US STRATEGY – DOLLAR DOG

The dollar continues to look as awful as the underlying health of the USA’s balance sheet.

 

TODAY’S SET UP

 

As we look at today’s set-up for the S&P 500, the range is 26 points or 1.9% downside (1,052) and 0.6% upside (1,078).  Equity futures are trading below fair value this morning. 

 

One of our 3Q Macro Themes, Bear Market Macro, continues to find support in the data and GDP estimates on the Street are being cut accordingly.  While there are two sides to this debate, our view is that data related to earnings and housing will continue to shape this debate and we are not bullish on either area.

 

The dollar continues to slide and looks bearish from an intermediate term perspective; Hedgeye Risk Management’s TREND line of resistance for the USD Index is 84.13.

 

Following Monday’s session, there are only three sectors bullish on TRADE: Utilities (XLU), Consumer Staples (XLP), and Technology (XLK).  Utilities (XLU) remains the only sector positive on TREND.

 

On the MACRO front today, Housing Starts came in below expectations: 549k reported vs. 580k consensus. Based on our Q3 Macro Theme of Housing Headwinds, we expect reporting risk to be to the downside for housing data points over the next 6-9 months, barring further government intervention.

 

 

THE HEDGEYE MACRO TRADE RANGES FOR 7/20/10:

 

US STRATEGY – DOLLAR DOG - 1

 

US STRATEGY – DOLLAR DOG - S P

 

US STRATEGY – DOLLAR DOG - DOLLAR

 

US STRATEGY – DOLLAR DOG - VIX

 

US STRATEGY – DOLLAR DOG - OIL

 

US STRATEGY – DOLLAR DOG - GOLD

 

US STRATEGY – DOLLAR DOG - COPPER