STOCK MARKET BEARISH -- SHORT -- CAUTION

Keybot idles along on a Sunday, remaining short. Quite a week last week with the bounce on Thursday and then the slap on Friday. SPX:VIX losing the 68 typically coincides with the Dow Industrials losing from 100 to 300 points, and it did again as forecasted. Watch this ratio closely since staying under 68 means the markets will be weak for quite some time, despite any short term pops that may occur.  A move back above 68 tomorrow or Tuesday says the market buyers are coming back in to drive the indexes higher and the market bulls are not ready to relinquish intermediate control to the bears.

Since utilities are the only major sector Keybot considers bullish currently, and that the utes typically lead or are coincidental to any longer term down move, this hints that the bulls are not finished yet.  Potential set-up is one more move up again for the indexes to line out the utes so the utes can lead downwards on the following move down.  At that point, the longer term weakness will be in the markets for weeks and months, or, at least until QE3.

NYA 40 week MA cross is critical since it identifes secular bull and bear markets.  NYA price is 8016 and the 40 week MA is 8001. High drama since only 15 points are stopping the markets from falling into a secular bear market pattern moving forward. The algorithm is scanning this relationship closely.

For tomorrow for the SPX, we start at 1271.  If the market bears can push three points lower after the opening bell, and move under 1268.28, the indexes will accelerate the selling once again. If the bulls can push above 1288.60, eighteen points higher, then the market declines have stopped and the bulls will accelerate the indexes higher a few handles from there.

Markets remain highly unstable. Potential V bottom may occur quickly similar to the March bottom.  SPX support at 1270, 1268, 1262, 1258 (starting number for 2011), 1252, 1247. Resistance above is 1273, 1277, 1279, 1282, 1286, 1289, 1293.

Note: The -42 number the algorithm kicked out on Friday is the lowest number since 8/27/10. During August 2010, the markets were languishing, about to collapse, and Chairman Bernanke stepped in to save the day, or, actually, in more realistic terms, created additional asset bubbles, with QE2, to give us the 10-month rally that has topped this year.

Keybot the Quant will click off two pre-scheduled numbers this week, one on Thursday morning and one on Friday morning.

7/3/11; 7:00 PM EST =

7/1/11; 10:00 AM EST =

6/30/11; 7:00 PM EST EOM =

6/28/11; 10:00 AM EST =

6/26/11; 7:00 PM EST =

6/19/11; 7:00 PM EST =

6/17/11; 10:00 AM EST =

6/16/11; 9:00 AM EST =

6/12/11; 7:00 PM EST = -28

6/10/11; 1:54 PM EST = -28; signal line is -21

6/10/11; 1:45 PM EST = -42

6/10/11; 10:06 AM EST = -28; signal line is -18; go short 1277; (Benchmark SPX for 2011=+1.5%)(Keybot this trade=-1.0%; Keybot for 2011=+5.4%)(Actual this trade via DIA=-1.1%; Actual for 2011=-0.1%)