Editor's note: This unlocked research note from CEO Keith McCullough was originally published March 10, 2014 at 10:44 in Macro. For more information on our services click here.
POSITION: 11 LONGS, 10 SHORTS @Hedgeye
If the buck wasn’t burning and #InflationAccelerating wasn’t slowing US growth, I wouldn’t be selling on immediate-term TRADE overbought signals. Consensus hasn’t acknowledged the inflation impact on 2014 growth (yet), and I like that.
To call it a bubble isn’t a big deal. I called it a bubble when I was buying it all of last year (remember: #BTDB – buy-the-damn-bubble). What else would you call the all-time highs in prices?
Across our core risk management durations, here are the lines that matter to me most:
- Immediate-term TRADE overbought = 1888
- Immediate-term TRADE support = 1864
- Intermediate-term TREND support = 1805
In other words, why would you buy an overbought price if you have 4% mean reversion downside to the TREND line of 1805? I might consider chasing the mo-mo on the upside, if the fundamental research view supported it – but it doesn’t.
Let’s see if 1864 holds. Then we reset.
Chief Executive Officer