Sunday, October 18, 2020


Keybot the Quant remains long as the bull's momentum slips slightly. The bulls are in charge of stock market direction but the algo number is only 5 points above the signal line. Interestingly, on Friday, the important price action for the stock market occurred outside of the standard session hours. 

Volatility is in the bear camp with the VIX at 27.41 above the critical 27.02 bull-bear line in the sand. Stocks will weaken if the VIX remains above 27.02. Bulls will be on easy street if the VIX falls below 27.02.

Bears need weaker copper, commodities and/or banks, CPER below 18.50, GTX below 1726 and/or XLF below 24.50, respectively. If any 1 of the 3 turn bearish, consider the imminent turn to the short side to be in play, and if the SPX falls below 3480, Keybot will likely flip short. Copper futures will need to fall about -2.7% so the bears have their work cut out for them. Banks reported earnings last week so watch to see if any sogginess shows up in financials this week.

VIX 27.02 is the rudder steering the stock market ship. Another way for the bears to steal the stock market back away from the bulls is to keep jogging volatility above and below 27.02 during the Monday session. Each time that the VIX price jogs below and then back above 27.02 the signal line will move higher to eventually confront the algorithm number and perhaps set up the flip to the bear side. If you see the VIX price jog above and below 27.02 two or three times on Monday, take that as a hint that the stock market is ready to turn south. Keybot prints one pre-scheduled number this week on Tuesday morning before the opening bell. 

10/25/20; 7:00 PM EST =
10/20/20; 9:00 AM EST =
10/18/20; 7:00 PM EST = +59; signal line is +54
10/16/20; 4:10 PM EST = +59; signal line is +53
10/16/20; 10:00 AM EST = +73; signal line is +52
10/16/20; 7:25 AM EST = +73; signal line is +50
10/16/20; 6:54 AM EST = +59; signal line is +48
10/16/20; 6:46 AM EST = +73; signal line is +48
10/16/20; 3:06 AM EST = +59; signal line is +46

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