The 200-day Moving Monkeys took a good, hard, and long look into the depths of The Shark Tank this morning. Both the pre and post opening bell trading saw some of the most reactive monkeys in this market get eaten. We like monkeys; we just don’t want to trade like them.
This isn’t to say that this market is without risk. It’s to remind ourselves that proactively predictable risks get priced in. From the April Flower peak of 1217 (April 23rd) to this morning’s freak-out May Shower low, we have witnessed a correction of -13%. For you stock market almanac fans, a -13% drop in 20 days of SP500 trading happens very infrequently!
Now I have never been a big fan of the sell side giving me a risk management life-line. Managing risk doesn’t happen in the vacuum that they and the media perpetuate. It changes as prices do. The quantitative levels I give you are born out of a multi-factor model that changes dynamically as market prices do. Its math, not alchemy.
The thick green line in the chart below is the line you should be laser-like focused on. That’s the long term TAIL line of support for the SP500 at 1070. And we need more price, volume, and volatility data than a 1.5 hour feeding by Squeezy The Shark to validate it.
I’m going to give this 3-days. If the long term TAIL line of support can hold, the SP500 has no resistance up to the 1125 line. That would be a 5% squeeze that performance chasers and monkeys alike cannot afford to miss.
Take your time here and be patient. The big down moves are behind us, for now…
Keith R. McCullough
Chief Executive Officer