Market Summary:
The SPX failed at resistance again yesterday at the previously identified 10dma (ref 5589), the 38.2% retracement level (ref 5562) and the 50% retracement level (ref 5583). Risk remains to the downside. That has been my expectation for the past three weeks even as the SPX index was finishing its run to all-time highs. Why? Internal weakness was identified by my momentum/trend model (MOTR) back in early July. The negative divergence which I have continued to write about (broken record) caused my model to shift from Positive to Neutral and then to outright Negative on July 18. The signal remains Negative with additional downside likely. I continue to remain confident that the previously identified downside target of 5400 is realistic and will be achieved in the near term. Note, as of the writing of this note the S&P 500 futures are trading down by 34 handles (60bps) ahead of the regular session.
Trade Support:
5500: June 20 high and Jul 19 low
5400: Low/Base of the June 12 Gap
5300: Previous Resistance/Support
Trade Resistance:
5562: Jul 8 low and 38.2% Retracement (Jul 16 high to Jul 19 low)
5583: 50% Retracement (Jul 16 high to Jul 19 low)
5589: 10dma
5622: July 17 high (gap)
5642: Jul 11 high (A)
5655: Jul 12 high (B)
5666: Jul 15 high (C)
