Market Summary:
Current Momentum/Trend Model (MOTR) Signal: NEGATIVE (Day Count = 14)
After the recent ~10% peak-to-trough drawdown the SPX index has now achieved all of my previously identified downside targets which were established back in mid-July. Coming off the Aug 5 low of 5119 the index rallied just under 4% to an intra-day high yesterday of 5312. As I wrote in yesterday’s note, “While aggressive, short-lived rallies should be expected as we work through the current drawdown, I would not be inclined to participate. Risk remains to the downside”. Even as the overnight session has the S&P 500 e-mini futures +1.20% as of the writing of this note, I would remain extremely cautious not to get caught “picking up pennies in front of a steamroller”. Market internals are off their recent/worst levels, but the MOTR model remains Negative. The higher risk remains to the downside with targets at the 200dma (ref 5016) and 4840 (38.2% Retracement of Oct 2022 low (ref 3491) to Jul 2024 high (5669)
Trade Support:
5016: 200dma
4840: 38.2% Retracement (Oct 2022 low to Jul 2024 high)
Trade Resistance:
5400: Low/Base of the June 12 Gap
5449: 50dma
5497: 10dma
5500: June 20 high and Jul 19 low
5669: Jul 15 high
