Market Summary:
Current ICAP Momentum/Trend Model (MOTR) Signal: NEUTRAL (Day Count = 1)
I apologize for not having written a note the past two days. I was away from the desk working at the polls and participating in our wonderful election process. Democracy at work!!
Quick recap – On Oct 30 I wrote that “I continue to expect 5800 to break and 5733 to be tested before we start filling in ballots on Nov 5. Either way, as we approach what will be a major volatility event (up or down), I am paired down across the board.” We did in fact see that break as the SPX Index hit a low of 5702 (Oct 31) and 5696 (Nov 4). The Index began a strong rally on Nov 5 with an open/low of 5722.43/5722.10. This as sentiment began to lean further towards a Trump win. The Index closed at 5782 as the polls closed showing a massive Republican wave building. Yesterday the Index gapped up on the open with a starting print (and low) of 5864.89. On the day the Index gained a huge 2.53%. The Index was up 3.79% from the Nov 4 close. Simply parabolic and precisely what we expected. Internals are confirming as momentum exploded and Spot VIX melted to a closing print of at16.27 for yesterday’s session. The ICAP Momentum/Trend (MOTR) Model is behind this massive move higher, shifting to Neutral on the close yesterday. This was somewhat expected and led me to pair down exposures across the board heading into Nov 5. At this point I fully expect 6000 to get tapped but I wouldn’t be surprised at all if the Index retests 5900 before making that next leg up. I would look for support at 5900 or even 5878 to be tested in the near term ahead of a leg higher towards 6000. Note, it is massively important that the Index does not break below yesterday’s low of 5864. That break could lead to a filling of the gap back down to 5783. I don’t expect this to happen in the near term but keep that level in mind moving forward.
Trade Support:
5900: Round Level
5878: Projection Level
5800/5796: Oct 9 High
5733: Sep 19 High
Trade Resistance:
5970: Projection Level
6000: Even Target
