Market Summary:
Current ICAP Momentum/Trend Model (MOTR) Signal: NEUTRAL (Day Count = 4)
The SPX Index closed almost 1% lower on the day at 5708. After opening on the high at 5757 the Index broke and closed below the previously identified support level at 5733. This 5733 level has been a major focus for me since Sep 19. My second support level of focus has been 5686. This level was violated on an intraday basis but essentially held as the index gained some footing after hitting a low of 5681. As I wrote back on September 30, “I am becoming more convinced that the current setup will resolve itself to the downside and that MOTR will shift to Negative over the next few trading sessions. A break of the 5733 support level on a closing basis would be a near-term negative and would set up for a quick test of the 5686 level. Under this scenario, if 5686 does not hold the Index could slide very aggressively back towards the 5500 level”. Obviously, this has begun to play out as expected and I am glad to see that. At this point I am watching internals and waiting on confirmation from the ICAP Momentum/Trend (MOTR) Model. As of the close yesterday internals continued to fade with price confirming additional risk to the downside. While the MOTR Signal is close to an outright Negative, it has held the Neutral rank by a small margin heading into today’s cash session. Near term I expect 5733 to revert back to acting as resistance and fully expect support at 5686 to be retested. I continue to see risk as skewed to the downside even as the potential for a “dip buyers” pop exists. In my opinion, at this time, such a pop would be an opportunity to sell, not to chase to the upside.
Trade Support:
5686: Sep 19 Low
5615: Sep 18 Low
5600: Previous Support/Resistance
Trade Resistance:
5733: Sep 19 High
5878: Projection Level
