Sell: Russell 2000 Levels, Refreshed

Takeaway: Stay with what’s worked in 2014.

POSITION: 7 LONGS, 10 SHORTS

 

Having sent out the cover signal on the Russell lower (we have 9 consecutive wins on the short/cover signal in the Russell 2000), I was just waiting and watching for the re-short signal – and here it is.

 

If today’s jobs report was anything other than what it is (a lagging economic indicator), maybe I’d care about it. What I really care about is that as inflation (cost of living) continues to accelerate in the US, both the consumer and housing continue to slow.

 

Today you want to be doing precisely what you should have been doing 5 months ago, focusing your sales, under-weights, etc. on US domestic consumer/growth. Being long slow-growth #YieldChasing (Bonds and any stock that looks like a bond!) continues to be where the real outperformance is at.

 

Across our core risk management durations, here are the lines that matter to me most:

 

  1. Immediate-term TRADE resistance = 1163
  2. Intermediate-term TREND resistance = 1169
  3. Long-term TAIL risk support = 1091

 

In other words, the Russell 2000 continues to signal a series of lower-highs from its all-time bubble high (March 2014) and the fundamentals for US growth today are worse than they were on January 1st, 2014. Stay with what’s worked.

 

KM

 

Keith R. McCullough
Chief Executive Officer

 

Sell: Russell 2000 Levels, Refreshed - R2K


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