Market Summary:
Current Momentum/Trend Model (MOTR) Signal: NEUTRAL (Day Count = 2)
The SPX Index was manic yesterday. Aside from a session gain of over 1%, the Index had a high/low range of almost 3%. The VIX had a like range of almost 20%! How much more fun could we really expect to have in just one day? On a broader stroke, I can’t help but see what is becoming a massive consolidation near all-time highs. That view is developing and would be very bearish. The need for the Index to rally to and break out above previous highs (ref 5669) is not immediate, but it is necessary. In the near term my Momentum/Trend (MOTR) Model remains Neutral coming out of the recent Negative call. As far as straight price action, I stated in the Sep 10 note that “a greater move is imminent either through Friday’s (Sep 7) high (ref 5522) or low (ref 5402) (highlighted on chart). The Index did hit a low yesterday of 5406 (held support) and then rallied through the 5522 level to close at 5554. This action clearly resolved the “inside day” which developed on Sep 6/Sep 9 to the upside. Now, as I said, we are in a massive consolidation with multiple levels of support/resistance within. The Index has quickly found itself at another resistance level (ref 5562) which was marked back on Jul 8 (doji low) (Jul 9 archive report available for reference – website link below). I do see risk here as evenly distributed. What concerns me is this pattern of massive volatility within a top range of 5400/5600. I stick with the current MOTR call of Neutral but in my gut feel that the greater move from current levels will be to the downside. After covering the remainder of my shorts yesterday mid-morning I am very much paired down in the portfolio and watching.
Trade Support:
5531: 10dma
5507: 50dma
5500: Jun 20 high and Jul 19 low; Base of Aug 15 Gap Up
5400: Previous Support
Trade Resistance:
5562: Jul 8 low
5600: Previous support/resistance
5669: Jul 16 high
