Thursday, August 18, 2011

STOCK MARKET BEARISH -- SHORT -- CAUTION

Uneventful day for Keybot as the algo idled along without printing any numbers today, despite the large drop in the indexes.  Keybot remains short. The SPX:VIX ratio dropped under 35 indicating that the bears are back in business. Market bears have the advantage as long as the ratio stays under 35, once the ratio regains the 35 level, however, the bulls will run again.

The utilities, UTIL, have two key levels to watch, 414.00 and 429.81. Although markets tumbled today, UTIL did not fall under 414, thus, the sell off may be short-lived. Consider 414 a trap door and if UTIL loses that level, the broad markets will go into free fall. Today 414 held nicely, price did not even come close to threatening a failure. UTIL not losing 414 is constructive towards markets placing a bottom.

For the SPX tomorrow, starting at 1141, the market bears need to push down below 1131 if they want to keep the bear party alive. If 1131 is lost tomorrow and a 1130 handle is touched, the sellers will come into the market in force, the indexes will drive lower in short order and the day will become ugly.  The market bulls have a formidable task ahead. If the bulls want to stop the bleeding, they must touch 1190 tomorrow, 50 points higher, so a formidable task indeed. Perhaps the bulls simply hope for a sideways day thru 1132-1188. Market instability remains, stay on guard.

8/28/11; 7:00 PM EST =
8/26/11; 10:00 AM EST =
8/21/11; 7:00 PM EST =
8/17/11; 11:52 AM EST = -72; signal line is -75 but algorithm says stay short
8/17/11; 11:08 AM EST = -56; signal line is -75 but algorithm says stay short
8/17/11; 10:31 AM EST = -72; signal line is -74 but algorithm says stay short
8/17/11; 9:59 AM EST = -56; signal line is -73 but algorithm says stay short
8/16/11; 9:00 AM EST = -72; signal line is -72
8/15/11; 9:30 AM EST = -72; signal line -70
8/14/11; 7:00 PM EST = -88; signal line -68

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