POSITION: 10 LONGS, 3 SHORTS @Hedgeye
After tagging last week’s immediate-term TRADE overbought bubble highs (1881 SPX on Tuesday), the SP500 had a brisk -2.1% correction to immediate-term TRADE oversold as both Gold and VIX signaled overbought. #TextbookBounce
Across our core risk management durations, here are the lines that matter to me most:
- Immediate-term TRADE resistance = 1867
- Immediate-term TRADE support = 1845
- Intermediate-term TREND support = 1815
In other words, this market can easily bounce to 1867. But the bigger question is what does it do from there? A close above that TRADE line would be bullish inasmuch as a close below it would be bearish.
With #InflationAccelerating (should be > 2% by Q3) and US #GrowthSlowing (might drop < 2% in 1H14), there’s no reason to chase the +1% up days, but there’s no need to sell on oversold days either.
Stick to the process. Buy/cover on oversold signals. Sell/short on overbought ones. Don’t chase.
Keith R. McCullough
Chief Executive Officer