Tuesday, February 28, 2017


Keybot the Quant remains long albeit with the algo number only one measly point above the signal line. The algo awoke from its slumber during the last 15 minutes of trading on Tuesday. The EOM number prints as well and the caution flag is now out. Wednesday is a battle between volatility and commodities and the winner takes the stock market in that direction.

The market bulls need to push the VIX back under 12.86 as soon as possible (now at 12.92). If so, the upside rally in equities will resume with more new all-time highs ahead. Bears win if VIX remains above 12.86. The market bears need to push GTX under 2369 (now at 2373) to receive more downside juice with stocks taking a firm leg lower. If GTX turns bearish, and the SPX drops under 2359, Keybot will likely flip short.

The robot may jog volatility, the VIX, above and below 12.86 a time or three. If so, that likely indicates that the model is getting ready to go short. If the VIX jogs along 12.86 it may create the condition to send the algo number below the signal line and set up the potential move to the bear camp.

For the SPX starting at 2364, the bulls need to touch the 2368 level and bingo, the upside will accelerate into the 2370's so fast your head will spin. The bears need to push below 2359 to accelerate the downside. A move through 2360-2367 is sideways action for hump day.

VIX 12.86 and GTX 2369 will tell you everything you need to know about stock market direction for Wednesday. President Trump is speaking before Congress as this message is typed Tuesday evening in the States. S&P futures are up +7. As seen above, a +4 gain in the SPX at the opening bell Wednesday morning would be enough to move the SPX price above the 2368 threshold. Bears will need to punch the S&P futures lower overnight. VIX begins trading at 3 AM EST and will provide an early hint on Wednesday's market direction.

3/5/17; 7:00 PM EST =
2/28/17; 7:00 PM EST EOM = +86 signal line is +85
2/28/17; 3:59 PM EST = +86 signal line is +84
2/28/17; 3:55 PM EST = +100 signal line is +83
2/28/17; 3:44 PM EST = +86 signal line is +82
2/28/17; 10:00 AM EST = +100 signal line is +82

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