Market Summary:
Current ICAP Momentum/Trend Model (MOTR) Signal: NEGATIVE (Day Count = 1)
The SPX index fell 1.97% on the day Friday, hitting a low of 5572 and closing at 5580. Momentum and trend are breaking down aggressively. Spot VIX does remain “risk on” but VIX term Structure is neutral and moving quickly towards “risk off”. The ICAP Momentum/Trend (MOTR) Model has shifted to Negative. As the recent +5.13% counter trend rally from 5504 to 5786 ran its course, I have been very consistent and blunt.
On Mar 14th I wrote, “I do believe we will see some of the bleeding stop momentarily with counter trend rally upside potential to the 5700/5800 range. That said, my overall view has not changed. We are topping, not continuing higher, with a remaining downside target of 5000 likely. Any rallies from current levels should be sold, not chased.”
On Mar 24th I wrote, “That said, I continue to be a patient seller into any strength and expect the index to test my downside target of 5000 over the coming months.”
On Mar 27th I wrote, “The 5700 level needs to hold, or I would expect a relatively aggressive slide back to 5500. All said, I do not like the long trade here. I continue to believe that the greater risk overall remains skewed to the downside.” For now, I will stay with my conservative forecast of the next major downside target of 5000. I continue to believe that the greater risk overall remains skewed to the downside.
Trade Support:
5700: Previous Support Sep/Nov (BROKEN)
5500: ~10% Move Peak-to-Trough
5000: ~20% Move Peak-to-Trough
Trade Resistance:
5750: 38.2% Retracement Peak-to-Trough
5900: 50dma
6000: Previous Support
6100: Previous Resistance
6147: All-Time High
