- Hello, everyone.
It's Stephen Whiteside here from the .
- uptrend.com with this weekend's edition
of Stock Market Timeing Television. .
- Well, we had another very volatile .
- week and we're not expecting
that to change anytime soon. .
- Well, it's been over a year .
- now, since we started talking about
what the Fed was going to do. .
- We knew they were going to raise interest
rates to fight inflation, and the result .
- of that would be lower stock market prices
and a recession. .
- Well, we've got some
of the lower stock market prices. .
- We don't have the recession .
- and inflation has not
been wrestled to the ground just yet. .
- So during this period, there's lots of .
- mixed signals out there and there's a lot
of people that don't learn from history. .
- And that's probably the biggest problem
that we have because during .
- this rate tightening cycle, some of the
sectors that don't do well are the ones .
- that are seeing the most
activity at the moment. .
- And during a rate tightening cycle, the
sectors that do the worst are utilities, .
- real estate, consumer discretionary,
financials, and technology. .
- And what do you know? .
- Well, the stocks that are in the most
actively traded right now, when you look .
- at the dollar volume, it
is all technology stocks. .
- So people, even though they know .
- that lower stock market prices are coming,
a recession is coming, they're willing to .
- take a risk right now and try to
drive these stock prices higher. .
- Now, when I talk about mixed signals, of
course, some of the things that we watch .
- to see if a recession
is coming or if recession is over. .
- One of the ones I like to
watch is the Baltic Dry index. .
- This is the cost of moving
dry goods around the world. .
- And you can see over the past couple
of weeks, we've been moving higher. .
- So does that mean that the worst is over
and the world is about to start to recover .
- economically, well, what if you
looked at the price of copper? .
- Now, you can see as the stock market was
rising over the past couple of months, so .
- was the price of copper, which
just rolled over this week. .
- So we're back on a sell signal. .
- If you watch copper as an economic
barometer, that's not a good sign. .
- Now, another global economic
barometer is the price of crude oil. .
- And if we're looking at crude oil, crude
oil has made a new low for this move. .
- We peaked back in May of last year and
we've been trending lower ever since. .
- We were looking to see if the fall lows .
- would hold and they
certainly did not this week. .
- And so here we are. .
- We're back at prices we haven't seen since .
- early 2022 and may continue
to move lower from here. .
- Looking for support maybe
at the lows from late 2021. .
- We'll just have to wait and see. .
- Now, a more localized economic
barometer is the price of lumber. .
- And again, it peaked at the start of 2022
and has been trending lower ever since. .
- We got a couple of pops, but
they didn't last very long. .
- And here we are.
We traded up into the channel last week, .
- but this does not look like the start
of any major trend to the upside. .
- So a lot of mixed signals out there. .
- Now, during a rate tightening cycle, the
market is fully .
- ready to accept the fact that some
stocks are not going to make it. .
- And it's easy to tell if you look at a
particular sector, the worst performing .
- stock is just put on a list of
stocks that probably won't make it. .
- But sometimes there's stocks that just
collapse and the market wasn't .
- anticipating it, and those
are called Black Swan events. .
- A lot of people think that what's happened
over the past two weeks in the US regional .
- banking sector is a
Bflypaperlack Swan event. .
- There's a lot of people out there that .
- we're betting against
this sector for a while. .
- The way the stock market works is it's
not a problem until it's a problem. .
- And there's lots of stocks out there that .
- have problems, but if the market isn't
going to focus on them, then the market .
- isn't going to take vengeance
on that particular stock. .
- So when we look at the regional banking .
- sector, and this is a weekly
chart, you can see that once it started to .
- break down in early
2022, it just got trapped in the Flypaper .
- channel and basically treaded
sideways for nearly a year. .
- Then it's just been the last two
weeks that we started to break down. .
- That's where the
Black Swan event comes in. .
- You can see that the market was not .
- selling these stocks off in anticipation
that there would be a Black Swan event. .
- Here we've traded down, we've
filled this open gap over here. .
- Wouldn't be surprised if we continue
to move lower from this point. .
- Now, the market is trying to
repair some of the damage. .
- They're trying to save some of the .
- stocks. And a couple of stocks in the
news, the first one, First Republic, .
- the market pulled together $30 billion
to infuse into this particular stock. .
- But even after that happened, the
stock dropped another 32 % on Friday. .
- So I would expect that First Republic is
going to continue to move lower from here. .
- Another stock that the market was really
anticipating to implode was Credit Suisse. .
- And today it has been taken
over, apparently, by UBS. .
- And that stock has been hit
hard over the past week or so. .
- But it looks like it's buying Credit
Suisse with lots of conditions. .
- I'm not sure if that's going to calm the .
- market down at all, but we'll
just have to wait and see. .
- Now, the last time that we had a cluster .
- of US financial institutions falling
apart was back in 2008 into 2009. .
- We had one fall apart in
2017, but if we just go back in time back .
