Tuesday, September 6, 2011


Keybot the Quant motors along on the short side today but the action was far from calm.  The algo exhibited high drama during the first half hour of trading as the utilities were on the verge of signaling a waterfall collapse in the broad markets. If you followed along with the levels given for UTIL on the weekend, and was watching the 50 week MA, you were on the edge of your seat.

At 9:47 AM, UTIL collapsed thru the 50 week MA. Keybot is programmed to look for the signal to hold for several minutes, if so, the algo locks it in and this says that the broad markets will go into free fall within 0 to 20 minutes time.  When the algo was within seconds of locking in the signal, wham, UTIL exploded to the upside negating the signal. High drama indeed. UTIL moved up from there signaling that the lows were in for the day with the broad indexes.  Since Keybot is already short, the move would not have changed the algo's direction, it would have simply accelerated the downside in the markets substantially, a waterfall event. Thus, market bulls dodged a bullet and the majority of them probably do not even realize it.

Thus, once UTIL was moving up, the day took on a steady-eddy upside profile.  SPX support at 1140 held, and price also moved above the important 1155 level.  For tomorrow for the SPX, starting at 1165, the market bulls have a slight advantage. If the bulls can touch an 1174 handle, the buyers will enter in force, and the indexes will jump upwards several more handles, the SPX will test 1178 and 1181 in short order.  The bears have a much harder road to hoe tomorrow. The bears have to take the SPX all the way back down to 1140, 25 points lower, if they expect to restart the negativity. A move thru 1142-1172 is sideways action.

Volatility remains high and markets remain unstable. Pay attention to the Beige Book release at 2 PM since markets may pivot on the data.

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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