Market Summary:
Current ICAP Momentum/Trend Model (MOTR) Signal: NEGATIVE (Day Count = 7)
The SPX Index hit an early high of 5986, reversed to a low of 5810 (down 2.93%) and closed down 1.76% on the day at 5849. Momentum and trend indicators continue to degrade. Spot VIX has rallied 61% (trough-to-peak) in just 8 sessions while VIX term structure has now fully shifted to backwardation (“risk off”). The ICAP Momentum/Trend (MOTR) Model signal remains Negative. As I have continued to repeat and wrote in yesterday’s note again, “I remain a seller of the index and a buyer of volatility for the near term. The greater risk remains skewed to the downside.” Even with the aggressive -5.5% peak-to-trough move since Feb 19, internals and my model signals suggest there is more downside to come. I am absolutely convinced that the SPX index will test 5700 within the current move. This will bring it right back to pre-election levels. In other words, even now, the greater risk remains skewed to the downside.
Trade Support:
6130: Previous Resistance (BROKEN)
6100: Previous Resistance (BROKEN)
6000: Previous Support (BROKEN)
5850/5900: Jan 14 / Jan 15 Gap (BROKEN)
5700: Previous Support Sep/Oct
Trade Resistance:
6250: Measured Move
6400: Measured Move
