Thursday, January 5, 2012


Keybot the Quant is long for the opening bell but that may not last long.  In yesterday's action, the robot wanted to go short as shown by the algo number dropping under the signal line (-10 is lower than -3 if you remember how to handle negative numbers), but other programming rules have to be met before the algorithm triggers the flip in position. In the afternoon yesterday, the semiconductors moved strongly higher which helped maintain broad market buoyancy.

Today is very important.  Note that the algo number is now only five measley points above the signal line. The quant is itching to go short but it is disciplined waiting for the proper signals to line up. If SOX drops under 367.85, the algo number will most definitely be under the signal line indicating selling pressure in the markets. If the SPX drops under 1268 today, and holds under for about ten minutes, it is highly likely that Keybot will flip to the short side.

Watch the financials, XLF, now at 13.30, well above the algo's danger line at 12.80. Watch retail, RTH, which appears ripe for a tumble. If the RTH loses the 110.25 level, the broad markets will be selling off strongly.  For the SPX today, starting at 1277.30, the bulls have the easy road to hoe, only needing to touch a 1279 handle and the upside will accelerate.  The futures, however, show the S&P heading for a ten point drop at the open.  For the market bears, the 1268 level must give way, if you see a 1267 on the screen, the down move should accelerate strongly and Keybot will more than likely flip to the short side. Markets are very unstable. A turn appears imminent.

1/8/12; 7:00 PM EST =
1/6/12; 9:00 AM EST =
1/4/12; 2:40 PM EST = +6; signal line is +1
1/4/12; 10:10 AM EST = -10; signal line is 0 but algorithm says stay long
1/4/12; 9:42 AM EST = +6; signal line is -2
1/4/12; 9:30 AM EST = -10; signal line is -3 but algorithm says stay long
1/3/12; 3:22 PM EST = +22; signal line is -4

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