Braveheart: SP500 Risk Management Levels, Refreshed

There was a time in my career where I thought I could pretend I was Braveheart and buy my “best ideas” on valuation – then I got crushed. In a market that’s flashing negative across my core 3-factor model (Price, Volume, Volatility), the risk/reward is skewing to the downside.

After registering price, volume and, volatility studies after the first hour of this morning’s trading, the risk in the SP500 clearly outruns the reward (1108 downside versus 1144 upside). Here are some other real-time risk management factors to consider: 

  1. SP500’s dominant TREND line (1144) is not only broken, but the bulls are keep trying to test it – that should equate to higher VIX if SPX fails again
  2. VIX remains in a Bullish Formation (bullish across all 3 of our core investment durations, TRADE, TREND and TAIL), with no resistance to 39.37
  3. Immediate term TRADE support drops to a lower-low for the first time in a week (was 1110 and is now 1108 which would also be a lower-closing low) 

The brave move from here may simply be not getting sucked into the bid.

KM

Keith R. McCullough
Chief Executive Officer

Braveheart: SP500 Risk Management Levels, Refreshed - S P