Thursday, July 31, 2014

STOCK MARKET BEARISH -- SHORT

Keybot the Quant remains short as markets collapse. The algo was very active today printing six numbers. The month of July prints negative for the SPX. Keybot is tracking utilities with UTIL 543.00 as a key market direction driver. UTIL price is under at 541.82 which is creating broad market negativity. Very simply, equities will recover if UTIL moves above 543.00. More importantly, watch the 4 PM closing price of UTIL for the week because next week UTIL must stay above 551.66 to prevent market selling. So the bulls must not only pump UTIL higher by two points at the opening bell but must drive UTIL above 551.66 before the Friday session ends. If not, more broad market weakness will be in play for Monday.

The bulls also need XLF above 22.61 and/or RTH above 59.62 to regain their mojo. Bears can receive more downside juice with JJC 38.90 (weaker copper). The bears are cruising without worry; the algo number goes negative to -9, fifty points under the signal line.

For the SPX starting at 1931, the bears only need a smidge of negativity in the S&P futures and the SPX will drop several handles at the opening bell. The bulls will focus on keeping the overnight S&P futures positive and at the opening bell pushing UTIL above 543.00 to stop the market bleeding. Keybot prints a pre-scheduled number tomorrow morning before the opening bell.

8/3/14; 7:00 PM EST =
8/1/14; 9:00 AM EST =
7/31/14; 7:00 PM EST EOM = -9; signal line is +41
7/31/14; 11:59 AM EST = -9; signal line is +44
7/31/14; 11:19 AM EST = +7; signal line is +46
7/31/14; 9:58 AM EST = +23; signal line is +47
7/31/14; 9:48 AM EST = +39; signal line is +48
7/31/14; 9:40 AM EST = +23; signal line is +49
7/30/14; 9:47 AM EST = +39; signal line is +50

STOCK MARKET BEARISH -- SHORT

Keybot the Quant remains short after a roller coaster ride yesterday. The bulls tried to lower volatility but they could not keep the beach ball underwater. Instead bulls jammed semiconductors higher but fell short of the SOX 623 target as well. The bears could not make headway lower since the RTH remains above 59.62. Watch VIX 12.69, RTH 59.62 and XLF 22.63; the algo rates these three parameters as most greatly impacting market direction currently. Bulls need VIX under 12.69 or SOX above 623 or they have serious problems. Bears need RTH under 59.62 or XLF under 22.63 which will create stronger downside selling pressure. Markets ended flat yesterday since the parameters remained in their respective camps.

For the SPX starting at 1970, the bulls need to touch the 1979 handle and an upside acceleration will occur. The bears need to push under 1962.50 to create a downside acceleration. S&P futures are weak overnight at -11 due to the Russia sanctions and Argentina default. This negatively will easily print a sub 1962.50 number. A move through 1963-1978 is sideways action. The bears have the ball. Keybot prints a pre-scheduled number this evening for EOM. July began at SPX 1960 so the bears need a ten-point down day to stop a positive month from printing.

8/1/14; 9:00 AM EST =
7/31/14; 7:00 PM EST EOM =
7/30/14; 9:47 AM EST = +39; signal line is +50
7/30/14; 9:36 AM EST = +53; signal line is +51 but algorithm remains short
7/29/14; 1:51 PM EST = +39; signal line is +52

Tuesday, July 29, 2014

STOCK MARKET BEARISH -- SHORT

Keybot the Quant remains short. The bulls need lower volatility and the bears need lower retail or financial stocks. Watch VIX 12.69, RTH 59.62 and XLF 21.63. Bulls will take the stock market to new all-time highs if they push VIX under 12.69. If VIX loses 12.69, and the SPX moves above 1985, Keybot will likely flip long. If either RTH fails under 59.62 (only a nickel away at 59.67) and/or XLF drops under 21.63 (only 15 cents away), market carnage will result with the stock market falling in earnest. If VIX remains bearish, and RTH and XLF remain bullish, equities will float along sideways with a slight upward bias.

For the SPX on Wednesday starting at 1970, closing on the lows, the bears only need a smidge of negativity in the futures and a few-handle flush downward will occur at the opening bell, so watch the overnight S&P futures (S&P's are +2 Tuesday evening). The bulls need to recover to 1985 to regain the upside market mojo. Since this is a formidable task, instead the bulls will focus on moving volatility lower while sending retail and financial stocks higher.

Any negative news concerning retail or financial stocks overnight and tomorrow morning will tell you that the bears will win and likely start growling strongly while positive news will hint at a bullish recovery for stocks. The caution flag is removed for now but consider it and the imminent turn status to be in play if VIX drops under 12.69. Wednesday's price action is very important with volatility and the retail and financial sectors deciding the fate of the stock market.

