Wednesday, August 13, 2014


Keybot the Quant remains short. The algo is very close to turning to the long side and it is surprising the bulls could not push the wee bit further to lock in a recovery rally. Despite somber retail news, RTH remains above 59.52 (causing bullishness) and is of less importance to the algo. Financials took the indexes higher today. XLF is 22.55 in the bull camp creating market upside, albeit only two pennies above the 22.53 bull-bear line. The VIX drops to 12.90 and the bulls only need three more pennies, to push under 12.87, which will lock in market upside. SOX (semiconductors) is at 617 and the bulls only need 618 to create further market upside. UTIL climbed higher to only stop pennies short of the 543.81 bull-bear line (isn't it amazing to see price come up to these target numbers using them as pivot and inflection points and Keybot identifies these levels ahead of time hours and days before they occur?). So the door was wide open for the bulls today, but they did not walk through.

Bears immediately need XLF under 22.53 or they are in for a long Thursday of pain. Bulls need either VIX under 12.87, or, SOX above 617 or UTIL above 543.81, and the relief rally is here for equities with substantive upside. If 2 of the 3 parameters turn bullish, the broad indexes will run strongly higher. All 3 turning bullish will create 30 to 50 SPX handles of upside. So you can see how important Thursday will be. If any one of the 3 parameters turn bullish (volatility, semi's, utes), Keybot will likely flip to the long side, hence, the imminent turn status.

For the SPX starting at 1947, the bulls need to push above 1948.50 which ignites an upside acceleration and likely the strong relief rally will be in play. The bears need to push under 1936 to accelerate the downside. A move through 1937-1948 is sideways action. The bulls had it on a silver platter but did not yet take the prize. Bears need XLF under 22.53 pronto or they are in big trouble. Volatility and financials as described above will immediately tell you the correct market direction after the opening bell.

8/15/14; 10:00 AM EST =
8/13/14; 11:07 AM EST = +7; signal line is +17
8/11/14; 10:13 AM EST = -9; signal line is +18

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