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

Keybot the Quant remains on the bull side as the battle rages on. The bears stick two shivs in the bulls gut into the closing bell today but it is not yet enough to flip the model short. Keybot is champing at the bit to go short but the internal parameters will not yet permit the move. The algo number is 23 big points below the signal line so the quant wants to be short.

If the SPX falls below 3272 (starting the Thursday session at 3273), so only one negative point lower, Keybot will likely flip short. The bulls must immediately push RTH above 119.95 and/or XLF above 30.32, either one would do, to stop the stock market selling. Bulls also benefit from lower volatility and if the VIX drops below 13.72.

If RTH and XLF remain bearish, stocks will fall apart, and if the chips then collapse, equities will drop down the rabbit hole. Bears need SOX below 1834 (now at 1859) to send the stock market into a tailspin. If the SOX fails, you will need to get the women and children inside and batten down the hatches; it will get ugly fast.

What does all that mumbo-jumbo mean? Keybot will likely flip short if the SPX begins the day negative and trends lower. A gap-down move in the SPX would not be helpful for bears since this may delay the quant flipping to the short side. A slow move lower is what the bears need during the Thursday session (in the beginning) and that will lead to a quicker drop after the robot locks-in the downside.

Bears win if they can turn chips negative sending the SOX below 1834; carnage will begin. Bulls will rejoice if they can push retail stocks and banks higher, volatility lower, and keep the semiconductors elevated and away from the bears grasp. As a side note with the chips, if SOX fails into the bear camp, especially out of the gate or in early trading, the quant may immediately flip short without hesitation, time will tell. This would be due to a subroutine running that identifies when the stock market is quickly deteriorating; if that situation is triggered, Keybot will immediate flip short.

It's on a silver platter if the stock market bears want it. Watch the overnight futures to see if the bears can scare up a negative point in the S&P's. Listen for any news on the large retailers and the banks since that will directly impact stock market direction. Watch and listen for any news on those chips. S&P futures are trading up +4.

2/2/20; 7:00 PM EST EOM =

1/31/20; 10:00 AM EST =

1/29/20; 3:54 PM EST = +24; signal line is +47 but algorithm remains long

1/29/20; 3:05 PM EST = +40; signal line is +48 but algorithm remains long

1/29/20; 10:21 AM EST = +56; signal line is +49

1/29/20; 10:06 AM EST = +40; signal line is +49 but algorithm remains long

1/29/20; 9:36 AM EST = +56; signal line is +50

1/28/20; 3:51 PM EST = +40; signal line is +51 but algorithm remains long