The Keybot the Quant algorithm remains long for the last five weeks as the Fed keeps pumping the stock market higher with easy money. The RTH 59.04 level is likely the market bears best chance to turn equities around to the downside. The West Coast dock strike is already impacting retailers and the Monday evening strike deadline looms which will impact RTH. Keybot is at +81 a very lofty overbot territory so just like the RSI, stochastics and money flow indicators on a chart, the +81 reading verifies the bull party ongoing but at the same time caution should be exercised since the overbot conditions likely identify a market top.
Keybot's site provides two SPX charts showing what happens to markets when oversold conditions occur for the algo number at -70 to -100 (market bottoms) and also for the recent overbot algo numbers at +79 and higher (market tops). Keybot's overbot condition can be lumped in with the other technical parameters such as the CPC and CPCE put/call ratios, VIX, SPXA150R, sentiment indicators, an uber long 5-year plus rally that historically needs a correction, a rally with price above the 200-day MA and 50-week MA for over one year's time and Bob Shiller's elevated CAPE ratio, that all indicate a significant market top is likely at hand.
Keybot the Quant
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