Monday, August 24, 2020


Keybot the Quant remains long. The Fed wine is flowing like water. At the same time, President Trump is providing tasty vaccine and plasma cake snacks each day. The stock market grows to the sky. Tech stocks are at higher valuations than the dotcom bubble in 2000. The SPX prints a new all-time high at 3399.96 and new all-time closing high at 3397.16 both on Friday, 8/21/20. The bulls missed the 3.4K print by only 4 pennies so they show up with vengeance this morning pumping S&P futures +30 points higher.

The quant was sleepy last week only printing the prescheduled number and nothing else. The bulls remain in control of the stock market direction with the algo number 6 points above the signal line (which is not much).

The caution flag is out despite the daily new all-time record highs printing. The banks are key. Bears need XLF below 24.08 which will wreak havoc on the broad stock market. This represents about a -1% drop. The bulls are pumping banks in the pre-market with XLF up +0.7% so now the bears will need a -1.7% retreat to create negativity and the start of selling in the stock market. If XLF loses 24.08, consider the imminent turn to the bear side to be in play, and if the SPX drops below 3379, Keybot will likely flip short.

The bulls are floating along effortlessly higher since the central banks keep telling everyone they will print money forever. To extend the all-time record highs for several days and weeks ahead, the bulls have to push UTIL above 834.60. On an intermediate term basis, with UTIL at 809 right now, bulls need a huge push higher in utilities to prove that they will keep stocks elevated into year end. Each day that goes by and UTIL does not move above 834, is another day that it is far more likely that stocks will trail lower, perhaps far lower, into year-end. In a couple weeks, the utes will be a major focus again for the algorithm. UTIL is trending lower for the last couple weeks. This is a negative sign for the stock market. In nearly all major stock market down moves, UTIL either moves first to the downside or coincidentally with the broad stock indexes selling off. If utes keep trending lower, that is a very negative signal for stocks over the intermediate term (weeks and a few months ahead; into year-end).

Keybot prints two prescheduled numbers this week one on Tuesday morning and one on Friday morning. EOM is Monday, 8/31/20, next week so 6 trading days remain in the month. The US Labor Day holiday is late this year on 9/7/20 two weeks from now.

Watch the banks. They are all that matters today.

8/30/20; 7:00 PM EST =
8/28/20; 10:00 AM EST =
8/25/20; 10:00 AM EST =
8/23/20; 7:00 PM EST = +53; signal line is +47
8/18/20; 9:00 AM EST = +53; signal line is +46

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