STOCK MARKET BULLISH -- LONG -- CAUTION

Keybot the Quant remains long and became active in the afternoon yesterday, printing four numbers before the close. Note how the algo number and signal line number are closing in on each other showing that the bulls are weakening somewhat.

The SPX:VIX remains above 35, bullish. If the ratio drops under 35, that is bearish. Retail sector is active, watch RTH 104.02, if below, like now at 103.91, the market bears are capable of pushing the indexes lower, if RTH moves above 104.02, the market bulls will run. Copper continues its run higher, watch JJC, the 54.53 level, now at 54.20. Yesterday price came up to tap 54.53 but quickly retreated. If JJC gets up and over 54.53, the broad markets will be running much higher. Lastly, commodities are heating up as well. Watch CRB 342, now about one point under.  If CRB moves above 342, the broad markets will move substantially higher. Thus, you can see the markets poised today to make the next jump to extend the recovery rally, or fail. Prices for the sectors above are on top of the algorithm's projections so today is shaping up to be a decisive day.

For the SPX today, starting at 1213, if the market bulls can run seven points higher and touch the 1220 handle, the broad markets should shoot upwards like a rocket from there. This move would probably be in concert with RTH, or JJC, or CRB, or all three, hitting the targets listed above thereby reinforcing the bullish move. From there, the liklihood would increase that the party is on into and thru the Labor Day weekend.

The market bears need to prevent a 1220 handle at all costs today, otherwise, they are in trouble. Lots of data this morning with Challenger and ADP data, then Chicago PMI, Factory Orders, as well as Oil Inventories to round out the first hour of trading, so the early action will dictate the tone of the day. The market bears need to watch for a 1195 handle.  If they can drive lower towards 1196 and stab underneath, the sellers will come into the markets in force. A move thru 1197-1219 is sideways indecision.

Volatility, VIX, remains elevated at 32.89, so continue to expect wild swings in the indexes each day. A Bradley turn date was yesterday so now is an ideal time if the market bears want to push lower. Thursday and Friday shold be bull-friendly into the holiday weekend as per seasonality. Markets remain unstable.

Watch SPX:VIX 35, RTH 104.02, JJC 54.53 and CRB 342; the algo says these levels dictate broad market direction today.

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; 3:58 PM EST = -72; signal line -74

8/30/11; 3:28 PM EST = -56

8/30/11; 2:47 PM EST = -72; signal line -75

8/30/11; 2:39 PM EST = -56

8/30/11; 10:00 AM EST = -72; signal line -76

8/28/11; 7:00 PM EST = -72; signal line -77

8/26/11; 10:00 AM EST = -72; signal -77

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%)