Market Summary:
Current ICAP Momentum/Trend Model (MOTR) Signal: NEGATIVE (Day Count = 1)
The SPX Index faded by over 1% yesterday, hitting a low of 5890 and closing at 5909. Both ticks are obviously well below resistance at 6000 as the Index continues to chop and fail. Spot VIX rallied almost 18% at the session high (ref 18.90) as momentum and trend indicators faded, continuing their work lower. The ICAP Momentum/Trend (MOTR) Model signal has shifted back to Negative. The MOTR signal has been extremely efficient over the past two months and continues to be so. As I have been writing since the beginning of December, I believe risk is skewed to the downside for the intermediate term. While we may see some near-term rallies, “all longer-term signals and data points continue to suggest that the greater near-term move is to the downside.” I believe the SPX is topping and preparing for at least a 10% move down from the recent all-time high of 6099.97. That would create a downside target of ~5500. I have very little doubt that we will see that target hit over the coming months. Over the coming weeks I fully expect to achieve my downside target of 5700.
Note: I suggested Gold (GCG5) was a strong strategic Buy on Dec 24. These active contracts were trading at 2629 when I issued that note. Those contracts hit a high on Jan 3 at 2681 (~2% gain) and are currently trading at 2662. I reduced my exposure during yesterday’s session at ~2670 but wanted to highlight the trade again today.
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:
5950: Nov 7 Low
6000: Previous Support
6100: Dec 6 High
