Tuesday, February 3, 2015

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

Keybot the Quant remains short with the bears hanging on by only one strand of thread. With the huge two-day rally it is surprising the algo did not flip long but the whole year is a surprise thus far. The algo was in position to go long waiting for various parameters to latch but by the time 2:30 PM rolled around and ducks were lining up in a row, the algo number dropped again. So, for at least overnight tonight, the bears hang on by a fingernail.

The algo is tracking four parameters that will dictate market direction on Wednesday; NYA 10809, XLF 23.87, SOX 670.55 and VIX 16.48. The bears must push NYA under 10809 after the opening bell or they got nothing. Market selling will begin again if the NYA loses 10809. If it stays above, the bears are going to be toast.

The bulls need to either push XLF above 23.87 (only a dime away), SOX above 670.55 (only about 3 bucks away) and/or the VIX under 16.48 (only a point away). Any one of the three parameters flipping into the bull camp will likely cause Keybot to flip long. So the bears have their hands full trying to prevent these three parameters from turning bullish and at the same time pushing NYA lower. Clearly the bulls have it on a silver platter if they want it at the opening bell on Wednesday.

For the SPX starting at 2050, closing at the highs, the bulls only need a tiny smidge of green in the overnight futures and bingo, another bullish rally will occur. Watch the S&P futures overnight to see if that smidge of positivity appears. The bears must retrace today's rally and push the SPX under 2023, a formidable task, so instead the bears will focus on pushing NYA under the important 10809 bull-bear level. If the bears push NYA under 10809 they are fine and stocks should soften. If NYA stays above 10809, the bears are in big trouble. A move through SPX 2024-2049 is sideways action for Wednesday. Focus on watching NYA 10809 and XLF 23.87 and you will receive the market answer.

2/6/15; 10:00 AM EST =
2/3/15; 2:50 PM EST = +24; signal line is +25
2/3/15; 2:33 PM EST = +10; signal line is +24
2/3/15; 1:35 PM EST = +24; signal line is +24 but algorithm remains short
2/1/15; 7:00 PM EST EOM = +10; signal line is +24

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