STOCK MARKET BEARISH -- SHORT -- CAUTION

Keybot the Quant finishes the day on the short side with high drama.  The NYA recovered back above 7760 which created further market buoyancy into the close. The XLF moved up towards 14.50 but fell back to close at 14.48. Note that the algo number is now above the signal line so the quant wants to flip back to the long side but other programming rules are holding it back.  Interestingly, if XLF 14.51 would have printed, only pennies away, Keybot would have probably flipped to the long side. This drama continues into tomorrow. At XLF 14.51 and higher, Keybot will probably flip back to the long side. If XLF remains under 14.50, the algo will likely stay on the short side.

For the SPX, starting at 1365, the bulls need 1375 to launch an upside acceleration.  The bears need to push under 1355 to accelerate the downside.  A move thru 1356-1364 is sideways action but unlikely since the Jobs Report at 8:30 AM EST should send markets one way or the other. The markets are parked on the fence, equal distance to the bull and bear sides, and the financials, XLF, will be the decider. Keybot prints a pre-scheduled number at 9 AM so the action can be updated right before the opening bell.  XLF 14.50, NYA 7760, and SPX 1375 and 1355 will tell the story tomorrow. Caution is required. XLF 14.50 is what matters.

8/5/12; 7:00 PM EST =

8/3/12; 9:00 AM EST =

8/2/12; 3:54 PM EST = +44; signal line is +39 but algorithm says stay short

8/2/12; 2:18 PM EST = +30; signal line is +38