Friday, April 11, 2014

STOCK MARKET BEARISH -- SHORT -- CAUTION

Keybot the Quant flips back to the short side yesterday at SPX 1848. This is the first whipsaw for the algo in quite some time. Equities were hammered yesterday. The markets slapped the bears silly the day before and then just when the bulls ran in for the next rally higher they were mowed down in a killing field. Bulls and bears are both beaten. Retail and financial sectors drop and volatility pops creating downside fuel.

The algorithm program loses only about one-half percent on the last trade but the actual trading loses -2.6%. This is due to the collapse in the tech sector that is now cascading around the globe. Keybot cycled out of QLD and into SH. Since the algo whipsawed it automatically drops into the single ETF mode here forward for the next 35 days. This reduces risk since the markets are very erratic, unpredictable and unstable.

The bears can receive further downside fuel with weaker semiconductors. Watch SOX 563.95. SOX is at 569.15 about five points above creating market bullishness. The bulls can stop the bleeding if XLF moves above 21.86 now at 21.54 causing bearishness. Interestingly, JPM and WFC earnings results are out in a couple hours and will greatly impact the XLF.

For the SPX today starting at 1833, the bulls are simply trying to stop the collapse and will succeed if XLF moves above 21.86. The bears need to push under 1831, only two points lower, to accelerate the downside to test the 1828 support in a heartbeat. S&P futures are dead flat as this is written about 4-1/2 hours before the opening bell but were up +4 one hour ago. Keybot prints a pre-scheduled number this morning at 10 AM.

4/13/14; 7:00 PM EST =
4/11/14; 10:00 AM EST =
4/10/14; 12:54 PM EST = +17; signal line is +37; go short 1848; (Benchmark SPX for 2014 = +0.0%)(Keybot this trade = -0.6%; Keybot for 2014 = +4.0%)(Actual this trade = -2.6%; Actual for 2014 = +1.5%)
4/10/14; 12:02 PM EST = +17; signal line is +38 but algorithm remains long
4/10/14; 11:49 AM EST = +31; signal line is +39 but algorithm remains long
4/10/14; 11:32 AM EST = +17; signal line is +40 but algorithm remains long
4/10/14; 11:12 AM EST = +31; signal line is +41 but algorithm remains long
4/9/14; 12:22 PM EST = +47; signal line is +41; go long 1859; (Benchmark SPX for 2014 = +0.6%)(Keybot this trade = +0.9%; Keybot for 2014 = +4.6%)(Actual this trade = +0.6%; Actual for 2014 = +4.1%)

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