SPX Daily Chart Showing Keybot the Quant Algorithm Turns

For the last turn, Keybot the Quant flipped to the short side at 2:10 PM EST 9/29/11 at SPX 1146. More stutter steps and whipsaws would be anticipated with volatility remaining high.

STOCK MARKET BEARISH -- SHORT -- CAUTION

Keybot the Quant is on the short side. The program was modified this morning; the first programming changes in months. Changes do not materially impact the posted numbers. Everything is back on line now and operating.

Retail, RTH, and utilities, UTIL, remain the key sectors to monitior.  The algo now tracking RTH 103.75 and last print is 103.34, thus market bearish. Keep watching, however, since a Friday end-of-quarter short-covering rally can change this quickly. UTIL last print 437.27 well above the 426.79 key level for this weeks trading, thus, the utes are single-handedly sector-wise, supporting the markets from the bullish perspective. If RTH moves above 103.75, the market bulls will try to run it up into the close, if RTH stays under 103.75, broad market weakness continues. SPX 1139 handle is vital, it tested twice in the last half hour, a third time may fail, if so, indexes will lose several handles quickly.

10/9/11; 7:00 PM EST =

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

10/2/11; 7:00 PM EST EOM EOQ3 =

9/30/11; 12:11 PM EST = -56; signal line is -42

9/30/11; 11:30 AM EST = -40; signal line is -42 but algorithm says stay short

9/30/11; 10:00 AM EST = -56; signal line is -43

9/30/11; 9:30 AM EST = -56; signal line is -43

9/29/11; 2:10 PM EST = -56; signal line is -45; go short 1146; (Benchmark SPX for 2011=-8.9%)(Keybot this trade=-0.2%; Keybot for 2011=+23.9%)(Actual this trade via DIA=+1.1%; Actual for 2011=+35.2%)

STOCK MARKET BEARISH -- SHORT -- CAUTION

9/29/11; 9:30 AM EST = -56; Program Modification; Algorithm Remains Short; Whipsaw Nullified; Program Adjusted and Credited from 9/29/11 at 2:10 PM EST; Printout Adjusted from 9/29/11 Forward; See Next Updated Post.

9/29/11; 3:58 PM EST = -40; signal line is -44; go long 1157; (Benchmark SPX for 2011=-8.0%)(Keybot this trade=-1.0%; Keybot for 2011=+22.9%)(Actual this trade via DOG=-0.9%; Actual for 2011=+34.3%) WHIPSAW

9/29/11; 2:10 PM EST = -56; signal line is -45; go short 1146; (Benchmark SPX for 2011=-8.9%)(Keybot this trade=-0.2%; Keybot for 2011=+23.9%)(Actual this trade via DIA=+1.1%; Actual for 2011=+35.2%)

STOCK MARKET BULLISH -- LONG -- CAUTION

Keybot the Quant whipsaws back to the long side in the final two minutes of trading today. This is odd behavior for the algo but it testifies to the wild moves in the markets now due to the higher volatility. In the final two minutes, retail, RTH, was pumped flipping the algo back to the long side. Both the algo and the actual trading took a 1% loss in less than a couple hours time on today's whipsaw move.

So today was simply a round trip.  For tomorrow, watch RTH again, it will dictate broad market direction. If RTH stays above 103.90 then the bulls will be in good shape. If RTH loses 103.90, then markets will weaken like today and head lower. Utilities look like they want to finish the week bullish with UTIL now at 439 and only having to stay above 427 to stay bullish, and keep the broad markets buoyant. Semi's were beaten today so the market bulls do not appear able to gain strength from that sector, and the other major sectors are all in sick bay as well.  Thus, retail remains the key.

For the SPX in the Friday session, starting at 1160, the market bulls need to touch 1176 and the upside buyers will enter in force. The market bears need to lose the 1140 level, if you see an 1139 handle, the sellers will jump in large, and the indexes will stumble lower quickly. A move thru 1141-1174 is sideways slop.

Tomorrow is EOM and EOQ3. The ride is not over yet so stay on guard for anything. RTH will lead the way.  Keybot clicks off a pre-scheduled number tomorrow morning at 10 AM.

10/9/11; 7:00 PM EST =

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

10/2/11; 7:00 PM EST EOM EOQ3 =

9/30/11; 10:00 AM EST =

9/29/11; 3:58 PM EST = -40; signal line is -44; go long 1157; (Benchmark SPX for 2011=-8.0%)(Keybot this trade=-1.0%; Keybot for 2011=+22.9%)(Actual this trade via DOG=-0.9%; Actual for 2011=+34.3%) WHIPSAW

9/29/11; 2:10 PM EST = -56; signal line is -45; go short 1146; (Benchmark SPX for 2011=-8.9%)(Keybot this trade=-0.2%; Keybot for 2011=+23.9%)(Actual this trade via DIA=+1.1%; Actual for 2011=+35.2%)

STOCK MARKET BEARISH -- SHORT -- CAUTION

Keybot the Quant just flipped to the short side at 2:10 PM EST at SPX 1146. The algo gave up two measley handles, 1148 to 1146, for the long trade, only a minor smidge of a loss, and the actual trading actually gained a percent on the long play.

