Tuesday, February 7, 2012


Keybot the Quant remains long but the quant is chomping at the bit to go short. The algo number is below the signal line indicating a preferred move to the short side but the algorithm must line out other programming rules before the move to the short side occurs. The algo did not print out any numbers in the Monday session.

The drama for the broad markets centers around two sectors that should dictate broad market direction; utilities and commodities. UTIL remains under 453.69 and CRB remains above 310.50.  These levels of interest are constantly recalculated by Keybot; note that the CRB number is moving up which makes it easier for the market bears to necessitate the turn. CRB starts today at 314.20 about 3 to 4 points above danger.

If the market bulls move UTIL above 453.69, the upside bull party will kick into gear again for another leg higher.  If UTIL remains below 453.69 and CRB remains above 310.50, as it is now and was yesterday with no change, then the markets continue to stumble along sideways.  If the CRB drops under 310.50, the market bears will finally be able to stop the upside momo and hand the markets some noticeable downside.

For the SPX today, starting at 1344, closing at the highs yesterday, if the market bulls can simply provide green futures, even by a few pennies, this will be enough to accelerate the broad markets higher.  Alas, futures are red as this is written and perhaps leaking lower slowly.  The market bears need to push the SPX down to touch the 1337.50 level.  The 1337 level is key support and held yesterday favoring the bulls.  If 1337.50 is touched, however, about seven points lower, the downside will accelerate with large block sellers entering in force. A move thru 1339-1343 is sideways action.

The quant remains on the edge of flipping short but needs to see a few more key items to fall into place to trigger the turn.  If CRB drops under 310.50 and the SPX touches the 1337.50 level, Keybot will likely flip to the short side.  The algorithm continues to sleepily move along each day since the markets are in a sideways rest mode waiting on the Greece resolution, key earnings, and the China CPI number tonight.  Stay on guard, these current markets are highly unstable and not to be trusted.

2/12/12; 7:00 PM EST =
2/10/12; 10:00 AM EST =
2/5/12; 7:00 PM EST = +48; signal line is +49 but algorithm says stay long
2/3/12; 9:00 AM EST = +48; signal line is +49 but algorithm says stay long

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