Friday, January 11, 2019

STOCK MARKET BULLISH -- LONG -- CAUTION

Keybot the Quant remains long as the algorithm goes crazy the last two days printing 17 numbers. The model is very active. Utilities, semiconductors and retail stocks create the upside market joy. The algo was a hair from going short yesterday but the Federal Reserve rode to the rescue flapping dovish wings and pumping the stock market higher. The central bankers are the market.

The market bulls need UTIL above 720.60 (now at the 717 palindrome) to gain more stock market strength. Interestingly, this 721 number means nothing come 4 PM EST and is replaced by 733.73 which is in play as a bull-bear line for all of next week. The bulls will have a more difficult time moving UTIL above 734 next week but if they do, stocks will be catapulting higher. If UTIL slumps and falls below 709.75 today or any day next week, the broad stock market will fall apart.

The bulls need lower volatility to continue the upside party. The bulls need to push the VIX below 19.11 (now at 19.666 in real-time Friday morning 4 hours before the opening bell for the regular US trading session). If bulls can push the VIX 55 pennies lower, the stock market is going to take a huge leg higher. If bears hold the VIX 19.11 line in the sand and volatility begins drifting higher again, the stock market will sag.

The bears need to move chips lower by sending SOX below 1182 (now at 1201). Bears will also benefit from weaker retail stocks. Bears need RTH below 97.47 (now at 98.65). You can see why the bulls are feeling pretty good above these key levels. If either one fails, however, the stock market will take a strong leg lower.

Watch UTIL 709.75, SOX 1182 and RTH 97.47. If any one of these three parameters turn bearish (falling below the levels shown), the imminent turn to the short side is in play. If 2 of the 3 turn bearish, and the SPX drops below 2565, Keybot will likely flip short.

Bulls need VIX below 19.11 and they will be throwing confetti and singing songs. VIX is 19.78 up a couple ticks from a few minutes ago. If VIX cannot drop below 19.11, it tells you that the stock market rally is not strong or sustainable and will likely roll over and die. Markets remain erratic and unstable.

1/13/19; 7:00 PM EST =
1/10/19; 11:10 AM EST = -4; signal line is -29
1/10/19; 10:28 AM EST = -20; signal line is -30
1/10/19; 10:14 AM EST = -36; signal line is -31 but algorithm remains long
1/10/19; 10:07 AM EST = -20; signal line is -31
1/10/19; 10:04 AM EST = -36; signal line is -32 but algorithm remains long
1/10/19; 9:38 AM EST = -52; signal line is -32 but algorithm remains long
1/10/19; 9:36 AM EST = -36; signal line is -31 but algorithm remains long
1/9/19; 1:37 PM EST = -20; signal line is -32
1/9/19; 12:54 PM EST = -4; signal line is -33
1/9/19; 12:07 PM EST = -20; signal line is -34
1/9/19; 11:07 AM EST = -4; signal line is -35
1/9/19; 10:58 AM EST = -20; signal line is -35
1/9/19; 10:50 AM EST = -36; signal line is -35 but algorithm remains long
1/9/19; 10:49 AM EST = -20; signal line is -35
1/9/19; 10:11 AM EST = -4; signal line is -35
1/9/19; 9:44 AM EST = -20; signal line is -37
1/9/19; 9:39 AM EST = -4; signal line is -37
1/8/19; 3:14 PM EST = -20; signal line is -38
1/7/19; 11:45 AM EST = -36; signal line is -38; go long 2555; (Benchmark SPX for 2018 = +1.9%)(Keybot algorithm program this trade = -1.9%; Keybot algo for 2018 = -1.9%)(Actual results this trade = -4.1%; Actual trading results for 2018 = -4.1%)

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