Sell'em: SP500 Levels Refreshed

Position:  4 Longs, 5 Shorts @Hedgeye

We highlighted the emergent deceleration in the domestic fundamental macro data in a flash call on Wednesday (ping for the replay) and, on balance, this morning’s payroll data confirms that broader slowdown.   

Sure, there was plenty of fodder for both perma-camps in this morning’s employment release with the Establishment Survey discretely soft (+113K vs 180 exp) while the Household Survey (+638K employment, 6.6% Unemployment, Higher Participation Rate) was almost unanimously positive – but from a quantitative perspective, virtually nothing has changed. 

The dollar is down and ten year yields are off 3bps with equities bouncing on the expectation of Yellen-being-Yellen in the face of #GrowthSlowing

So, inclusive of this morning’s price action, the SPX, $USD and 10Y all remain Broken TREND while the VIX remain in BULLISH Formation and well above TREND Support at 14.91.

For the S&P500, here are the lines that matter:

  1. Intermediate-term TREND Resistance = 1786
  2. Immediate-term TRADE Support =1735
  3. Long-term TAIL support = 1683

In other words, if we can’t close above 1786 with volume confirming and the price signals across the constellation of macro factors mentioned above corroborating, further drawdown risk remains acute and we’ll remain sellers of strength.   

Still keeping it tight here with a low gross and tight net.   

Christian B. Drake

Sell'em: SP500 Levels Refreshed - Levels