Tuesday, December 9, 2014

STOCK MARKET BEARISH -- SHORT -- CAUTION -- TURN MAY BE IMMINENT

Keybot the Quant is on the short side after two months of rallying. Intraday the bulls stage a big comeback with the SPX closing near the highs above 2060. The SPX covered a near 30-point range today. The VIX jumped above 16 and as the volatility increases you will see larger and larger intraday and day to day point swings. The VIX drops all afternoon fueling the intraday recovery in stocks. The VIX remains above 14.43 in bear territory causing market negativity overall. The imminent turn notation is in the title line and Wednesday we find out if Keybot whipsaws back to the long side, or not. If the VIX drops under 14.43 and the SPX touches 2061 and remains above, Keybot will likely flip long creating a whipsaw and taking a loss on the stutter step. So obviously Wednesday is a key day.

The algo is tracking three parameters; VIX 14.43 is the key determinant of market direction when the bell rings Wednesday morning and NYA 10749 and JJC 36.10 are second tier parameters of import. If VIX stays above 14.43, stocks will sell off and if NYA 10749 fails, stocks will collapse. If the VIX drops under 14.43 the bulls are back in business and if JJC moves above 36.10 the bulls will be partying to SPX 2100 and Dow 18K. So bulls need lower volatility and higher copper and bears need higher volatility and a lower NYA Index.

For the SPX for Wednesday, starting at 2060, the bulls need less than one point higher, to touch the 2061 handle, and bingo, the upside will accelerate and Keybot will likely whipsaw back to the long side. So watch S&P futures since any positivity is going to put the bulls back in the driver's seat. The bears need to push under 2034 to accelerate the downside, a formidable task, so instead bears will be focused on keeping VIX above 14.43 by all means necessary. A move through SPX 2035-2060 is sideways action for Wednesday. The bears are driving the bus but off to a shaky start with the bulls already wrestling for control of the VIX 14.43 steering wheel.

12/14/14; 7:00 PM EST =
12/12/14; 10:00 AM EST =
12/9/14; 9:36 AM EST = +44; signal line is +56; go short 2038; (Benchmark SPX for 2014 = +10.3%)(Keybot algo this trade = +7.3%; Keybot algo for 2014 = +16.2%)(Actual results this trade = +8.1%; Actual results for 2014 = +17.8%)

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