STOCK MARKET BEARISH -- SHORT -- CAUTION

Keybot the Quant is short to start the Friday session. Today we find out if the algorithm wants to whipsaw back to the long side, or not. The Moody's bank downgrades were anti-climactic so the XLF may recover. Watch XLF 14.35. Other levels of interest to the quant are VIX 19, NYA 7666 and SOX 384. All four of these parameters are bearish to start the day. Any changes back to the bull side are important.  Watch RTH 41.27. RTH closed at 41.28. If the RTH loses the 41.27 level, the markets will take another strong leg lower. If RTH stays above 41.27 it indicates that the market down move is stalling and the bulls are gathering strength.

For the SPX starting at 1325.51, just under the critical 1326 support/resistance level, the bears only need to push one single point lower, to move under 1324.50, and the market downside will accelerate lower, much lower if the RTH gives way as described above. The bulls are simply trying to stop the bleeding and will accomplish that by keeping the RTH bullish and bringing the XLF, VIX and others back into the bull camp.

One of the programming rules for Keybot monitors for a 1% backwards move, after a turn, within the first 24 hours after the turn.  The turn to the bear side occurred at 1334, thus, 1347-ish (1334+13.34 = 1347.34) is an important level for the quant to consider, should it print today, and could lead to a whipsaw back to the long side. XLF, RTH and VIX are likely the three most important items to watch at the opening bell. Markets remain unstable. Caution is warranted.

6/24/12; 7:00 PM EST =

6/21/12; 1:39 PM EST = -14; signal line is +1; go short 1334; (Benchmark SPX for 2012  = +6.0%)(Keybot this trade = +2.2%; Keybot for 2012 = +9.4%)(Actual this trade = +1.8%; Actual for 2012 = +9.2%)

6/21/12; 1:31 PM EST = -14 signal line +0 but algorithm says stay long

6/21/12; 12:21 PM EST = +2 signal line -1