Sunday, September 4, 2011


Keybot the Quant is short to start the new trading week Tuesday. Watch the SPX 20 day MA as support at 1172-1173, also key horizontal support. For the SPX, starting at 1173.97, the market bears have the wind at their backs since Friday closed near the lows. If the bears can push under 1170.56, then the selling will increase in force and several additional handles will be lost in quick order testing 1168, 1166 and 1162. The bulls need to simply stop the SPX from losing 1170.56 to stop the bleeding. If joyous news occurs, and the SPX can make it up to touch 1204, then the buyers will enter in force, but this outcome appears unlikely for Tuesday. A move thru 1172-1202 is sideways action that the bulls would actually be content in seeing.

Watch the SPX:VIX ratio, now at 34.61. The bulls will throw confetti if it moves above 35 since this signals a huge up day for the indexes. If the ratio stays sub 35, however, the market bears will rule the days ahead.

If serious selling enters the markets on Tuesday, the indexes are in no fear of completely losing it unless the utes, UTIL, lose the 50 week MA creating a trap door for equities. UTIL is now at 427, comfortably above this danger level of 415.30 so the overall current market weakness will remain somewhat contained--unless the 415.30 fails.  If UTIL loses the 415.30, the broad markets will go into free fall.  If the bulls come out running and UTIL hits 433.54, 6 1/2 points higher, this is a strongly bullish signal for the broad markets, but, at this time this outcome is not expected early in the week. Watch as the week progresses, however.

In a nutshell, market bears, which includes Keybot since the algo is short, want to see a failure at SPX 1170.56, also the SPX:VIX ratio stay under 35, and UTIL losing the 415.30 level.  Market bulls want to see the SPX 1170.56 hold strong and not fail, the SPX:VIX ratio to move above 35 indicating a big up day on tap, and UTIL not to dip under 415.30. In fact, bulls want to see UTIL move above 433.54, any day this coming week since this will run the indexes higher.

Volatility remains high and markets remain unstable, mainly at the mercy of Euro news. There are no pre-scheduled numbers for the algo for the new trading week.

10/7/11; 10:00 AM EST =
10/2/11; 7:00 PM EST EOM =
9/30/11; 10:00 AM EST =
9/27/11; 10:00 AM EST =
9/25/11; 7:00 PM EST =
9/20/11; 9:00 AM EST =
9/18/11; 7:00 PM EST =
9/16/11; 10:00 AM EST =
9/11/11; 7:00 PM EST =
9/4/11; 7:00 PM EST = -72
9/2/11; 9:00 AM EST = -72
9/1/11; 2:02 PM EST = -72; signal line is -51; go short 1207; (Benchmark SPX for 2011=-4.1%)(Keybot this trade=+5.3%; Keybot for 2011=+26.5%)(Actual this trade via SSO=+12.1%; Actual for 2011=+40.5%)

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