Thursday, July 23, 2020


Keybot the Quant remains long as the stock market remains elevated on the euphoric bullishness. The bulls remain in charge with the algo number 24 points above the signal line. Even though this is a substantive spread, the imminent turn notation remains in play since there are likely three potential scenarios ahead.

The bulls pump stocks higher after the utilities turn partially bullish. UTIL is at 830 which creates stock market bullishness above 827.83 this week but is also below 835.57 which creates market bearishness. Utes will make a decision today and the broad market will likely follow. UTIL prints above 833 yesterday for the HOD so the bulls are itching to prove it to the world that the upside rally has more legs.

The bears need weaker utes and to push UTIL below 827.83 pronto. Next week, this bull-bear line in the sand drops to 824 so the bears only have two days to drive UTIL from 830 down below 824. If UTIL finishes the week above 824, the bulls are in okay shape for next week. If UTIL drops below 824 trending lower over the next couple days, that is an extremely negative signal for the stock market.

Bears also need NYA below 12472 and/or GTX below 1690. Something's gotta give since the bulls and bears have each stretched their games to the limit. One of them is going to crack at any time.

So the three scenarios are as follows. First, UTIL overtakes 835.57 which verifies that the bulls will maintain an elevated stock market that will remain buoyant through the end of the year. Second, UTIL fails at 827.83 ushering in negativity, however, bears will also need either NYA or GTX to also join the bear camp, and the SPX to drop below 3253, for Keybot to likely flip short. This sounds like a lot but if things turn south it could happen quickly. The third scenario would be UTIL, NYA and GTX all reversing into the bear camp which may cause the robot to immediately flip short.

The bulls are happy in the early going. European indexes will begin trading in a few minutes ditto the VIX. S&P futures are up +13 ramping higher over the last half hour. The stage is set the die is cast. Bulls need stronger utilities for a walk away victory in the stock market going forward. Bears need weaker utilities, NYA index and commodities.

The stronger euro, popping to 1.15 then 1.16, after the ECB meeting, tanks the US dollar (they move inversely since each basket contains about two-thirds of each other's currency) which pumps commodities, stocks, gold, silver and emerging markets higher. The promises of more government stimulus, and of course Fed and other central bank easy money, and the hype around vaccine development for the coronavirus (COVID-19) contribute to the euphoric highs in equities. S&P futures are now +17 receiving a pump into the European open.

7/26/20; 7:00 PM EST =
7/22/20; 12:54 PM EST = +56; signal line is +32
7/22/20; 12:35 PM EST = +40; signal line is +31
7/22/20; 12:06 PM EST = +56; signal line is +30
7/21/20; 9:36 AM EST = +40; signal line is +28

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