Market Summary:
Current ICAP Momentum/Trend Model (MOTR) Signal: NEUTRAL (Day Count = 2)
The SPX Index gapped down on Friday and faded for the entire session. The Index opened at 5912, hit a low of 5853 and closed at 5870. Once again, this price action was right in line with expectations. For over a week I have been calling for a fade from the ~6000 level. In fact on Nov 12 I wrote that “it feels like a good spot to lighten up on some longs and take a breath.” In my note this past Friday I wrote that I expected “a lot of supply and fear still to hit the tape.” The Index has now faded peak-to-trough -2.73% from the Nov 11 high (ref 6017) to Friday’s low (ref 5853). Previously identified support levels/targets have been tested or broken at 5976, 5947, 5864 (intraday only). The ICAP Momentum/Trend (MOTR) Model remains in Neutral as all but one input are marked as negative. I expect there to be a shift to Negative over the next few sessions. I expect 5864 to break, setting up for a filling of the first “Trump Gap” down to 5783 (Nov 5 high). As this gap is filled, I would expect Spot VIX and Term Structure to shift higher as well with a current upside target for Spot VIX in the 20 to 23 range. Simply put, in my opinion, this dip is not done.
Trade Support:
5976: Nov 9 Open/Low (broken)
5947: Nov 7 Open/Low (broken)
5864: Nov 6 Open/Low (broken – intraday)
5783: Nov 5 High
5733: Sep 19 High
Trade Resistance:
6000: Even Target
6017: Nov 11 High