RTH failed today. Good ole Keybot told you to watch RTH closely and that was your signal today to put the bear suit on.  The only major sector that is currently bullish, as measured by the algo, is the utilities.  As long as UTIL stays above 426.79, now at 435.81, the down side will be minimized, if 426.79 fails, the down side will open up wide and markets will fall substantially.

Thus, watch UTIL moving forward. Also, RTH, now at 102.85 last print. As long as RTH remains under 103.70, Keybot's real-time calculated number, the weakness in the broad markets will continue.  As always, when a turn occurs, stay on guard for a whipsaw today or tomorrow. The algo has already locked in a whipsaw target of SPX 1157.46; in other words, if the SPX hits that number within the next 24 hours, that would be one thing that would automatically trigger Keybot to return to the long side. For now, however, the bears are growling again.

10/9/11; 7:00 PM EST =

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

10/2/11; 7:00 PM EST EOM =

9/30/11; 10:00 AM EST =

9/29/11; 2:10 PM EST = -56; signal line is -45; go short 1146; (Benchmark SPX for 2011=-8.9%)(Keybot this trade=-0.2%; Keybot for 2011=+23.9%)(Actual this trade via DIA=+1.1%; Actual for 2011=+35.2%)

9/29/11; 1:33 PM EST = -56; signal line is -45 but algorithm says stay long

9/28/11; 10:14 AM EST = -40; signal line is -45

9/27/11; 3:58 PM EST = -24

9/27/11; 3:46 PM EST = -40

9/27/11; 10:00 AM EST = -24

9/27/11; 9:51 AM EST = -24

9/26/11; 11:41 AM EST = -40; signal line is -50; go long 1148; (Benchmark SPX for 2011=-8.7%)(Keybot this trade=+0.2%; Keybot for 2011=+24.1%)(Actual this trade via SH=-1.3%; Actual for 2011=+34.1%)

STOCK MARKET BULLISH -- LONG -- CAUTION

Keybot the quant is long but a turn appears imminent. The algo number is below the signal line so Keybot is chomping at the bit to go short but there are other internal algorithm rules that have to be satisfied so these last few items have to fall in place to trigger the quant to the short side.

The big deal, as Keybot has been scanning and reported here, was retail, RTH, and this sector gave up the ghost a short time ago. This down move in retail is causing the broad market weakness.

Looks like the turn is occurring now...............stay tuned.......................

10/9/11; 7:00 PM EST =

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

10/2/11; 7:00 PM EST EOM =

9/30/11; 10:00 AM EST =

9/29/11; 1:33 PM EST = -56; signal line is -45 but algorithm says stay long

9/28/11; 10:14 AM EST = -40; signal line is -45

9/27/11; 3:58 PM EST = -24

9/27/11; 3:46 PM EST = -40

9/27/11; 10:00 AM EST = -24

9/27/11; 9:51 AM EST = -24

9/26/11; 11:41 AM EST = -40; signal line is -50; go long 1148; (Benchmark SPX for 2011=-8.7%)(Keybot this trade=+0.2%; Keybot for 2011=+24.1%)(Actual this trade via SH=-1.3%; Actual for 2011=+34.1%)

STOCK MARKET BULLISH -- LONG -- CAUTION

Keybot the Quant is long despite today's sell off.  The retail sector held up fine and it was the sector that generated the recovery rally days ago.  Currently, the algo only sees two bullish sectors, as measured by the quant, retail and utilities.  Semi's joined the bear camp this morning.  Thus, RTH and UTIL will determine broad market direction for Thursday.

The utes, UTIL, dropped to 431.81, now inching back towards the critical 426.79 number for this week identified by Keybot. It's comfortably five points above but this must be watched closely. Thus, if UTIL loses 426.79, the markets will be in major trouble. If the bears choose to push lower, they will start the push with attacking the retail sector. If RTH loses the 104 level, now at 104.50, the markets are in big trouble. If both the RTH and UTIL lose the levels indicated, the broad markets will already be tumbling much lower.

The market bulls can save the day if they keep RTH and UTIL elevated above those key levels, and also move the SOX, now at 355.36, back above 363.40. This is a formidable task so the market bears can do some damage tomorrow if they come to play. SPX:VIX ratio is 28 and under 35 favoring bears.

For the SPX tomorrow, starting at 1151, the market bears have the wind at their back since the close occurred only one point from the LOD. If the futures have any hint of red, it only takes a point, but if the SPX falls under 1150, the broad markets will tumble several more handles in short order. Market bulls will try to stop the bleeding by keeping the RTH and UTIL buoyant. The bulls need to touch 1185 to get their momo back so that is a difficult road to hoe, therefore, they will defend the 1150 level with all their might.

Note that the SPX sits only three points away from where Keybot the Quant entered long at 1148. Also note the algo number is within five points of the signal number. This behavior verifies the sideways bull-bear fight. RTH and UTIL will signal the resolution.