- to 2008, you can see that we started
off the year and we're heading down. .
- Here's where Bear Stearns failed. .
- Then what happened next? .
- Well, after Bear Stearns failed, the
market did rally .
- and peaked a couple of months later in the
middle of May and then started to come .
- right back down to retest
those previous lows. .
- Here's where Countrywide failed. .
- Then a little while later, a couple
of weeks later, we had Indie Mac. .
- The market is continuing to move lower. .
- Now, from that point, which was the middle .
- of July, the market started to move up and
got a rally into early August where it .
- peaked, and then it started to
come back down into September. .
- Here's where Leman Brothers failed. .
- You can see that even in a bad year in .
- which you've got financial
failures, you do get some rallies. .
- But my last point about looking back at .
- 2008 is that for that year, or going back
previous to that, the market, .
- the S&P 500 ETF was up at $160
and traded down below $80. .
- So that is a 50 % loss
from the peak to the trough. .
- And so we haven't seen
anything like that yet. .
- So I wouldn't be surprised if the market .
- can make lower lows in 2023
than it did in 2022. .
- Now, the fractional banking system that
the world economy is based .
- on works really well when it works, but
when it doesn't work, it doesn't work. .
- There are a lot of problems out there that .
- people are not focusing on, and it's
not a problem until it's a problem. .
- Whether it's your country, your company,
your currency, it doesn't matter. .
- If nobody's focused on it and nobody cares .
- about it at the present time, then just
keep sailing straight ahead. .
- Now looking at the VIX, the VIX had .
- another wide bar, so
another volatile week. .
- It ended the week just up 2.86 %
after making a new high. .
- We're going to remain long term bearish on .
- the stock market as long as the VIX does
not close below $19.21 this coming Friday. .
- If we look at the recent peaks, you can .
- see that just back in September,
we were up at the 34, 38 level. .
- We haven't got there yet. .
- And then back in the early part of 2022, .
- we were up there at
37.50. So I think we have a ways to go .
- before the market finds
an official bottom. .
- Looking at the daily chart of
the VIX, if we close below 21. .
- 41 on Monday, that would turn us
short term bullish on the market. .
- And of course, that lower channel
line is moving higher daily. .
- Now, we've got the DAO on a sell signal. .
- It was down Friday, had an inside day. .
- S&p 500 had an inside day. .
- We also had an inside day
for the Russell 2000. .
- We saw microcaps with a
new lower close on Friday. .
- The TSX had an inside day on Friday. .
- Financials, Canadian financials
made a new low on Friday. .
- Us financials had a new
closing low on Friday. .
- Also, we're seeing the broker
dealers having a bad week. .
- Insurance companies, there's a new closing
low on Friday for insurance companies. .
- So none of this looks very pretty
going into Monday's trading action. .
- Now, the only thing that's working right .
- now is those technology stocks
that everybody's focused on. .
- They were up by the end of the week, and
it has a lot to do with semiconductors. .
- Everybody's all excited about the .
- opportunities in artificial
intelligence, and that's pushing up some .
- of the chip stocks,
and that's holding the Nasdaq up. .
- Now, while money was flowing out of the
stock market, it was going into Bitcoin, .
- which I don't think is any safer,
but it's where money went this week. .
- We also saw money go back into gold. .
- And during the week, we were looking at .
- gold and gold stocks hitting resistance,
but it punched right through the .
- 1937 50 level and made it all
the way up to $2,000 on Friday. .
- And gold stocks followed suit. .
- And of course, where's money
coming from to go into gold stocks? .
- Well, it looks like it's been
coming out of energy stocks. .
- So we've switched from being bullish
on energy to being bullish on gold. .
- And that has not changed
going into the week end. .
- So here we are. .
- We're coming into Sunday night trading. .
- Big move in the banks with
UBS buying Credit Suisse. .
- I would assume that nobody's going
to change positions this week. .
- We're still looking over the cliff. .
- Nobody's talked about China when we're
talking about all these financial woes. .
- The Chinese banking system has not fixed .
- all of its problems, so maybe that's
the next one that's going to pop up. .
- I don't know if you saw this during the
week, but Saudi Arabia and Iran brokered .
- peace accord, brokered by China, not
the United States, not the Europeans. .
- And so there's a lot of stuff going on in .
- the world that doesn't necessarily
make the nightly news. .
- But there is a pretty good possibility
that Saudi Arabia and Iran are going to .
- start selling China oil and being paid
in local currency, not the US dollar. .
- And that may throw the financial
markets into a tizzy. .
- Okay, folks, thank you very much
for your time and attention. .
- Looking forward to another exciting week. .
- I don't think the stock market is going to
be able to do much .
- on the upside this week, but
we'll just have to wait and see. .
- We'll be watching the VIX closely
and to see if the options traders give us .
- a heads up on what's going to happen .
- next. you. Byeyou. .
- Bye. .