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..