Keybot the Quant remains short after clicking off three numbers today. The -42 number registers again which is the lowest number for the algorithm since last August, when the markets were about to crumble but were saved by Chairman Bernanke's QE2.
Utilities remain bullish as measured by the algorithm and typically the large market down moves will not occur until the utes lead, so a move back up for the indexes will be prudent at some point forward to allow the utes to set up to lead down. The NYA fell below the 40 week MA today indicating that the broad markets have now fallen into a secular bear market. This is serious.
For tomorrow for the SPX, the market bears need to push six points lower to accelerate the selling. If the bears push under 1265.64, the sellers will come out in force, the 1262 support will be tested and fail, and the assault on the starting number for the year 1257-1258 will occur. If this support fails, the whole game changes moving forward and the bearishness will increase substantially for the markets.
Market bulls need to push the SPX higher to grab the 1277 handle, if they do, buyers will flood into the markets and accelerate the move higher several additional handles, testing resistance above at 1279, 1282 and 1286.
If the bulls and bears wrestle all session long between 1266 and 1277, we will have another sideways slop day with no clear winner or direction, pushing off the battle for another day.
China data overnight is critical as well as the NFIB Sentiment at 7:30 AM EST. PPI and Retail Sales follow at 8:30 AM. Markets remain unstable.
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 =
6/13/11; 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%)
Key, can the number go below -42? or is it the absolute minimum, like zero kelvin? what is the implication if it hangs around this area for a few days?
ReplyDeleteGreat question, the algorithm is an oscillator so it moves between -100 and +100, so it can move plenty lower. The resaon it would move lower would be if the utilities started to weaken--which they remain stubbornly high. Utes will lead the way down so this hints that markets will come up again to allow the utes to set up for the down side.
ReplyDeleteAlso, secular calls on the SPX and NYA willdrive the algoirthm lower, and lastly, any weakness in the jobs picture would also click the algorithm into lower numbers. Time will tell.
There is no implication if the algorithm stays at this level, watch the relation between the algorithm number and the signal number, that will tell you when Keybot wants to flip sides.