STOCK MARKET BEARISH -- SHORT -- CAUTION -- TURN MAY BE IMMINENT

Keybot the Quant remains on the short side as the stock market cannot make a decision on which direction to go. The quant prints six numbers yesterday and you can see the ping-pong, back and forth game, ongoing between the bulls and bears. The algo wants to flip back to the long side right now but the internal parameters will not yet fully latch to permit the move.

If the bulls can push the SPX 2 or 3 points higher above 3086, after the opening bell, Keybot will likely flip long, hence the imminent turn notation in the title line. A gap-up open would not be good instead bulls need a nice gentle and steady trending path higher. However, S&P futures are currently down -10 so the bears must be planning to fight. Bulls will receive upside fuel if utilities strengthen. Bulls need UTIL above 762.60 (now at 757) to create lift in the stock market.

For next week, the UTIL 762.60 number disappears and is replaced with 646.13. Thus, the bulls will receive relief next week and some stock market buoyancy will be created by the utilities. However, the plot thickens again, since for the following trading week, 7/6/20 through 6/10/20, the UTIL 646.13 number disappears and is replaced with 758.93 as the key bull-bear line in the sand for that week. Note that price is a couple bucks below this number right now. The uber low 646.13 is pulled from the depths of the March selloff and an outlier. The machines are likely looking through that number to the 759 line in the sand in six trading days. Thus, watch that UTIL 759 level for the next two weeks into 7/10/20. If UTIL remains below 759 going forward, especially if it drops below 700, over the next couple weeks, a crash scenario for the US stock market is definitely on the table.

The bears have the ball although as explained above the bulls want it back as trading begins today. Did you see how the XLF came up and was sticky at that 23.36-23.37 bull-bear line in the sand called out by Keybot the Quant ahead of time? You should be impressed that the robot can pull off such a feat. The bulls goosed the banks before the stress test results by rescinding rules put in place during the Great Recession (in other words the bankster thieves can return to their old ways of gambling on derivative investments and when they get into financial trouble the sucka American peon will bail them out; isn't crony capitalism grand?). So XLF catapults from the 23.36-23.37 line in the sand to 23.59 at the closing bell. For the stress tests, the Fed freezes the bank dividends for a quarter and halts buybacks which sends the stocks lower in AH (after hours) trading. Guess where price was sticky after the stress test results? Yes, at 23.36-23.37. XLF will begin trading shortly in the pre-market and that will tell you a lot about today's path forward for equities. Bears need XLF below 23.37 to create market negativity. It looks like that may be on tap that is why you see the futures red.

Keybot prints a pre-scheduled number one-half hour after trading begins in the regular session begins. Bulls need S&P futures positive by a couple points and they can flip the model long. UTIL above 763 will also create bull fuel.

Bears need to keep futures negative and push XLF below 23.37 as fast as possible to create negativity. Bears must maintain weak utes going forward and start pushing UTIL towards sub 700 which will create stock market carnage and a serious crash scenario.

Today, if the banks turn negative (XLF below 23.37) and the stock market is looking troubled, watch volatility. If the VIX pops above 37.31 (now at 33.35 trading for about an hour) it is lights-out for the stock market. The downside is real and stocks will fall apart. If the session is soggy with weak stocks but the VIX does not move above 37.31, the bulls will battle back and stocks will likely recover during a choppy session.

6/28/20; 7:00 PM EST =

6/26/20; 10:00 AM EST =

6/25/20; 2:52 PM EST = +7; signal line is -4 but algorithm remains short

6/25/20; 1:27 PM EST = -9; signal line is -5

6/25/20; 12:47 PM EST = +7; signal line is -4 but algorithm remains short

6/25/20; 10:42 AM EST = -9; signal line is -4

6/25/20; 10:19 AM EST = +7; signal line is -4 but algorithm remains short

6/25/20; 9:37 AM EST = -9; signal line is -4

6/24/20; 2:12 PM EST = +7; signal line is -4 but algorithm remains short

Note Added 4:26 AM EST: The XLF is trading down -2% to 23.11 in the pre-market. VIX 33.40.