In the highlight reel above from The Macro Show this morning, Hedgeye CEO Keith McCullough explains why we told investors to raise cash last week and buy the dip in U.S. stocks today.
- Stocks Overbought, Raise Cash… Stocks Oversold, Buy Stocks – In our asset allocation model, we took cash up to the year-to-date max on Friday because the market was overbought. “It’s really simple. Raise cash at the top end of our ranges,” McCullough says. “On the pullback, when nobody wants to buy’em, you buy’em.” By the way, it’s almost time for the month-end, quarter-end mark-up. In other words, “Yesterday could be the lows of the quarter,” McCullough says.
- Hedge Fund Performance Chasers – Our proprietary risk ranges, which investors use to buy low and sell high, are calculated via the price, volume and volatility of an underlying asset. Staring at one of these in isolation is no way to trade. “If all you did was look at the surface, at price, you’d sell low and buy high. That’s what a lot of people, in the hedge fund community in particular, are being pressured to do. What they’re constantly doing is chasing their own momentum tail and that really doesn’t help you.”
- A Brief Note on Oil – Oil prices are breaking down, McCullough says. Stay away.