7/31/14; 7:00 PM EST EOM =
7/29/14; 1:51 PM EST = +39; signal line is +52

STOCK MARKET BEARISH -- SHORT -- CAUTION

Keybot the Quant remains short as the Tuesday session only has about 90 minutes of trading remaining. Volatility is dancing above and below the critical VIX 12.69 line in the sand. Look at the price action hug 12.69 and commit to the high side, moving towards 13, over the last few minutes. Isn't it amazing that the algo can identify important key pivot and inflection points such as VIX 12.69 before they occur?

Watch VIX 12.69 and RTH 59.62. Semiconductors are remaining in the bear camp today. Bears need RTH 59.62 to unleash downside carnage. Bulls need VIX under 12.69 which will immediately halt the market selling.

7/31/14; 7:00 PM EST EOM =
7/29/14; 1:51 PM EST = +39; signal line is +52
7/29/14; 12:18 PM EST = +53; signal line is +53
7/29/14; 11:37 AM EST = +39; signal line is +54
7/29/14; 10:00 AM EST = +53; signal line is +56

STOCK MARKET BEARISH -- SHORT -- CAUTION

Keybot the Quant remains short but the bulls are running higher today. The bulls slap the bears in the face by pushing retail stocks higher. RTH is above 59.62 creating lift in the equity markets. Volatility remains low. The algo is now tracking semiconductors again as they stage a comeback. Watch SOX 623.15, now at 617.81 with a HOD at 620.51. Semi's remain in the bear camp under the critical SOX 623.15 bull-bear line in the sand so a lid is placed on the stock market upside. If bulls push SOX above 623.15, the stock market will catapult to new all-time highs. The bears need to push RTH under 59.62 and/or VIX above 12.69 to regain their mojo.

If the SOX moves above 623, and the SPX above 1985, Keybot will likely flip long. Thus, bulls need higher semiconductors and it is smooth sailing higher for equities. Bears need weaker retail stocks and/or higher volatility to reinitiate the downside market selling. Note the algo number is now only three points from the signal line verifying the continued bull-bear sideways struggle. The three parameters above will tell you who wins. The caution flag is out since bulls can start a big upside party if they simply goose the chip stocks.

7/31/14; 7:00 PM EST EOM =
7/29/14; 10:00 AM EST = +53; signal line is +56
7/29/14; 9:36 AM EST = +50; signal line is +57
7/28/14; 2:34 PM EST = +34; signal line is +58

Monday, July 28, 2014

STOCK MARKET BEARISH -- SHORT

Keybot the Quant remains short moving into the Tuesday trading. The RTH turned bearish under 59.62 late-day on Monday creating equity weakness for the last one hour of trading. The VIX, however, prefers the bull camp at 12.56 remaining under the 12.69 bull-bear line in the sand. Retail stocks and volatility are the two major market direction forces currently. Thus, bears need VIX above 12.69 to claim victory and create sustainable downside selling. Bulls need RTH above 59.62 to pop the champagne corks and prove they have the beans to move equities higher. If RTH remains bearish, and VIX remains bullish, equities will stagger sideways.

For the SPX starting at 1979, the bulls need to move up through 1981.50, only 2-1/2 points higher, and bingo, an upside acceleration will occur to the mid and upper 1980's. The bears need to push under 1967.50 to regain their mojo and create a downward acceleration. A move through 1968-1981 is sideways action for Tuesday. Listen for any news concerning retailers, good or bad, that will influence RTH. Watch RTH 59.62 and VIX 12.69 since they dictate market direction. A pre-scheduled number will print tomorrow one-half hour after the markets open for trading.

7/29/14; 10:00 AM EST =
7/28/14; 2:34 PM EST = +34; signal line is +58
7/28/14; 1:46 PM EST = +50; signal line is +59

STOCK MARKET BEARISH -- SHORT

Keybot the Quant  remains short as the bulls stage a comeback today. RTH moves above the 59.62 bull-bear level so equities recover. Over the last few minutes VIX drops under the 12.68 bull-bear line in the sand adding additional upside fuel for the stock market. It now makes sense that the stock market did not sell off more this morning since the breakdowns in RTH and VIX were only tentative. The bulls can run several SPX points higher if they can touch the 1985 handle

Overall, the bears continue to drive the bus. The bulls likely need either stronger commodities or semiconductors to prove that they can mount a sustainable recovery. Market selling will resume if either RTH drops under 59.62 or if VIX moves back above 12.68.

