Tuesday, May 23, 2017


Keybot the Quant flips to the bull side yesterday at SPX 2390. Interestingly, both the commodities (GTX) and volatility (VIX) turned bullish creating higher stock prices. In the afternoon, copper turned bullish which was a punch to the bear's soft belly. Markets remain in the sideways choppy pattern that chews up bulls and bears alike. Low volatility wreaks havoc on trading algorithms.

Copper will immediately tell you broad stock market direction today. Watch JJC 29.47 at the opening bell. Price is at 29.50 in the bull camp that caused lift in the stock market late yesterday. Market bears need JJC to fall under 29.47 and head lower which will signal that further upside in equities will not occur. Bulls win if copper keeps moving higher. Copper is down -0.5% in trading overnight.

Market bulls need the higher copper to keep the upside going and then need stronger banks. Financials are the laggard and XLF will need to move above 23.55 (now at 23.41) to prove that the SPX will jump above 2400 and rock and roll higher. Bears are fine if they can keep XLF under 23.55 and send JJC under 29.47.

Market bears need JJC under 29.47 and either GTX under 2291 or VIX above 11.81. If 2 of these 3 occur and the SPX drops under 2387, Keybot will likely whipsaw back to the short side.

On the last trade that only lasted three days, the Keybot computer program loses -0.6% and the actual trading dumps about -1%. For the year thus far, the SPX benchmark index is up a healthy +6.7%. The algorithm program is down -0.7%. The actual trading is down about -5% thus far this year. The sideways choppiness should subside in the weeks ahead.

For today, simply watch JJC 29.47, XLF 23.55, VIX 11.81 and GTX 2291. They will tell you everything you need to know about broad stock market direction; copper, banks, volatility and commodities, respectively.

5/28/17; 7:00 PM EST =
5/26/17; 10:00 AM EST =
5/22/17; 1:18 PM EST = +84; signal line is +58
5/22/17; 9:38 AM EST = +68; signal line is +57; go long 2390; (Benchmark SPX for 2017 = +6.7%)(Keybot algo this trade = -0.6%; Keybot algo for 2017 = -0.7%)(Actual results this trade = -0.9%; Actual results for 2017 = -5.2%)
5/22/17; 9:36 AM EST = +54; signal line is +56
5/21/17; 7:00 PM EST = +40; signal line is +55
5/17/17; 9:57 AM EST = +40; signal line is +56; go short 2376; (Benchmark SPX for 2017 = +6.1%)(Keybot algo this trade = +0.0%; Keybot algo for 2017 = -0.1%)(Actual results this trade = +0.2%; Actual results for 2017 = -4.3%)

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