The Dow Jones Industrial Average (DJIA) hit a new all-time high today. Hedgeye CEO Keith McCullough signaled sell it in Real-Time Alerts. If you’re sticking to the Hedgeye process and following the data (not your feelings), this shouldn’t come as a surprise.

“It’s not because I was feeling anything. It is not because of anything qualitatively,” McCullough says in the above video. “It is all process.”

Here’s the set-up in the Dow:

  1. The Dow hit the top end of our quantitative risk ranges
  2. Wall Street consensus is now more bullish on the Dow than any other major asset class, according to CFTC data on big bank/hedge fund positioning
  3. Based on our reading of positioning in futures and options markets, the Transports, which is a major component of the Dow, has an implied volatility discount (i.e. bulls are getting complacent and bears have capitulated).

Bottom line? Follow the data, not your feelings.


McCullough: Why I Signaled Sell the Dow - the macro show