Tuesday, August 4, 2020


Keybot the Quant remains short as the stock market gyrations and epic price action continues. The algo did not print any numbers on Monday. Keybot is champing at the bit to go long but the internal parameters will not yet fully latch to permit the move. The bulls needed a slow and steady move higher for the SPX but instead another wild gap-up move occurs yesterday. The quant is tracking S&P 500 price with great interest and it appears that if the SPX moves above 3313, Keybot will likely flip long.

There are many moving parts nowadays creating this sideways choppiness chewing up both the bulls and bears. Commodities are receiving lots of love these days which creates buoyancy in the stock market. Banks are also hanging in there which supports equities. The deciding action remains with the utilities and NYA index. These two are the top dogs dictating the stock market direction ahead.

The bulls are on the verge of flipping the model long. The algo number is 14 points above the signal line which is bullish. As mentioned above, if the SPX moves above 3313, call it that 3303-3313 range, and steadily trends higher, Keybot will likely flip long. If UTIL moves above 835.30, the stock market will take off skyward like a rocket ship. Stronger utes will be confirmation that the bulls are running the show going forward on a near-term (hours, days and a few weeks) and intermediate-term (weeks and months) basis.

The bears must flex their muscles immediately or they will go down in a ball of flames. Bears need NYA below 12432 pronto. This is a lower bull-bear line in the sand, by a few points, as compared to yesterday, so the bears have their work cut out for them. NYA is at 12537 so a 105 point drop is a -0.8% retreat. S&P futures are down -11, or -0.3%, about 3 hours before the opening bell on Wall Street for the Tuesday session. Nazzy futures are down -0.4%.

Bears also need weaker utilities. If you see utes rallying out of the gate today moving higher, the bears are likely cooked and the model will probably flip long today. If utes are drifting lower, and the NYA begins trending down towards the 12432, that is an extremely negative sign for the stock market in the near-term. If NYA loses 12432, the stock market will be in retreat. UTIL likely needs to drop below 795 to create a potential crash scenario for the US stock market. Weaker banks will also create market negativity. Bears need XLF below 23.64 which would immediately create significant selling pressure for equities.

Keybot prints one pre-scheduled number this week on Friday morning. The bulls have it on a silver platter; all they need is about +8 to +18 points in the S&P 500 and they will likely flip the quant long. Bears will throw confetti if the NYA loses 12432. If NYA remains bullish, and the SPX cannot achieve the upside shown, status quo, stocks will chop sideways. The price action remains erratic and unstable and just plain odd.

8/9/20; 7:00 PM EST =
8/7/20; 9:00 AM EST =
8/2/20; 7:00 PM EST EOM = +53; signal line is +39 but algorithm remains short
7/31/20; 3:59 PM EST = +53; signal line is +38 but algorithm remains short

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