Market Summary:
Current ICAP Momentum/Trend Model (MOTR) Signal: NEGATIVE (Day Count = 7)
I wrote on Oct 29, “I do believe that we will see one final push out ahead of next Tuesday. My gut is that there will be a final move to derisk, trim and hedge long exposure. I expect 5800 to break and 5733 to be tested before we start filling in ballots on Nov 5”. I reiterated on Oct 30 writing that “I continue to expect 5800 to break and 5733 to be tested before we start filling in ballots on Nov 5”. Finally, I wrote in yesterday’s note that “I expect 5800 to be tested and to break leading to an aggressive move down to 5733”. Well, The SPX Index gapped down yesterday, opening at 5775 (breaking support at 5800), breaking support at 5733, hitting a low of 5702 and closing at 5705. Absolutely amazing price action and directly in line with my expectation. Price has broken down with confirming momentum and volume. The ICAP Momentum/Trend (MOTR) Model remains Negative. While the risk of a snapback rally exists, risk overall remains to the downside. What Trumps all of this over the near term is the massive price volatility that will result from Nov 5. Regardless of the election results, the process and emotion will create “yuge”, volatile price swings. The next downside target is 5686. I do expect us to hit that target but it is a much more difficult trade than the one we just saw.
Trade Support:
5800/5796: Oct 9 High (broken)
5733: Sep 19 High (broken)
5686: Sep 19 Low
5615: Sep 18 Low
Trade Resistance:
5816: 10dma
5878: Projection Level
5970: Projection Level
6000: Even Target