10/9/11; 7:00 PM EST =

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

10/2/11; 7:00 PM EST EOM =

9/30/11; 10:00 AM EST =

9/28/11; 10:14 AM EST = -40; signal line is -45

9/27/11; 3:58 PM EST = -24

9/27/11; 3:46 PM EST = -40

9/27/11; 10:00 AM EST = -24

9/27/11; 9:51 AM EST = -24

9/26/11; 11:41 AM EST = -40; signal line is -50; go long 1148; (Benchmark SPX for 2011=-8.7%)(Keybot this trade=+0.2%; Keybot for 2011=+24.1%)(Actual this trade via SH=-1.3%; Actual for 2011=+34.1%)

STOCK MARKET BULLISH -- LONG -- CAUTION

Keybot the Quant remains long. The semiconductors gave up the ghost a short while ago which caused the indexes to lose their early strength.  Moving forward today, watch retail, the RTH, now at 105.72. The algo is scanning 104.19 so the market bulls are okay as long as RTH stays above 104.19.

10/9/11; 7:00 PM EST =

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

10/2/11; 7:00 PM EST EOM =

9/30/11; 10:00 AM EST =

9/28/11; 10:14 AM EST = -40; signal line is -45

9/27/11; 3:58 PM EST = -24

9/27/11; 3:46 PM EST = -40

9/27/11; 10:00 AM EST = -24

9/27/11; 9:51 AM EST = -24

9/26/11; 11:41 AM EST = -40; signal line is -50; go long 1148; (Benchmark SPX for 2011=-8.7%)(Keybot this trade=+0.2%; Keybot for 2011=+24.1%)(Actual this trade via SH=-1.3%; Actual for 2011=+34.1%)

STOCK MARKET BULLISH -- LONG -- CAUTION

Keybot the Quant is long to start the Wednesday session.  The rally started because of strength in retail and then received more juice today with semiconductors. For tomorrow, watch SOX, now at 366.01. If SOX loses the 365.40 level, this will signal that the rally is in big trouble. Market bulls need to maintain 365.40 or higher.

For retail, watch RTH, now at 105.24.  The algo is monitoring 104.11, so about a point lower, and the same idea is in place. If 104.11 is lost the market bears are seizing control of the broad markets, the rally will be fading fast. Since the rally occurred first with retail strength, then semi's, look for the reverse order to take place should the market bears come to play. More than likely, semi's will fail first, then if the rally is truly cooked, retail will fail.

On the bull side, for the rally to continue, retail and semi's are already in the bull camp, as measured by the quant, so the next major sector it is monitoring is the financials. Bulls need the XLF, now at 12.26, to move above 12.80, if so, the rally will be in full mode skyward. This appears to be a formidable task, however.

For the SPX, the market bulls gave up the ghost into the close and hurt their momo. The SPX starts at 1175 and the bulls need to push up to touch 1196 to regain the momo, so they have their work cut out for them. If the bulls can touch 1196, however, the upside will rock and the bulls will not look back.  The market bears have a slightly easier path. The bears need to push the SPX down to 1163, if so, they can get the large block sellers to enter the markets and the indexes will lose several more handles quickly.  A move thru 1164-1195 is sideways mumbo jumbo. SOX and RTH are the keys as described above, watch them closely, they will tell you the direction of the broad markets during the Wednesday session. Note the caution flag remains in the title since the markets are churning as the Europe sound bites hit the wires.

10/9/11; 7:00 PM EST =

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

10/2/11; 7:00 PM EST EOM =

9/30/11; 10:00 AM EST =

9/27/11; 3:58 PM EST = -24

9/27/11; 3:46 PM EST = -40

9/27/11; 10:00 AM EST = -24

9/27/11; 9:51 AM EST = -24

9/26/11; 11:41 AM EST = -40; signal line is -50; go long 1148; (Benchmark SPX for 2011=-8.7%)(Keybot this trade=+0.2%; Keybot for 2011=+24.1%)(Actual this trade via SH=-1.3%; Actual for 2011=+34.1%)

STOCK MARKET BULLISH -- LONG -- CAUTION

Keybot the Quant remains long as the session ends. The weakness into the bell was not a surprise considering that the market bulls could not push the SPX:VIX ratio above 35. The market rally is led by retail and semiconductors, the semi's causing the upthrust for much of today. Into the close the semi's stumbled and even dropped back into the bear camp, as measured by the algo, before recovering in the final couple minutes to stay on the market bull side. Thus, retail and semi's continue to support the market bulls so continue to focus on these two sectors tomorrow, via RTH and SOX respectively, to gauge broad market direction.

10/9/11; 7:00 PM EST =

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

10/2/11; 7:00 PM EST EOM =

9/30/11; 10:00 AM EST =

9/27/11; 3:58 PM EST = -24

9/27/11; 3:46 PM EST = -40

9/27/11; 10:00 AM EST = -24

9/27/11; 9:51 AM EST = -24

9/26/11; 11:41 AM EST = -40; signal line is -50; go long 1148; (Benchmark SPX for 2011=-8.7%)(Keybot this trade=+0.2%; Keybot for 2011=+24.1%)(Actual this trade via SH=-1.3%; Actual for 2011=+34.1%)

STOCK MARKET BULLISH -- LONG -- CAUTION

Keybot the Quant remains long kicking off two numbers this morning thus far.  The 10 AM number was pre-scheduled. The market bulls are in control today. Retail is riding strong and the semiconductors joined the bull party providing additional upthrust. Interestingly, however, the SPX:VIX ratio remains under 35, now at 32.56 last print, which dampens bullish spirits. Confirmation of a firm bull recovery rally will not occur until the ratio moves above 35.

