Market Summary:
Current Momentum/Trend Model (MOTR) Signal: NEGATIVE (Day Count = 1)
The SPX Index was down just under 20bps yesterday as it held the 50dma (ref 5505) for the second day (A, B). The index did attempt to rally away from this week’s lows hitting a high of 5552 but faded, closing the session at 5520. Broad stroke, the reversal on Sep 3 from >5600 to current levels with a spike in the VIX to 23.31 was significant. The 5500 level must hold. My Momentum/Trend (MOTR) Model has been extremely accurate over the past few months. The recent Neutral call which triggered on the Aug 22 close (ref 5570) has now shifted to outright Negative. This shift was expected. In fact, I wrote back on Aug 27 that “I remain cautious here and have reduced most of my long exposure. I am positioned slightly short with plenty of dry powder available”. I see additional risk to the downside from here and expect the 5500 level to break, leading the SPX to fill the gap below with a 5400 downside target. I will continue to monitor price action, internals and the MOTR Signal for additional datapoints.
Trade Support:
5595: 10dma (BROKEN)
5600: Previous support/resistance (BROKEN)
5562: Jul 8 low (BROKEN)
5505: 50dma
5500: Jun 20 high and Jul 19 low; Base of Aug 15 Gap Up
5450: 38.2% Retracement for the recent trough-to-peak move (Aug 5 – Aug 30)
5400: Previous Support
Trade Resistance:
5645: Previous support/resistance
5669: Jul 16 high
