Sunday, March 4, 2012

STOCK MARKET BULLISH -- LONG -- CAUTION

Keybot the Quant is long as the new trading week begins. Last week the algorithm motored thru the week without printing any real-time numbers.  The quant has a mind of its own. That behavior highlights the sideways movement of markets in recent days.  Perhaps this week the activity will increase. There is only one pre-scheduled number that prints this week on Friday morning.

The market bulls maintain control by keeping the majority of sectors buoyant.  The weak dollar lifts commodites, copper, gold, silver, etc..., which in turn raises the broad indexes. The market bears need to see a stronger dollar weaker euro, or they got nothing. JJC 48.50 and CRB 313 are important levels for the bulls to maintain, if lost, the market bears will accelerate the broad indexes downwards.

Watch semiconductors, SOX, the 411 level.  SOX is now at 420 comfortably 9 points above helping to keep the broad markets elevated.  The retail sector is truly remarkable in its resiliency in the face of ever-increasing gasoline prices. Watch RTH 39.10, the current print is 39.96, thus the bulls receive strength off the retail sector, unless 86 cents is lost on the RTH. Look for a huge spike in volatility, VIX, which will have market bears dancing with glee. The interesting aspect moving forward is that even though the broad markets may go into sell mode the algorithm may or may not flip to the short side.  With the signal line ticking upwards, however, Keybot does appear poised for a move to the short side at any time.

For the SPX, starting the week at 1370, if the bulls can move up and over 1374.50, and hold it a few minutes, the upside will launch, the SPX will attack 1378.04, the intraday high from a couple days ago. The bears need to need to lose the 1366 handle which is a confluence of support formed by horizontal support, the 10-day MA and Friday's LOD. If 1366 is lost, large block sellers will enter the markets and the broad indexes will accelerate lower. The SPX would test 1363.61 (2011 closing high) quickly, and likely fail.  Once 1366 is lost, the SPX should move lower to test the 20-day MA support at 1357.19. A move thru 1367-1373 is sideways action.

Stay on guard, do not be lulled into complacency as the majority of the long-side players are currently. Markets are unstable and can react violently at any time depending on the dollar and volatility behavior moving forward.

3/11/12; 7:00 PM EST =
3/9/12; 9:00 AM EST =
3/4/12; 7:00 PM EST = +76; signal line is +66
2/29/12; 7:00 PM EST EOM = +76; signal line is +65

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