The algo is currently tracking the RTH 104.30 level and last print shows 106.14, handily above favoring market bulls.  Keybot is also tracking the semi's, SOX, at the 365.50 level. SOX last print is 366.40 so the bulls are having a party currently.  Financial participation is needed for the bulls to continue the fun. The quant is now monitoring XLF 12.85. XLF last print is 12.53 so it has a lot of work to do to help boost the broad markets; financials continue to favor the market bears. The current strength in the markets is due to retail and semi's, so continue to watch the RTH and SOX levels above since they will tell you broad market direction today.

10/9/11; 7:00 PM EST =

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

10/2/11; 7:00 PM EST EOM =

9/30/11; 10:00 AM EST =

9/27/11; 10:00 AM EST = -24

9/27/11; 9:51 AM EST = -24

9/26/11; 11:41 AM EST = -40; signal line is -50; go long 1148; (Benchmark SPX for 2011=-8.7%)(Keybot this trade=+0.2%; Keybot for 2011=+24.1%)(Actual this trade via SH=-1.3%; Actual for 2011=+34.1%)

STOCK MARKET BULLISH -- LONG -- CAUTION

Keybot the Quant is long as of this morning. Retail launched the indexes today. Thus, for tomorrow, keep watching RTH to see if the bulls can maintain momentum. Also, the semiconductors and financials are now important to see if they can add to the bullish strength. Talking levels, the RTH must stay above 104.25 and now sits comfortably above at 105.97. The markets will remain buoyant if RTH stays above 104.25.

For the semi's, watch the socks, SOX, now at 359.50. If SOX moves above 364 the market bulls will receive further fuel for the rally. Considering the AAPL's news on decreased iPad shipments and the lagging tech sector today, this may be a toughie. The other sector of importance is the financials. Watch XLF, now at 12.20. The XLF needs to move above 12.80 to supply bull fuel for the indexes. Neither of these two tasks are easy, the semi's are probably more likely to happen than the financials.

But focus on the RTH since if the 104.25 is lost, nothing will matter, the market bears will be slapping the indexes south again.  The SPX:VIX ratio is at 29.80 well under the 35 level which would confirm a strong bull rally so the bulls have nothing to cheer about yet, today was simply a market bounce day, nothing more, nothing less.

For the SPX tomorrow, the bulls have the wind at their backs since the 1162.95 close is near the intraday high of 1164.19. If the market bulls bounce only a couple points, and move up over the 1164 tomorrow, the buyers will enter in force and some large block buying will initiate, driving the indexes even higher. The bulls obviously want to see green futures overnight and they will be whistling a happy tune in the morning.  The market bears have a more formidable task ahead since they need to move the SPX down to 1131 to regain the momo. The bears will instead focus on stalling the upside move and the best way to do that is to provide weakness in the semi's and retail sectors. Keybot clicks off a pre-scheduled number at 10 AM tomorrow morning so we can take a look at the action at that time. For now, the algo is long. Extreme caution is warranted.

10/9/11; 7:00 PM EST =

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

10/2/11; 7:00 PM EST EOM =

9/30/11; 10:00 AM EST =

9/27/11; 10:00 AM EST =

9/26/11; 11:41 AM EST = -40; signal line is -50; go long 1148; (Benchmark SPX for 2011=-8.7%)(Keybot this trade=+0.2%; Keybot for 2011=+24.1%)(Actual this trade via SH=-1.3%; Actual for 2011=+34.1%)

SPX Daily Chart Showing Keybot the Quant Algorithm Turns

Keybot flipped to the long side this morning. The odd trading day today was all about the strength in retail and not one media outlet has mentioned the retail sector today. That's good.  From late last week the algo was monitoring the retail sector to confirm market strength and the utility sector to confirm market weakness.  The bulls came to play today and bounced retail. Once RTH moved above 103.80-ish the broad markets followed higher. RTH closed only pennies shy of 106, now two points above the level Keybot identifies as market bullish.

This was the sixth turn by the algo in the last 17 trading days which is not typical for Keybot. This action reflects the high market volatility which results in wild large points swings day after day. Things will not settle down until volatility, VIX, heads lower.

Keybot the Quant was odd man out after committing to the long side this morning, some traders wondering if the robot had a screw loose.  The SPX actually drifted lower back into the 1130's before catapulting higher to honor the shift to the long side by the algo. Tomorrow we see if the move has any legs.

STOCK MARKET BULLISH -- LONG -- CAUTION

Keybot the Quant flipped to the long side about an hour ago but markets are very much in a churn pattern currently.  The retail sector is lifting the broad markets today. Continue to watch RTH 103.90. Current print is 104.10 so the market bulls are only in command by a sliver. The Keybot algo gained two points on the short side play just ended but note the actual trading lost a percent on the last trade. The robot continues to operate in reduced risk mode, and this appears to be a wise choice given the current churn.  As always when a turn occurs, and especially in these sideways markets that are responding to Euro news, watch for a potential whipsaw either today or tomorrow. The algo identifies SPX 1136 as the whipsaw level where the program will step in and go short again if the SPX drops to this number within the next 24 hours. Extreme caution is warranted moving forward.