7/29/14; 10:00 AM EST =
7/28/14; 1:46 PM EST = +50; signal line is +59
7/28/14; 1:33 PM EST = +36; signal line is +60
7/28/14; 9:48 AM EST = +20; signal line is +62

STOCK MARKET BEARISH -- SHORT

Keybot the Quant remains short as the new trading week is underway. The bears come to play turning both the retail sector and volatility bearish, while maintaining weak semiconductors, so equities fall. The algo begins the week by printing two numbers verifying a weaker picture for the stock market ahead. The algo number is now 42 points below the signal line. Surprisingly, the SPX is now printing only 2 or 3 points lower when for this failure a 20 plus point failure would be expected.

Watch RTH 59.62 (causing market negativity), VIX 12.70 (causing market negativity) and XLF 22.63 (causing bullishness). Thus, bulls need either RTH above 59.62 and/or VIX under 12.70 to stop the market selling. Bears need XLF under 22.63 to drive markets lower. Since RTH price is 59.58 only four pennies away use this as the main market driver of direction right now.


Equities will recover with RTH above 59.62. Instead, if the RTH price action is a simple back kiss, and the RTH resumes the path lower, equities will start to tumble lower in earnest. The bears are in firm control with the bulls sitting in the back seat of the bus. Keybot prints three pre-scheduled numbers this week; one tomorrow morning, the second on Thursday for the month-end and the third on Friday morning before the opening bell. It is very surprising that the stock market is not far lower.

8/3/14; 7:00 PM EST =
8/1/14; 9:00 AM EST =
7/31/14; 7:00 PM EST EOM =
7/29/14; 10:00 AM EST =
7/28/14; 9:48 AM EST = +20; signal line is +62
7/28/14; 9:36 AM EST = +36; signal line is +63
7/27/14; 7:00 PM EST = +50; signal line is +64

STOCK MARKET BEARISH -- SHORT -- CAUTION

Keybot the Quant is short to begin the new week of trading. Watch SOX 624 (now at 616 causing market negativity), RTH 59.55 (now at 59.80 causing market bullishness) and VIX 12.96 (now at 12.69 causing market bullishness). Thus, the bulls need SOX above 624 to prove the trek to new all-time highs continues. Bears need either RTH under 59.55 or VIX above 12.96 which will create strong downward selling pressure. If semiconductors remain weak, and retail and volatility remains bullish, markets will float sideways with a slight upward bias.

For the SPX starting at 1978, the bulls need to touch the 1985 handle to unleash an upside acceleration. The bears need to push under 1974.50 to accelerate the downside. S&P futures are +1 about 6-1/2 hours before the US opening bell. The bears are driving the bus. 

8/3/14; 7:00 PM EST =
8/1/14; 9:00 AM EST =
7/31/14; 7:00 PM EST EOM =
7/29/14; 10:00 AM EST =
7/27/14; 7:00 PM EST = +50; signal line is +64
7/25/14; 11:25 AM EST = +50; signal line is +64; go short 1975; (Benchmark SPX for 2014 = +6.9%)(Keybot this trade = -0.3%; Keybot for 2014 = +5.0%)(Actual this trade = -0.6%; Actual for 2014 = +5.4%)

Friday, July 25, 2014

STOCK MARKET BEARISH -- SHORT -- CAUTION

Keybot the Quant flips back to the short side today at SPX 1975 in a fickle trading environment. SOX remains bearish and VIX drifts higher today which maintained the downward selling pressure in equities. The algo was within seconds of triggering short at 1979 but did not, then at 1978 but did not, but then at 1975 near the lows of the day, the parameters all latch and the algo commits to the short side. SOX 624 is a big deal come Monday morning. VIX and RTH are also greatly impacting market direction so semiconductors, volatility and retail stocks rule the roost. Levels of interest can be identified once the Sunday pre-scheduled number prints.

The Keybot algorithm program loses -0.3% on the last trade and the actual trading loses -0.6%. The algo cycled out of SSO and into QID remaining in double X ETF's. The algo flip-flops twice, every three days over the last six days, first to the short side, then back to the long side, now back to the short side. This behavior highlights indecision in markets. Listen over the weekend for any news concerning chip and retail stocks. The bears are driving the bus.

7/27/14; 7:00 PM EST =
7/25/14; 11:25 AM EST = +50; signal line is +64; go short 1975; (Benchmark SPX for 2014 = +6.9%)(Keybot this trade = -0.3%; Keybot for 2014 = +5.0%)(Actual this trade = -0.6%; Actual for 2014 = +5.4%)
7/25/14; 9:36 AM EST = +50; signal line is +65 but algorithm remains long
7/22/14; 9:35 AM EST = +66; signal line is +65; go long 1982; (Benchmark SPX for 2014 = +7.3%)(Keybot this trade = -1.0%; Keybot for 2014 = +5.3%)(Actual this trade = -1.9%; Actual for 2014 = +6.0%)