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

Keybot the Quant flips to the long side yesterday afternoon at SPX 2845. The massive short-covering rally induced by the Federal Reserve sends stocks to the moon. Keybot has been champing at the bit to flip long for a week but the internals of the market remain very weak. This tells you plain as day that the huge rally is another central banker money printing party. Traders are simply buying stocks for a joyride higher on the Fed stimulus. This has been the bull party ride for the last 11 years.

The bulls pumped retail stocks and chips higher to provide the firm enough boost to make the robot flip long. Stay alert for a potential whipsaw back to the short side. S&P futures are down -50 as this is typed about 2 hours before the hump-day opening bell on Wall Street.

Bears need weaker chips and retail stocks. Bears need SOX below 1610 and RTH below 111.50. AMZN is off to the races higher pumping the retail sector higher since everyone is sitting at home these days. Equities may sell off sharply at the opening bell, as the futures suggest, but if SOX remains above 1610, the bears got nothing, and stocks would be expected to reverse to the upside and resume the rally.

Bulls need stronger banks and copper to gather more upside juice for the broad stock market. Bulls need XLF above 23.80 and CPER above 14.97. Both parameters are within striking distance especially copper, however, the banks are stumbling as they kick off earnings season this week; they are yearning for more earnings. Copper futures are tanking -2% right now. Ditto XLF down -2% in early trading. Since the bulls do not appear to have game at the start, they will be playing defense and making sure that the chips and retail stocks remain elevated.

On the last trade that ran for a month, it followed the stock market V bottom path down and back up. Humorously, the entry and exit of the robot is at the relatively same SPX price (2815-2845) but the SH ETF, which is a 1x short play against the S&P 500, got smoked. Traders were using SH as a hedge and they ran for the exits. As stocks rally on the Fed's easy money as usual, a short-covering rally, SH was thrown out the window. Keybot is a smart robot and fortunately was in the 1x ETF. The 2x leveraged short ETF's, such as SDS, were burned at the stake. The algorithm program loses a percent on the last trade while the actual trading loses -8%. SH was taken to the shed out back and beaten with a baseball bat. The quant exits SH and enters SPY remaining in the 1x ETF's to keep risk low. Interestingly, if the algo would have flipped long one day later, it likely would have went back to the 2x ETF's (the 35-day whipsaw timer is about to expire).

There was lots of bragging by authorities that the ETF industry held up great during the crash. The behavior in tickers such as SH show that not to be the case. The thin volume, that then turns into massive volume as everyone runs for the exit, drastically impacts prices. Just think in the weeks and months ahead, as we experience more trouble, the ETF industry may not hold up and the bigshots may be eating their words. Remain very cautious on thinly traded ETF's.

Thus, on the year, the benchmark S&P 500 is down -12%, the Keybot program is up +7% and the actual trading, generated by the algorithm program, is up +3%, outperforming the broad market by +15%. The strange year continues. Keybot prints a pre-scheduled number tomorrow morning. Watch the semiconductors; that SOX 1610 bull-bear line in the sand should tell you the stock market direction story today. SMH is down -1.5% in the pre-market so taking that away from the starting SOX price at 1696 would take it down to 1671. Looks like the bears have lots more work to do.

4/19/20; 7:00 PM EST =
4/16/20; 9:00 AM EST =

4/14/20; 1:53 PM EST = -44; signal line is -52; go long 2845; (Benchmark SPX for 2020 = -12.0%)(Keybot algo this trade = -1.1%; Keybot algo for 2020 = +6.7%)(Actual trading results this trade = -8.0%; Actual trading results for 2020 = +2.5%)

4/13/20; 1:45 PM EST = -44; signal line is -52 but algorithm remains short

4/13/20; 12:36 PM EST = -60; signal line is -52
4/13/20; 12:18 PM EST = -44; signal line is -52 but algorithm remains short

4/12/20; 7:00 PM EST = -60; signal line is -51

4/9/20; 3:55 PM EST = -60; signal line is -50

4/9/20; 10:00 AM EST = -44; signal line is -50 but algorithm remains short

4/8/20; 11:16 AM EST = -34; signal line is -50 but algorithm remains short

4/8/20; 10:34 AM EST = -50; signal line is -50 but algorithm remains short

4/8/20; 9:54 AM EST = -50; signal line is -48

4/8/20; 9:36 AM EST = -50; signal line is -48

4/7/20; 3:56 PM EST = -66; signal line is -48

4/7/20; 3:46 PM EST = -50; signal line is -47

4/7/20; 2:48 PM EST = -66; signal line is -47

4/7/20; 2:41 PM EST = -50; signal line is -46

4/7/20; 11:12 AM EST = -34; signal line is -46 but algorithm remains short

4/7/20; 10:46 AM EST = -50; signal line is -45

4/7/20; 10:32 AM EST = -34; signal line is -44 but algorithm remains short

4/7/20; 10:21 AM EST = -50; signal line is -43
4/7/20; 9:36 AM EST = -34; signal line is -41 but algorithm remains short

4/5/20; 7:00 PM EST = -66; signal line is -41

4/3/20; 9:00 AM EST = -66; signal line is -39

3/31/20; 7:00 PM EST EOM EOQ1 = -54; signal line is -37

3/31/20; 10:00 AM EST = -54; signal line is -35

3/29/20; 7:00 PM EST = -54; signal line is -34

3/27/20; 10:00 AM EST = -54; signal line is -32

3/22/20; 7:00 PM EST = -52; signal line is -31

3/18/20; 9:00 AM EST = -52; signal line is -29

3/15/20; 7:00 PM EST = -52; signal line is -28
3/13/20; 10:00 AM EST = -52; signal line is -28
3/11/20; 9:36 AM EST = -52; signal line is -27; go short 2815; (Benchmark SPX for 2020 = -12.9%)(Keybot algo this trade = -2.1%; Keybot algo for 2020 = +7.8%)(Actual trading results this trade = -3.7%; Actual trading results for 2020 = +10.5%)