- Morning, everyone.
Welcome to Friday morning. .
- It's Stephen Whiteside
here from theuptrend. .
- Com.
In the premarket this morning, stock index .
- futures and commodities
are trading below fair value. .
- DOW futures currently down 150 points. .
- So far, it looks like we're going to see .
- some selling at the
open on Friday morning. .
- Now, today is options expiration
for the February options. .
- And you say to yourself, Well, I don't .
- trade options, so that doesn't
affect me at all. .
- Well, it can affect you because a lot of .
- positions in the market are
hedged using options. .
- And the reason they hedge those positions, .
- of course, is to reduce risk
but also to increase leverage. .
- Investors can often take on much .
- larger positions if they use
options to hedge those positions. .
- And if they unwind them today and don't
put them back on right away, then that can .
- often affect the price of
the underlying securities. .
- While speaking of options, of course, we .
- watch the VIX Index every day
and it moved back into the channel. .
- Of course, being in the
channel is a neutral zone. .
- So on Friday, we're looking for a
close above $20.51 for the VIX. .
- Now, the VIX has been in a tight range for .
- months now, and
this range has been bracketed by a bullish .
- reversal signal here and a
bearish reversal signal there. .
- Neither one has been taken out so far. .
- So looking for a breakout of that range,
and you can see the top of the range is up .
- there at 21.88 and we may be heading
for that level on Friday. .
- And of course, if we start to break out .
- above that, that would certainly
be negative for stocks. .
- Some other things that
are negative for stocks. .
- Well, the US dollar index .
- made a new high for this move before
pulling back ever so slightly on Thursday. .
- And then bonds continued to move lower on .
- Thursday, which means bond
yields continued to move higher. .
- Whether you're looking at the 30 year or .
- the 10 year or any of them,
they continued to move up. .
- And that, of course, can
be negative for stocks. .
- Another thing that could be negative for .
- not only stocks, but the global economy
is the Baltic Dry Index. .
- Now, this chart looks a little strange, .
- and that's because there's just one
data point per day. .
- The open high low close,
it's all the same. .
- And so right now, if you look at the
bottom right hand corner of the screen, .
- you'll see that we are making new
lows, and these are multi year lows. .
- And so if the
Baltic Dry Index, which measures the .
- shipping capacity versus the supply
of dry bulk carriers. .
- Now, what's a dry bulk carrier? .
- Well, these are ships that move around .
- materials that go into
making other things. .
- So it could be wheat, it could
be coal, it could be iron ore. .
- That's the type of things that dry
bulk carriers carry around the world. .
- And a lot of people use it as a .
- measurement of the health
of the global economy. .
- And looking at this chart, the patient is
in major cardiac arrest at the moment. .
- If we look at a weekly chart of the .
- Baltic Dry Index, you can see
we are breaking down below 625. .
- And so if you were in this business, you .
- could have got twice as much money for
shipping stuff just a few month .
- ago, and three times as much money
if you go back to just last September. .
- And of course, you can see you could
have got a lot more money previously. .
- So this is not a good sign for that .
- particular industry, but it's also not
a good sign for the global economy. .
- Now, we didn't get cell signals yesterday
for the major index ETF, so we follow. .
- Looking at the SPY, you can .
- see we need a close below 407.14
on Friday, and that is certainly doable. .
- I noticed, going through the reports last
night, that the iShares Canada ETF traded .
- in New York actually closed just a penny
below the lower channel line after .
- putting in a lower high
just a couple of days ago. .
- Some of the weakness in the Canadian .
- market was from the info tech sector,
which had a big down day yesterday. .
- And that was probably due to Shopify,
which had a huge down day on Thursday. .
- Now, we came in to Thursday morning seeing .
- that Shopify
had generated a new buy signal. .
- And of course, I always tell you to look .
- and see what's happening in the premarket
before you go ahead and take a signal. .
- And yesterday when we looked at Shopify, .
- and this chart is Shopify
trading on the TSX, it was down over 10 % .
- or around 10 % in the premarket, and
it ended the day down over 15 %. .
- So we saw some additional
weakness once the market opened. .
- And if you're short Shopify .
- at the moment, then $56.25 and $50 are
the next two targets to the downside. .
- Now, we're also watching
Tesla and our next mathematical .
- price target was $218.75. We got
as high as $217.65 yesterday. .
- And so we often tell you to put your order .
- in a little below
what the price target is. .
- And of course, yesterday's trading
activity, which generated a bearish .
- reversal signal, was stopped
by the 200 day moving average. .
- So hopefully you're watching that as well. .
- Looking down on Friday .
- for Tesla, we need to close below
189.82. Now we're also watching .
- Apple and Apple put in a bearish reversal
day a few weeks ago. .
- Now, we hit 156.25 again yesterday before
pulling back, and so that would be .
- considered a lower high if we
continue to move lower from here. .
- And also, we were watching Microsoft this .
- week, which traded down
into the channel yesterday. .
- So looking for a close on Friday below
260.97. And you can see the bearish .
- reversal day marks the high
for this particular move. .
- That's why we watch them. .
- That often happens, and that is certainly
what's happening to Microsoft right now. .
- Okay, folks, that is all for
this morning's presentation. .
- Stock index futures and commodities
are trading below fair value. .
- So again, it does look like .
- we're going to see some selling
at the open on Friday morning. .
- Enjoy your Friday, enjoy your weekend. .
- Next time you'll hear my voice .
- is on Sunday. .