STOCK MARKET BEARISH -- SHORT -- CAUTION

Keybot the Quant remains short to start the new trading week.  The Sunday pre-scheduled number had no impact today, the algorithm simply idles along unchanged.  The futures markets open shortly to provide initial hints on market direction.  For tomorrow, the financials are key just as they were on Friday.  The algorithm uses the XLF to gauge the financials, and now at 15.32, is exactly on the calculated number that Keybot is using currently to determine bullishness versus bearishness. The broad markets will follow whichever way the XLF moves after the opening bell tomorrow.

For the SPX in Monday's session, the market bulls only need to push upwards one point to touch 1346.10.  If this occurs, the buying will come in force, with the indexes roaring higher to 1347, 1349 and upward to test the 1354 high from 12 days ago.  If the debt ceiling talks deteriorate this evening into the Monday session, then the market bears have a chance to push things lower.  The bears need to get the SPX below 1337, if you see a 1336 handle, the gloves are off, the indexes will tumble lower in short order, testing 1333 and then 1331. A move thru the 1338-1345 range is a sideways day with no winner either way. Thus, all you need to watch for Monday's outcome is the behavior at XLF 15.32 and SPX 1346.10 and 1337.

Keybot is 21 points above where it shorted 10 trading days ago and will either flip long taking its lumps if the bulls run, or, stay the course if the mood is soured over the debt ceiling drama.  The algorithm will print two pre-scheduled numbers this week; one on Tuesday morning and one on Friday morning.  Markets remain highly unstable, stay on guard.

7/31/11; 7:00 PM EST EOM =

7/29/11; 10:00 AM EST =

7/26/11; 10:00 AM EST =

7/24/11; 7:00 PM EST = +34; signal line is +25 but algorithm says stay short

7/22/11; 11:36 AM EST = +34; signal line is +25 but algorithm says stay short

7/22/11; 9:43 AM EST = +18; signal line is +24

7/21/11; 12:39 PM EST = +34; signal line is +23 but algorithm says stay short

7/21/11; 9:49 AM EST = +18; signal line is +20

7/19/11; 9:00 AM EST = +4; signal line is +19

7/18/11; 3:54 PM EST = +4; signal line is +17

7/18/11; 10:06 AM EST = -10

7/17/11; 7:00 PM EST = +4; signal line +15

7/15/11; 10:00 AM EST = +4

7/11/11; 10:34 AM EST = +4; signal line is +12; go short 1324; (Benchmark SPX for 2011=+5.3%)(Keybot this trade=+3.0%; Keybot for 2011=+7.8%)(Actual this trade via IWM=+3.7%; Actual for 2011=+2.8)