10/9/11; 7:00 PM EST =

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

10/2/11; 7:00 PM EST EOM =

9/30/11; 10:00 AM EST =

9/27/11; 10:00 AM EST =

9/26/11; 11:41 AM EST = -40; signal line is -50; go long 1148; (Benchmark SPX for 2011=-8.7%)(Keybot this trade=+0.2%; Keybot for 2011=+24.1%)(Actual this trade via SH=-1.3%; Actual for 2011=+34.1%)

9/26/11; 10:51 AM EST = -40; signal line is -50 but algorithm says stay short

9/26/11; 10:09 AM EST = -56; signal line is -51

9/26/11; 9:37 AM EST = -40; signal line is -51 but algorithm says stay short

9/25/11; 7:00 PM EST = -56; signal line is -51

9/22/11; 9:30 AM EST = -56; signal line is -51; go short 1150; (Benchmark SPX for 2011=-8.6%)(Keybot this trade=-2.5%; Keybot for 2011=+23.9%)(Actual this trade via SPY=-4.3%; Actual for 2011=+35.4%)

STOCK MARKET BEARISH -- SHORT -- CAUTION

Keybot remains short. The retail sector was up after the opening bell bringing the broad markets higher but it has now weakened again. The algo is monitoring RTH 103.80 currently. The last print is 103.56. The algo motors along on the short side. Continue watching RTH for guidance for the broad markets, above 103.80 and the indexes will run hgher again, if the day continues with RTH under 103.80, the market bulls got nothing.

10/9/11; 7:00 PM EST =

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

10/2/11; 7:00 PM EST EOM =

9/30/11; 10:00 AM EST =

9/27/11; 10:00 AM EST =

9/26/11; 10:09 AM EST = -56; signal line is -51

9/26/11; 9:37 AM EST = -40; signal line is -51 but algorithm says stay short

9/25/11; 7:00 PM EST = -56; signal line is -51

9/22/11; 9:30 AM EST = -56; signal line is -51; go short 1150; (Benchmark SPX for 2011=-8.6%)(Keybot this trade=-2.5%; Keybot for 2011=+23.9%)(Actual this trade via SPY=-4.3%; Actual for 2011=+35.4%)

STOCK MARKET BEARISH -- SHORT -- CAUTION

Keybot the Quant kicks off the week on the short side and prints a number after the opening bell. This places the algo in the mode to want to flip long but other algo rules for the quant are holding it back right now. If the SPX can get up and over 1148 today, Keybot will probably flip to the long side. The retail sector is buoyant which is giving the markets its current strength. This may be fading, however, since RTH is now printing 104.19 and the algo is monitoring the 103.90 level to separate market bulls from market bears.

10/9/11; 7:00 PM EST =

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

10/2/11; 7:00 PM EST EOM =

9/30/11; 10:00 AM EST =

9/27/11; 10:00 AM EST =

9/26/11; 9:37 AM EST = -40; signal line is -51 but algorithm says stay short

9/25/11; 7:00 PM EST = -56; signal line is -51

9/22/11; 9:30 AM EST = -56; signal line is -51; go short 1150; (Benchmark SPX for 2011=-8.6%)(Keybot this trade=-2.5%; Keybot for 2011=+23.9%)(Actual this trade via SPY=-4.3%; Actual for 2011=+35.4%)

STOCK MARKET BEARISH -- SHORT -- CAUTION

Keybot is short to start the new trading week. After Thursday's open, the SPX travels sideways thru 1119 and 1142. The lower boundary was tested in conjuntion with the utilities, UTIL, testing a specific price level that is dictated by the quant. Last week that level was 423.83, this week the level is 426.79. Note that this is three points higher than last week, thus, favoring the market bears more, since now the threshold to cross under it and to push the markets lower is easier.

As the SPX moved up to test the top side of the range at 1142, the retail sector was causing this lift trying to pull the entire market up. But, RTH went up to try and punch thru the 103.75 (another number dictated by the quant) three times on Friday and could not seal the deal. Thus the SPX moves thru the overall range sideways; the utes unable to signal the downside rupture and retail unable to signal the top side thrust.

So, for Monday's trade, watch the 1119-1142 range, any move outside of these boundaries is important. Watch UTIL 426.79. UTIL starts at 431.55 only four and one-half points higher. If UTIL loses the 426.79, that will cause the broad markets to fall, the SPX 1119 level would give way and the trip downward to test 1101 would begin. For the bulls, they need to see RTH move above 103.85, now at 103.49. Any bit of positive retail news would push the RTH above that level and take the broad markets higher.

For the SPX, starting at 1136, market bulls need to punch up thru 1142 to ignite large block buying. SPX should move to 1155 if 1142 is broken. For the bears, they need to lose the 1121 support, if they can see an 1120 handle, the sell side should open up wide and 1119 would probably fail immediately, then the trek towards testing 1101 would begin. A move thru 1122-1140 is sideways mumbo jumbo. The tell for each side is described above. For bulls, watch to see if RTH moves above 103.85, if so, you are in clover.  For bears, watch to see if UTIL loses 426.79, if so, you are in clover.

Equities move in the same direction as the euro (opposite the dollar) so the news flow dictates the markets. The algo prints off two pre-scheduled numbers this week one on Tuesday the other Friday. Friday ends the month and quarter; EOM, EOQ3.

