Conclusion: We remain short both the SP500 (SPY) and US Dollar (UUP).
Gotta love a bear market that rallies on rumors of “Fed cuts”, when they can’t cut from zero. I suppose if the rumor is that Bernanke could implement more quantitative easing, that would be more believable. If he does that, the US Dollar and balance sheet position will weaken further…
We continue to believe that the 7 consecutive weeks we’ve seen of the US Dollar trading lower (week-over-week) bodes ominously for both future US economic growth and equity performance. Unlike the bullish REFLATION trade we made in 2009 (Dollar down = stocks up), this time US Dollar weakness won’t have accelerating global and domestic growth at its back.
The Bear Market Macro intermediate term TREND line of resistance remains firmly intact up at 1144, and our refreshed immediate term TRADE line of resistance is now 1080. We probably should have covered our SPY short position on this morning’s open near our immediate term TRADE line of support (1058), but shoulda, coulda, woulda, only works in men’s league hockey when you are on the bench talking to yourself.
Keith R. McCullough
Chief Executive Officer