Keybot the Quant Turns Bullish

Out of the blue this afternoon, during the big rally, Keystone's proprietary trading algorithm, Keybot the Quant, flips to the long side at SPX 2361. Market bulls need higher banks, the XLF above 23.94, to keep the party going to the upside.

The bears can stop the upside rally in stocks dead in its tracks with either JJC under 30.43, RTH under 78.16 and/or VIX above 11.85. More information is found at Keybot's site;

Keybot the Quant

SPX S&P 500 30-Minute Chart with 8/34 MA Cross and 60-Minute Chart with 200 EMA Cross

Here are two of Keystone's key VST (very short term) stock market direction indicators. On the SPX 30-minute, the 8 MA remains under the 34 MA signaling bearish markets for the hours ahead. The price action is in a downward channel. The SPX is at 2342 above the 8 MA so price continues to pull this moving average higher to potentially create a positive cross above the 34 MA and prove that the bulls will receive a relief rally. The market bears must push price under the 8 MA at 2340 pronto to curl it lower away from the 34. Watch this closely.

On the SPX 60-minute, the S&P 500 is below the 200 EMA on the 60-minute at 2352 signaling bearish markets for the hours and days ahead. Note how price failed through the 200 EMA last Tuesday, a week ago, so you knew markets were in trouble. The SPX then comes up for the back kiss and on Friday was spanked down unable to overcome the 200 EMA. If a relief rally occurs, pay attention to the 2352 level since that will determine if any rally continues, or if it is squashed. For now, the bears rule the markets with  bearish signals from both charts. The first hint that the bulls are creating a market bottom and recovering would be shown with a positive 8/34 MA cross on the SPX 30-minute. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Note Added 8:20 PM EST: At 11 AM EST, the SPX price ran above the 200 EMA on the SPX 60-minute chart at 2352 signaling bullish markets for the hours and days ahead. The bears were on the ropes and then, at 11:30 AM, the 8 MA crosses above the 34 MA on the SPX 30-minute chart signaling bullish markets for the hours ahead. The bulls punch the bears squarely in the face. The bears fall backwards and do not know what hit them.

BPSPX Bullish Percent Index Daily Chart

The BPSPX six percentage-point reversals and the 70% level are two key signals for the stock market. The BPSPX was on a buy signal and in December price poked above the 70 level creating a double-whammy buy signal. Note the textbook back kiss of the 70 level which proves how important this level is.

So the bulls party like its 1999 into the early March top. That red line is 79.6 so taking away 6 is 73.6. Interesting. Despite what seems to be a lot of recent selling and negativity in the stock market, the BPSPX remains on the double-whammy buy signal. The bears need to push the BPSPX under 79.6 to receive a sell signal and prove that down is the direction ahead for equities. If the BPSPX then drops through the 70 level, the stock market will be collapsing significantly lower with a double-whammy sell signal. If the BPSPX remains above 79.6, the bears got nothing and the bulls will celebrate a recovering stock market that keeps moving higher. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Note Added Tuesday Morning, 3/28/17, at 8 AM EST: The BPSPX collapses to 71.80 reversing more than six percentage-points off the 79.6 top which issues a market sell signal. The market bears will create serious damage to the stock market if the BPSPX next drops under 70. Bulls simply need to prevent the BPSPX from slipping under 70.

VIX Volatility Daily Chart; 200 EMA Cross

There are two key levels to watch in the VIX this week. First is the 11.92 level which was violated to the upside yesterday which sent the broad stock market another leg lower in the afternoon trading. Keybot the Quant is on the short side and the algo is identifying 11.92 as the key bull-bear line in the sand. VIX creates a positive influence on the stock market under 11.92 and a negative impact, like now, above 11.92.

The second number to watch is the 200-day MA at 13.56. As the chart shows, the bulls are happy when the VIX is under the 200-day (green circles) while the bears rule above the 200 (red circle). So you can gauge the direction and strength of the stock market with VIX 11.92 and 13.56.

Under 11.92, the bulls rule. Between 11.92 and 13.56 stocks are moving sideways with a slight downward bias. Bears rule the markets above 13.56.

In addition, a previous chart shows the 200 EMA on the SPX 60-minute chart at 2354. This  number is extremely important. Bulls win big above SPX 2354. Bears win big below SPX 2354.

Keybot is tracking the VIX 11.92 number. In addition, bulls will recover if VIX moves below 11.92, RTH moves above 78.25, JJC above 30.40 and/or XLF above 24.04. Volatility, retail stocks, copper and financials are the main parameters dictating market direction currently. Any one of the four parameters turning bullish will stop the downward slide in the stock market. Monitor the parameters above since they tell you what you need to know. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Note Added 6:37 AM EST Friday Morning: With the Friday session ahead, the VIX sits at 13.12. Close, but no cigar for the bears. Bears need to poke above the 200-day MA at 13.56 to prove they have the strength to drive the stock market strongly lower. Market bulls are content with the stock market since they are keeping the VIX below 13.56.