10/9/11; 7:00 PM EST =

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

10/2/11; 7:00 PM EST EOM EOQ3 =

9/30/11; 10:00 AM EST =

9/27/11; 10:00 AM EST =

9/25/11; 7:00 PM EST = -56; signal line is -51

9/22/11; 9:30 AM EST = -56; signal line is -51; go short 1150; (Benchmark SPX for 2011=-8.6%)(Keybot this trade=-2.5%; Keybot for 2011=+23.9%)(Actual this trade via SPY=-4.3%; Actual for 2011=+35.4%)

STOCK MARKET BEARISH -- SHORT -- CAUTION

Keybot the Quant sits on the short side over the weekend. The algo has not clicked off any numbers since the switch short at Thursday's open. Tomorrow, Sunday's pre-scheduled number will print so at that time we can assess the week ahead. Utilities and retail are going to be the two key sectors to watch, that is what the algo is focused on right now. SPX is trading in the 1119-1142 range the last two days so that will more than likely resolve in the week ahead.

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

10/2/11; 7:00 PM EST EOM =

9/30/11; 10:00 AM EST =

9/27/11; 10:00 AM EST =

9/25/11; 7:00 PM EST =

9/22/11; 9:30 AM EST = -56; signal line is -51; go short 1150; (Benchmark SPX for 2011=-8.6%)(Keybot this trade=-2.5%; Keybot for 2011=+23.9%)(Actual this trade via SPY=-4.3%; Actual for 2011=+35.4%)

STOCK MARKET BEARISH -- SHORT -- CAUTION

Keybot the Quant is on the short side as of yesterday's open.  If the SPX hits 1114 today, and the futures are indicating a run down to there, the selling will accelerate. Caution is warranted since new lows, put/call and other indictators hint at a potential capitulative move coming. Folks are starting to feel that panic vibe.

If you were watching UTIL 423.83, you had quite a show yesterday.  Five tests of this level but the bulls managed to hold it above each time. This aided the late day recovery. If UTIL loses the 423.83 level, this confirms the next round of selling is at hand. If UTIL maintains itself above 423.83 today, then the markets will stablilize into the weekend. Volatility is highly elevated so continue to expect wild swings in the markets.

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

10/2/11; 7:00 PM EST EOM =

9/30/11; 10:00 AM EST =

9/27/11; 10:00 AM EST =

9/25/11; 7:00 PM EST =

9/22/11; 9:30 AM EST = -56; signal line is -51; go short 1150; (Benchmark SPX for 2011=-8.6%)(Keybot this trade=-2.5%; Keybot for 2011=+23.9%)(Actual this trade via SPY=-4.3%; Actual for 2011=+35.4%)

SPX Daily Chart Showing Keybot the Quant Algorithm Turns

Keybot is back on the short side as of today's option but watch out for any potential whipsaw today or tomorrow.  The chart shows the recent turns. Utilities are key as the session plays out.  Watch UTIL 423.83, if that holds, bulls should be able to moderate the selling and return some steadiness to the markets. If 423.83 fails, the broad markets will take the next leg lower. Current UTIL print is 425.45.

STOCK MARKET BEARISH -- SHORT -- CAUTION

Keybot the Quant flipped short at the open. The algo gave back 30 spoo's for the long play over the last week. Note how, despite Keybot having already reduced risk, the algo lost 2.5% on the last trade but the actual trade in SPY still lost 4.3%. On the bright side, without reduced risk, the quant would have given back over 8% for the actual trade, and, of course, Keybot remains up over 35% thus far this year, beating the SPX benchmark handily by about 45%.  So, the market bears are in control again. The SPX:VIX ratio dropping under 35 yesterday morning has led the equity land slide.

All major sectors are bearish as perceived by the algo, except the utes.  Watch UTIL 423.83 level next.  UTIL now printing 426.69, about three points above.  If the 423.83 is lost, another market down leg will occur. The bears need to keep the RTH under 104 to maintain market bearishness. And, as always, watch for a whipsaw move today or tomorrow.

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

10/2/11; 7:00 PM EST EOM =

9/30/11; 10:00 AM EST =

9/27/11; 10:00 AM EST =

9/25/11; 7:00 PM EST =

9/22/11; 9:30 AM EST = -56; signal line is -51; go short 1150; (Benchmark SPX for 2011=-8.6%)(Keybot this trade=-2.5%; Keybot for 2011=+23.9%)(Actual this trade via SPY=-4.3%; Actual for 2011=+35.4%)

9/21/11; 3:50 PM EST = -40; signal line is -51

9/20/11; 9:00 AM EST = -24

9/18/11; 7:00 PM EST = -24

9/16/11; 10:00 AM EST = -24

9/14/11; 12:43 PM EST = -24

9/14/11; 12:39 PM EST = -40; signal line is -58; go long 1180; (Benchmark SPX for 2011=-6.2%)(Keybot this trade=+0.5%; Keybot for 2011=+26.4%)(Actual this trade via SH=+0.4%; Actual for 2011=+39.7%)

STOCK MARKET BULLISH -- LONG -- CAUTION

Keybot the Quant remains long as the indexes flush in the final minutes. The algo shows that the semiconductors dropped back into the bearish camp today leaving the utilities and retail as the only bullish sectors, as perceived by the quant. The big trouble started this morning at 10:50 AM EST when the SPX:VIX ratio lost the 35 level indicating that the market bears have regained control of the markets and a large down day is on tap.  Then Chairman Bernanke rides out on a white horse and proceeds to lay an egg. He provides the Operation Twist as everyone anticipated but he follows it up with a negative outlook on the markets that told traders things were worse than they thought. The selling accelerated as traders ran for the exits.

