Market Summary:
Current ICAP Momentum/Trend Model (MOTR) Signal: NEGATIVE (Day Count = 3)
The SPX Index acted exactly as expected, selling off 1.54% during Friday’s session to close at 5827. The low on the day came down almost 2% at 5807 and marked an intraday violation of the 100dma (ref 5820). Momentum and trend signals continued to weaken. Additionally, Spot VIX was able to breakout above the previously mentioned 19.50 level hitting a high of 20.31 and closing at 19.54. The ICAP Momentum/Trend (MOTR) Model signal remains Negative. As identified support at 5830 begins to break, the Index is now down ~5% from the all-time highs at 6099.97. I continue to see risk skewed to the downside (as I have since early December). As I wrote last week, “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 on Friday of 2735 for a 4% return.
Trade Support:
5864: Nov 6 Open/Low (BROKEN)
5830: Dec 20 and Jan 2 Lows (BROKEN)
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
