Market Summary:
Current ICAP Momentum/Trend Model (MOTR) Signal: NEUTRAL (Day Count = 4)
After hitting an intra-day high of 6120, the SPX Index sold off hard heading into the close, hitting a low of 6030 and closing down 50bps at 6040. Note the “Double Top” question presented on the chart since Jan 24. The session was once again extremely volatile with a high/low spread of 90 handles and an open/close spread of 56 handles. Extreme volatility and lack of conviction is never good near all-time highs. As I wrote Friday morning (again), “I continue to believe this consolidation is actually forming a top (bearish reversal) rather than a continuation pattern (bullish).” Momentum and trend indicators continue to degrade. Spot VIX and VIX term Structure have stubbornly remained in a “risk on” posture. The ICAP Momentum/Trend (MOTR) Model signal remains in Neutral. I continue to see opportunity in the short term with price volatility but remain cautious as I have seen longer term risk skewed to the downside since early December.
Note: As of the writing of this note the S&P500 E-mini Futures (Mar25) are trading down 1.70% at 5965. On parity, the SPX Index (cash) would open ~5930 if the futures sit right here through 9:30am EST. I fully expect the MOTR Signal to shift to Negative tomorrow from Neutral.
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 / Jan 21 Highs
6400: Measure Move