Thursday, January 21, 2021


Keybot the Quant remains long but the algo is champing at the bit to go short for the last two days. The holiday-shortened week begins on Tuesday and the bears came to play. Their chests are puffed-out and they are ready to push stocks lower. Utilities fail out of the gate this week as expected but markets rise instead of fall. Whazzat all about?

Former Fed Chair Yellen, Queen of the Doves, who never met a printing press she never loved, is now running Treasury and promises loads of fiscal dough forever. The Yellen Rally occurs. Then President Biden steps into the ring, tagging Yellen, this week is a tag-team event, promising free money for as far as the eye can see. The Biden Orgy occurs yesterday. This morning, ECB President Lagarde is on tap in three hours, and her words will impact the euro, which will send the dollar the other way, which will send stocks and gold the other way (moving with the euro). And don't forget the Fed keeps printing money like mad in the basement of the Eccles Building.

So the bears came to play with their ute negativity but the bulls have rich Aunt Janet, rich Uncle Joe, rich Uncle Jerome and rich Aunt Christine stepping in to slap the bears around and tell them to go home. Git! Go home!

The quant wants to go short but the internal parameters in the model will not yet fully latch to permit the move. If the SPX falls through that 3804-3817 zone today trending lower, Keybot will likely flip short. The SPX begins up at 3852 so that would be a 35-point drop just for the bears to get in the game today. S&P futures are higher +5 so that would be about a 40-point drop needed.

Despite the upside euphoric joy and never-ending optimism that stocks will never go down again, bulls cannot get the UTIL above 876. UTIL is at 865. Up is the wrong direction for stocks unless UTIL moves above 876 pronto and trending higher for next week. Watch utilities closely today and tomorrow since they will tell you a lot. If UTIL moves above 876, the bulls are going to maintain elevated markets for a few days. If UTIL remains below 876, it is only a matter of time, perhaps today, before stocks start selling off and sinking lower.

If VIX pops above 24.76, that will tell you it is lights-out time for stocks. Weaker copper will also help bears but copper futures are higher this morning. Keybot prints a pre-scheduled number this morning before the opening bell.

The quant number is 10 points below the signal line placing the bears in charge of stock market direction but stocks go parabolic on a buying frenzy and short-covering rally. Understand that this is highly unique, erratic and unstable price behavior in markets. It is historic.

1/24/21; 7:00 PM EST =
1/21/21; 9:00 AM EST =
1/19/21; 9:36 AM EST = +51; signal line is +61 but algorithm remains long
1/17/21; 7:00 PM EST = +67; signal line is +62

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