Sunday, December 18, 2011


Keybot the Quant remains short as the algo idles this weekend. The utilities and retail sectors, along with the lower relative volatility, are the three legs supporting the bull stool. The elevated utilities hint that the indexes will want to rally in preparation for setting up for the next market move lower. The financials weakened last week, however, and the market bulls must have the financials gain traction if the markets are to rally.

Watch RTH 109.40, now with a 110 handle and market bullish, providing overall market lift. If 109.40 is lost, the selling in the indexes will pick up dramatically. The market bulls need to drive the XLF above 12.82 to attain a more sustainable broad market Santa Claus-type rally. If the RTH does not move under 109.40, and the XLF cannot get above 12.82, the broad indexes will continue to bump along sideways as traders enjoy the eggnog.

For the SPX on Monday, starting at about 1220, the bears need five points lower to break under 1215, if so, the sellers will enter the markets in force and the broad indexes will accelerate the down move. If the market bulls can touch the 1231 handle, that will signal the all-clear and the buyers will accelerate the upside from there. A move thru 1216-1232 is sideways action. Keybot prints two pre-scheduled numbers this week, one on Tuesday morning and one on Thursday morning. Markets remain at the mercy of Europe and especially the potential S&P downgrade of France debt.

1/1/12; 7:00 PM EST EOM EOQ4 EOY2011 =
12/27/11; 10:00 AM EST =
12/25/11; 7:00 PM EST =
12/22/11; 10:00 AM EST =
12/20/11; 9:00 AM EST =
12/18/11; 7:00 PM EST = -26; signal line is -4
12/15/11; 9:30 AM EST = -26; signal line is -3
12/14/11; 2:00 PM EST = -42; signal line is -2

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