Wednesday, September 28, 2011


Keybot the Quant is long despite today's sell off.  The retail sector held up fine and it was the sector that generated the recovery rally days ago.  Currently, the algo only sees two bullish sectors, as measured by the quant, retail and utilities.  Semi's joined the bear camp this morning.  Thus, RTH and UTIL will determine broad market direction for Thursday.

The utes, UTIL, dropped to 431.81, now inching back towards the critical 426.79 number for this week identified by Keybot. It's comfortably five points above but this must be watched closely. Thus, if UTIL loses 426.79, the markets will be in major trouble. If the bears choose to push lower, they will start the push with attacking the retail sector. If RTH loses the 104 level, now at 104.50, the markets are in big trouble. If both the RTH and UTIL lose the levels indicated, the broad markets will already be tumbling much lower.

The market bulls can save the day if they keep RTH and UTIL elevated above those key levels, and also move the SOX, now at 355.36, back above 363.40. This is a formidable task so the market bears can do some damage tomorrow if they come to play. SPX:VIX ratio is 28 and under 35 favoring bears.

For the SPX tomorrow, starting at 1151, the market bears have the wind at their back since the close occurred only one point from the LOD. If the futures have any hint of red, it only takes a point, but if the SPX falls under 1150, the broad markets will tumble several more handles in short order. Market bulls will try to stop the bleeding by keeping the RTH and UTIL buoyant. The bulls need to touch 1185 to get their momo back so that is a difficult road to hoe, therefore, they will defend the 1150 level with all their might.

Note that the SPX sits only three points away from where Keybot the Quant entered long at 1148. Also note the algo number is within five points of the signal number. This behavior verifies the sideways bull-bear fight. RTH and UTIL will signal the resolution.

10/9/11; 7:00 PM EST =
10/7/11; 10:00 AM EST =
10/2/11; 7:00 PM EST EOM =
9/30/11; 10:00 AM EST =
9/28/11; 10:14 AM EST = -40; signal line is -45
9/27/11; 3:58 PM EST = -24
9/27/11; 3:46 PM EST = -40
9/27/11; 10:00 AM EST = -24
9/27/11; 9:51 AM EST = -24
9/26/11; 11:41 AM EST = -40; signal line is -50; go long 1148; (Benchmark SPX for 2011=-8.7%)(Keybot this trade=+0.2%; Keybot for 2011=+24.1%)(Actual this trade via SH=-1.3%; Actual for 2011=+34.1%)

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