Editor's note: This complimentary market note from CEO Keith McCullough was originally published February 12, 2014 at 10:57 in Macro. Click here for more information on how you can subscribe to Hedgeye.
POSITION: 4 LONGS, 9 SHORTS @Hedgeye
While being short into the tail-end of a market v-bottoming off the YTD lows was painful yesterday, that doesn’t mean our bearish call on consumption growth ends. If you want to be long, buy commodity inflation and/or slow-growth (bonds) assets.
That’s what’s working.
Across our core risk management durations here are the lines that matter to me most:
- Immediate-term TRADE overbought = 1837
- Intermediate-term TREND = 1785
- Immediate-term TRADE support = 1729
In other words, SPX is making lower-highs on lower-volume signals than we are seeing on the down days (Top 5 Volume Days of 2014 were all down days).
Given US #InflationAccelerating and consumption #GrowthSlowing, I am not convinced my @Hedgeye TREND support of 1785 holds. This is materializing into a very different setup vs. what our process signaled in 2013.
If they snap 1785 again, there’s no support to 1729. On a move like that, risk will most likely happen fast.
Keith R. McCullough
Chief Executive Officer