STOCK MARKET BEARISH -- SHORT -- CAUTION

Keybot the Quant flips short yesterday afternoon at SPX 4078. The robot did not bite on the short side out of the gate due to the gap-down move. Typically, stocks will recover under that scenario but the weakness in copper creates a pall over the market and in the afternoon the wheels fell off.

The chips started to rally early and then performed a faceplant guaranteeing stock weakness. The quant is most fixated on volatility right now. Also, copper and utilities.

As volatility goes, so goes the stock market inversely. The bull/bear line in the sand is VIX 26.59. Yesterday's stock market selling is no biggie but if the VIX pops above 26.59, the stock market will quickly deteriorate. The VIX ran up into the 26.40's a couple hours ago and is now trading at 26.34 (bullish) about 4-1/2 hours before the opening bell in the States. The selloff will not have any downside oomph if the VIX remains below 26.59.

Bulls need higher copper to steady the market ship. Bulls need CPER above 26.77 (now at 26.39). This equates to the bulls needing a +1.4% pop in the red metal futures. Copper futures are down -0.3% right now so the bulls need a +1.7% gain in copper today to create stock market happiness.

The quant is tracking utilities again which have been ignored for several weeks; an interesting development. The utes tell you if a fun stock market crash will occur, or not. UTIL collapses to 986. The bull/bear line in the sand is at 938 so the bulls are likely safe today. All Hades will break loose if UTIL loses 938. But this is not the key element in play. For all of next week, UTIL 988.47 is the bull/bear line in the sand. UTIL at 986 is a failure that will create stock market weakness but it does not count until Monday morning. Watch UTIL 988 like a hawk today because the bulls need to push utilities back above before the closing bell. If UTIL ends the week below 988, that will create stock market weakness come Monday morning.

The analysis is more intense, however. UTIL 951 is also coming into play which is the trap-door for the US stock market. If UTIL finishes today above 988.47, the bulls remain in the game and have a good chance of rallying stocks next week into the Wednesday FOMC decision. If UTIL remains below 988.47 at the end of today, that is a bad omen for next week and will create downside in stocks. If UTIL 951 fails, it is light's out. The SPX would be expected to lose between 20 and 40 points within an hour or two after the trap-door fails and serious stock market carnage would follow. The US markets would assume a crash profile if UTIL 951 fails. So there is lots of fun ahead. Keybot sees 1's and 0's so it will be interesting to see how it navigates through the minefield.

On the last trade, that ran for a week, the quant program and actual trading each lose a half percent. For the year thus far, the benchmark S&P 500 is down -14%. The Keybot the Quant algorithm program is up +10% and the actual trading generated by the robot is up +8%. After 5 months of 2022, Keybot is outperforming the SPX by +22%. Keybot exits SPY and enters SH remaining in the 1x non-leveraged ETF's because the market price action is erratic and unstable prone to whipsaws. Speaking of which, do not be surprised if Keybot whipsaws back to the long side but it likely needs stronger copper and chips.

Watch VIX 26.59 today since it tells you everything you need to know about US stock market direction. If VIX remains below, watch copper and the chips to see if they are rallying which would be positive for the bull case.

If VIX pops above 26.59, stocks are in major trouble. If UTIL closes below 988.47 today, it is a bad omen for next week. Conversely, a rally in utes today and UTIL moving above 988.47 sets up positivity for early next week.

6/12/22; 7:00 PM EST =
6/10/22; 10:00 AM EST =
6/9/22; 2:41 PM EST = -5; signal line is +13; go short 4078; (Benchmark SPX for 2022 = -14.4%)(Keybot algo this trade = -0.6%; Keybot algo for 2022 = +9.5%)(Actual results this trade = -0.5%; Actual results for 2022 = +8.0%)
6/9/22; 9:36 AM EST = -5; signal line is +13 but algorithm remains long
6/8/22; 10:16 AM EST = +11; signal line is +13 but algorithm remains long
6/8/22; 10:00 AM EST = +27; signal line is +13
6/8/22; 9:36 AM EST = -5; signal line is +12 but algorithm remains long
6/7/22; 3:12 PM EST = +27; signal line is +13
6/7/22; 2:49 PM EST = +11; signal line is +13 but algorithm remains long
6/7/22; 2:15 PM EST = +27; signal line is +13
6/7/22; 12:10 PM EST = +11; signal line is +13 but algorithm remains long
6/7/22; 9:36 AM EST = -5; signal line is +12 but algorithm remains long
6/6/22; 2:21 PM EST = +11; signal line is +12 but algorithm remains long
6/6/22; 2:01 PM EST = +27; signal line is +11
6/6/22; 12:08 PM EST = +11; signal line is +10
6/6/22; 10:38 AM EST = +27; signal line is +10
6/6/22; 10:23 AM EST = +43; signal line is +9
6/6/22; 9:36 AM EST = +27; signal line is +7
6/5/22; 7:00 PM EST = +11; signal line is +6
6/3/22; 1:23 PM EST = +11; signal line is +5
6/3/22; 1:07 PM EST = +27; signal line is +4
6/3/22; 10:34 AM EST = +11; signal line is +3
6/3/22; 9:00 AM EST = +27; signal line is +2
6/2/22; 10:53 AM EST = +27; signal line is +0
6/2/22; 10:25 AM EST = +11; signal line is -1
6/2/22; 10:17 AM EST = +27; signal line is -2; go long 4102; (Benchmark SPX for 2022 = -13.9%)(Keybot algo this trade = +0.0%; Keybot algo for 2022 = +10.1%)(Actual results this trade = +0.1%; Actual results for 2022 = +8.5%)