Wednesday, February 17, 2016


Keybot the Quant remains long moving into the Thursday session. The algo has been sleeping this week until the pre-scheduled number this morning and then Keybot prints five numbers during the trading session. Thursday will be a battle of copper versus chips. The bulls need to push SOX above 611.50 to create a strong leg higher in the stock market. The bears need to push JJC under 23.76 to reintroduce negativity into the stock market and start pounding equities lower. Stocks will stagger sideways if copper remains bearish and semiconductors remain bullish.

For the SPX starting at 1927 on Thursday, the bulls need to touch the 1931 handle, four points higher, and bingo, price will accelerate higher towards 1940-1942. The bears need to push under 1899 to regain their mojo a difficult task so the bears will mainly focus on pushing copper and semiconductors lower to stop the big three-day stock market rally. A move through 1900-1930 is sideways action. For now, the bulls remain in control as the roller coaster ride continues.

Something very special occurred which is worth mentioning. The algorithm remained long despite the SPX dropping 90 handles last week away from where Keybot entered long at SPX 1902. The SPX recovers and is now above this long entry point. The shocking and astounding behavior can be put into context by realizing that the algorithm has probably only ventured 30 to 35 handles as a maximum move away from any trade entry point, and that has only occurred maybe 10 times in the history of the algo over the last 8 years.

In other words, if the stock market moves opposite of where the algorithm entered the last trade, Keybot will typically flip in that direction if the SPX deviates 30 to 35 handles. This is because the algo is willing to take a loss to maintain a steady and safe path through the trading year. The move last week had the SPX about 90 handles under where the algo had flipped long at SPX 1902; it is truly remarkable and astounding. Keybot was steadfast in staying long and in only three days the SPX recovers over 120 handles now well above the 1902! You must keep the heart medication handy as you watch these markets. The algo number is 19 points above the signal line.

2/21/16; 7:00 PM EST =
2/17/16; 1:44 PM EST = -8; signal line is -27
2/17/16; 10:44 AM EST = -24; signal line is -28
2/17/16; 10:35 AM EST = -8; signal line is -28
2/17/16; 10:13 AM EST = -24; signal line is -39
2/17/16; 9:36 AM EST = -8; signal line is -30
2/17/16; 9:00 AM EST = -24; signal line is -31
2/14/16; 7:00 PM EST = -24; signal line is -31

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