Monday, May 13, 2019


Keybot the Quant whipsaws back to the short side at SPX 2831 after this morning's opening bell. When S&P futures opened down -50 last night at 6 PM EST a bloodbath was on tap. At 3 AM EST, the VIX spikes higher harpooning the bulls. Chips, retail stocks and banks all crash at the opening bell, boom, boom, boom, like dominoes falling. Commodities also turn bearish and ditto the key NYA Index although it jumped back in bed with the bulls before the closing bell.

The also number drops 48 points at the opening bell that is a rarity for the quant. Humorously, the last trade only lasted one big hour from late Friday to Monday's opening bell. President's Trump and Xi are loggerheads over the trade negotiations so down she goes. Who knows, tomorrow they may play nice and stocks may recover.

The whipsaw move triggers a timer in the quant where Keybot exits the 2x leveraged ETF and drops down into the single ETF mode for 35 days. This immediately lowers risk in these choppy, erratic and unstable markets. The 2x ETF's will get beaten up in markets that chop along.

On the last trade, the one-hour trade, the algo program loses -1.6% and the actual trading is slapped -3.3%. The actual trading remains up over +20% on the year versus the benchmark S&P 500 up +13% this year. Keybot exits UWM and enters SH. The bears are steering the ship for a while.

Watch NYA 12491 (now at 12533). If NYA drops below 12491, the stock market will take another big leg lower. The stock market bulls must establish a beach head at NYA 12491 and defend it with all their might. It is big trouble if it ruptures.

Watch SPX 2783 (now at 2812). If SPX drops below 2783, it is lights out for stocks. Currently, this may not be on tap. Note that the utilities are not yet moving down in unison with the stock market. If the drop in stocks was going to be real bigtime, you would expect utes to be collapsing with equities. Keep an eye on utilities. If they remain buoyant, the stock market is likely destined to recover. If the utes collapse over the coming few days, along with stocks, the downside will likely become extremely ugly and become a potential crash scenario.

The bulls must push commodities, retail stocks and banks higher to prove they have the strength to stop the selloff. Bulls need GTX above 2538 (now 2527), RTH above 105.47 (now 103.41) and XLF above 26.96 (now 26.68), respectively. XLF is only about a percent away so pay close attention to the financials on Tuesday. The beat goes on.

5/16/19; 9:00 AM EST =
5/13/19; 1:36 PM EST = +8; signal line is +51
5/13/19; 1:03 PM EST = -6; signal line is +54
5/13/19; 11:37 AM EST = +8; signal line is +57
5/13/19; 9:36 AM EST = +22; signal line is +59; go short 2831; (Benchmark SPX for 2019 = +12.9%)(Keybot algorithm program this trade = -1.6%; Keybot algo for 2019 = +9.7%)(Actual results this trade = -3.3%; Actual trading results for 2019 = +20.2%)
5/12/19; 7:00 PM EST = +70; signal line is +62
5/10/19; 3:06 PM EST = +70; signal line is +63; go long 2878; (Benchmark SPX for 2019 = +14.8%)(Keybot algorithm program this trade = +1.6%; Keybot algo for 2019 = +11.3%)(Actual results this trade = +4.7%; Actual trading results for 2019 = +23.5%)

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