STOCK MARKET BULLISH -- LONG -- CAUTION

Keybot the Quant remains long for a day and one-half so far, so a whipsaw has not occurred, but let's let today play out first to be sure. The algo idled along on the long side yesterday without printing any numbers. The utilities are rockin' to the upside so any fear of UTIL losing the 50 week MA now appears unlikely. In fact, UTIL, now at 431.28, is only six points away from attaining the 436.91 level which would be viewed as very bullish for the broad markets. Considering the strong sell off during August, however, UTIL may not have the oomph to get there, time will tell. As time moves forward, do not forget the importance of the UTIL 50 week MA 'trap door'.

Watch the retail sector, RTH, now at 102.32.  Use the 104 level as a gauge for broad market direction over the next couple days. If the 104 level is achieved this is very broad market bullish and indicates that the recovery rally has legs. If not, then the market bears remain in the game and broad market pressure can return at anytime.

For the SPX today, the market bulls have the advantage, only needing to move a point higher to cross above 1178.56 and the buyers will enter in force with several more handles higher ticking off in short order. For the market bears, they need to push over 20 points lower today to drop below 1156. If an 1155 handle is touched, the markets will sell off large. A move thru 1157-1177 is sideways action representing consolidation of the recent gains.

The recovery rally continues but there is no evidence as yet that the rally has any staying power. Volatility remains elevated, markets remain unstable. Stay on guard.

9/4/11; 7:00 PM EST =

9/2/11; 9:00 AM EST =

8/31/11; 7:00 PM EST EOM =

8/30/11; 10:00 AM EST =

8/28/11; 7:00 PM EST =

8/26/11; 10:00 AM EST =

8/23/11; 11:51 AM EST = -72; signal line is -77; go long 1146; (Benchmark SPX for 2011=-8.9%)(Keybot this trade=+13.4%; Keybot for 2011=+21.2%)(Actual this trade via SDS=+25.6%; Actual for 2011=+28.4%)