Note Added 8:03 AM EST Tuesday Morning, 3/28/17: The VIX runs above the 200-day MA at 13.56 creating stock market selling for a couple days but then retreats back down through the 200-day MA on Monday, 3/27/17. The VIX tagged 15.11 yesterday but is now down to 12.50. The VIX at 12.50 continues to cause market negativity based on the Keybot algorithm, however, the bears need the VIX above 13.56 if they want to create serious stock market damage. The bulls will easily weather the storm if the VIX remains under 13.56.

SPX S&P 500 60-Minute Chart; 200 EMA Cross

The SPX drops under the 200 EMA on the 60-minute chart at 2354 signaling bearish markets for the hours and days ahead. The market bulls are toast if the S&P 500 remains under 2354 but the bulls will be fine if the SPX moves above 2354. Watch this number like a hawk over the next couple days.

The tight bands squeezed the move lower in this one-hour time frame. Price has violated the lower band so the middle band at 2369 and falling is on the table. The indicators want a bounce in price now but the weak and bleak MACD line wants another lower low after price bounces in this 60-minute time frame. Thus, a bounce would be expected in stocks for the first hour or two of trading on hump day, then back down to test the lows in price, then a more substantive recovery for a few hours.

The 2-hour chart shows weak and bleak chart indicators so it may take from 2 to 5 candlesticks to set up with possie d which would be 4 to 10 hours of trading time which is all of Wednesday and Thursday. Thus, a guess would be that the SPX may recover into Wednesday afternoon but then may roll back over to the downside for soggy  markets for a day or two.

The 200 EMA at 2354 is extremely important and tells you what you need to know concerning market direction. Bears win big with the SPX under 2354. Bulls win big above 2354. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

Quarterly Reminder

It is time for the Quarterly Reminder;

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SPX Monthly Chart; Obverbot; Rising Wedge; Negative Divergence Developing; Upper Band Violation; Price Extended

The SPX monthly chart above is a bowl of spaghetti. Note the universal negative divergence across all indicators over the last four years (red lines) which are calling a multi-year top on the come. The dark red lines show the May 2015 market top spanked down by the universal neggie d. The Fed and other central bankers saved the day in February 2016, as usual, and then President Trump's November election kicked stocks into overdrive with traders drooling over promises of lower taxes, less regulation and massive infrastructure spending. The ECB's QE has been a key driver in the buoyant stock market but the central bank is reducing its monthly asset purchases from this month into April.

So stocks float higher after the May 2015 major top fueled by central banker easy money and Trump hype. The red lines are universal neggie d wanting a multi-year top to print at anytime but note the very near term. The Trump bump creates short-term momentum as shown by the short green lines that indicate long and strong RSI, MACD line and money flow. This will likely create a couple jog moves in price until these indicators can print neggie d in the very short term to match the neggie that remains in place over the last four years. As long as the RSI and MACD lines stay below the purple line shown in the right margin, the bears will have their multi-year top at some point in the near future (probably within 16 weeks). Above those lines and the multi-year top would be likely occur in October-ish instead. The chart will simply have to be monitored as it develops.

The month of March began at 2364. The SPX is at 2378, up 14 points this month, +0.6%. The month ends on Friday 3/31 which is 10 trading days away where the chart will receive an official print for March and a candlestick for April will begin. The S&P 500 is currently  up for five months in a row gapping-up on the Trump joy each month since November.

The RSI and stochastics are overbot wanting to pull back and take a rest. Price is extended above the 10-month moving average above the 20-mth MA above the 50 MA above the 100 above the 200 so the SPX needs a mean reversion lower. Price tags the upper standard deviation line at 2374 sitting firmly above at 2378. The S&P 500 will need to move lower to touch the middle band at 2119 and rising, and the lower band at 1864 is on the table as well for the weeks and months to come.

The pink box shows that the upside multi-year rally was a strong trend in late 2013, 2014, 2015 but then petered out in 2016. The ADX is down at 16 so the move higher in the stock market, at or near record highs, is occurring but not with a strong trend anymore. The rising wedge over the last two years and the long-term rising wedge since 2009 are ominous since the drops from rising wedges can be quite dramatic.

The 10-month MA is 2220 and followed closely by old-timers that control a lot of money on Wall Street. Algo's, such as Keybot the Quant, have this number programmed into models. The 10-month is an excellent early warning indicator of serious trouble ahead. If 2220 is lost stocks will likely drop like a rock. The 12-month MA at 2197 is Keystone's indicator called "the cliff" since markets will completely fall apart under this level now at, say, 2200-ish.

Recapping after all this windbag talk, there is momo in the short-term monthly basis, but the neggie d over the last four months is very ominous. Stocks may go down for one month, then back up for a month for a matching high, when the RSI would likely turn neggie d in the couple-month time frame, then down for a month, then back up again where the MACD should go neggie d in the couple-month time frame. This would be THE top; thus, down to mid April, up to mid May, down to mid June, up to mid July then major roll over to the downside. This momo in the shorter term is subservient to the negative divergence for all indicators in place over the last four years.

