Wednesday, September 9, 2020


Keybot the Quant remains bearish with the algo number 24 points below the signal line. The bulls stage a big recovery. The 2-day move is a flash crash and flash spike. The bulls are front-running the ECB tomorrow. Whatever President Lagarde spouts tomorrow, the price action today hints that the ECB decision will create a flat or higher euro and weaker dollar.

The bulls do not want to give up the party. The stock market is Outtasite and Outta Mind. Bulls pumped the utes and chips out of the gate guaranteeing upside fun. Bulls needed lower volatility and it came down to test the quant's VIX 28.15 bull-bear line in the sand but only printed down to 28.17 and bounced (these target numbers are continuously recalculated in real-time). The bears held the line at VIX 28.15 which was important. Keybot probably would have flipped long if volatility would have dropped more today. Banks were buoyant so the bears could not gather more negative energy.

Bulls need weaker volatility, VIX below 28.15, and stronger commodities, GTX above 1721. Bulls likely need both to flip into the bull camp and for the SPX to move above 3425 to flip long. If the parameters turn bullish, consider the turn to the long side to be in play for the quant. If Lagarde sends the euro higher, the dollar moves lower, and commodities will rally, so this scenario can easily play out depending on Christine's comments at the presser. The bulls also need to push UTIL above 827 by Friday at 4 PM EST or they face problems next week.

Bears need weaker utilities out of the gate to prove they mean business. Bears need UTIL below 807 which will create immediate negativity in the stock market. If UTIL drops below 793, stocks will fall apart. Bears need weaker chips, SOX below 2131, and weaker banks, XLF below 24.51. Bears must keep VIX above 28.15.

Whittling it down to something more simple, watch VIX 28.15; it is for all the marbles. The VIX begins trading at 3 AM EST. The stock market continues lower as long as VIX remains above 28.15. Watch the UTIL 807 bull-bear line in the sand; bulls win above 807; bears win below 807.

Global traders await ECB President Lagarde to bring the tablets down from on high tomorrow morning and tell investors how to trade. Her decision on the euro impacts the US dollar inversely which will impact commodities, gold and the US stock market. DXY, or USD, the US dollar index, is at 93.26. Euro 1.1805.

9/13/20; 7:00 PM EST =
9/9/20; 9:38 AM EST = +22; signal line is +46
9/9/20; 9:36 AM EST = +6; signal line is +46
9/8/20; 2:42 PM EST = -10; signal line is +47

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