Market Summary:
Current ICAP Momentum/Trend Model (MOTR) Signal: POSITIVE (Day Count = 2)
The SPX Index continued its push higher as it ran 88bps during yesterday’s session, closing at 6049. This close is 4.78% higher than the Jan 13 low and just 50 handles below the Dec 6 all-time high of 6099. Market internals have continued to improve. Momentum and trend indicators remain short term bullish as do both Spot VIX and VIX Term Structure. The ICAP Momentum/Trend (MOTR) Model signal remains Positive. While price has rallied beyond what I expected, my overall view has not changed. As I wrote last week, “In the near term I remain open to prices rising even further. I believe the Index is topping. This is a process and aggressive price action in both directions should be expected.” That said, I also see significant structural damage done to the Index over the past two months while momentum and trend counts have faded beyond what I consider consolidation within a strong up trend. The net of this, prices can continue to rally in the near term, but I am cautious in the intermediate and longer term.
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 2774 for over a 5.5% return as the commodity has broken out of a three-month wedge to the upside.
Trade Support:
6000: Previous Support
5950: Nov 7 Low
5770: Bottom of Nov 5 / Nov 6 Gap; Jan 13 Low
5700: Oct 31/ Nov 4 Lows
Trade Resistance:
6100: Dec 6 High