Market Summary:
Current ICAP Momentum/Trend Model (MOTR) Signal: NEUTRAL (Day Count = 2)
The SPX Index extended its year end rally with a gain of 1.11% during the shortened Christmas Eve session. The closing print of 6040 is well above my estimated upside of 6000 for this rally. Internals have improved relatively sharply coming off the Dec 18 low. Spot VIX has been crushed, now down almost 50% from the Dec 18 high. VIX Term Structure has also reversed fully to “risk on” after a full shift to “risk off” on Dec 18 and 19. The ICAP Momentum/Trend (MOTR) Model signal remains in Neutral after one of the most efficient Negative calls I have ever run/traded. Overall, my view has not changed. As I have been writing, “although risk remains skewed to the downside there could be a year-end rally as high as 6000.” Additionally, I am convinced that there is a larger downside move coming in the intermediate term.
Note: Watch the active Gold contract for Feb (GCG5) (ref 2639). The 2600 level seems to be solid support, and the commodity is working to recapture momentum to the upside. I see the long trade here as well balanced with upside of 200-300 points with the downside limited to ~30 (using a ~2600 stop).
Trade Support:
6000: Even Target
5864: Nov 6 Open/Low
5100: Intermediate-Term Downside Target
4800: Intermediate-Term Downside Target
Trade Resistance:
6100: Dec 6 High
