STOCK MARKET BEARISH -- SHORT -- CAUTION

Keybot the Quant is short. The algo printed a number yesterday afternoon further bolstering the bear case.  The retail sector, RTH, appears to have given up the ghost but RTH 41.38 still requires monitoring. The NYA 7628 level is very important and gave way yesterday taking the quant lower and also signaling that the broad indexes have now fallen into a secular bear pattern. Watch the 7628 level closely in the following days. The SPX 1294 level is very important moving forward and a loss of this level, only about 30 handles lower, will usher in significant, extended and sustainable bearishness moving forward. If SPX 1294 is attained, it would be important to see if Chairman Bernanke announces QE3 to save the day.

Thus, focus on NYA 7628 for a direct gauge on market direction today, bears are currently winning. If markets move up, watch to see if the bulls can wrestle back control with RTH 41.38. If markets move lower watch to see if the bears can smack the markets harder with SPX 1294 or if the utilities, UTIL, drops under 451 (now at 467).

For the SPX today starting at 1325, bulls need to touch 1342 to accelerate the upside and bears need to push under 1325 to accelerate the downside.  Therefore, any hint of red in the futures will embolden the market bears at the opening bell. At this writing, the futures are flat falling about four S&P points over the last hour. The Nasdaq is leading the market lower which is an advantage for bears. The selling has been extensive lately so a relief rally should be at the doorstep.  The bears are in control but the caution flag remains out due to the unstable and erratic nature of the broad markets currently.

5/20/12; 7:00 PM EST =

5/16/12; 1:25 PM EST = -30 signal line -1

5/16/12; 9:00 AM EST = -16 signal line +1

5/15/12; 2:29 PM EST = -16 signal line +3