TREND Bearish?: SP500 Levels, Refreshed

Takeaway: For a few weeks I have been saying ‘get out of the way’ – and for the 1st time this year I am saying stay out of the way (for now).

POSITION: 5 LONGS, 4 SHORTS @Hedgeye

This is not good. Both PRICE and VOLATILITY are now confirming yesterday’s VOLUME signal. In my 3-factor model, that’s all I need to stay out of the way. If the TREND line of 1589 remains broken, there is not intermediate-term support to 1503.

Many of you will ask why I am using 1589 now (instead of 1583). That’s the right question. And the answer is that I’ve had to tweak my implied volatility assumption for a breakout in intermediate-term US Equity (front-month) volatility above my 18.98 VIX TREND line.

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

  1. Immediate-term TRADE resistance = 1629
  2. Intermediate-term TREND resistance = 1589
  3. Long-term TAIL support = 1503

In other words, for a few weeks I have been saying ‘get out of the way’ – and for the 1st time this year I am saying stay out of the way (for now). That’s new for me. For 6 months you’ve been used to seeing me buy corrections. Thanks Ben.

I am price, volume, and volatility data dependent. This is my plan (for now). And the plan is that the plan is always changing.

Enjoy your weekend,

KM

Keith R. McCullough
Chief Executive Officer

TREND Bearish?: SP500 Levels, Refreshed  - SPX