Sunday, March 28, 2021


Keybot the Quant remains long. The bears made a run at it on Thursday morning but performed a faceplant. The Federal Reserve and Congress keep promising limitless money. The Fed places its knee on the neck of volatility holding it low to the ground so stocks catapult higher. The SPX launched 22 points in the last 8 minutes of trading on Friday. Chips are pushed higher which also carries the broad stock market higher along with lower volatility. The bull orgy party sends the SPX to 3974.54 a new all-time closing high by only 42 pennies although it fell short of setting a new record intraday high.

You always dance with the lady that you brought to the party, no gentlemen would do otherwise, so the likely culprits that would precipitate a reversal would be weaker chips and higher volatility. The copper joy may also end. Bears need SOX below 2995, CPER below 24.28 (a drop in copper futures of about -3.2%) and/or VIX above 22.75.

Any 1 of the 3 parameters flipping bearish will immediately halt the rally in stocks and the caution flag would be out. If any 2 of the three parameters flip bearish, the imminent turn to the short side would be in play, and Keybot will be champing at the bit to go short, and, if the SPX loses 3917 trending lower, Keybot will likely flip short. Also, if 1 parameter flips bearish, and then back to bullish, then maybe a half hour or hour later back to bearish again, rinse and repeat, oscillating above and below the bull-bear numbers, jogging, that would hint that the bears are trying to set things up short. Also, if all 3 parameters fail, the quant will likely immediately flip short.

Bulls are on easy street cruising higher. If the 3 parameters remain bullish the bulls will kick back and enjoy a stock market that floats higher. The rally in utilities is hugely important for the stock market. It takes the intermediate and long-term stock market weakness somewhat off the table. Bears need UTIL below 857.26 (now at 874). If UTIL loses 857, consider that to be an extremely negative development. If UTIL remains above 857, it is looking good for bulls through summer.

Keybot prints 3 pre-scheduled numbers this week Tuesday morning, hump day evening and Friday morning. The month of March ends on Wednesday, EOM, and the first quarter ends, EOQ1, so the year is already 25% over with the COVID-19 pandemic continuing and the US fourth wave underway. Chips, volatility, copper and utes are the only parameters impacting stock market direction currently. You can sprinkle in some commodities as well.

4/4/21; 7:00 PM EST =
4/2/21; 9:00 AM EST =
3/31/21; 7:00 PM EST EOM EOQ1 =
3/30/21; 10:00 AM EST =
3/28/21; 7:00 PM EST = +82; signal line is +62
3/26/21; 10:00 AM EST = +82; signal line is +61
3/26/21; 9:52 AM EST = +80; signal line is +59
3/25/21; 11:21 AM EST = +64; signal line is +57
3/25/21; 10:55 AM EST = +50; signal line is +56 but algorithm remains long
3/24/21; 3:52 PM EST = +64; signal line is +54

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