10:17 AM at $17.59.

We locked in the 8% gain here. IGT is immediate-term TRADE overbought, within a bullish TREND. It’s more of a market (beta) call in selling this than anything fundamental from Hedgeye’s Todd Jordan. For the record: Jordan is batting 87% all-time (long and short) in IGT. He's made 23 calls on the stock in the last 5 years. Impressive? We’ll let you be the judge.

 

Trade of the Day: IGT - IGT


Stock Report: Nationstar Mortgage Holdings, Inc. (NSM)

Stock Report: Nationstar Mortgage Holdings, Inc. (NSM)  - HE II NSM 6 14 13

THE HEDGEYE EDGE

There are three things NSM needs to do to grow. First, it needs to continue to acquire its share of the outstanding pipeline of servicing assets. We think the risk to execution here is low, as NSM has the infrastructure and backing (Newcastle & Fortress) to be able to execute on significant further volume.

 

Second, it needs to improve its servicing profit margins. Mortgage servicing is a scale business, and the company will grow its servicing book meaningfully in the coming 12-24 months. As the servicing business grows, we expect to see significant servicing margin improvement.

 

Third, the company needs to continue to grow its mortgage origination platform. The volume of this business should grow alongside the servicing business; however, one wildcard is gain-on-sale margins. Gain on sale margins depend on factors outside Nationstar’s control, and are currently wider (larger) than their historic norms.

 

Mean reversion seems like a reasonable assumption, which will put some pressure going forward on this portion of the business, but we think it can be more than offset by volume growth.

 

TIMESPAN

INTERMEDIATE TERM (the next 3 months or more)

Over the intermediate term, we expect NSM to announce further portfolio acquisitions and a continued expansion of its mortgage origination platform. Historically, acquisition announcements have been positive catalysts for the stock, and the company has indicated that it has a $300 billion UPB pipeline of acquisitions as of the end of 1Q13.

 

LONG-TERM (the next 3 years or less)

Over the longer-term, we think banks will continue to sell high-touch, specialty mortgage servicing to a select group of non-bank servicers that includes NSM, OCN and WAC. This industry should remain in a high-growth phase throughout 2013/2014.

 

ONE-YEAR TRAILING CHART

Stock Report: Nationstar Mortgage Holdings, Inc. (NSM)  - HE II NSM chart 6 14 13

 


Fear & Loathing (and Greed) on Wall St

Takeaway: With the Official Meddlers in high gear, market volatility is on a tear.

(Editor's note: The sneak-peak excerpt which follows below is from Hedgeye's popular "Investing Ideas" newsletter that is sent out every Saturday morning. Investing Ideas is for the savvy, longer-term self directed investor looking for fresh, long-only opportunities.This week we focus on seven of our high-conviction stock ideas.  It also features macro commentary like the excerpt below. With your subscription, you'll know immediately when one of our award-winning analysts uncovers a new Idea or changes a current one. Click here to sign up.)

Fear & Loathing (and Greed) on Wall St - fearloathing

Fear & Loathing (and Greed) on Wall Street

With the Official Meddlers in high gear, market volatility is on a tear.  Pundits expect a protracted period of turbulence – possibly running through year end, or even into Q1 of 2014 – as the Fed pretends to decide what policy steps it will take, aided and abetted by their partners in crime at the European Central Bank and the Japanese policy to out-print the US Treasury.  The “Fear & Greed” index maintained by CNN Money was registering Extreme Greed just one month ago.  It now reads Extreme Fear.  It’s “Risk-On” worldwide.

 

Hedgeye CEO Keith McCullough, who reminds us that Risk is always “On,” says our sentiment analysis since the end of 2012 “has indicated you want to be long fear – everyone is looking for a crisis that didn’t come."

 

Did it finally come this week?


Hedgeye remains firmly bullish on US economic growth.  This is not the same as being bullish on the stock market, which is easy to overlook with the indexes at all-time highs.  The Fear Factor is so overpowering in the short term that people always lose sight of the longer term.  As we have observed, highs are made in the markets when Greed overpowers Fear, as note the recent all-time highs in the stock market indexes, that coincided with the CNN index’ “Extreme Greed” reading.  And conversely – no surprise here – when Fear is in the ascendant, markets make lows. 

 

This week’s gapping-down openings in the S&P 500 have been seen as nothing short as a sign that Life-As-We-Know-It is coming to an end.

 


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