Market Summary:
Current ICAP Momentum/Trend Model (MOTR) Signal: NEGATIVE (Day Count = 1)
The SPX Index fell 1.71% during Friday’s session to close at 6013. The index is now below the previously highlighted support levels at 6130 and 6100 while also sitting just above the 50dma (ref 6009) and the 6000 support level. In the Feb 21 morning note I wrote, “although the ICAP Momentum/Trend (MOTR) Model signal remains Positive I do not like the current set up. I am positioned relatively flat waiting patiently for a better trade in either direction.” I believe that better trade has developed. I have been net negative since early December as I have consistently written that I see longer term technical weakness developing and that the SPX Index seems to be forming a top rather than a continuation pattern (all reports are available at www.islandcapitalinvestments.com). Friday’s selloff has us testing support of the previously identified 6000/6100 support/resistance range with confirming breakdowns in momentum and trend indicators. Spot VIX and VIX Term Structure shifted decisively to “risk off”. Additionally, the ICAP Momentum/Trend (MOTR) Model signal shifted to Negative. I am fully convinced that, regardless of any “buy the dip” bounce we may see in the coming days, the much larger trade is to the downside. I will be selling into any SPX strength, watching for the break below 6000 and adding to my long volatility position.
Trade Support:
6130: Previous Resistance (BROKEN)
6100: Previous Resistance (BROKEN)
6000: Previous Support
5850/5900: Jan 14 / Jan 15 Gap
Trade Resistance:
6250: Measured Move
6400: Measured Move
