Wednesday, July 15, 2020


Keybot the Quant remains long as the stock market roller coaster ride continues. The quant did no print any numbers on Monday unimpressed with the big rally, and then also unimpressed with the big intraday collapse. Yesterday, stocks rally on strong banks and biotech stocks. Commodities stuttered out of the gate falling on their face but they immediately recovered. The bulls remain in charge of the stock market with the algo number 22 points above the signal line.

The bulls need the NYA index above 12479 (now at 12204) which will seal the deal for new record highs for the stock market. If the NYA moves higher, the broad stock market should be floating higher as well. If the NYA drops, equities should be soggy as well.

The bears path to victory is with weaker banks and commodities. Higher volatility will also help but the bears mainly need XLF below 23.26 (now at 23.68) and/or GTX below 1683 (now at 1693). GTX ruptured yesterday but then quickly recovered to join the bullish fun. Bank earnings releases started yesterday and JPM beats, of course they do, with the other banks a mixed bag. More bank earnings are on tap through this week. Thus, if the bank numbers are weak, that may sink XLF so all you can do is keep an eye on it. If XLF loses 23.26, you will visibly see the broad stock market dropping.

If either XLF or GTX join the bear camp, the stock market will be moving lower. The quant likely needs to see both parameters to fail to flip short so the imminent turn to the short side will be in play if both banks and commodities fail today. If both fail and the SPX slips below 3128, Keybot will likely flip short.

The ECB will provide more easy money goodies tomorrow morning so stocks may be in a holding pattern today until Madame Lagarde brings the tablets down from on high and tells global traders how to trade.

Bulls are rooting for super bank results and a weaker dollar to drive commodities higher. The bulls have already decorated the town hall with balloons and crepe paper awaiting the NYA to move above 12479 which guarantees bull victory through the end of the year into 2021.

Bears are rooting for disappointing bank earnings, although the bar is set so low that even Aunt Mildred in her white orthopedic shoes can easily step over, and weaker commodities that will seal the downside dealio. Price action remains erratic and unstable. Do not be surprised to see epic stock market price activity over the coming days.

7/17/20; 9:00 AM EST =
7/14/20; 9:44 AM EST = +42; signal line is +20
7/14/20; 9:36 AM EST = +28; signal line is +18
7/12/20; 7:00 PM EST = +42; signal line is +17

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.