The four-years of neggie d is is like an anvil hanging over the market's head supported by a thin frayed rope. The stock market may be able to play out the down up down jog move or moves described, however, the rope may snap and markets may collapse downwards at anytime printing the major top and the long-term downside begins. The 18-year stock cycle is coming to a close in 2018 (2000 to 2018; 1982 to 2000 was a secular bull) and we are  in a secular bear so it makes sense that now through 2018 and perhaps 2019, negative years should be logged for the stock market. It is very common to have powerful cyclical bull markets such as 2003-2007 and 2009 to present within the secular bear so this action is no surprise. A secular bull market would occur from 2018 to 2036 which makes sense since inflation and hyperinflation will likely kick into high gear in the 2020's driving all prices wildly higher.

The expectation would be for a major multi-year market top to print in the April-July time frame, or sooner (at anytime forward). The prices in the stock market now, once she rolls over at anytime in the weeks ahead, may not be seen again for many years. Looking at the prior SPX weekly chart and technical analysis, the MACD line needs to go neggie d to identify the market top in the weekly time frame which may be a couple weeks out so it is conceivable that the stock market may print its epic multi-year top over the next month. The weekly chart would be cooked and the monthly chart would honor the four years of neggie d across all chart indicators shown above which would be the end game and then the bears would begin to growl for many months and perhaps a couple years ahead. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

SPX S&P 500 Weekly Chart

On the SPX weekly chart, price makes a new higher high from 2 weeks ago. Looking at the indicators, all are neggie d ready to create a spankdown except the pesky MACD line. The MACD line remains long and strong as price makes a new high, thus, price will likely make a jog move, down, up, then  potential roll over, on a weekly basis, to provide time for the MACD line to display neggie d which will identify THE top in the weekly time frame.

So the indicators want to see price spanked down for say, a week or so, then price will venture back up again for a matching or higher high in this 2385-2393 area, and, if the MACD line is then sloping downward indicating neggie d, the top will be in, and the S&P 500 will roll over to the downside.

Price has violated the upper standard deviation band and needs to return to the middle band at 2272 and rising and perhaps the lower band at 2118 and rising. The red rising wedge is ominous since the collapses from rising wedges can be quite dramatic. A top is near as described.

Interestingly, Fed Chair Yellen speaks on 3/23/17 although she may or may not discuss monetary policy. The new moon peaks on Monday, 3/27/17 so perhaps some market voodoo is on tap to end the month and begin April. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

SPX S&P 500 Daily Chart; Tight Bands; Sideways Symmetrical Triangle

The dark red lines show the prior top on the daily chart. The negative divergence with the MACD line, histogram, stochastics and money flow, and overbot RSI and Stoch's all pointed to a down in price, which occurs, but that RSI printed a tiny peak so this long and strong sliver of strength wanted price to come back up again, which it is doing now. Price is not yet matching the prior high as shown by the thick red line so negative divergence cannot yet exist, but the thin red lines in the right margin for the indicators clearly show each one sloping lower and lagging. If price would make a matching or higher high at 2400-ish, chances are all the indicators will be neggie d forecasting a move lower that will be sustainable on the daily basis.

A sideways triangle is in play and a breakout above 2182-2183 opens the door to 2432 while a drop below 2368 forecasts a drop to 2318. The SPX is printing above 2183 as this message is typed so the bulls have the bears in the corner and are giving them the ole one-two.

The tight bands forecast a big move on tap any day forward that will probably create a move of 30 or 40 handles or more. Tight bands do not forecast direction. The pink boxes show a strong upside trend in December but this petered out. However, this month, the strong trend shown by the elevated ADX reestablished itself. Market bulls need the ADX to curl upwards again while market bears need the ADX to start dropping to stop the strong uptrend.

It may be reasonable to expect that price will come up to touch the upper band at 2392 and from there either become squeezed strongly higher, or, forced lower by the band squeeze. Coming up to 2392-2400 may be good enough to satisfy that RSI strength from 13 days ago. With the indicators staying under the thin red lines, the bears would be favored going forward but the door remains open for 2384-2393 over the next day or two. Price remains above the moving averages and continues to need a mean reversion lower. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

SPX S&P 500 60-Minute Chart; 200 EMA Cross; Sideways Symmetrical Triangle

The SPX 2-hour chart morphs into another sideways triangle after the Yellen Rally breakout on Wednesday. The tight bands in the previous chart squeezed out a 30-point move from bottom to top for the SPX. The SPX remains above the 200 EMA on the 60-minute chart at 2351 which forecasts a bullish stock market for the hours and days ahead. Market bears need SPX under 2351 to create strong selling pressure. Since 2351 is also strong price support, if it fails, there will be market carnage. If the SPX remains above 2351, the bulls will keep smoking expensive Cuban cigars flicking the ashes in the bear's faces.

The vertical side of that sideways symmetrical  triangle is 50 points. Thus, a breakout above 2381 will target 2431 and a breakdown from 2368 will target 2318. So if the bottom trend line of the triangle fails, watch 2351 and if that fails, 2318 is the likely destination. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.