Keystone's proprietary algorithm, Keybot the Quant, that has remained long the SPX (via MDY ETF) for the last eight weeks straight, flipped to the short side today at 2:30 PM EST. As always when a turn occurs, stay alert for a whipsaw move today or tomorrow.
More information can be found at Keybot's site:
http://www.keybotthequant.blogspot.com
Note Added 2/14/12 at 4:07 PM: The SPX whipsawed and recovered into the close printing 1350.50 at the bell. Keybot remains short from 1342 and should not trigger a whipsaw move back to the long side unless the SPX moves above 1355 tomorrow.
Did you mean remains "short from 1342"???
ReplyDeleteHow many times has Keybot flipped short to long or long to short in a very short time frame (less than 1-2 days)?
ReplyDeleteThanks
Hi Keybot: I think Ocean was referring to this sentence - " Keybot remains ... 'long from 1342'... and should not trigger a whipsaw move back to the long side unless the SPX moves above 1355 tomorrow."
ReplyDeleteSPX:VIX closed above 68, so doesn't that mean bulls have the ball back?
ReplyDeleteCan you post a chart for the long/short call of keybot in the past? What a whipsaw day alright!
ReplyDeleteKS, lately, the market is selling off in the morning and going back up in the afternoon. Last year, it was the exact opposite. It seems the market still wants to move higher on light volume. The sellers are just not there this year. Have you seen a market this resilient before? I know the SPX is up against major resistance but it is continually trying to crack through since it's only a few handles away from doing so. I want to look at inverse ETFs but not sure if it's the right time to dip into it but if Keybot doesn't flip back to bullish tomorrow, I might initiate a position in SDS or TWM. Thanks for all your insights KS.
ReplyDeleteSteve
Hello all, what a day is right. The Euro news slapped things around. The move down after 2 PM was enough for Keybot to finally trigger for the short side, then the happy news from Europe ran things skyward. Keybot will probably move back to the long side if the SPX 1355 is taken out to the upside tomorrow but the smoke has to clear first to see what things look like.
ReplyDeleteFor 900, yes, you are right, that was a typo, Keybot is short today from 1342.
For Anon, great question, there were seven whipsaws of 1 or 2 days during 2011. Keystone was surprised since he would have guessed about five. During a typical year markets should trend more which greatly lessens the whipsaws so normally you may only expect 3 to 5 per year, but these markets are anything but normal, these are some of the wildest markets we may ever see, and the ride is not over yet.
For Anon, yes, it was a typo.
For Alex, yep, the SPX:VIX ratio popped back above 68 at 3:50 PM, with only ten minutes remaining in the session, and it jumped nearly one full point from 67 to over 68 in one minute's time. Isn't that something? Yes, so the market bulls are steering the bus again, and in control as Wednesday (tomorrow) begins, unless the ratio falls back under 68, and if it does, you know the drill by now, the broad indexes will be slapped hard and the Dow will be down triple digits.
For Curious, Keystone will post a shorter duration chart showing the last few turns but a shorter term and longer term chart is posted at Keystone's public charts page on stockcharts.com. Click the link to "Keystone's Public Charts" in the right hand margin and the two charts you want to look at are at the top of the first page.
Hello Steve, it is tough to read too much into the up morning down afternoon stuff and so forth. One thing to look for is that if Friday's finish up and Monday's begin up that is a sign of market strength whereas a weak Friday and weak Monday opening signals weaker markets.
ReplyDeleteStudy chart divergences for clues. The SPX daily chart's negative divergence is across all indicators so that is bear friendly now and really wants to see a spank down. The weekly chart, however, will probably want another high since the indicators are long and strong, thus, a potential outcome is a drop in the markets now, traders will jump on the band wagon as markets fall, then wham, markets reverse quick and catapult skyward, ripping off short sellers faces.
Then, all traders will think that is the sign that the bull rally is ready to go higher again so traders will jump on the band wagon going up, then in this same 1350-1370 range, wham, the markets flush downwards quickly, since the weekly chart may be set up with negative divergence to trigger this slap down, and a smack down occurs ripping the faces off the bulls that just jumped in long. The markets always strive to hurt the maximum amount of traders. If Keybot does not whipsaw back to the long side tomorrow, that would be extremely encouraging for short sellers, but, be nimble.
Nimble is the key word moving forward. Like the nursery rhyme, 'Jack be Nimble', but, do not worry you do not have to jump over any candlesticks, you simply have to know when to click the mouse. Keep a close eye on all positions over the next month since today we may have just headed into the white water. Lots of hazards are ahead.