Even though the markets tumbled and the SPX:VIX ratio dropped under 35, Keybot maintains a bullish posture.  Note that SPX is now under the 1180 level where Keybot entered the long side a week ago.  Watch SOX tomorrow, now at 365.37. If the algo sees 366.30 the bulls will be back in biz, but, if SOX remains under 366.30, then the market bears will continue to enjoy the downside.  If the bears keep the semi's below 366.30 tomorrow, the retail sector will determine broad market direction. If RTH, now at 105.03 and bullish, loses 104.10, then retail becomes bearish and this will help exacerbate the down side for the indexes. If retail stays above 104-ish, the market bulls are hanging in there overall and this will help the indexes recover.

For the SPX on Thursday, starting at 1166.76, the bears have the wind at their backs. Market bears only need to push the SPX a measley 55 cents lower and the downside will once again accelerate. Thus, if bearish, you want to see red futures overnight into the open to ensure the markets demise. If bullish, you need to provide green futures to stop the bears before things get out of hand.  SPX provides support at 1166 and 1155. SOX and RTH as described above will tell you the direction of the broad markets tomorrow. We will find out if Keybot the Quant wants to flilp to the short side, or stay on the long side, for tonight, the algo is in the bull camp still yet.

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

10/2/11; 7:00 PM EST EOM =

9/30/11; 10:00 AM EST =

9/27/11; 10:00 AM EST =

9/25/11; 7:00 PM EST =

9/21/11; 3:50 PM EST = -40; signal line is -51

9/20/11; 9:00 AM EST = -24

9/18/11; 7:00 PM EST = -24

9/16/11; 10:00 AM EST = -24

9/14/11; 12:43 PM EST = -24

9/14/11; 12:39 PM EST = -40; signal line is -58; go long 1180; (Benchmark SPX for 2011=-6.2%)(Keybot this trade=+0.5%; Keybot for 2011=+26.4%)(Actual this trade via SH=+0.4%; Actual for 2011=+39.7%)

STOCK MARKET BULLISH -- LONG

Keybot the Quant remains long after today's action. The algo calmly motors along and has not kicked out any numbers this week thus far except for the pre-scheduled number before the open today. Looks like markets are in idle mode in front of the Fed tomorrow afternoon.

If you are following along with the sectors currently of most interest to the quant, you see the utes, retail and socks maintaining their buoyancy, even after the markets drifted lower late in the day today. The SPX tagged 1215 so the indexes jumped higher as expected, the SPX came up to test the 1219-1220 resistance cluster, printing a HOD of 1220.39 which actually surpassed the 1220.06 HOD printed on Monday, but considering this is formidable resistance, a spank down occurred. SPX fell back thru 1209-1210 support, then 1204 support closing at the lows for the day.  SPX:VIX ratio stayed above 35 all day favoring bulls so the markets were very much in idle mode today showing sideways action with the bulls maintaining control of the markets overall.

For tomorrow, watch the socks, SOX now at 372.76. Keybot is scanning 367.60 currently, five points lower, so the bulls will continue to maintain market control unless SOX loses 367.60.  The utes exploded to the upside today hinting that the market bulls may have further legs to this recovery rally.  Retail hung in there as well, RTH now at 107.37 and market bulls have no worries unless it loses 104.60. Interesting split in the major sectors since copper, commodities and financials remain firmly bearish.

For the SPX tomorrow, starting at 1202, the market bulls need good news out of Europe as well as from Chairman Bernanke since they need to push back up to touch 1220 to accelerate the recovery rally. If they touch 1220, that is the third test of the 1219-1220 resistance cluster so she should spike up thru and the indexes will not look back.  For the market bears, they have an easier task ahead for Wednesday.  The bears only need to move 90 cents lower to get under 1201.29, and the downside will open up quickly. If you are a bear you want to see red futures overnight.1198-1199 test will occur and most likely fail right away, then the SPX will head down to 1193. The indexes favor the bulls, if the bears want to stop them, they will need to make a stand tomorrow. A move thru 1203-1219 is sideways slop but with data and the Fed on tap, as well as Europe remaining in trouble, the markets should make a more firm committment one way or the other.

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

10/2/11; 7:00 PM EST EOM =

9/30/11; 10:00 AM EST =

9/27/11; 10:00 AM EST =

9/25/11; 7:00 PM EST =

9/20/11; 9:00 AM EST = -24

9/18/11; 7:00 PM EST = -24

9/16/11; 10:00 AM EST = -24

9/14/11; 12:43 PM EST = -24

9/14/11; 12:39 PM EST = -40; signal line is -58; go long 1180; (Benchmark SPX for 2011=-6.2%)(Keybot this trade=+0.5%; Keybot for 2011=+26.4%)(Actual this trade via SH=+0.4%; Actual for 2011=+39.7%)

STOCK MARKET BULLISH -- LONG

The algo remains long to start the Tuesday trade. Housing Starts are in the tank still yet falling 5% last month. Keybot the Quant continues to show that the housing market has fallen back into a double dip as of mid-May. For today, the SPX:VIX ratio is above 35 so the market bulls are in control.

