Market Summary:
Current ICAP Momentum/Trend Model (MOTR) Signal: NEGATIVE (Day Count = 4)
The SPX Index bounced +1.26% during Friday’s session after what looks like a short-term double bottom at ~5830 on Dec 20 and Jan 2. As I mentioned last week, “We may see some bounce here off the 5830 level” and we did. This bounce came with improved internals and a significant shift in Spot VIX and VIX term Structure back towards “risk on”. It has also brought the Index back up towards near-term resistance at ~5950 (watch this level). The ICAP Momentum/Trend (MOTR) Model signal remains Negative. I continue to believe that the greater risk from here is to the downside even as we see some whipsaw rallies take hold in the near term. While the intermediate term call remains to the downside, I am watching the MOTR signal and internals carefully and am open to taking on a short-term long trade if it presents itself. My expectation is that this, if it does occur, will be a very short-term position.
Trade Support:
5864: Nov 6 Open/Low
5830: Dec 20 and Jan 2 Lows
5700: Oct 31 Low/Bottom of Gap
5100: Intermediate Term Downside Target
4800: Intermediate Term Downside Target
Trade Resistance:
5850: Nov 7 Low
6000: Previous Support
6100: Dec 6 High
