Market Summary:
Current ICAP Momentum/Trend Model (MOTR) Signal: NEGATIVE (Day Count = 5)
The SPX index fell 4.84% yesterday, closing at 5396. The index is now well below my 5500 support level as trend and momentum indicators roll over. Both Spot VIX and VIX term structure are “risk off”. The ICAP Momentum/Trend (MOTR) Model signal remains Negative. I have been very vocal and consistent in my opinion since December that risk is skewed to the downside and that any rallies should be sold, not chased. In fact, on Dec 23 I wrote, “The Dec 18 selloff was the beginning of a larger move to the downside which I believe will accelerate in Q1. Any rally higher from current levels should be strategically sold, not chased. The ICAP Momentum/Trend (MOTR) Model signal remains Negative. The recent peak-to-trough move in the SPX of -4.39% was not a blip. I believe the index is set up to test 5100 and potentially 4800 over the coming months.” For reference, the index closed on Dec 23 at 5974. So now what? Well, the index has now marked a peak-to-trough selloff of over 12%. While I fully expect the 5000 level to be tested (at a minimum), bear markets are a process. That said, I would not be surprised if 5400 holds for now with some degree of retracement back towards the 5500/5600 range. I remain a seller of any rally and continue to see risk as skewed to the downside.
Trade Support:
5700: Previous Support Sep/Nov (BROKEN)
5500: ~10% Move Peak-to-Trough (BROKEN)
5000: ~20% Move Peak-to-Trough
Trade Resistance:
5750: 38.2% Retracement Peak-to-Trough
5878: 50dma
6000: Previous Support
6100: Previous Resistance
6147: All-Time High
