Sunday, July 20, 2014


Keybot the Quant is bearish moving into the new week of trading but the algorithm wants to flip to the long side. Internal programming rules, however, will not yet permit to the move to the short side. If the SPX moves above 1980, only a couple points higher, Keybot will likely flip long. Hence, the imminent turn notation is in the title line. If equities gap-up at Monday's opening bell, Keybot will likely not flip long right away. A gap-up timer may trigger that will prevent the move for about 90 minutes. S&P futures are lower by one point as the week begins.

The algo is tracking copper and volatility as the two key drivers of market direction to begin the week. Watch JJC 38.61 and VIX 13.06. Both are causing market bullishness with JJC at 38.95 and VIX at 12.06 (volatility moves inversely to the stock market). Equities will continue floating higher unless the market bears can pull one of these two parameters into the bear camp which will create immediate selling pressure. JJC is 34 cents from the bull-bear failure line which would be about a -0.9% drop. Thus, watch copper trading overnight. Any copper negativity is a plus for market bears and a drop in copper of -0.8% to -1.0% is a signal that the stock market is about to begin dropping in force. If copper is positive overnight moving higher the bulls are going to win the day on Monday and create new all-time highs in the SPX.

For the SPX starting at 1978, the bulls need to touch the 1980 handle and a big upside acceleration party occurs with bulls dancing in the streets and Keybot likely flipping long. The bears need to push under 1961 to accelerate the downside. A move through 1962-1979 is sideways action to begin the week. Very simply, bulls win with SPX 1980 and bears win with JJC 38.61 (copper dropping about -0.9% or more). Copper is trading about -0.2% lower as a new week of trading begins. 

7/27/14; 7:00 PM EST =
7/20/14; 7:00 PM EST = +66; signal line is +63 but algorithm remains short
7/18/14; 10:58 AM EST = +66; signal line is +63 but algorithm remains short

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