Continue watching the three key sectors that led this recovery rally; socks, retail and utes. The SOX, now at 377.49 needs to stay above 368.50 for the bullish market fun to continue. Retail, the RTH, now at 107.84, needs to maintain its three point height above the 104.70 level. If so, the market bulls will continue to keep the indexes buoyant. UTIL, now at 438-ish, is comfortably 14 points above the critical 423-424 level for this week thus far so the market bulls have another feather in their caps.

For the SPX, if the market bulls touch the 1215 handle, the buyers will enter in force and send markets much higher. The SPX begins at 1204 support, spending late yesterday bouncing between the key S/R of 1204 and 1209-1210. The market bears need to move the SPX down to 1188-1189 to accelerate the selling and regain control of the markets. A move thru 1190-1214 is sideways slop. Markets remain at the mercy of Euro news, as well as the Fed's Operation Twist stategy decision.

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

10/2/11; 7:00 PM EST EOM =

9/30/11; 10:00 AM EST =

9/27/11; 10:00 AM EST =

9/25/11; 7:00 PM EST =

9/20/11; 9:00 AM EST = -24

9/18/11; 7:00 PM EST = -24

9/16/11; 10:00 AM EST = -24

9/14/11; 12:43 PM EST = -24

9/14/11; 12:39 PM EST = -40; signal line is -58; go long 1180; (Benchmark SPX for 2011=-6.2%)(Keybot this trade=+0.5%; Keybot for 2011=+26.4%)(Actual this trade via SH=+0.4%; Actual for 2011=+39.7%)

STOCK MARKET BULLISH -- LONG

Keybot the Quant motors along on the long side today without printing any numbers. The three key sectors that caused the market buoyancy last week were the utilities, retail and semiconductors. Therefore, they are under close scrutiny by the algo to note any reversal for the indexes but nothing occurred today; status quo despite the heavy selling, especially at the open.

Keybot prints a pre-scheduled number at 9 AM so we can pick it up there to map out tomorrow's action. The algo remains long. Copper is extremely sick foretelling the intermediate term ahead. Retail and semiconductors should tell the tale for the short term trading over the next couple days, for now the bulls remain in control.

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

10/2/11; 7:00 PM EST EOM =

9/30/11; 10:00 AM EST =

9/27/11; 10:00 AM EST =

9/25/11; 7:00 PM EST =

9/20/11; 9:00 AM EST =

9/18/11; 7:00 PM EST = -24

9/16/11; 10:00 AM EST = -24

9/14/11; 12:43 PM EST = -24

9/14/11; 12:39 PM EST = -40; signal line is -58; go long 1180; (Benchmark SPX for 2011=-6.2%)(Keybot this trade=+0.5%; Keybot for 2011=+26.4%)(Actual this trade via SH=+0.4%; Actual for 2011=+39.7%)

STOCK MARKET BULLISH -- LONG

Keybot the Quant is long to start the new trading week. The algo program shows the initial utes failure occurred in early August, six weeks ago, and last week the utes recovered from this failure giving market bulls something to cheer about. This is an important development since it hints at further underlying strength in the markets. The bugaboo is that the ute daily and weekly charts are forming negative divergence so this upside market fun may be short-lived. For this week, Keybot is scanning UTIL 423.83. UTIL is now at 439.29, comfortably 15 points above, thus the market bulls are running.

The financials are the next major sector that can add some further upside oomph to the markets. Watch XLF, now at 12.90, the algo wants to see 13.25, if so, the broad markets will be rockin' higher.  Copper, commodities and the high volatility remain firmly planted in the bear camp, however, and, considering a sustained potential move up in the dollar, the markets should not receive any help from this trio.  Overall, the markets are currently maintaining a sideways to sideways up bias and that will continue as long as the utes, retail and the semi's remain buoyant.

For the SPX for Monday's session, starting at 1216, if the market bulls can touch 1220, the buyers will enter in force and drive the indexes up several more handles in quick order. The market bears need to lose the 1204.50 level, about 11 points lower, to wrestle back control of the markets and usher in large block selling.

The algo clicks off one pre-scheduled number this week on Tuesday morning at 9 AM. The market bulls are in firm control and it looks like the only thing that can derail the upside bias is bad news out of Europe. The Housing Starts data is pivotal, a vital monthly number, so definitely focus your attention on the markets for Tuesday's open.

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

10/2/11; 7:00 PM EST EOM =

9/30/11; 10:00 AM EST =

9/27/11; 10:00 AM EST =

9/25/11; 7:00 PM EST =

9/20/11; 9:00 AM EST =

9/18/11; 7:00 PM EST = -24

9/16/11; 10:00 AM EST = -24

9/14/11; 12:43 PM EST = -24

9/14/11; 12:39 PM EST = -40; signal line is -58; go long 1180; (Benchmark SPX for 2011=-6.2%)(Keybot this trade=+0.5%; Keybot for 2011=+26.4%)(Actual this trade via SH=+0.4%; Actual for 2011=+39.7%)