"We're seeing very short-term oversold signals in US Equity Beta yesterday (see Real-Time Alerts for details)," Hedgeye CEO Keith McCullough wrote this morning in a note sent to subscribers this morning. Here's more from McCullough:
"One of the main reasons for the oversold SPY signal was the super-short term overbought signal in USD (2 USD up days rocked reflation beta, but on a bad jobs report tomorrow, USD can easily retrace to 16 month lows); 90-day inverse correlation b/t SPY and USD is -0.62, so it’s not the layup that buying oil/energy stocks has been (higher correlation), but it’s there."
Digging deeper into oil...
"Big bounce +3.3% on Dollar Down move as WTI holds the low-end of our immediate-term $42.34-46.63 risk range and that’s all it’s signaling to me here – short-term range bound with long-term TAIL risk in that $46-47 range."
Ahead of Friday's down Dollar jobs report, that's why McCullough sent out the buy Energy (XLE) signal in Real-Time Alerts late yesterday.