STOCK MARKET BULLISH -- LONG -- CAUTION

Keybot the Quant is long to start the new trading week. There are ten trading days remaining in March which will close out Q1. Window dressing, where money managers buy the leadership stocks so the quarterly statements do not dissapoint investors (if they do not see the high-flyers listed--such as AAPL), may occur, thus, market buoyancy would be anticipated for the following week, the week of 3/26/12. So if the market bears want to play it will have to be this week.

Utilities sector weakened as bond yields rose, which is expected.  If UTIL loses the 447 handle, now at 453.60, about seven points higher, the broad markets will be in serious trouble.  Semiconductor, financial and retail sectors as well as low volatilty (extreme trader complacency and lack of fear) are leading the markets allowing the market bulls to glide along without a care.  If the broad markets pull back, a rising dollar would likely provide the catalyst, since copper and commodities should weaken and negativity impact the broad markets. Watch copper, JJC, the 48.85 level (now at 49.84), comfortably one point above which provides bull market support. Market trouble will be apparent if JJC drops under 49. China growth, or lack thereof, is key.

Watch commodities, CRB, the 312.75 level (now at 317.93), five points above danger. Keybot is fixated on the CRB and this would likely be the first area to crack should the broad markets decide to move lower.  Thus, the dollar and CRB should tell the tale. Market bulls want to see a weaker dollar and market bears want to see a stronger dollar.  The markets have shown some correleation of an up dollar with up equities in recent days but the last couple days the inverse relationship was back in sync.

For the SPX for Monday, starting at 1404, the tight range on Friday favors neither bulls or bears to start the week.  The market bulls need to touch the 1406 handle, if so, another upside acceleration leg will occur for markets, and this is important since the SPX is now starting to test resistance levels from 2008. The market bears need to push under 1401.50 to ignite the downside. A move thru 1402-1405 is sideways action but not expected, markets should make a decisoin one way or the other.  A couple points higher and bulls will strike up the band once again, but about three or so points lower and the bears will begin their own party. The futures markets overnight will provide an early indication.

Stay cautious, markets are unstable and erratic, potentially indicating a market top. The algorithm prints out one pre-sheduled number this week on Tuesday morning at 9:00 AM EST. Last week, Keybot did not print out any numbers during the week except for the pre-scheduled Friday number, which reinforced the market bull position, perhaps this week the quant will become much more active.

3/25/12; 7:00 PM EST =

3/20/12; 9:00 AM EST =

3/18/12; 7:00 PM EST = +76; signal line is +67

3/16/12; 10:00 AM EST = +76; signal line is +67