Sunday, August 30, 2020


Keybot the Quant remains long but is champing at the bit to go short. The algo number and signal line are both sitting at +50. The stock market is a coin flip as the SPX prints a new all-time high at 3509.23 and new all-time closing high at 3508.01 on Friday, 8/28/20. The S&P 500 crossed 3.4K last Monday and 3.5K on Friday. Equities are in a non-stop melt-up as the Federal Reserve and other central bankers promise to print money forever to keep stocks elevated. The quant has only printed the pre-scheduled numbers for the last two weeks. The price activity is jammed higher across the board.

For stocks to be printing new record highs day after day, the algo number should be 20, 30 even 40 points or more above the signal line instead the numbers are the same. There is likely something very bad about to happen to the stock market but Keybot only sees 1's and 0's so time will have to play out.

Stock market parameters are jammed into the upper stratosphere; the price moves are remarkable. It is an all-out buying frenzy after the dollar was jammed lower a couple weeks ago. The bulls need UTIL above 834 (now at 800) to prove that stocks should be moving higher and plan to remain elevated into year-end. Considering the new record highs, UTIL should be at 840, 850 and higher. Something is likely wrong under the surface.

The bears need UTIL below 763.93 this week, call it 764, for equities to drop and the stock market selling will be accelerating if it occurs. Note that UTIL at 8 hundo is exactly between the bull and bear case for the direction of stocks into year-end. But there is something else going on. UTIL must be above 806.92 next week (the 764-ish number will no longer matter), the holiday-shortened week of 9/8 to 9/11. UTIL is currently below this key number. The action of the utes will tell you a lot this week about the direction of the stock market in the near-term (hours, days and a few weeks) as well as intermediate term (weeks and months).

Bulls must pump utilities higher this week to keep the party going. Independent of achieving the 834, bulls must at a minimum push price above 807 by Friday at 4 PM EST, otherwise, there will be big trouble the following week. The pattern of utilities falling for three consecutive weeks is a very bearish development and predicts serious trouble for stocks going forward on an intermediate and long-term basis. Bulls must pump utes this week to save the day.

Bears need UTIL below 764 this week to lock-in market carnage going forward. Lower commodities and higher volatility will also aid the bears. VIX is at 22.96 and spiked to 27 on Friday. Keybot the Quant identifies VIX 28.92 as the key bull-bear line in the sand where carnage would accelerate.

It is amazing that stocks print new all-time highs but the algorithm just signaled that it wants to go short. That has never happened in the history of the quant. We are in special times. The S&P 500 starts the week at 3508 the record high.

If the SPX falls below 3484, Keybot the Quant will likely flip short. Watch this closely

Keybot prints two pre-scheduled numbers this week one on Monday evening and the other on Friday morning. Hold on to your hats. Things are getting dicey. If you see UTIL continuing to fall this week and ending the week sub 807, the stock market is in serious trouble going forward. The bulls may be able to keep the stock market boat afloat a bit longer if they can push utilities higher this week. These are exciting and very special times.

9/6/20; 7:00 PM EST =
9/4/20; 9:00 AM EST =
8/31/20; 7:00 PM EST EOM =
8/30/20; 7:00 PM EST = +50; signal line is +50 but algorithm remains long
8/28/20; 10:00 AM EST = +50; signal line is +49
8/25/20; 10:00 AM EST = +50; signal line is +48

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