Saturday, July 2, 2016


Keybot the Quant remains long through the holiday weekend. US stocks do not trade again until Tuesday morning. On Thursday, you saw XLF catapult higher with the happy bank stress test results and volatility drops like a rock, the VIX sporting a 14-handle, so  you knew the market bulls were in full control.

The algorithm prints an eye-opening +98. Wow. Keybot the Quant has never printed that high a number in its eight year's existence. Keybot is an oscillator. That is a fancy word that simply means a line that fluctuates above and below a centerline. Think of the RSI, MACD and stochastics chart indicators as examples of oscillators. For the Keybot algo, zero is a neutral stance while negative numbers favor the bears and positive numbers favor the bulls. The maximum number possible for the algorithm is +100 and minimum is -100. Therefore the +98's that printed over the last couple days are only 2 tiny points from the maximum possible reading. The +80 level and higher can be thought of as overbot conditions while a -80 and lower number is oversold conditions. The Keybot model is jammed all the way into the +100 ceiling and it is a mystery as to what else can send the stock market higher.

The banks are the number one influence on broad market direction currently. Watch XLF 22.77 as a key bull-bear line in the sand (now printing 22.74). Since the bears are only favored by three measly points, the pivot from this level dictates market direction on Tuesday. Market bulls win big above 22.77 while bears win big below XLF 22.77.

The Sunday pre-scheduled number prints tomorrow where the holiday-shortened week ahead can be assessed. The +98 prints are astonishing. Something special is happening in markets. Bears can growl only if they push the banks lower and volatility higher.

7/3/16; 7:00 PM EST =
7/1/16; 12:22 PM EST = +82; signal line is +55
6/30/16; 7:00 PM EST EOM = +98; signal line is +54
6/30/16; 3:58 PM EST = +98; signal line is +52
6/30/16; 3:51 PM EST = +68; signal line is +50
6/30/16; 3:23 PM EST = +82; signal line is +50
6/30/16; 2:16 PM EST = +98; signal line is +49
6/30/16; 10:43 AM EST = +82; signal line is +47

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