Wednesday, January 4, 2017


Keybot the Quant remains short but the bulls are pushing hard to flip the algo back to the long side. Keybot prints five numbers today and the algo wanted to go long but the internal programming parameters would not fully latch to permit the move.

Thursday will be a duel between utilities and retail stocks. UTIL is battling at its 50-week MA at 661.55. This is an extremely important market parameter. The bulls punched above but then fell back below. If UTIL remains under 661.55, stocks will be in trouble for the weeks and months ahead. If the bulls push UTIL above 661.55 (now at 659.24 only 2 points away), Dow 20K is on tap as the bulls will send stocks strongly higher. If UTIL moves above 661.55, and the SPX moves above 2273, Keybot will likely flip long, hence the imminent turn notation in the title line.

The bears desperately need weaker retail stocks and for the RTH to drop under 76.48 (now at 76.93). This will create a leg lower in the stock market. After the closing bell this evening, KSS, M and other retail stocks are collapsing on lower guidance and disappointing holiday retail sales. The bears smile; this is exactly what they need, however, is it enough to sink the RTH tomorrow? If RTH remains bullish, and UTIL bearish, the stock market will stagger along sideways with an upward bias.

For the SPX starting at 2271, the bulls need to touch the 2273 handle, only 2 points higher, and bingo, the upside will accelerate with price tapping on 2280 so fast your head will spin. Watch the overnight S&P futures to see if a couple positive points appear, or not. The bears need to push below 2262 to get their mojo back. A move through 2263-2272 is sideways action for Thursday.

The bears are in control but the bulls have their hands on the steering wheel as well. The algo number is only 5 points below the signal line. UTIL 661.55 and RTH 76.48 will tell the stock market direction story on Thursday. Bulls cheer for higher utilities while bears cheer for lower retail stocks.

1/8/17; 7:00 PM EST =
1/6/17; 9:00 AM EST =
1/4/17; 11:42 AM EST = +68; signal line is +73
1/4/17; 11:18 AM EST = +84; signal line is +75 but algorithm remains short
1/4/17; 10:49 AM EST = +68; signal line is +75
1/4/17; 10:09 AM EST = +84; signal line is +75 but algorithm remains short
1/4/17; 9:36 AM EST = +68; signal line is +75
1/3/17; 9:36 AM EST = +52; signal line is +76

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