Sunday, June 4, 2017


Keybot the Quant remains long. The market strangeness continues. The algo has wanted to flip short for the last four trading days but the internal programming parameters will not fully latch to allow the move. This is the longest period of time that the model has gone without flipping in the direction the algo number and signal line call out. A couple prior times over the nine-year history of the Keybot the Quant algo took three days to flip but last week's action is unprecedented.

Keybot is champing at the bit to go short. If SPX falls below 2428, Keybot will likely flip short.

The week ahead may be very epic. Keybot wants to go short but markets float higher. There is a major disconnect occurring. The market bulls can prove that up is the correct path ahead if either XLF moves above 23.57 (now at 23.45) and/or JJC moves above 29.40 (now at 29.21). So bulls need higher banks and copper to verify the euphoric rise in stock prices. The bulls jammed XLF higher to tag 23.57 on Friday afternoon, but price then reversed and failed.

If the bears keep XLF and JJC in the bear camp, the stock market should reverse and start selling off (it is extremely surprising that markets did not sell off last week). If the VIX moves above 11.70 (now at 9.75), equities will be tumbling lower in earnest but the bulls have done a great job at keeping volatility low which elevates stocks.

Utilities continue their run higher which is a feather in the bull's cap going forward. Bears can create market weakness with UTIL under 700 but price remains elevated way up at 732.

On Thursday, 6/8/17, the UK elections, ECB policy meeting and FBI Director Comey testimony on Capitol Hill all occur at the same time. The FOMC rate decision and press conference is on 6/14/17 only 8 trading days away. Keybot does not print any pre-scheduled numbers this week.

The banks (XLF 23.57), copper (JJC 29.40) and SPX 2428 tell you everything you need to know concerning broad stock market direction.

6/11/17; 7:00 PM EST =
6/4/17; 7:00 PM EST = +54; signal line is +68 but algorithm remains long
6/2/17; 9:00 AM EST = +54; signal line is +69 but algorithm remains long

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