Market Summary:
Current ICAP Momentum/Trend Model (MOTR) Signal: NEGATIVE (Day Count = 9)
The SPX Index rallied 1.12% during yesterday’s session, closing at 5842. Nothing unexpected as the 200dma (ref 5728) and 5700 acted as support after an over 6% selloff in just 9 sessions. Momentum and trend indicators remain negative. However, my Spot VIX signal hit a Buy on the close today. This is important. This is a secondary signal which I developed and use alongside MOTR to manage the ICAP portfolio and should be given some weight. The ICAP Momentum/Trend (MOTR) Model signal remains Negative. As I wrote yesterday morning, “The test of 5700 will be key as a break there could lead to a test of additional downside targets at 5500 and 5000. In short, I have taken down most of my short SPX/long VIX exposure but will continue to be a seller of any bounce (or break) moving forward.” My view and strategic stance have not changed. However, I will be more patient in reinstating the SPX short as I expect the current counter trend rally to have some legs. That said, I continue to believe that the index is topping. This is a process and will involve massive spikes in price volatility in both directions ultimately leading to a breakdown below 5700.
Trade Support:
6130: Previous Resistance (BROKEN)
6100: Previous Resistance (BROKEN)
6000: Previous Support (BROKEN)
5850/5900: Jan 14 / Jan 15 Gap (BROKEN)
5725: 200dma (TESTED)
5700: Previous Support Sep/Oct
Trade Resistance:
6250: Measured Move
6400: Measured Move
