Tuesday, October 6, 2020

STOCK MARKET BULLISH -- LONG -- CAUTION

Keybot the Quant flips back to the long side yesterday afternoon at SPX 3399. The last couple days of choppy action is due to President Trump's coronavirus drama. The bulls are in charge but stocks remain a coin-flip with the algo number only 4 points above the signal line. The markets are chop suey. Bulls and bears alike are chopped-up and served cold.

There remains several moving parts creating the whipsaw price action. Typically, only one or two parameters will dominate the US stock market direction on any given day but for the last month there are at least six, seven, sometimes more, parameters jumping around like ping-pong balls. These are epic times for the stock market.

The bulls need to see stronger copper and commodities and lower volatility; CPER above 18.35, GTX above 1717 and VIX below 27.18, respectively. Any one of these flipping bullish will create upside in the stock market, two will create bigtime equity gains and all three will send stocks catapulting higher. Copper and commodities would move lower on a stronger US dollar now trading marginally lower at 93.45. Coper futures are dead flat. At the same time, bulls will try to keep pumping utilities and banks higher.

The bears need to see weaker utilities and banks; UTIL below 826.80 and XLF below 24.30, respectively. Banks receive a boost as the yield curve steepens. At the same time, bears will try to keep stabbing and kicking copper and commodities lower while keeping volatility elevated. If either UTIL or XLF turns bearish, consider the imminent turn to the short side to be in play, and then if the SPX drops below 3367, Keybot the Quant will likely flip short. For now, the caution flag is out.

UTIL above 826.80 is a huge win for bulls. If UTIL remains above 826, the stock market will likely not take a huge dramatic tumble into year end. If UTIL falls back below 826, and down to and below 8 hundo, trending lower, that would spell major trouble ahead for the stock market on the intermediate term basis.

The VIX 27.18 bull-bear line in the sand is important. The VIX is coming on line now. Let's see. VIX 28.18. S&P -3. Volatility initially moves higher out of the gate giving a nod to the bears. Watch this closely. Bears win going forward if VIX remains above 27.18. Bulls will be enjoying a nice rally higher in stocks if VIX falls below 27.18.

On the last trade that ran for about 12 hours, the quant program loses -2% and the actual trading loses -1%. The whipsaw action continues. Keybot exits PSQ and enters QQQ. For the year thus far, the S&P 500, the US stock market, is up +5.2%. The Keybot the Quant algorithm program is up about +22% and the actual trading generated by the quant is up about +41%. Humorously, President Trump is back and this time it is no more Mr Nice Guy.

10/11/20; 7:00 PM EST =
10/5/20; 2:59 PM EST = +29; signal line is +25; go long 3399; (Benchmark SPX for 2020 = +5.2%)(Keybot algo this trade = -2.0%; Keybot algo for 2020 = +21.5%)(Actual trading results this trade = -1.0%; Actual trading results for 2020 = +41.2%)
10/5/20; 2:19 PM EST = +29; signal line is +25 but algorithm remains short
10/5/20; 10:52 AM EST = +43; signal line is +25 but algorithm remains short
10/4/20; 7:00 PM EST = +29; signal line is +24 but algorithm remains short
10/2/20; 3:58 PM EST = +29; signal line is +24 but algorithm remains short
10/2/20; 3:33 PM EST = +43; signal line is +24 but algorithm remains short
10/2/20; 3:18 PM EST = +29; signal line is +22 but algorithm remains short
10/2/20; 2:27 PM EST = +43; signal line is +21 but algorithm remains short
10/2/20; 2:06 PM EST = +29; signal line is +19 but algorithm remains short
10/2/20; 1:56 PM EST = +13; signal line is +17
10/2/20; 1:45 PM EST = +29; signal line is +16 but algorithm remains short
10/2/20; 12:18 PM EST = +45; signal line is +13 but algorithm remains short
10/2/20; 12:05 PM EST = +13; signal line is +11 but algorithm remains short
10/2/20; 11:31 AM EST = +29; signal line is +10 but algorithm remains short
10/2/20; 10:48 AM EST = +13; signal line is +8 but algorithm remains short
10/2/20; 10:00 AM EST = -3; signal line is +6
10/2/20; 9:30 AM EST = -3; signal line is +4; go short 3331; (Benchmark SPX for 2020 = +3.0%)(Keybot algo this trade = +2.6%; Keybot algo for 2020 = +23.5%)(Actual trading results this trade = +3.7%; Actual trading results for 2020 = +42.2%)

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