Textbook Bounce: SP500 Levels, Refreshed

Takeaway: In other words, this market can easily bounce to 1867. But the bigger question is what does it do from there?



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:


  1. Immediate-term TRADE resistance = 1867
  2. Immediate-term TRADE support = 1845
  3. 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


Textbook Bounce: SP500 Levels, Refreshed - SPX

Another French Revolution?

"Don't be complacent," writes Hedgeye Managing Director Neil Howe. "Tectonic shifts are underway in France. Is there the prospect of the new Sixth Republic? C'est vraiment possible."

read more

Cartoon of the Day: The Trend is Your Friend

"All of the key trending macro data suggests the U.S. economy is accelerating," Hedgeye CEO Keith McCullough says.

read more

A Sneak Peek At Hedgeye's 2017 GDP Estimates

Here's an inside look at our GDP estimates versus Wall Street consensus.

read more

Cartoon of the Day: Green Thumb

So far, 64 of 498 companies in the S&P 500 have reported aggregate sales and earnings growth of 6.1% and 16.8% respectively.

read more

Europe's Battles Against Apple, Google, Innovation & Jobs

"“I am very concerned the E.U. maintains a battle against the American giants while doing everything possible to sustain so-called national champions," writes economist Daniel Lacalle. "Attacking innovation doesn’t create jobs.”

read more

An Open Letter to Pandora Management...

"Please stop leaking information to the press," writes Hedgeye Internet & Media analyst Hesham Shaaban. "You are getting in your own way, and blowing up your shareholders in the process."

read more

A 'Toxic Cocktail' Brewing for A Best Idea Short

The first quarter earnings pre-announcement today is not the end of the story for Mednax (MD). Rising labor costs and slowing volume is a toxic cocktail...

read more

Energy Stocks: Time to Buy? Here's What You Need to Know

If you're heavily-invested in Energy stocks it's been a heck of a year. Energy is the worst-performing sector in the S&P 500 year-to-date and value investors are now hunting for bargains in the oil patch. Before you buy, here's what you need to know.

read more

McCullough: ‘My 1-Minute Summary of My Institutional Meetings in NYC Yesterday’

What are even some of the smartest investors in the world missing right now?

read more

Cartoon of the Day: Political Portfolio Positioning

Leave your politics out of your portfolio.

read more

Jim Rickards Answers the Hedgeye 21

Bestselling author Jim Rickards says if he could be any animal he’d be a T-Rex. He also loves bonds and hates equities. Check out all of his answers to the Hedgeye 21.

read more

Amazon's New 'Big Idea': Ignore It At Your Own Peril

"We all see another ‘big idea’ out of Amazon (or the press making one up) just about every day," writes Retail Sector Head Brian McGough. "But whatever you do, DON’T ignore this one!"

read more