Friday, March 30, 2012

STOCK MARKET BEARISH -- SHORT -- CAUTION

Keybot the Quant remains short.  Commodities, CRB, collapsed yesterday dropping 2% now down 3% on the week. Copper, JJC, ushered in the market weakness over the last couple days but in the final half hour of trading yesterday, recovered to move above the critical 48.83 level to close above at 48.87. The dollar is weaker today so JJC and CRB may enjoy some buoyancy. Watch JJC 48.83 very closely since it is a direct gauge for broad market direction.  The drop in the CRB is a major win for market bears moving forward.

If you look back at Keybot moving to the short side this year, two days later the bulls would wrestle back control. Think of this in the context of the bear slashing at the bull but only creating scratches on the bull's hide as the bull ran away and ran higher this year thus far.  After the drop in the CRB yesterday, however, the bear has stopped the bull from running now and the bear's claws are dug deep into the bull's flesh holding it back. The markets will move sideways to sideways lower as long as the CRB stays under 312, it is now under 306, comfortably lower making market bears smile.

More drama is on tap with the utilities today as the week, month and Q1 all close out at 4 PM EST. UTIL is at 456. It must close above 463 today, seven points higher, otherwise, Monday is set up for further bearish action in the markets so watch this closely as the day plays out. The game changer for bulls and bears alike occurs this evening with the China PMI data. This data will directly impact copper and commodities markets drastically and the U.S. equity markets will react strongly come Monday morning.  Lower Asian growth means less need for copper and commodities and equities will move lower; if the China data beats expectations then copper and commodities will recover strongly and likewise the equities markets.

For the Friday session with the SPX starting at 1403.28, the bulls have the wind at their backs since they only need to see prints above 1405 to accelerate the upside action, and with the U.S. futures up strongly as this is written, this appears a done deal.  SPX overhead resistance levels are 1406, 1410, 1413, 1414 and 1419. The market bears need to push the SPX down under 1392 to reignite the market negativity.  A move thru 1393-1404 is sideways action. Keybot prints a pre-scheduled number at 10 AM so market action can be updated at that time. In a nutshell, watch JJC 48.83, CRB 312, UTIL 463, SPX 1405/1392 which will dictate broad market direction today.

4/1/12; 7:00 PM EST EOM EOQ1 =
3/30/12; 10:00 AM EST =
3/29/12; 3:14 PM EST = +62; signal line is +66
3/28/12; 12:17 PM EST = +46; signal line is +66
3/28/12; 10:33 AM EST = +60; signal line is +67; go short 1409; (Benchmark SPX for 2012  = +12.0%)(Keybot this trade = -0.2%; Keybot for 2012 = +3.6%)(Actual this trade = -0.3%; Actual for 2012 = +5.2%)

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