Market Summary:
Current ICAP Momentum/Trend Model (MOTR) Signal: POSITIVE (Day Count = 6)
The SPX faded over 2% yesterday, hitting a low of 5962 early in the session. The Index closed down 1.46% at 6012. Headlines aside, internals degraded as the index gaped down and broke back below 6100 support on an intra-day and closing basis. Momentum and trend faded modestly while Spot VIX and VIX Term Structure snapped back to “risk off” and remain so. The ICAP Momentum/Trend (MOTR) Model signal remains Positive, but I fully expect a shift to Neutral on the close today. Additionally, I would note that the MOTR signal for the S&P 500 active futures contracts (ESH5) has already shifted to Neutral. As I wrote coming out of the Jan 24 close (ref 6101), “I continue to see near term upside as probable as I remain very focused on whether the Index can repair the longer-term damage that was done over the past two months. My gut is that this repair will not occur. So, more near term upside likely, but I remain very negative on the coming quarters. As far as positioning I am paired down and waiting for a better set up.” All said, I have been pounding the table since early Dec that the Index is damaged and is to be sold on a net basis. Obviously short-term prices will be volatile but overall, I believe the Index is topping and regardless of whether we rally from current levels I am prepared for and expecting significantly lower prices in the coming months. Again, as I said prior to yesterday’s little downside blip, I am paired down and waiting for a better set up (to gain long exposure).
Trade Support:
6100: Dec 6 / Jan 21 Highs (BROKEN)
6000: Previous Support (BROKEN – INTRADAY BASIS)
5950: Nov 7 Low
5770: Bottom of Nov 5 / Nov 6 Gap; Jan 13 Low
5700: Oct 31/ Nov 4 Lows
Trade Resistance:
6400: Measure Move
