Sunday, December 25, 2011


Keybot the Quant is long; the algorithm is idling flat on the weekend as usual.  The Sunday number results in no changes. Trading begins again on Tuesday.  The markets are closed tomorrow to observe the Christmas Day holiday today. The high drama on Friday revolved around the semiconductor sector and that will be front and center when the bell rings Tuesday morning. The SOX, now at 368.60, is sitting directly on top of the algo's level of interest, the bull-bear line, where the move up or down will take the broad markets in the same direction.

The utilities moved up last week in a wild bullish euphoria. For the new trading week, watch UTIL 439.29. The broad markets will be in serious trouble if this level is lost.  UTIL gained 4% last week to close at a nose-bleed 462.94. The recent action had price moving across the low 440's, extremely close to the algo's level of danger.  That makes the upside explosion very interesting; the market makers had to push the utes higher to get away from the 439 and achieved a 20 point barrier for now.

Utes, retail, financials, and the lower volatility are the four pillars of strength that took the markets up last week.  This week semi's will either join the bulls for a fifth leg of bullish market support, or, move lower ushering in broad market weakness.

The drama with the retail, RTH, and financial, XLF, sectors is not finished as well.  Watch RTH 109.40 and XLF 12.82 levels this week, both comfortably above now and supporting bulls. Commodities and copper remain weak, as the dollar continues moving up, and will be the next focus should semi's decide to give the markets a bullish week this week.

For the SPX on Tuesday, as the week's trading begins, starting at 1265.33, the bulls are whistling a happy tune since price closed at the highs on Friday. Market bulls have an easy road as long as they keep the futures overnight Monday night on the green side.  If so, the indexes will enjoy a nice post-holiday bump higher, the SPX should immediately test the 1267 resistance and move higher. Thus, the futures are important going into Tuesday's open. If the market bears can muster up the energy to push 10 points lower on Tuesday, downward to lose the 1254 handle, the broad market negativity will return in force.  A move thru 1255-1265 is sideways action. SPX 1281 is very important resistance and is a game-changer for markets if taken out to the upside.

Keybot will print one pre-scheduled number this week on Tuesday morning one-half hour after the open so the action can be updated at that time. There are four trading days remaining in 2011.  The Friday closing print will serve as the final EOM, EOQ4 and EOY 2012 numbers with the monthly charts receiving another data point. Keybot had another good year, the results will be tallied and posted and the new tally for 2012 will begin. The caution flag remains out. In a nutshell, for Tuesday's trade in the new week, SOX 368.60 and whether or not the S&P futures are green, or not, will dictate broad market direction as described above. Merry Christmas. Happy Hanukkah. Happy Holidays.

1/1/12; 7:00 PM EST EOM EOQ4 EOY2011 =
12/27/11; 10:00 AM EST =
12/25/11; 7:00 PM EST = -10; signal line is -20
12/22/11; 10:00 AM EST = -10; signal line is -20
12/21/11; 2:36 PM EST = -10; signal line is -20
12/21/11; 9:35 AM EST = -26; signal line is -19 but algorithm says stay long
12/20/11; 2:49 PM EST = -10; signal line is -17; go long 1240; (Benchmark SPX for 2011=-1.4%)(Keybot this trade=-0.5%; Keybot for 2011=+31.2%)(Actual this trade via RWM=-1.5%; Actual for 2011=+35.5%)

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