Friday, January 29, 2021


Keybot the Quant remains short. Hump day was an active day for the algo printing out six numbers. The broad stock market direction is currently controlled by volatility, utilities, banks, retail stocks and copper so there are many moving parts. Price action remains erratic and unstable.

The bears are in charge of market direction with the algo number 11 points below the signal line. S&P futures are down -36 and the VIX is at 33.98 about 3-1/2 hours before the opening bell on Wall Street for Friday.

Bears win going forward with weaker banks and retail stocks. Bears need XLF under 29.11 and/or RTH below 158.00. One of the two turning bearish will cause a noticeable leg lower in the stock market and if both fail, stocks will flush lower. Bears need weaker copper and CPER below 21.74 will create trouble and that reflects about a -1.4% drop in copper futures that are down -0.3% now. So watch copper.

Futures are down so if they hold the negative scenario is on tap for stocks at the start. As equities drop watch XLF and RTH. If one of the two turns bearish, the downside is sustainable going forward. If stocks drop but these two remain in the bull camp, the stock market will recover and rally.

Bulls win with stronger utilities and lower volatility. Bulls need UTIL above 885 pronto to salvage the bull path forward. This is for today; It gets tougher, bulls. For all of next week, the 885 is meaningless and replaced by 893.68, call it 894. Thus, by 4 PM EST today, UTIL must be above 894, a formidable task, otherwise, utes will continue to contribute negatively to the stock market next week.

If utilities begin dropping like a rock, watch UTIL 822.50 which is a trap-door in the stock market. If UTIL collapses and drops below 822-823, look-out. The stock market would be in position to crash big. At the least, if the trap-door opens, the SPX will likely drop from 20 to 40 handles within an hour. The crash scenario would obviously be a few hundred points of carnage that occurs from there forward.

Bulls win with lower volatility and desperately need the VIX below 24.80 to signal the all-clear for stocks. The Fed lost control of volatility and is trying to wrestle it back.

Summing up all that windbag stuff, bulls will stop the carnage with VIX below 24.80 or UTIL above 885-894. If either occurs, consider the imminent turn to the long side to be in play perhaps around SPX 3830.

Bears need XLF below 29.11 and/or RTH below 158.00 and/or CPER below 21.74 to create carnage on Wall Street. The degree of stock market selling is directly correlated to how banks, retail stocks (AMZN) and copper perform today.

Keybot prints a pre-scheduled number this morning shortly after the opening bell.

1/31/21; 7:00 PM EST EOM =
1/29/21; 10:00 AM EST =
1/28/21; 9:36 AM EST = +38; signal line is +49
1/27/21; 3:45 PM EST = +22; signal line is +50
1/27/21; 3:30 PM EST = +6; signal line is +51
1/27/21; 3:28 PM EST = +22; signal line is +53
1/27/21; 3:19 PM EST = +38; signal line is +55
1/27/21; 2:22 PM EST = +22; signal line is +55
1/27/21; 5:37 AM EST = +38; signal line is +57
1/26/21; 10:00 AM EST = +52; signal line is +57
1/25/21; 12:40 PM EST = +51; signal line is +57

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