You’ll notice a welcomed change in the title of this risk management product – we change as prices do and, unless we see a breakdown through 1144 before today’s market close, we can’t call this an intermediate term Bear Market anymore.
What we’ll call it is a Bull/Bear Battle however. With Q3 performance problems in the hedge fund industry capitulating into month and quarter end, I see no reason to make a decisive move yet in the SP500 – that’s why I am neither long nor short SPY in the Hedgeye Portfolio.
Where would I consider taking a position? From an immediate term TRADE perspective, the 1148 line is the most interesting spot on the short side and 1131 is support. The range in my 3-day probability model is as tight today (30 SPX points) as it has been in all of 2010. A tight range of probabilities (on a very short term duration) simply gives me a higher confidence interval in trading around my gross exposure and in/out of long/short positions.
May the Battle begin,
Keith R. McCullough
Chief Executive Officer