Market Summary:
Current Momentum/Trend Model (MOTR) Signal: NEGATIVE (Day Count = 3)
The SPX Index sold off 1.73% for the day Friday as it tested and held the previously identified support level at 5400. Since my Momentum/Trend (MOTR) Model shifted to Neutral on Aug 22 and then Negative on Sep 3 the Index has taken a peak-to-trough hit of over 4%. The current MOTR Negative Signal has thus far returned +2.02% on a closing basis (not bad). The MOTR Signal and the Index have acted just as expected. For reference I have highlighted below all the previously identified support levels (downside targets) which have been broken over the past four sessions. As of the overnight session, S&P 500 futures are bouncing off the Friday close, up ~70bps as of the writing of this note. The MOTR Model remains Negative. Spot VIX remains elevated at 21.08 while VIX Term Structure/Slope is positive (both neutral to negative for stocks). All said, 5400 remains key support. I continue to see risk skewed to the downside and would not be a true buyer of any rally until the MOTR Model shifts out of the current Negative Signal.
Trade Support:
5567: 10dma (BROKEN)
5600: Previous support/resistance (BROKEN)
5562: Jul 8 low (BROKEN)
5505: 50dma (BROKEN)
5500: Jun 20 high and Jul 19 low; Base of Aug 15 Gap Up (BROKEN)
5450: 38.2% Retracement for the recent trough-to-peak move (Aug 5 – Aug 30) (BROKEN)
5400: Previous Support
5378: 100dma
5300: Previous Support (Aug 2, Aug 9)
Trade Resistance:
5645: Previous support/resistance
