Bear Market Macro: SP500 Levels, Refreshed...

On our Macro Morning Call a client asked "so what's your catalyst on the downside?”


My answer: price - humans will chase it when it cracks.


This is the reality of modern day risk management. Price momentum dominates decision making at the margin. In our risk management model, the immediate term TRADE zone of 1115-1118 that we have been focusing on this week can quickly become resistance again (as quickly as it became support). There is no immediate term support below 1115 to 1095.


What’s interesting about 1115 is that it’s also the line for the 200-day Moving Monkeys. This rarely happens, but our quantitatively driven line being the same line as the 200-day all of a sudden makes for an even scarier picture to the downside. However bad the back-testing is on using the 200-day as your risk management line in a bear market, the reality is that a lot of people use it.


In the meantime, we’ll keep using what we use – our own proprietary research process – and we’ll remain as bearish as the US employment data (jobless claims of 479,000 yesterday and this morning’s unemployment report of 9.5%) continues to look.


Have a great weekend,



Keith R. McCullough
Chief Executive Officer


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