Monday, September 12, 2011


Keybot the Quant remains short despite the end of day pop, motoring along without printing any numbers today. The utilities, UTIL, came down for a test of the 50 week MA 'trap door' again at 2:19 PM EST, just like last Tuesday, and Friday, only to bounce and rocket higher taking the broad markets with it.  This break down that signals a collapse of the broad markets only held for four minutes and it needed to hold for seven to ten minutes, thus, the bulls dodged another bullet.  UTIL finished at 423 seven handles above the 416 danger level. Thus, the market bulls are in business again, so for tomorrow, watch the semiconductor, retail and commodities sectors to see if the bulls have further gusto.

If SOX, now at 359, moves above 362, as measured by the algo, the bulls got game. Similarly, if RTH, now at 102.50, moves up only 45 cents to get above 102.95, the bulls got further game. If CRB, now at 334.07, moves above 338.34, four points higher, then the bulls are whistling a happy tune.  If any two of these three sectors accomplish these bullish goals, the markets will be in recovery rally mode again.

Now for the market bears.  Financials, copper and volatility remain firmly bearish. The SPX:VIX ratio remains well under 35 at 30.12 signaling that the bears remain in full control of the indexes. The confirmation of a large bull move will not occur until the ratio moves above 35.

For the SPX tomorrow, starting at 1162.27, the bulls have the wind at their backs since the indexes closed at the highs. If SPX moves up only a quarter at the open, yes, 25 cents, the buyers will come into the markets accelerating the indexes higher quickly. At that point, should it occur, watch the levels listed above for SOX, RTH and CRB to determine the strength of the upside move.  Of course with only pennies required to the upside to start a big upside party, watch the futures overnight. Any hint of green is more than likely going to bring this outcome.

The market bears need to show red futures and deny the bulls the scenario just presented. Further, the bears need to drive the SPX south 26 points to lose the 1136 handle. If you see a 1135 handle on the SPX tomorrow, these markets are going to crack wide open and the stick-save scenario that occurred today will probably not occur a fourth time in six trading days. The selling will substantially escalate and a test of 1120 will come in short order then perhaps further downside to the 8/9/11 low of 1101-ish. A move thru 1137-1161 is sideways slop.

This gives you only a partial glimpse of some of the numbers the quant is scanning currently, but they are key numbers, and allow you to play the home game tomorrow.  Markets obviously remain highly unstable and at the mercy of the Euro news flow. 

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 = -72; signal line is -56
9/8/11; 3:51 PM EST = -72; signal line is -55
9/8/11; 3:39 PM EST = -56; signal line is -53
9/8/11; 3:00 PM EST = -72; signal line is -52
9/8/11; 2:32 PM EST = -56; signal line is -51
9/8/11; 2:28 PM EST = -72; signal line is -50; go short 1186; (Benchmark SPX for 2011=-5.7%)(Keybot this trade=-1.2%; Keybot for 2011=+25.9%)(Actual this trade via SSO=-2.0%; Actual for 2011=+39.3%)

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