Sunday, January 29, 2012


Keybot the Quant is long as the new trading week begins.  The bears tried to make a push on Friday but the strength of the tech sector, and Nasdaq, was too much to overcome.  The algorithm has been bullish for about six weeks now.  To start the new week, however, there are cracks forming in the bull case since the utilities sector has now dropped into a weekly downtrend. This typically precedes extended bearish action in markets.

UTIL closed at 449, four points below the 453 level, indicating that, when the bell rings tomorrow morning, that utilities will create bearish pressure on the broad markets. The only way this can be prevented is for UTIL to move above 453, specifically the 452.66 number. In fact, for the next four weeks the utilities must maintain the 450's or higher otherwise the broad markets will experience deterioration. Thus, at the opening bell tomorrow, watch UTIL 452.66 like a hawk, if UTIL moves above, the fix is in, the bulls will continue with broad market upside. If UTIL stays under 452.66, the broad indexes will weaken.

Preliminary indications show that Keybot is on the ragged edge of flipping to the short side but even with UTIL staying under 453, the aglo should remain long, but only by a single hair. Monday proves to be an interesting trading day.

For the SPX, starting at 1316, if the market bears can push under the 1312 level, especially with UTIL staying sub 453, strong broad market selling will occur and a test of SPX 1307-1308 will occur quickly. The market bulls need to push the SPX up to touch the 1320 handle which will ignite another upside buying frenzy.  A move thru 1313-1319 is sideways action.

Markets remain highly unstable. Expect the unexpected. Keybot remains long but is a hair away from flipping to the short side.  The algo prints two pre-scheduled numbers on Tuesday and one on Friday morning.  The algo should become immediately active at tomorrow morning's opening bell and is likely to print number/s as trading gets underway.

2/5/12; 7:00 PM EST =
2/3/12; 9:00 AM EST =
1/31/12; 7:00 PM EST EOM =
1/31/12; 10:00 AM EST =
1/29/12; 7:00 PM EST = +64; signal line is +47
1/27/12; 10:00 AM EST = +64; signal line is +45

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