Market Summary:
Current ICAP Momentum/Trend Model (MOTR) Signal: NEGATIVE (Day Count = 1)
The SPX Index faded (as expected) yesterday, losing almost 1% on the day, closing at 5797. The low on the session was 5762 as price broke down below the highlighted downtrend channel (see chart). Previously identified support at the 10dma (ref 5832) and 5796/5800 were also broken. The next identified support level at 5733 was not tested as the Index held ~30 handles above and reversed into the close. I would note that on Oct 21 I wrote that “Although the Index gained 85bps for the week while marking some new all-time highs, resistance at 5878 continues to hold. This is concerning and as I stated last week, the Index feels “toppy”” and that “I am reducing long exposure”. On Oct 22 I wrote that “the longer the Index churns at current levels the more likely it is that we fade back towards support at 5800 in the near term”. In yesterday’s note I wrote “I would not be surprised if there was a derisking of assets heading into the election”. With yesterday’s fade, the ICAP Momentum/Trend (MOTR) Model shifted from Neutral to Negative as price and internals got crushed. The Index did manage to close back in the 5796/5800 range and futures are up an additional ~40bps in the overnight. I continue to see risk skewed to the downside. Follow through over today and tomorrow will be key.
Trade Support:
5831: 10dma (broken)
5800/5796: Oct 9 High (broken)
5733: Sep 19 High
5686: Sep 19 Low
5615: Sep 18 Low
Trade Resistance:
5878: Projection Level
5970: Projection Level
6000: Even Target
