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00:00:00Good morning, everyone, and welcome to Monday morning.
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00:00:02It's Stephen Whiteside here from theuptrend.com.
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00:00:06In the premarket this morning, stock index futures are slightly below fair value.
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00:00:10Commodities are slightly above fair value.
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00:00:13So far, it looks like we're going to have a quiet open on Monday morning.
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00:00:17No major economic numbers coming out
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00:00:19today, so expect it to be a fairly quiet day.
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00:00:23Now, last time we talked, we were coming off a bearish reversal Thursday.
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00:00:27And of course, when we look at a bearish
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00:00:30reversal day, it can often mark the top for a market.
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00:00:33And if we go back looking at the SPY, you
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00:00:36can see we had a bearish reversal day there that marked the top, then another
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00:00:40one there that marked the top, and another one there that marked the top.
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00:00:44But this time around it may not have worked.
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00:00:47Remember, these are one day events.
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00:00:49They come up, they need to be acknowledged and watched.
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00:00:52But we need to see fall through on a bearish reversal day.
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00:00:55We need to see fall through to the downside.
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00:00:57On a bullish reversal day, we need to see the follow through to the upside.
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00:01:01We're looking to see if we're going to get that follow through.
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00:01:04You can see the big bar that we had on
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00:01:07Thursday and it engulfed the previous day's bar.
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00:01:10We were looking for a breakout of
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00:01:12Thursday's range to tell us which way the market wanted to go next.
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00:01:16Oddly enough on Friday, we continue to push higher, putting in a higher high.
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00:01:21On Thursday, I was also concerned about
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00:01:23the fact that the chips were not participating in last week's rally.
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00:01:28Well, on Friday, what happened?
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00:01:29Well, chips actually led the market higher, so that was helpful.
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00:01:33And so pushing the Nasdaq up again, we're
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00:01:36making higher highs here, which are a positive sign for the market.
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00:01:40At the same time, we are coming up to resistance.
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00:01:43And you can see the high from late August there, up there at 380.
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00:01:4783, that's a potential target within the grasp on Monday.
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00:01:52And then above that, you can see that 38
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00:01:562.81 would be our next target above that level if we can take out the August high.
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00:02:02Now, the Nasdaq-100 is market cap weighted.
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00:02:05So Apple and Microsoft make up over 20 % of the value of the Nasdaq-100.
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00:02:11And then if you go down the list, most of
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00:02:13the ones are the ones we look at regularly.
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00:02:16But you see, Broadcom is in there, and
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00:02:18that's a stock we don't take a look at very often.
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00:02:22But there's what Broadcom is looking like at the moment.
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00:02:26Now, at the other end of the
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00:02:28scale, Lucid is the least important stock in the Nasdaq-100.
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00:02:32Its value is or its weighting in the Nasdaq-100 is less than 1%.
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00:02:38So not giving the Lucid group a lot of
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00:02:42ability to move the Nasdaq-100 if it doubled, tripled or whatever, nobody would
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00:02:47really notice except Lucid shareholders, of course.
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00:02:51If we look at the Nasdaq-100 and assume that the majority of the gains are made by
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00:02:58the Magnificent Seven, if we take that away, you can see that if we look at an
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00:03:03equal weighted version of the Nasdaq-100 that hasn't really moved that much over
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00:03:08the last week and certainly has not taken out the October high.
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00:03:12That's if you give every stock in the Nasdaq-100 equal weighting.
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00:03:17Now, the next 100 stocks or the Nasdaq,
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00:03:19let's say 200, is known as the Nasdaq Next Gen ETF.
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00:03:25You can see that it really isn't participating in this week's rally at all.
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00:03:29So once again, it is those big cap tech stocks that everybody's loved in 2023.
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00:03:33That pattern has not changed.
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00:03:36You can also see that in the S&P 500.
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00:03:38If we look at the SPY compared to the equal weighted version of the SPY, the
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00:03:44rest of the S&P 500 isn't really participating at the moment.
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00:03:48And then, of course, we've also pointed
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00:03:50out the fact that the Russell 2000, the microcap stocks are not participating.
