It’s been so long that we have put up a chart with our old mascot from 2008 (Squeezy The Shark), that the boys on our Macro Desk here in New Haven have resorted to stitching their own plush version of the deadly one from the depths. Hedrick and Dale took a picture of their creation and superimposed it on this chart – this thing looks like a minnow! We’ll work on making this thing look as concerning as the SP500 does on a breakdown through 1144.
We call the line that will create accelerating volatility The Shark Line (moves below/above have the propensity to get people leaning on the wrong side of the line eaten). For now, that line is the intermediate term TREND line for the SP500. Its not always the TREND line; it just is now. A lot of the bulls who missed the initial correction in this market got sucked into believing that all weakness was to be bought; expectations are what the Shark Line is built upon.
If this market can close at or above 1144, I’ll cover my short position in the SPY. If it can’t, there is no downside support for the SP500 to the immediate term TRADE line down at 1111.
If you are betting on another Monday bailout of these waters from professional politicians in Europe, all we’d recommend is to swim at your own risk.
Keith R. McCullough
Chief Executive Officer