Market Summary:
Current ICAP Momentum/Trend Model (MOTR) Signal: NEGATIVE (Day Count = 4)
The SPX index gained 67bps yesterday, closing at 5670. The high on the day was 5695, testing but failing at the previously identified resistance level (and top of near-term range) at 5700. The index remains stuck in the 5500/5700 range as momentum and trend continue to degrade/stall. The ICAP Momentum/Trend (MOTR) Model signal remains Negative. I would note that after the cash close the S&P 500 E-mini futures (ESM5) spiked to 5773 and then sold off over 5% to a low of 5481. It was a shocking move. Obviously, I run the model and write this report on the SPX cash index, but I realize my trades using the front month futures, in this case the ESM5 contracts. I would expect the SPX index to gap down on the open tomorrow based on the post close and overnight action. All said, as I have previously written, “I continue to believe that risk overall remains skewed to the downside with a real break below 5500 coming over the next week or so.” This is a dangerous market, and I believe the ultimate lows will come at 5000 or deeper.
Trade Support:
5700: Previous Support Sep/Nov (BROKEN)
5500: ~10% Move Peak-to-Trough (TESTED)
5000: ~20% Move Peak-to-Trough
Trade Resistance:
5750: 38.2% Retracement Peak-to-Trough
5893: 50dma
6000: Previous Support
6100: Previous Resistance
6147: All-Time High
