Market Summary:
Current ICAP Momentum/Trend Model (MOTR) Signal: NEGATIVE (Day Count = 2)
The SPX Index was +16bps on the session yesterday, closing at 5918. The session was a total “chop fest” with multiple 30+ point swings. The low of 5874 broke the previous day’s low (ref 5890) as momentum and trend remain negative to flat. Spot VIX hit a high of 19.50 matching the Jan 2 high. This, based on a VIX spike signal I follow, kept volatility contained. Watch for a break in VIX above 19.50 as a signal that the SPX Index downside velocity is ready to spike. I watch but rarely mention, the 10-year yield was at 4.68%. This is clearly a bad signal for the SPX Index. The ICAP Momentum/Trend (MOTR) Model signal remains in a Negative position. I continue to see risk skewed to the downside under the current set up. The consolidation we are forming is more a reversal than a continuation pattern in my opinion. The Nov 5/Nov 6 gap still needs to be filled and would suggest a near-term downside target of 5700. Additionally, I fully expect a 10% peak-to-trough move in the intermediate term, suggesting a downside target of 5500.
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 today of 2690.70.
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
