Market Summary:
Current Momentum/Trend Model (MOTR) Signal: NEGATIVE (Day Count = 16)
As I have been reiterating, market internals as I count them remain negative, the MOTR Model remains Negative (triggered on Jul 18) and risk remains to the downside. That all said, I wrote in yesterday’s note pre-market that “aggressive, short-lived rallies should be expected. The 5200 level is key for now.” The index did in fact hold 5200 and rallied well over 2% for the session. Note, the SPX rally stalled at the previous day’s high (ref 5330 and 5328, respectively). That level remember is significant and represents the 38.2% retracement for the entire peak-to-trough move from the Jul 16 high (ref 5669) to the Aug 5 low (5119). Very interesting. Nonetheless, the rally was amazing and very typical as volatility begets volatility. The phrase “Bear Market Rally” came about for a reason (no I am not calling for a Bear market just yet). I would also continue to remember its counterpart the “Bear Trap”. Bottom line, while aggressive, this entire move has been very technical and uniform overall. Risk remains to the downside and will until I see my model shift back to Neutral and eventually Positive. Traders enjoy the volatility but be mindful that under the current setup these snap back rallies are more likely to create reversals to lower lows.
Enjoy the weekend all.
Trade Support:
5200: Previous Support
5119: Aug 5 low
5026: 200dma
4840: 38.2% Retracement (Oct 2022 low to Jul 2024 high)
Trade Resistance:
5330: 38.2% Retracement (Jul 16 high to Aug 5 low)
5361: 10dma
5400: Low/Base of the June 12 Gap
5444: 50dma
