Wednesday, October 26, 2011


Keybot the Quant remains long.  The algo motored along calmly today since the four main sectors supporting this bull rally; utes, semi's, retail and financials, remained above the quant's reference number, but, in the final half hour, volatility, VIX, dropped and decided to further fuel the levitating indexes.

For Thursday, watch VIX 29.90, now at 29.86, only four pennies on the bull-friendly side. The bulls will run if the VIX stays under 29.90. If the VIX moves above 29.90, the market bears will be selling the indexes. Retail is receiving a negative divergence smack down and may turn bearish to weaken the markets.  For the four sectors mentioned above, watch the following levels, price is above for all four currently, the market bears would need at least one to drop below the level the algo is tracking which is: UTIL 432, SOX 367.75, RTH 106.75 and XLF 12.75.

For the SPX, starting at 1242, the market bulls need to get up and over 1246, if so, the upside will accelerate higher in short order, 1247 will give way and price will probably run to 1252 for a test of that resistance.  The market bears need to push hard since a drop of 21 points is needed for bears to get any mojo going.  If the bears move the SPX down to 1221, the sellers will enter in force, if a 1220 handle hits, the selling will accelerate. A move thru 1222-1244 is sideways slop.

As the bell rings, the VIX will immediately tell you the preferred market direction for the indexes; simply watch VIX 29.90. If the markets sell off, watch to see if any of the four sectors drop below the levels listed.  If so, then the bears have something going and Keybot may flip to the short side, if not, the market bears got nothing.

10/31/11; 7:00 PM EST EOM =
10/30/11; 7:00 PM EST =
10/28/11; 10:00 AM EST =
10/26/11; 3:59 PM EST = +6 signal line is -17
10/26/11; 3:47 PM EST = -8 signal line is -18
10/26/11; 3:31 PM EST = +6 signal line is -18
10/25/11; 10:00 AM EST = -8; signal line is -20
10/25/11; 9:30 AM EST = -8; signal line is -20
10/24/11; 10:34 AM EST = +6; signal line is -21
10/24/11; 9:30 AM EST = -8; signal line is -23; go long 1238; (Benchmark SPX for 2011=-1.6%)(Keybot this trade=-2.7%; Keybot for 2011=+26.4%)(Actual this trade via MYY=-3.8%; Actual for 2011=+36.5%)

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