STOCK MARKET BEARISH -- SHORT -- CAUTION

Keybot the quant remains bearish as the smoke is clearing from an odd day. Financials are now perceived to be bullish.  The XLF, now at 15.36, is three cents above the 15.33 level which the algorithm is currently using as a bull-bear line. The only two major sectors that remain bearish are semiconductors and commodities (ex-copper). Even though the algorithm perceives copper to now be bullish, it was weak today. A strong market should be led by copper not with copper in retreat.

The price swings are becoming more wild as trading volume lightens.  Volume is always light in the summer but more so now due to many traders trading small, reducing their positions, to avoid the magnitude of the beatings incurred from the wild whipsaw swings.

Keybot is in one of those unique modes where the signal line now wants the algorithm to be long, but, other programming rules must be satisfied to allow that to happen, and the algorithm is not permitting the move yet, so Keybot remains short.

For tomorrow, watch the XLF as described above to gauge broad market direction, markets will move the way the XLF above moves.   For the SPX, if 1347 is hit tomorrow, only three points higher, so watch for green futures, there will be a wild buying orgy into the summer weekend. SPX will jump to 1349, then test the next resistance level at 1354. The 1360 gap remains open and remains a target.

For the market bears for tomorrow, they need the XLF to get under that 15.33 level after the bell rings so bears must wish for bad banking news or earnings.  Bears need to push the SPX under 1326 for any significant selling to reignite, a formidable task. Bears would probably be content with a sideways move thru 1327-1346 into the weekend. Considering that price blew thru that strong resistance zone of 1329-1333 so easily, a retracement down to back kiss the 1333 would be in order.

Markets remain unstable. Keybot wants to flip to the long side after tomorrow's open, but only time will tell. Green futures are vital for the bulls to continue their fun but red futures will signify that this three day rally is suspect. Watch XLF 15.33 and SPX 1347 tomorrow; they will tell you everything you need to know about the broad market tomorrow.

7/31/11; 7:00 PM EST EOM =

7/29/11; 10:00 AM EST =

7/26/11; 10:00 AM EST =

7/24/11; 7:00 PM EST =

7/21/11; 12:39 PM EST = +34; signal line is +23 but algorithm says stay short

7/21/11; 9:49 AM EST = +18; signal line is +20

7/19/11; 9:00 AM EST = +4; signal line is +19

7/18/11; 3:54 PM EST = +4; signal line is +17

7/18/11; 10:06 AM EST = -10

7/17/11; 7:00 PM EST = +4; signal line +15

7/15/11; 10:00 AM EST = +4

7/11/11; 10:34 AM EST = +4; signal line is +12; go short 1324; (Benchmark SPX for 2011=+5.3%)(Keybot this trade=+3.0%; Keybot for 2011=+7.8%)(Actual this trade via IWM=+3.7%; Actual for 2011=+2.8)