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00:03:54And we've also pointed out that in Canada, the small cap and microcap stocks,
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00:03:59again, are not participating in this recent rally.
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00:04:03Now, as I've mentioned before, we're in a
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00:04:05risk-off situation at the moment, and that makes it very, very hard
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00:04:09to make money outside of those big cap tech stocks that everybody loves.
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00:04:13So you can do the best job at stock
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00:04:17picking at the moment and pick out the best stocks in different sectors.
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00:04:21If the market's not interested, they're
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00:04:23not interested and that's just the way it is at the moment.
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00:04:27Now, the VIX is still supportive for higher stock prices.
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00:04:30The VIX is still on a weekly sell signal.
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00:04:32That won't change unless the VIX closes
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00:04:35above $19.47 this coming Friday on a shorter term basis.
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00:04:40If you're trading the market on Monday, we're going to remain short term bullish
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00:04:44on the market as long as the VIX does not close above $17.05 on Monday.
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00:04:49And of course, that upper channel line is going to continue to move lower daily.
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00:04:54Now we've talked about the seasonality of the VIX.
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00:04:56We're in the middle of November right now,
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00:04:58expecting the VIX to continue to move lower into Christmas.
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00:05:02And that would be supportive of a year end rally in the stock market.
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00:05:07If we move on to the Canadian market for
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00:05:09the week, the TSX actually lost money on the week.
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00:05:14What worked?
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00:05:14Well, Infotech worked just like in the US, but the rest of the market, not so much.
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00:05:20Financial services ended the week up a quarter of a %.
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00:05:24Then what didn't work? Gold stocks rolled over.
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00:05:26They're back on a weekly sell signal.
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00:05:28Then we've got materials already on a weekly sell signal.
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00:05:31No change in trend for marijuana stocks and no change in trend for base metals.
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00:05:37Those were all the biggest losers on the TSX for the week.
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00:05:42Energy stocks did come down but did not
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00:05:44generate a sell signal, so we've got a little bit more to go.
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00:05:47If we see energy stocks continue to move
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00:05:50lower this week, we could end the week on a weekly sell signal.
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00:05:54Let's finish off with the five charts the world's watching.
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00:05:57And we've got the US dollar index in the channel.
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00:06:01Once again, it actually ended the week higher.
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00:06:03The euro did something similar, ended the week slightly lower.
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00:06:07So no change in trend for the major currencies this week.
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00:06:10No change in trend for interest rates either.
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00:06:14Bond yields were actually up on the week.
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00:06:16So both currencies and bond yields are
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00:06:18trading in the channel on the weekly charts.
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00:06:21Then looking at the price of crude oil,
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00:06:22we're on our second week of a weekly sell signal right now.
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00:06:26We held $75 at the close.
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00:06:29If that breaks, then $68.
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00:06:3075, and then $62.
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00:06:3250 would be our next targets to the downside for the price of crude oil.
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00:06:37And then last up, we're looking at the
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00:06:38price of gold, which traded down into the channel looking for a close below $1918.
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00:06:4450 this coming Friday to give us a weekly sell signal for gold.
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00:06:49And as we expected, the $2,000 level was
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00:06:51going to act as both mathematical and psychological resistance.
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00:06:55And so far, that $2,000 level has held us in check.
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00:06:59Yes, we traded above it, but we did not break away from it on a weekly basis.
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00:07:05That's a bear sign for the price of gold.
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00:07:09Okay, folks, that is all for this morning's presentation.
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00:07:12Higher highs last week are bullish.
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00:07:15Chip stocks moving up but sharply on Friday, that's bullish.
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00:07:19It is a risk off market, though, so it's very hard to make money in this market as
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00:07:24most of the money is focused on a very small percentage of the stocks.
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00:07:29Falling commodity prices are good for the
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00:07:31US market, but not so helpful for the Canadian market, which is unfortunate.
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00:07:36Okay, folks, it looks like we're going to get a fairly quiet open on Monday morning,
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00:07:40and we may see Monday turn out to be an inside day or a day of indecision.
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00:07:45Enjoy the rest of your Monday, and the
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00:07:47next time you'll hear my voice is on Tuesday morning.