STOCK MARKET BEARISH -- SHORT -- CAUTION

Keybot the Quant remains short. The algorithm never ceases to amaze.  With the bullish euphoria today, it was a no-brainer that Keybot would simply flip long at the open and join the party, only one problem, the algorithm remained short all day long.  Keybot jumped 14 points at the opening bell to print the -28 shown below.  The algorithm is now only four measely points away from wanting to flip to the long side.

The algorithm needed only one additional positive change in the data it scans to move above the -24 signal line to flip long and show that the market bulls were running strong, but, it never happened today.  That does not mean it will not happen at the opening bell tomorrow, but it is extremely odd behavior and a rarity for the algorithm.

The drama today centered around copper; the algorithm was only a smidge from changing copper's posture from bearish to bullish, which would have increased the algorithm enough to flip it long, but, it fell a smidge short and Keybot stayed the short course.  All major sectors remain bearish as measured by Keybot except for utilities.  If the VIX would have dropped under 17.62, the algorithm would have flipped long, but, volatility remained elevated and closed at 18.26.

For tomorrow, the market bulls need to drive the markets five points higher to overtake 1292.50, if so, the buyers will be going wild, grabbing up stocks like there is no tomorrow, driving the SPX up thru 1293 resistance and onward to 1295, 1298, and even 1307 would be in play. Keybot would surely flip long. If copper shows any buoyancy tomorrow, Keybot will probably flip long.

The market bears, impressively preventing the market bulls from taking over despite the euphoric buying today, need to push markets only about three points lower under 1284 to dampen the market mood. A move down to 1272 would be needed for bears to get back the momo tomorrow and run markets much lower, a tall order, which would be a complete retracement of today's jump. A move between 1284 and 1292 results in sideways slop all day. CPI, manufacturing data and oil inventories are key tomorrow.

Markets are very unstable, exhibiting unnatural behavior.  Be extremely cautious moving forward. We will see if Keybot flips long at the open tomorow or if the market bears come to play, perhaps erasing today as if it never happened. It's going to be interesting.

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 =

6/14/11; 9:30 AM EST = -28; signal line is -24

6/13/11; 3:35 PM EST = -42

6/13/11; 1:59 PM EST = -28; signal line is -23

6/13/11; 11:51 AM EST = -42

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%)