STOCK MARKET BEARISH -- SHORT -- CAUTION

Keybot the Quant flipped to the short side today at SPX 1206 at 10:59 AM. Semiconductors failed at the open, then the financials dropped; these two weaker sectors caused the market selling. The move accelerated after SPX 1206 was lost, briefly touching an 1197 handle during munch time, but, in the one o'clock hour, positive Europe news hits our shores and the markets sky rocket. SPX moves from an 1197 handle to a 1219 handle, 22 ticks, in a couple hours.

Keybot closed out the long trade from 10/6/11, two weeks ago, with a nice steady eddy profit. Even though the positive news launched the indexes today, the quant remains short overnight tonight.  A whipsaw will occur tomorrow if the SPX touches 1220 since Keybot will probably flip back to the long side.  If the SPX stays sub 1220 for the Friday session, the algo will probably remain short.

For Friday, the SOX is the key ticker when the bell rings, the semi's.  Watch SOX 363.65, now at 363.88, only about 20 cents higher, the market bulls hanging on by their fingernails. If the SOX stays above 363.65 tomorrow, the bulls will rock into the weekend. If SOX fails the 363.65 level, strong broad market selling will occur.

XLF 12.62 must be watched as well, above and market bulls are happy, like now at 12.80; below, and market bears are happy.  For the SPX, starting at 1215, the market bulls must touch a 1220 handle, if so, the upside will accelerate and indexes will rally into the weekend. Market bears need to push lower to look at that 1197 handle again. If 1197 appears, the down side will accelerate, sellers will enter in force.  Between 1198 and 1218 is sideways slop. Keybot wants to go long again but algo rules are holding it back. Friday's action is important. Watch the SOX.

10/31/11; 7:00 PM EST EOM =

10/30/11; 7:00 PM EST =

10/28/11; 10:00 AM EST =

10/25/11; 10:00 AM EST =

10/23/11; 7:00 PM EST =

10/20/11; 1:20 PM EST = -8; signal line is -24 but algorithm says stay short

10/20/11; 1:06 PM EST = -24; signal line is -24; algorithm remains short

10/20/11; 10:59 AM EST = -40; signal line is -24; go short 1206; (Benchmark SPX for 2011=-4.1%)(Keybot this trade=+5.2%; Keybot for 2011=+29.1%)(Actual this trade via DIA=+4.8%; Actual for 2011=+40.3%)

10/20/11; 10:23 AM EST = -40; signal line is -23 but algorithm says stay long

10/20/11; 10:21 AM EST = -24; signal line is -23 but algorithm says stay long

10/20/11; 10:12 AM EST = -8; signal line is -23

10/20/11; 10:08 AM EST = -24; signal line is -24; algorithm remains long

10/20/11; 9:49 AM EST = -40; signal line is -24 but algorithm says stay long

10/20/11; 9:36 AM EST = -24; signal line is -24; algorithm remains long

10/19/11; 9:00 AM EST = -8; signal line is -25

10/18/11; 1:30 PM EST = -8; signal line is -26

10/18/11; 1:20 PM EST = -24; signal line is -27

10/18/11; 12:41 PM EST = -8; signal line is -27

10/18/11; 11:37 AM EST = -24; signal line is -28

10/18/11; 9:53 AM EST = -40; signal line is -30 but algorithm says stay long

10/17/11; 9:37 AM EST = -24; signal line is -31

10/16/11; 7:00 PM EST = -10; signal line is -32

10/14/11; 3:56 PM EST = -10; signal line is -34

10/14/11; 3:48 PM EST = -40; signal line is -37 but algorithm says stay long

10/14/11; 3:40 PM EST = -24; signal line is -38

10/14/11; 3:32 PM EST = -10; signal line is -40

10/14/11; 3:20 PM EST = -24; signal line is -42

10/14/11; 3:09 PM EST = -40; signal line is -44

10/14/11; 2:59 PM EST = -24; signal line is -44

10/14/11; 1:29 PM EST = -40; signal line is -45

10/14/11; 12:57 PM EST = -24; signal line is -45

10/14/11; 10:13 AM EST = -40; signal line is -46

10/14/11; 10:10 AM EST = -24; signal line is -46

10/14/11; 10:00 AM EST = -10; signal line is -48

10/14/11; 9:39 AM EST = -10; signal line is -49

10/14/11; 9:30 AM EST = -24; signal line is -50

10/13/11; 9:30 AM EST = -40; signal line is -50

10/12/11; 10:01 AM EST = -24; signal line is -50

10/11/11; 9:30 AM EST = -40; signal line is -50

10/10/11; 3:54 PM EST = -24; signal line is -50

10/10/11; 9:30 AM EST = -40; signal line is -50

10/9/11; 7:00 PM EST = -40; signal line is -50

10/7/11; 3:40 PM EST = -40; signal line is -51

10/7/11; 3:22 PM EST = -28

10/7/11; 9:00 AM EST = -40; signal line is -52

10/6/11; 10:21 AM EST = -40; signal line is -53; go long 1146; (Benchmark SPX for 2011=-8.9%)(Keybot this trade=+0.0%; Keybot for 2011=+23.9%)(Actual this trade via DOG=+0.3%; Actual for 2011=+35.5%)