Market Summary:
Current ICAP Momentum/Trend Model (MOTR) Signal: NEGATIVE (Day Count = 10)
Well, that was fun!!! The SPX Index lost 1.78% yesterday, closing at 5738. The low of 5711 represented a test of the previously identified support level at 5700 and a peak-to-trough move of 7.08% since Feb 19. The index broke below the 200dma (ref 5730) for the first time since Nov 2023. Momentum and trend indicators continued to degrade as the index works through what I have been calling a “topping pattern” since the middle of December. I mentioned yesterday that my Spot VIX signal hit a Buy on the Nov 5 close. Amazingly, that signal held during today’s price debacle. To complicate the current set up further, VIX Term Structure remains “risk off”. To add even more confusion, the ICAP Momentum/Trend (MOTR) Model signal remains Negative. The bottom line is we have had a fantastic short call from ~6100 down to ~5700. The “recognition” phase is in full effect, and I do believe the index will break 5700 in the near to intermediate term. This break should set up for a test of the 5500 and 5000 downside target levels. That all said, this top will be a process as it always is. I would be ready for a rally back towards the 5900/6000 range. I would be a seller there all day long and would also press hard on a break 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 (BROKEN/RETAKEN)
5700: Previous Support Sep/Oct (TESTED)
Trade Resistance:
6250: Measured Move
6400: Measured Move
