Good morning everyone.
Welcome to Tuesday morning.. It's Stephen Whiteside here
from Theuptrend.com. In the pre market. this morning stock index futures are
currently down below fair value.. Down future is currently down 190 points.. The market was fairly quiet and trading. right around fair value
for most of the morning.. So the sell off we're seeing
right now has started recently.. Of course it could change but from where
I'm sitting right now it looks like we're. going to see some selling
at the open on Tuesday morning.. Well the biggest story in the investment
world yesterday was the continued decline. of the Chinese market
which gapped lower once again.. So here we are seeing. this is what Panic Selling is
and of course you do not want to consider. shorting the Chinese market at the moment
even though it could go lower.. This would be the highest
risk time to do that.. This of course is the time and place.. If you're interested in the Chinese market. and interested in Chinese stocks,
you should be doing your homework right. now and looking for which stocks
you want to buy on the way back up.. But across the board Chinese
stocks got hit hard yesterday.. Whether you're looking at Baidu
or Ten Cent, they both gap lower.. All the Chinese stocks gap lower and a lot
of North American stocks that have large. Chinese exposure also
got hit hard yesterday.. So Las Vegas Sands,
Starbucks are two examples.. One example that didn't really
get hit hard yesterday is Nike.. Nike comes up in just about every. conversation about the Chinese
market and Chinese exposure.. But the Nike shares were down just
a little over half a percent yesterday.. If Nike starts running to the downside
of course that could hurt the Dow then. Nike is a Dow 30 stock and right now all
the excitement in the market is focused. around the Dow and the Dow 30 which made
a new high for this move yesterday.. So confidence in my mind I'm not
very confident in what's going on.. I would much rather see more
of a risk on trade right now.. I'd rather see technology stocks lead. the market higher and I'd rather see chip
stocks lead the technology stocks higher.. And then of course you can look
and see what Microcaps are doing.. There's the Ishares, Microcap ETF.. There's the Venture exchange in Canada.. In both situations we're not really
trending anywhere at the moment and so. this is still a risk on situation
and people are flooding into those big Dow. 30 stocks but not the rest
of the market just yet.. Next up, let's take a look at the VIX.. And what I've noticed about the VIX
of course is there's no early warning. signals up here as there were
back at previous peaks.. We seem to be stuck in a range right now.. If you can see that we need to head down. towards the $20 level if we're going
to get a Christmas rally,. but right now we're stuck in a range
we've been in for a few weeks now.. And so 34.38 at the highs and 28.13.. We traded down just above the 28.13 level. a few times and are finding
support down there.. So we're looking for a breakout of this. range to tell us which way
we're going to go next.. You can see we're still
above the Flypaper Channel.. You can see we are in a short term sell
signal, which is bullish for stocks.. That would change this week if
the VIX were to close above 32.13.. And if we can get above 30 213,
then I would expect we're going to take. out the recent highs and head
towards the $40 area.. Next up, let's take a look
at those megatrends.. And the US dollar index is officially
back on a shortterm sell signal.. Again.
We're range bound here.. We put in a recent high and a recent low.. We're still trading within that range,
so that doesn't tell us much just yet.. The Euro is back on a buy signal and again. we'd get more excited if we took
out the high from early October.. And the Canadian dollar is back on a buy
signal, pulled back into the channel. yesterday, so back on a buy
signal as of Friday's close.. And the British pound has been
treading water over the past few days.. Not much movement yesterday,. given that the next temporary prime
minister was named yesterday.. So the market has stabilized a bit,. but certainly we're not making
higher highs for the British pound.. Now, the price of gold had a wild day. yesterday, traded up to the upper
channel line, ended the day lower.. So we are still on a sell signal here.. The price of silver is back on a buy
signal as a Friday's close.. Now, silver is traditionally a lot
more volatile than the price of gold.. The average true range for silver right
now is 3.93%. Compare that to the average. true range of gold,
which is currently 1.65%.. So you expect to see a lot more volatility. in the price of silver than you
would in the price of gold.. That is the normal activity.. If those reverse for some particular. reason, then you know that hell
is about to freeze over.. Looking at bonds,
bonds made a new low yesterday.. Bond yields made a new high.. So that story has not changed.. Then we've got the energy sector.. We've got crude oil
trading lower yesterday.. We're still on a cell signal here. that would change on Tuesday
with a close above 86.92.. Natural gas.. Are we putting in the bottom here?. Well, we'll just have to wait and see.. We need to close above 6.84 on Tuesday
to give us a buy signal for natural gas.. Okay, folks, that is all
for this morning's presentation.. Not expecting a lot out
of the market on Tuesday.. We are getting a little overbought on A. Short Term basis
but haven't got There yet.. You can see that it's really the Dow. that is pushing the market higher,
not the rest of the major indices.. And that is something
to be concerned about.. Enjoy the rest of your day.. Next time you'll hear my voice is. on Wednesday morning music you..