• Hello, everyone. .
• It's Stephen Whiteside here from TheUpTrend.com. .
• I hope you had a wonderful weekend. .
• Well, we've gone seven weeks now where the .
• market has been fear free and the market has been up seven weeks in a row. .
• So we're going to remain long term bullish .
• on the market as long as the VIX does not close above 16.66 this coming Friday. .
• Now, we've been anticipating a year-end .
• rally, and we got a year-end rally, and so this is the time to celebrate. .
• It's also the time to make sure we've locked in some profits along the way. .
• No reason to completely liquidate a position. .
• We need to keep some money in the market, but you do want to lock in profits as .
• markets usually fall faster than they rise. .
• Now, we did see Panic buying this week on the back of the Fed announcement. .
• A lot of people had to do some short covering. .
• We've got a lot of charts that are poking .
• through the top of the Panic Zones right now. .
• We are waiting to see if we get some early warning signals. .
• Now, the first thing we're going to be .
• looking for is a close below Wednesday's low. .
• That was the Fed Day. .
• That's when all the short covering took .
• place and the market took off to the upside. .
• Those are a lot of people that are late to the game. .
• This trend started back in late October, and some people just couldn't take a hint .
• and they got in on Wednesday, which is late. .
• We're going to be watching .
• to see if the market closes below Wednesday's low or any individual stocks. .
• What was very bullish was that the semiconductors led the market higher. .
• We also had a lot of sectors of the market .
• that are playing catch up, finally joined the party. .
• Sectors like Homebuilders had a great week. .
• Now, we're looking at the daily VIX here. .
• We're going to remain short term bullish .
• on the market as long as the VIX does not close above 13.04 on Monday, .
• and you can see that upper channel line is going to continue to move lower daily if .
• we do not close above that level on Monday. .
• Now here's something to be concerned about. .
• The Pros look like they want to take control of the VIX. .
• And if they start taking control of the .
• VIX, that's probably going to indicate some selling in the overall market. .
• So most of the market held up going into Friday's close. .
• The Dow had an inside day. .
• A little bit of a pullback for the S&P 500. .
• The Nasdaq had a new closing high on Friday. .
• We saw a small pullback in the Russell, .
• small pullback in microcaps, and we saw a pullback in Regional Banks. .
• Regional Banks, big participant this week. .
• And you can see we gapped higher on .
• Thursday, so probably going to come back here again. .
• We'll be looking to see what happens if .
• the market starts to close below Wednesday's low. .
• Taking a look at the Canadian market, the .
• TSX ran up to resistance this week and pulled back. .
• So that resistance is still holding the market in check. .
• Here we are looking at a weekly chart and you can see that through all of 2023, this .
• level at 20,625 has held the Canadian stock market in check. .
• Now, there's a lot of divergence right now .
• between the Canadian stock market and the US stock market. .
• Look right now at Consumer Discretionary .
• traded in Toronto and then Consumer Discretionary traded in New York. .
• Consumer Staples in Toronto, Consumer Staples in New York. .
• A lot of divergence. .
• Those are just two examples. .
• If the financial services are doing well .
• on both sides of the border, that's a good sign for the overall health of the market. .
• But unfortunately, there are too many .
• divergences right now to help the Canadian market. .
• Moving on to bonds, and we're going to look at the major bond ETFs. .
• Just to make it very clear, I don't trade these at all. .
• There's not enough money in them for me to .
• trade, but they are useful for a lot of people. .
• A lot of people need to be diversified and need to be in bonds. .
• One of the reasons the stock market has gone up over the past seven weeks is that .
• bonds have gone up, which has put downward pressure on bond yields. .
• The market is basically doing the Fed's .
• job for them, pulling back on bond yields and rates and taking pressure off the .
• industry to keep raising rates at the present time. .
• Here we've got the TLT making a new high. .
• If the direction of the bonds changes, .
• that could have a negative effect to the overall stock market. .
• Whether you're looking at the TLT, which is the most actively traded bond ETF in .
• the US, in Canada, the XBB is one of the most actively traded bond ETFs. .
• Then you've got emerging markets, and then .
• you've got junk bonds, all doing well at the moment. .
• If the direction of these bonds change, .
• that could have a negative effect on the stock market. .
• Now, one of the reasons I don't trade them .
• is there's really no money in them from a trading point of view compared to other .
• ETFs, and certainly compared to the rest of the stock market. .
• If you're going to be involved in these, they need to be in a separate column. .
• They need to be in a separate portfolio. .
• I'll just give you an example. .
• This big move up is really an optical illusion. .
• When we look at the Fly Paper Channel .
• chart for the junk bond ETF, you can see how wide the Fly Paper Channel is. .
• Anytime you see that, you know that the .
• underlying symbol has very low long-term volatility. .
• Now, if we look down here at the .
• Average True Range, it's currently 0.6 %, so a little more than half a % per day. .
• When we look at this big move from this .
• low in October to the recent high, that is only 8%, so not very attractive. .
• Compare that to, say, something like .
• Apple, which has had a nice run from the October low to the recent high. .
