STOCK MARKET BULLISH -- LONG -- CAUTION

Keybot the Quant is long going into the new week of trading.  The utilities sector is moving lower dropping from 500 to 478, 4.4%, in only fourteen days. The stealth move is very important because when utes roll over, and lead the broad market downward, this is a very ominous market indication. Obviously, however, the markets have not rolled over, the broad indexes continue floating upwards. Watch UTIL 472 all week long which would signal major market trouble ahead. Price starts the week at 478.91 and printed a 477 handle on Friday.

The key is copper which is always the market leader but oddly, it is the only major sector that has not participated in the market rally.  Use JJC 43.65 as the bull-bear line in the sand. If the bulls take out 43.65 to the upside, JJC begins at 43.39, only 26 cents away, the rally is verified and lots more market upside is ahead. The bears must prevent 43.65 from printing to begin pushing back and stopping further market upside. JJC 43.65 will tell you more about the broad market direction for Monday than any other parameter. Bears win if JJC stays under 43.65 and bulls win above 43.65 and this is true regardless of how the broad markets are trading.

For the SPX starting at 1418, closing near the highs on Friday, the bulls only need a smidge of green in the futures overnight tonight and it will be off to the races for the bulls once again with 1419, 1422, and 1425 all on tap for Monday. These are significant technical levels. If 1419 is pierced and holds for a few minutes, there is lots more upside ahead. The bears need to stop this upside momo and that begins by keeping futures red overnight tonight with all their might. If not, it will be a long day for the bears. The bears need to push under 1415 to accelerate a downward move to 1410 and perhaps 1406 support. A sideways move appears unlikely for Monday, markets will likely choose up or down.

The algo does not print any pre-scheduled numbers until next Sunday, so the market action will dictate Keybot's activity, or non-activity, this week. After the couple-week lull, a period of intense wild activity would be expected this week. The bulls are driving the bus to start the week. JJC 43.65, UTIL 472, SPX 1419 and SPX 1415 will determine the broad market direction. Note that the algo number is only 13 points away from the signal line. Extreme caution is warranted moving forward.

8/26/12; 7:00 PM EST =

8/19/12; 7:00 PM EST = +60; signal line is +47

8/17/12; 10:00 AM EST = +60; signal line is +46