STOCK MARKET BEARISH -- SHORT

Keybot the Quant remains short as stocks stutter sideways waiting for Pope Warsh to bring the tablets down from On High tomorrow and tell international traders how to trade. A Fed rate hike is baked in so any deviation from this outcome would create drama. The hike may create drama depending on if it is considered to be one and done (stock market can probably live with this) or if it is the start of a rate hike cycle (multiple hikes in a row, at each meeting; bad for stocks).

Every hike over last few decades has started a rate hike cycle so the one hike and done is not as common an outcome. Warsh will likely hike because of all his bravado talk about tackling inflation. He is looking forward to the free buffet although he got a jelly stain on his necktie at the last meeting.

Banks, copper and volatility take the pipe and yet the stock market remains standing on its pale thin legs. Go figure. The stock market would have been expected to flush lower with these three parameters in the bear camp but the market oddities continue. Oil is moving markets. Oil up stocks down and oil down stocks up. The stock market may have not gone over the waterfall yet because Wizard Warsh is on tap. The chairman will appear tomorrow donning tap shoes, a top hat and cane, along with mirrors and a smoke machine.

The bears are in charge of the stock market with the algo number 39 points below the signal line but you would not know it with equities refusing to fall off their lofty perch. Bulls are going to need all three of the metrics to turn bullish to wrestle the ball back.

Bulls need XLF above 56.88, CPER above 39.21 and/or VIX below 16.59. All three are bearish opening the gates to Hell but the bulls are holding on by their fingernails trying not to fall into the abyss. Any 1 of the 3 turning bullish will immediately stop the stock market selloff. 2 of 3 turning bullish will create a substantive rally in equities and if all 3 turn bullish, the quant will be in position to go long again.

It sounds like a tall order for bulls but all the prices are within striking distance of crossing the lines in the sand. With the Fed on tap, anything may happen. Watch volatility and copper futures overnight to get a heads-up on where things are headed for hump day but of course, everyone will be waiting for Warsh and his rate hike. He better not show up empty-handed to a stock market expecting a hike With Arms Wide Open. 

9/20/26; 7:00 PM EST =
9/17/26; 9:00 AM EST =
9/15/26; 10:07 AM EST = -42; signal line is -3
9/14/26; 2:48 PM EST = -26; signal line is -1
9/14/26; 1:54 PM EST = -42; signal line is +1
9/14/26; 3:06 AM EST = -26; signal line is +2
9/13/26; 7:00 PM EST = -12; signal line is +3