Market Summary:
Current ICAP Momentum/Trend Model (MOTR) Signal: POSITIVE (Day Count = 4)
I wrote in yesterday’s note that “the Index seems to have additional upside from current levels. A break above 5878 (resistance) sets up for a potential test of 5970 and 6000. I would think this is the likely path but would expect some retracement over the coming sessions with a potential test of support at 5796/5800”. The SPX Index did in fact test 5800 (as expected) with a low of 5804 and a close down 76bps at 5815. The move down was relatively organized and one directional with Technology taking a rare role as one of the weakest sectors on the day (along with Energy). Spot VIX caught a bid and closed back above 20 at 20.64. I am watching for a close above 22.70 as a potential risk off signal. The ICAP Momentum/Trend (MOTR) Model Signal remains Positive but will shift to Neutral with any follow through to the downside. Overall, I remain net long but the 5800 level needs to hold. A breakdown below with a shift in MOTR could set up for an aggressive pre-election selloff. This scenario seems more possible than most would think as overall positioning is very long and very levered with the election presenting a massive known unknown. Keep your eyes on the screen.
Trade Support:
5800/5796: Oct 9 High
5733: Sep 19 High
5686: Sep 19 Low
5615: Sep 18 Low
Trade Resistance:
5878: Projection Level
5970: Projection Level
6000: Even Target
