Wednesday, October 8, 2014


Keybot the Quant is on the short side as the erratic week of trading continues. Into the closing bell, the RTH converged on the algorithm's rising line in the sand that is at RTH 62.13. RTH is at 62.12 failing in the final minutes of trading yesterday by one single penny. It is amazing how the algorithm can identify these price points before they occur. The market choppiness will continue as volatility rises in fact the ride may become far more erratic and dramatic if the VIX moves towards 20.

The algo identifies retail and financial sectors as the key drivers of broad market direction currently; watch RTH 62.13 and XLF 23.08. Both are causing bearishness but as mentioned above the RTH is only in the bear camp by one penny. Thus, the retail stocks will dictate market direction at the bell. Bulls win above RTH 62.13 and equities will recover today. Bears win if RTH remains below 62.13 and moves lower. Bulls will also try to move XLF above 23.08 to regain their mojo.

For the SPX starting at 1935, the bears only need a smidge of red in the futures and this will create a continued acceleration lower. S&P futures are +3 about two hours before the opening bell. The bulls will focus on moving RTH above 62.13 since this will stop the broad market selling. A move through SPX 1935-1961 is sideways action today. The bears are in control as the wild market ride continues. RTH 62.13 tells you the market direction answer as the day begins.

10/12/14; 7:00 PM EST =
10/7/14; 3:57 PM EST = -39; signal line is -5
10/7/14; 9:36 AM EST = -23; signal line is -2; go short 1951; (Benchmark SPX for 2014 = +5.5%)(Keybot this trade = -1.2%; Keybot for 2014 = +8.3%)(Actual this trade = -2.4%; Actual for 2014 = +8.9%)

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