Market Summary:
Current ICAP Momentum/Trend Model (MOTR) Signal: NEGATIVE (Day Count = 13)
The SPX index lost another 76bps yesterday, hitting a low of 5528 and closing at 5572. This intraday low brings the entire peak-to-trough move to -10.07%. No doubt this triggered some degree of a reversion trade late in the session as my previously identified downside target of 5500 was effectively tested. This -10% tick will also cause the phrase “correction” to be recited thousands of times tomorrow by the same TV personalities and experts who called the S&P 500 “fairly valued” at 6100 and who said breadth was broadening suggesting the rally had significant upside. That all said, momentum and trend continue to degrade as the index endures further, significant technical damage. Spot VIX has now rallied 100% from mid-February and remains “risk off” as does VIX Term Structure. The ICAP Momentum/Trend (MOTR) Model signal remains Negative. My view has not changed from December. We are working through a topping process as market internals continue to degrade on the daily, weekly and monthly counts. I expect violent rallies to be a part of this process, but they are to be sold not chased. The recent breakdown is the beginning (recognition) phase of what I believe will become a technical bear market with downside potential to 5000 at a minimum. Note, today’s chart is the Weekly count, not Daily.
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)
5700: Previous Support Sep/Oct (BROKEN)
5500: ~10% Move Peak-to-Trough (TESTED)
5500: ~20% Move Peak-to-Trough
Trade Resistance:
6250: Measured Move
6400: Measured Move
