Saturday, September 27, 2014


Keybot the Quant remains short through the weekend. The wild roller coaster ride continues all week long with a big down on Monday and Tuesday, followed by a big up on Wednesday, then a very big down on Thursday and then a very big up on Friday. Semi's and financials recover late in the week, and volatility drops, which helps the bulls recover. As mentioned previously, UTIL 566.46 is an important bull-bear line in the sand for all of next week and at 548 is in bear territory the minute the opening bell rings on Monday morning. The bearish utes will create market negativity.

On the bull side, the algo is champing at the bit to go long but the internal programming rules are not yet satisfied so the model will not latch to allow the move to the bull side. If the SPX moves above 1986, Keybot will likely flip long, however, with the utilities set to turn bearish, the move to the long side will probably be thwarted. Monday morning should be interesting. The parameters and levels of interest for next week can be identified once the Sunday pre-scheduled number prints tomorrow.

9/28/14; 7:00 PM EST =
9/26/14; 10:00 AM EST = +43; signal line is +38 but algorithm remains short

Note: The site continues to receive strong interest and requests by followers concerning providing more details on how the Keybot the Quant algorithm works and if the signal calls can be announced faster. Typically, the flips from the bull to bear side or bear to bull are announced in a timely manner. There are logistics required where anywhere from a few minutes to one-half hour or one hour are needed to post the change in all the areas that need to be updated. If the author is unavailable sometimes the announcement of the flip is delayed a few hours, however, remember that the algo is not a very short term timing model but instead Keybot plots the smoothest course possible for the stock market through the entire year. Thus, the algo can easily miss from zero to 10 even 20 SPX handles sometimes before the turn occurs. That is fine since the algo provides lower risk and safety as well as consistent returns rather than high-risk returns that could go bust at any time. Also, Keybot may flip direction but many times the stock market will reverse only to go against the direction of the algo; this is normal price action. Sometimes if the announcement that Keybot flips sides is delayed, it is to the advantage of anyone following the model since you may enter at a better spot than Keybot entered for the ongoing trade. The algo status is described each day so if you follow the guidelines for that given day you can usually infer that a flip has occurred in the model even if it is not posted to the site for an hour or so. The algo uses a two-tier approach where the algo number and signal line listed above provide the big picture status of markets and the initial signal to flip sides (currently the model is short but wants to go long). The algo has several subroutines constantly running that must latch into place to permit the move (currently the flip to the long side is not permitted by the internal subroutines). These subroutines and methods are proprietary having taken 10 years to properly develop although one key focus you must always maintain is on the prior day and current day's SPX price highs and lows. Happy trading.

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