Thursday, July 9, 2020


Keybot the Quant remains long and the song remains the same with banks and commodities dictating broad stock market direction. Well, look at that. XLF recovers higher late-day yesterday and ends exactly at the bull-bear line in the sand at 23.17 called out by the Keybot the Quant algorithm before it happens. Remarkable. Obviously, plain and simple, as banks go, so goes the stock market. The US pre-market will begin posting numbers shortly so XLF will tell you which way the market goes today.

The bulls remain in charge with the algo number only 12 points above the signal line. Keybot prints 4 numbers this week thus far, a sleepy week, one on Monday, one on Tuesday and two yesterday.

If the bulls, and banks, win, and XLF moves above 23.17, the stock market will be running higher with the universally bullish crowd nowadays all patting each other on the back, telling one another how smart they all are, and looking forward to more huge gains ahead. Bulls would then receive further upside fuel if the NYA index crosses above 12497.

The bears have to hold that resistance line at 23.17. If XLF is spanked down today, the bears are going to begin growling and it may be the start of something very ugly. Bears need weaker commodities to try and flip the model short. Keybot is tracking GTX 1681 as a key bull-bear line in the sand. GTX is at 1709 so the bears have their work cut out for them if they want to create market trouble. Generally, a rising dollar sends commodities lower and a weaker dollar sends commodes higher.

The caution flag is out. If GTX falls below 1681, consider the imminent turn notation to be in the title line and if the SPX then slips below 3137, trending lower, Keybot will likely flip short. This would require about a 33 point drop in the S&P 500 during the Thursday session. S&P futures are flat and the VIX is at 28.06 about 5 hours before the opening bell for the regular US trading session.

Watch the banks; they tell you the stock market direction story today. Bulls need XLF above 23.17, running higher, or they got nothing. Bears need GTX below 1681, along with weaker banks, to prove that the sell side will dominate going forward.

7/12/20; 7:00 PM EST =
7/8/20; 10:14 AM EST = +26; signal line is +14
7/8/20; 10:07 AM EST = +42; signal line is +13
7/7/20; 9:37 AM EST = +26; signal line is +12
7/6/20; 9:36 AM EST = +42; signal line is +11
7/5/20; 7:00 PM EST = +26; signal line is +9

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