Sunday, April 15, 2012

STOCK MARKET LONG -- BULLISH -- CAUTION

Keybot the Quant remains long thru the weekend.  The algo is idling so the Sunday number printed without any change to the algo number but the signal line dropped one tick. The three sectors to watch at the opening bell are utilities, financials and volatility. For utes, watch the 451.20 level, if above the bulls will push markets higher, if below, the markets will receive a negative bias.  UTIL is now at 452.10 so if this print stays above 451.20, there should be an immediate increase in the algo number as the bell rings. In general, for the days and weeks ahead, UTIL must remain at 448 or higher, if it drops under at anytime that is a signal of market trouble. For this week, UTIL 451.20 signals broad market trouble.

For financials, watch XLF 15.09.  XLF is now at 15.13 only four pennies on the bull side which affects the broad markets positively.  At the opening bell, XLF will either stay above 15.09, or fail, this tells you broad market direction. And thirdly, watch VIX 19.45.  VIX is now at 19.55 moving up at the end of the day Friday during the market selloff.  If VIX stays above 19.45, the bears will be happy, if VIX drops back under 19.45 that signals that the market bulls are bouncing the broad markets higher.

For the SPX, starting at 1370.26, the market bears need to see red futures overnight tonight, only one measley negative spoo point is needed so the SPX drops under 1370 at the opening bell, and this will accelerate the broad market downside move. A test of 1363-1366 support will quickly follow.  The market bulls will try to stop the down move by keeping the overnight futures green, the utes and financials elevated, and moving volatilty lower as described above, and this action would likely keep Keybot on the long side. A move thru SPX 1371-1386 is sideways action. Continue watching the dance of price vesus the 50-day MA at 1375.71, which serves as a resistance ceiling.

Note that Keybot is about 14 handles in the wrong direction currently; the quant has traveled as much as 25 handles in the wrong direction before. The more important aspect of broad market direction will be dictated by the three sectors highlighted above.  If the bears rule the day and the algo triggers the short side, then a one or two percent loss will be taken by the quant as it flips to the short side. Keybot prints one pre-scheduled number this week on Tuesday morning.  Markets remain unstable. Caution is warranted. The printout for Keybot will not be updated on this site until tomorrow afternoon but, with the description above, the readership here is easily able to gauge the market outcome. The opening move after the bell tomorrow is very important.

4/22/12; 7:00 PM EST =
4/17/12; 9:00 AM EST =
4/15/12; 7:00 PM EST = 0; signal line is +8 but algorithm says stay long
4/13/12; 3:58 PM EST = 0; signal line is +9 but algorithm says stay long
4/13/12; 10:00 AM EST = +14; signal line is +11

2 comments:

  1. Your signal is supposed to be taken at "4/15/12; 7:00 PM EST" unless that is a mistake. It is only 7 AM now. Maybe if you check the data again at 7 PM, it will look a lot different.

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  2. Hello Alex, nope, the algorithm is in a sideways idling mode during the off trading hours on the weekend so the Sunday print can be taken anytime from 4 AM EST Sunday thru 7 PM EST, and the algo number and signal line will not change (compared to the number that may be printed a couple hours later, or couple hours sooner. The Sunday time was simply standardized to print 7 PM on the printout.

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