STOCK MARKET BULLISH -- LONG -- CAUTION

Keybot the Quant remains long ahead of the Thursday session. Copper is trading up this morning so the bulls are going to attempt to push JJC above 43.70. If JJC stays under 43.70, this will continue to foster market negativity moving forward. Above 43.70 and the broad markets will float upwards. Continue watching UTIL 464, SOX 391 and NYA 7837.  In addition, the quant is showing interest in volatility. The late day push higher in the VIX shows traders seeking protection ahead of Jackson Hole and also indicates that the swings in the broad indexes will become more dramatic moving forward.  Watch VIX 18.35, now at 17.06 supporting the bullish case. If VIX moves above 18.35, the broad market selling will be substantial.

For the SPX starting at 1410, the bulls must touch and hold 1414 for a few minutes to launch an upside acceleration to 1419, that would occur in short order.  Yesterday, the bulls needed 1414 and fell one nickel short, running out of gas, printing a high at 1413.95. The bears need to push the SPX under 1407 to initiate a downside acceleration. The 1406 level is very strong support, but if 1407 fails, the 1406 should give way and that will send the SPX down to test 1403, then under 1400, all in short order. A move thru 1408-1412 is sideways action.  JJC 43.70 will provide the early tell on the markets minutes after the opening bell. If JJC stays under 43.70, and either the SOX falls under 391, or VIX moves over 18.35, there is a high liklihood that Keybot would flip to the short side. The tight nine point spread between the algo number and signal line verifies the bull-bear tug-o-war ongoing. Continue exercising caution.

9/2/12; 7:00 PM EST EOM =

8/31/12; 10:00 AM EST =

8/29/12; 9:43 AM EST = +60; signal line is +51

8/28/12; 10:00 AM EST = +76; signal line is +51