Sunday, July 28, 2019


Keybot the Quant is on the long side but the algo continues to want to flip short. The internal parameters will not fully latch to allow the move as yet. The algo number is 13 points below the signal line.

The SPX prints a new all-time record high at 3027.98, call it 3028, and a new all-time closing high at 3025.86, call it 3026, on Friday, 7/26/19. Humorously, copper tanks -0.7% and loses -2.5% on the week. The global economy is slowing as evidenced by copper. 'Peak Auto' and a top in the housing market is likely occurring (the two largest users of copper). Copper should be leading higher considering the record stock market highs. The market behavior hints that the never-ending upside in stocks is due to the ongoing central banker largess for over one decade and has very little to do with economic growth projections. 

The stock market bulls need lower volatility and higher copper and commodities to guarantee further upside. Bulls need CPER above 16.97 (now at 16.85) and/or GTX above 2492 (now at 2457). Bulls need a +0.7% pop in copper futures overnight into Monday to prove they have the beans to take stocks higher.

The stock market bears need higher volatility and lower copper and commodities to send equities lower and get Keybot to flip short. Bears need the VIX to move above 14.35 (now at 12.16) which will immediately create serious market turmoil.

If the SPX drops below 3013, Keybot the Quant will likely flip short, hence the imminent turn notation is in the title line. The SPX begins the week at the 3026 record high. The bears would benefit from a slow steady move lower and not a gap-down move. If copper or commodities flip bullish, the stock market bulls will be singing songs and carrying on as the SPX marches higher to more record highs.

For the week ahead, Keybot prints four pre-scheduled numbers; one on Tuesday, one on Wednesday for month-end (EOM) and two on Friday morning.

Watch copper futures overnight and the VIX begins trading at 3 AM EST. Bulls need to immediately see an 11-handle in the VIX to prove that stocks can print further highs.

8/4/19; 7:00 PM EST =
8/2/19; 10:00 AM EST =
8/2/19; 9:00 AM EST =
7/31/19; 7:00 PM EST EOM =
7/30/19; 10:00 AM EST =
7/28/19; 7:00 PM EST = +58; signal line is +71 but algorithm remains long
7/25/19; 12:33 PM EST = +58; signal line is +72 but algorithm remains long

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