Market Summary:
Current Momentum/Trend Model (MOTR) Signal: NEGATIVE (Day Count = 15)
The SPX index rallied yesterday over 1.50% hitting an early morning high of 5330. The index then failed and faded ~2.50% to close at 5199. So, what happened? First, as I have continued to relay, downside risk remains high as my momentum/trend model (MOTR) remains Negative (day 15). As I wrote pre-market yesterday, “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).” Second, 5330 was the perfect spot to fail. If you run an intra-day regression peak-to-trough from the Jul 16 high (ref 5669) to the Aug 5 low (5119) you will come to a 38.2% retracement level of…..wait for it……5329. Makes perfect sense. At this point I remain cautious but stay aware of the fact that “aggressive, short-lived rallies” should be expected. The 5200 level is key for now, a break here will set up the index for an aggressive re-test of the recent 5119 low.
Trade Support:
5119: Aug 5 low
5020: 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
