SP500 Risk Management Levels, Refreshed

Now that the initial round of this Goldman grilling is over with (5 hours and 15 minutes), it’s a good time to look at some legitimate risk management levels. What I heard from these young guns about risk management reinforced a lot about why I think global markets reached the heights that they did in 2007. The alleged smartest guys in the room truly didn’t know what they didn’t know. Birnbaum is really the poster child of this.

At least for the immediate term TRADE, an important top in the SP500 may have been reached on Friday at 1217. Today, we finally broke down through an important immediate term momentum line of support at 1205. Watch for that line to confirm into the close. If it does, the next line of support is the dotted green line in the chart below down at 1188.

Given the negative sentiment that the market has today with this pending Blankfein grilling, and that the line of support at 1188 is meaningful, I have covered our short position again in the SP500. What was support at 1205 is now resistance, which we could easily rally toward in the coming days. The VIX has also broke out above both my immediate and intermediate lines of resistance at 16.81 and 19.12, respectively. We haven’t seen that since late January.

KM

Keith R. McCullough
Chief Executive Officer

SP500 Risk Management Levels, Refreshed - S P