STOCK MARKET BULLISH -- LONG -- CAUTION -- TURN MAY BE IMMINENT

Keybot the Quant is on the long side but whipsawed late last week Thursday going short then flipping long again on Friday. Usually the algo avoids about 70% or 80% of the bear and bull traps but the drop in the stock market sucked Keybot in last Thursday. That was the day that later in the afternoon the Congress announced an agreement on a budget which paves an easier path to achieving a tax cut bill. Thus, stocks catapulted higher snaring the bear trap. On Friday morning, stocks gap up at the opening bell firmly slapping the bears in the face. Slap, slap.

So the algorithm remains long but Keybot is again champing at the bit to go short. The year is filled with this sideways choppy slop that chews up bulls and bears alike. Keybot is very active in the Tuesday trade printing six numbers. The bulls and bears keep fighting back and forth stealing the ball from each other but neither side is getting very far. The algo number is 8 points below the signal line so Keybot wants to go short.

Volatility is the key parameter impacting broad stock market direction currently. Watch VIX 10.72 as the bull-bear line in the sand. Market bears win big if the VIX stays above 10.72 and moves higher. Bulls win big if the VIX collapses below 10.72. The VIX begins trading at 3 AM EST overnight so if you cannot sleep check out where the VIX is at early tomorrow morning and it will tell you which way the stock market will move on hump day (the opposite direction).

If VIX remains above 10.72, and the SPX moves below 2566, Keybot will likely flip short, hence the imminent turn notation remains in the title line. Bears, however, would be best off if the SPX price slowly leaked lower under 2566 and a gap-down at the opening bell did not occur. If stocks gap down Wednesday morning, Keybot may delay a move to the short side until beyond 11 AM EST. Markets are extremely erratic and unstable.

The algo logged some nice gains on the long trade that ended 10/19/17 but then gave it back due to the whipsaw on 10/20/17. For the year, the S&P 500 is up a big time +15%. The Keybot algorithm program is up +2.4% and the actual trading is up +3.2% on the year. Keybot was in SPY on the long side and flipped into the 2x SDS ETF for the short side last Thursday. A 35-day timer expired so Keybot went back to using 2x ETF's but this was short-lived. Whack. The whipsaw occurs so the 35-day timer is triggered again and Keybot is back in the single ETF's until at least 11/24/17. Keybot exited SDS with the loss and reentered the single SPY ETF.

The bears have it on a silver platter if they want it. Bears must send volatility higher with the VIX above 11 and 12 and 13 and more. Bulls simply need the VIX under 10.72 on Wednesday morning and they will slap the bears in the face once again. Slap, slap. Keybot prints a pre-scheduled number on Friday morning. The EOM is only 5 days away.

10/31/17; 7:00 PM EST EOM =

10/31/17; 10:00 AM EST =

10/29/17; 7:00 PM EST =

10/27/17; 10:00 AM EST =

10/24/17; 2:40 PM EST = +86; signal line is +94 but algorithm remains long

10/24/17; 2:20 PM EST = +100; signal line is +94

10/24/17; 2:07 PM EST = +86; signal line is +94 but algorithm remains long

10/24/17; 1:43 PM EST = +100; signal line is +93

10/24/17; 9:48 AM EST = +86; signal line is +93 but algorithm remains long

10/24/17; 7:59 AM EST = +100; signal line is +92

10/23/17; 3:42 PM EST = +86; signal line is +92 but algorithm remains long

10/22/17; 7:00 PM EST = +100; signal line is +91

10/20/17; 12:23 PM EST = +100; signal line is +90; go long 2572; (Benchmark SPX for 2017 = +14.9%)(Keybot algo this trade = -0.9%; Keybot algo for 2017 = +2.4%)(Actual results this trade = -1.7%; Actual results for 2017 = +3.2%)

10/19/17; 10:35 AM EST = +100; signal line is +88 but algorithm remains short

10/19/17; 9:52 AM EST = +86; signal line is +87; go short 2549; (Benchmark SPX for 2017 = +13.9%)(Keybot algo this trade = +1.5%; Keybot algo for 2017 = +3.3%)(Actual results this trade = +1.7%; Actual results for 2017 = +4.9%)

10/19/17; 9:47 AM EST = +86; signal line is +86 but algorithm remains long

10/18/17; 9:00 AM EST = +100; signal line is +87

10/16/17; 1:31 PM EST = +100; signal line is +87

10/16/17; 12:41 PM EST = +84; signal line is +86 but algorithm remains long

10/15/17; 7:00 PM EST = +100; signal line is +87

10/13/17; 10:00 AM EST = +100; signal line is +86

10/9/17; 3:52 PM EST = +100; signal line is +86

10/9/17; 3:21 PM EST = +84; signal line is +86 but algorithm remains long

10/8/17; 7:00 PM EST = +100; signal line is +87

10/6/17; 9:00 AM EST = +100; signal line is +87

10/4/17; 11:05 AM EST = +100; signal line is +86

10/3/17; 9:36 AM EST = +84; signal line is +86 but algorithm remains long

10/2/17; 3:59 PM EST = +100; signal line is +85

10/2/17; 3:49 PM EST = +84; signal line is +85 but algorithm remains long

10/2/17; 10:20 AM EST = +100; signal line is +84

10/2/17; 10:06 AM EST = +84; signal line is +83

10/2/17; 9:48 AM EST = +100; signal line is +82

10/1/17; 7:00 PM EST EOM EOQ3 = +84; signal line is +82

9/29/17; 10:00 AM EST = +84; signal line is +82

9/29/17; 9:33 AM EST = +84; signal line is +82; go long 2511; (Benchmark SPX for 2017 = +12.2%)(Keybot algo this trade = -0.7%; Keybot algo for 2017 = +1.8%)(Actual results this trade = -0.7%; Actual results for 2017 = +3.2%)