Sunday, January 1, 2012


Keybot the Quant remains long to start the new trading year.  Trading resumes on Tuesday, 1/3/12. The main pillars of support for these markets currently are the utilities (UTIL), retail (RTH), financials (XLF), and lower volatility (VIX). The market bears are keeping things in check by beating on the semiconductors (SOX), copper (JJC) and commodities (CRB), the latter two must be watched in relation to disinflation and deflation.

For the drama ending 2011, the algorithm was focused on semiconductors, retail and financials. These three remain of interest and will dictate broad market direction in the initial days of 2012.  Watch SOX 368.60, RTH 110.25 and XLF 12.80. These levels may change slightly as trading gets underway on Tuesday.  SOX is now bearish while retail and financials are bullish.  Whichever way any of these three characters move, will dictate broad market direction.  If SOX regains the 368.60 the broad indexes will move much higher and return to Santa Claus rally mode.  If not, the semi's will create further market weakness. If the RTH moves down under 110.25, this will have a noticeable impact on the markets, the major indexes will be selling off substantially.  Likewise XLF 12.80. But, if the RTH and XLF remain bullish and buoyant, so will the broad markets.

For the SPX on Tuesday, starting at 1258, the same starting point as 2011, one year ago, the market bears have the wind at their backs. Any sign of red futures overnight Monday night, even pennies on the red side, will lead to a market sell off to start the year, a likely test of 1252 support, perhaps down to 1247.  The market bulls need to move six points higher and touch the 1264 handle, if so, the year will begin with an upside orgy.  SPX would then likely test 1267-1268, perhaps higher. A move thru 1258-1263 is sideways action.

Look for the SPX move either under 1258, or over 1264. The 200-day MA is 1258.82. The caution flag remains out. Stay on guard using the semi's, retail and financials as the leading sectors. Keybot prints a pre-scheduled number on Friday morning this week. Happy New Year and Good Luck to all in 2012.

1/8/12; 7:00 PM EST =
1/6/12; 9:00 AM EST =
1/1/12; 7:00 PM EST Starting 2012 Data = -10; signal line is -20
1/1/12; Begin 2012 Data Set = -10; signal line is -20; go long 1258; (Benchmark SPX for 2012  = 0%)(Keybot this trade = 0%; Keybot for 2012 = 0%)(Actual this trade = 0%; Actual for 2012 = 0%)

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