STOCK MARKET BEARISH -- SHORT -- CAUTION

Keybot the Quant remains short. The bears finally stretch their muscles a little bit on Friday with a deep selloff. The algo wanted to go long on Thursday afternoon and Friday morning but the S&P 500 was trading negatively the whole day and 35 minutes into the session the wheels fell off the bus. The bears are in control of the market with the algo number 30 points below the signal line.

The month of January ends with the SPX down -0.2%. After all that market joy during the month, it ends in negativity. As January goes, so goes the year (typically).

The bears should exert steady downward force on the stock market as long as the algo number remains at +8 or lower. If the NYA Index would fall about -3%, that could potentially create a flash crash or all-out crash scenario.

The bulls are on their back feet but have lots of avenues to explore to develop calm and stop the downside selling. Bulls need RTH above 120.00, XLF above 30.32 and/or SOX above 1827. S&P futures are up +21 with the US regular Monday trading session set to open in about 20 minutes. Bulls need stronger retail stocks, banks and chips, respectively. The extent that these three parameters turn bullish, or not, dictate the strength of the relief rally.

If 1 of the 3 turn bearish, bulls are in the driver's seat today. If 2 of the 3 turn bullish, the imminent turn to the long side is in play and if the SPX would then move above 3282, a long way higher, Keybot would flip long. This is not likely today, but you never know. Bulls will likely try to turn 1 or 2 of the 3 parameters bullish today and then try to push the SPX higher tomorrow to win victory.

Caution is warranted if all 3 parameters turn bullish today because this may cause Keybot to immediately flip long; watch this very closely.

Bears simply need to keep the 3 parameters in their camp and they will spend the coming days slapping the bulls to and fro.

Keybot prints one pre-scheduled number this week on Friday morning. Watch the chips, retail stocks and banks since these three sectors are currently dictating broad stock market direction.

2/9/20; 7:00 PM EST =

2/7/20; 9:00 AM EST =

2/2/20; 7:00 PM EST EOM = +8; signal line is +35

1/31/20; 1:15 PM EST = +8; signal line is +37
1/31/20; 10:05 AM EST = +24; signal line is +39
1/31/20; 10:00 AM EST = +40; signal line is +39 but algorithm remains short
1/31/20; 9:39 AM EST = +40; signal line is +40 but algorithm remains short
1/31/20; 9:36 AM EST = +56; signal line is +40 but algorithm remains short
1/30/20; 3:01 PM EST = +40; signal line is +39 but algorithm remains short