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Takeaway: There’s mean reversion risk down to 1734 TREND (-4.1% downside) versus +0.4% upside from the all-time closing high of 1808.

POSITION: 5 LONGS, 5 SHORTS @Hedgeye

 

During the 5-day correction in the SP500 (which ended Thursday) I went to 11 LONGS, 3 SHORTS. So all I am doing here is aggressively managing the immediate-term risk of this market’s range. #GetActive remains one of our Top 3 Global Macro Themes for Q413.

Unconventional markets call for unconventionally active risk management.

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

  1. Immediate-term TRADE overbought = 1815
  2. Immediate-term TRADE support = 1785
  3. Intermediate-term TREND support = 1734

In other words, the immediate-term risk range = 1 and, from an intermediate-term TREND perspective, there’s mean reversion risk down to 1734 TREND (-4.1% downside) versus +0.4% upside from the all-time closing high of 1808.

The less I try to over-think this, the better. The math works more than it doesn’t.

KM 

Keith McCullough

Chief Executive Officer

Extended (Again): SP500 Levels, Refreshed - SPX