STOCK MARKET BEARISH -- SHORT -- CAUTION

Keybot the Quant is short. Financials, volatility and retail sectors will drive the bus again today. Watch XLF 15.18 (now bearish), VIX 18.14 (now bearish) and RTH 41.35 (now bullish. Thus, bulls want to push XLF above 15.18 and VIX below 18.14 and the upside market party will swing back into gear. The bears want to push RTH back under 41.35 and this will initiate another leg lower for the broad indexes. With XLF remaining below 15.18, VIX remaining above 18.14 and RTH remaining above 41.35, status quo, the markets will languish sideways.

On a side note, watch NYA, now printing 7887.26.  If the 7621-ish level fails, call it 200 points lower, the broad markets enter a whole new phase of much stronger bearishness and markets will likely deteriorate at a faster pace.  The utilities remain flatish this week and is one tiny feather in the bull's cap. This buoyancy in utes will encourage the broad indexes to recover. If weakness appears in the utes and they continue lower the markets will be sliding down the rabbit hole.

For the SPX starting at 1364, the bulls need five points, to touch the 1369 handle, if so, the makets will recover and accelerate higher.  The bears must push lower to drop under 1348 to reignite and accelerate strong downward pressure, a formidable task sixteen points lower. The U.S. futures are off about eight as this message is typed so that only moves the bears halfway to where they need to go.  A move thru 1350-1368 is sideways action today. Markets remain unstable; XLF 15.18, VIX 18.14 and RTH 41.35 will dictate broad market direction today.  Also monitor the SPX:VIX ratio, a drop under 68 and the broad indexes will sell off large today. If the bulls prevent the failure at 68, then markets will lean towards a recovery move higher.

5/13/12; 7:00 PM EST =

5/11/12; 10:00 AM EST =

5/8/12; 1:20 PM EST = +0; signal line +20

5/8/12; 10:00 AM EST = -16; signal line +21