• If we look at the Fly Paper Channel chart, the Fly Paper Channel is much thinner. .
• We know that long-term volatility is much greater. .
• If we look at Average True Range down .
• here, the short-term volatility is at 1.49%. Just under one and a half %, more .
• than twice what we saw in the junk bond ETF. .
• Remember, junk bonds are the most volatile of bonds. .
• That move from the October-low to the recent high, that is a 20% move for Apple. .
• Then if we look at a symbol that has even .
• a skinnier Fly Paper Channel and a higher Average True Range, so looking at .
• CloudFlare at the moment, the current Average True Range is 3.38 %. .
• The move from the recent low in October to the recent high, that is 54%. .
• Now there's two lessons here. .
• The first one, of course, is know the .
• volatility of each symbol you're looking at and use them in comparison. .
• Remember, don't compare apples and oranges. .
• There's no reason to compare a stock like Cloudflare to, say, a Bank of America. .
• They're in two completely different worlds. .
• When you're looking at stocks in the same sector or ETFs in the same sector, check .
• the volatility and see what the opportunities are. .
• Also remember that where there's opportunities, there's also risk. .
• Your risk reward, you've got to balance it out. .
• You don't want a portfolio heavily laden with stocks with high Average True Ranges. .
• That's just too much risk. .
• One day when the stock market goes against .
• you, which it ultimately will, if you're in the market for any length of time, you .
• really don't want to take a huge loss because you're loaded up in stocks .
• that not only went up quickly, but will come down quickly as well. .
• Now moving on, another thing that I'm not trading, the USD Index, but we keep track .
• of it because a falling USD Index has been supportive for higher stock prices. .
• Now, we had a big inside day and a reversal day on Friday. .
• That was also true for the Euro. .
• This could change. .
• If this changes direction and we start .
• moving up, that could put downward pressure on the stock market. .
• There's the big reversal in the euro on Friday. .
• Oddly enough, the Canadian Dollar was able to push higher on Friday. .
• Now, this could also change, and that is crude oil. .
• Crude oil falling has also been supportive for higher stock prices. .
• Natural Gas has been falling. .
• Two things that have taken pressure off inflation and helped the overall consumer, .
• they could change direction and that could be negative for the stock market. .
• Now looking at the metals, price of copper may have run into resistance. .
• It's had a really good run over the past six weeks. .
• You can see copper miners bolted higher on Thursday, gapped higher, even went higher .
• on Friday before pulling back and closing unchanged on the day. .
• Now looking at the price of gold, we're still on a signal here. .
• That hasn't changed. .
• Gold miners look like they've put in a double top, whether you're looking at the .
• GDX or the XGD, and then the price of silver pulled back. .
• Silver miners also look like they're .
• putting in a double top at the present time. .
• Now, just to go back to where we started, .
• we have a lot of symbols that look like this. .
• This is manual life. .
• It's up through the top of the Panic Zones. .
• We're looking for a new early warning signal on the Panic Zone chart. .
• We haven't got that yet. .
• We do have a lot of early warning signals on the Right-Side chart. .
• This chevron indicates that we have a potential top-up there, but this signal .
• can fade away over the next couple of days if it's not confirmed. .
• What's going to confirm it? .
• Well, if we start breaking down below Wednesday's low. .
• Remember, Wednesday was the huge .
• volatility day for a lot of symbols, and that's where the short covering kicked in .
• and people late to the party jumped on board for whatever reason. .
• They were compelled to do that. They did that. .
• But look, here's how long the trend has been going. .
• And then finally on Wednesday, people .
• said, Hey, yeah, this is the time to get in. .
• So what we're looking for is a breakdown .
• below Wednesday's low is the first sign that we're heading lower and we're .
• possibly going to see new daily cell signals. .
• Last up today, a quick look at the Magnificent Eight. .
• Two stocks didn't participate. .
• That would be Alphabet and Microsoft still on cell signals. .
• We saw Amazon go up and hit our next .
• target at $150, which was both a daily and a weekly target. .
• We had Apple run up, did not hit the daily or weekly target of $200, got as high as .
• $199.62. We still have Meta on a buy signal. .
• We've got Invidea on a buy signal. .
• Nvidia, of course, no longer the big leader in the chip sector. .
• Then we've got Shopify making a new high on Friday on both sides of the border. .
• Tesla made a new closing high on Friday, did not take out Thursday's high. .
• So none of these .
• Magnificent 8 stocks really participated in the overall rally this week. .
• Now, some people are rather concerned that .
• the Magnificent Eight did not lead the market higher this week. .
• And I don't think we can read too much into it so far. .
• We've seen some sector rotation .
• and these stocks couldn't lead the market higher forever. .
• There is always some rotation. .
• What we haven't seen so far is any aggressive selling in these stocks. .
• So if we start to see aggressive selling in these stocks, then I would say there's .
• something to be concerned about, but that has not started just yet. .
• Okay, folks, that is all for today's video. .
• I'm sorry I was a bit longer than normal, .
• but I wanted to include a couple of extra topics. .
• Enjoy the rest of your day. .
• The next time you'll hear my voice is on Tuesday morning. .