Keybot the Quant remains on the short side despite the big rally on Friday. The algo number is 17 points above the signal line so Keybot is champing at the bit to go long. The quant has wanted to go long since Thursday but the internal parameters will not latch completely to permit the move.
On Friday morning, all the bulls had to do was send markets slowly higher but instead it was a gap-up euphoric open triggering the gap-up timer so the flip long is delayed by approximately 90 minutes. Once the gap-up timer expired, the SPX could not regain the day's high.
So short remains the direction and S&P futures are down 25 points on Sunday evening in the States. Traders were joyous last week expecting China to roll back the failed zero-covid strategy but instead, as any dictator would do, dirtbag Xi says no change creating sogginess in stocks to begin the new week.
If the SPX moves above 3796 trending higher, Keybot the Quant will likely flip long. The bulls do not want another gap-up open because that may delay the flip long. Thus, the SPX will need about 25 points of upside to flip long but futures are down 25 points right now in real-time.
There are a bunch of moving parts but let's find something simple that all of you can follow. Copper and commodities exploded higher last week expecting a China reopening so they should retrace. Banks have outperformed and remain bullish. Volatility dropped on Friday sending stocks higher. These are the four key parameters that created the bull rally.
Banks are elevated and even with a pullback they may want to remain in the bull camp. The VIX bull/bear line in the sand is 25.71 and the week ended at 24.55 in the bull camp (the VIX and SPX move inverse to each other well over 90% of the time). Volatility is a prime candidate to turn bearish that will create negativity in stocks (VIX will pop above 25.71).
If the VIX pops above 25.71, which it should overnight, watch to see if copper and/or commodities turn bearish. If so, short is the correct path forward. The bears need CPER to drop below 21.18 and/or GTX below 3633 to prove that down for stocks is correct. If the VIX pops higher but copper and commodities are not falling that much, this will hint that the bulls are setting things up for a rally (and the VIX will likely drop; stocks will rally if VIX remains below 25.71).
Copper futures need to drop -5.4% to help the bears and they are down -2.1% now so the bears have some work to do. Commodities need to drop -3.7% to help the bears maintain the downward path.
Humorously, the SPX is where it was at 6 weeks ago. It is chop suey chewing up bulls and bears alike. Is the pressure gonna drop on you? as Toots and the Maytals would sing.
11/13/22;
7:00 PM EST =
11/11/22;
10:00 AM EST =
11/6/22;
7:00 PM EST = -6; signal line is -23 but algorithm remains short
11/4/22;
9:36 AM EST = -6; signal line is -24 but algorithm remains short
11/4/22;
9:00 AM EST = -22; signal line is -25 but algorithm remains short
11/3/22;
12:06 PM EST = -22; signal line is -24 but algorithm remains short
11/3/22;
3:06 AM EST = -36; signal line is -24
11/2/22;
3:56 PM EST = -22; signal line is -24 but algorithm remains short
11/2/22;
3:31 PM EST = -36; signal line is -25
11/2/22;
3:18 PM EST = -22; signal line is -24 but algorithm remains short
11/2/22;
2:48 PM EST = -36; signal line is -24
11/2/22;
2:28 PM EST = -20; signal line is -24 but algorithm remains short
11/2/22;
1:40 PM EST = -6; signal line is -24 but algorithm remains short
11/2/22;
1:15 PM EST = -22; signal line is -25 but algorithm remains short
11/2/22; 4:53 AM EST = -36; signal line is -25
