Wednesday, October 21, 2015


Keybot the Quant remains long but is champing at the bit to go short. The algo prints five numbers today and the algo number and signal line are on top of each other at +24 but internal programming rules will not fully latch as yet to permit the flip short. Interestingly, there is an additional signal line that is kept proprietary and it is at +24 as well. This is showing that the bulls and bears are in exact balance right now. Blow on the markets and they will fall into one camp or the other. Flip a coin. Interestingly, the ECB rate decision and press conference occurs before the opening bell tomorrow morning so the US futures will likely tell the tale. If President Draghi provides more easy money stocks will likely party higher.

Thursday is a fight between retail stocks and financials. The bulls need to push RTH above 75.79 which will stop the broad market selling and stabilize stocks. If JJC moves above 28.04 stocks will be running strongly higher. The bears need to push XLF under 23.38 to guarantee market downside and stocks will be clearly tumbling lower. Bears will start to crush stocks lower if VIX moves above 18.05. Thus, bulls need higher retail stocks and copper while bears need lower financials and higher volatility. Watch RTH 75.79 and XLF 23.38 as the two key parameters that determine broad market direction. One of them is going to flinch.

For the SPX starting at 2019 on Thursday, the bulls need to move above 2038 to accelerate the upside. The bears need to push under 2017 to accelerate the downside. A move through 2018-2037 is sideways action. The bus is careening down the boulevard with both bull and bear hands on the steering wheel but the bulls are still sitting in the driver's seat.

If either XLF or VIX turn bearish as described, either one will do, Keybot will likely flip short. If the RTH jogs above and below the key level listed, 75.79, when price comes back down through the model may flip short at that time. Thursday is an important day.

10/25/15; 7:00 PM EST =
10/21/15; 3:22 PM EST = +24; signal line is +24 but algorithm remains long
10/21/15; 2:44 AM EST = +40; signal line is +24
10/21/15; 1:10 PM EST = +24; signal line is +24 but algorithm remains long
10/21/15; 10:44 AM EST = +40; signal line is +24
10/21/15; 10:32 AM EST = +24; signal line is +24 but algorithm remains long
10/20/15; 9:00 AM EST = +40; signal line is +23

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