Morning Market Outlook 01032024

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Good morning, everyone, and welcome to Wednesday morning.
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It's Stephen Whiteside here from theuptrend.com.
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In the pre-market this morning, stock
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index futures are down across the board, so so far it looks like we're going to see
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some selling at the open on Wednesday morning.
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Now, the first trading day of 2024 has
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come and gone and it was a pretty cloudy day.
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We saw a big move up in the US dollar index, which can be negative for stocks.
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We saw bonds selling off yesterday, which of course, can be negative for stocks.
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So so far, things are not looking very good.
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Now, crude oil was down yesterday.
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That's good for the economy, but not necessarily good for investors.
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While natural gas traded higher, gold was fairly stable yesterday.
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It's down $16 in the premarket this morning.
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That's not a good sign.
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Gold is chasing silver already back on a daily sell signal.
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Now, the DOW was able to hold its own on Tuesday.
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That had a lot to do with one sector of the market, and that is US Health Care,
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which was the best performer in North America on Tuesday.
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You can see a couple of the DOW 30 stocks
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led the healthcare sector higher, which was Merck and Amgen.
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Then we also have a couple of stocks that
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all of these stocks are in the S&P 500, some Moderna and Viatris.
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Viatris is up over 5% on the day.
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If you own any of these stocks and you haven't been systematically taking money
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off the table, Wednesday would be a good day to lock in some profits.
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But again, there is no reason to completely liquidate a position.
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There's nothing wrong with selling into
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strength, and we certainly had strength on Tuesday.
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Now, the VIX for the S&P 500 is pretty close to a buy signal right now.
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It certainly traded through the upper channel line yesterday.
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It traded right up to the tether line on the midterm chart.
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So that's looking like options traders are getting a little nervous at the moment.
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We did not get a sell signal in the S&P 500 on Tuesday.
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That would happen on Wednesday with a
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close below 471.08. Now, the VIX for the Nasdaq, a
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little more elevated already on a buy signal.
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And we saw the Nasdaq 100 roll over yesterday.
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Remember coming into this week, we had a
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lot of window dressing, a lot of panic buying over the last couple of weeks, and
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now we're seeing those people unwind those positions.
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They don't need them anymore.
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We're seeing some selling, whether that continues or not is another story yet to
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be written, but we'll just have to take the signals as they come.
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The biggest loser on the Nasdaq 100
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yesterday was MongoDB, which was down over 6% on the day, and then followed by
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Advanced Micro Devices, which was down nearly 6% on the day.
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But I think the biggest drag was probably
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those Magnificent Seven stocks, and we had a gap lower for Apple.
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That you don't see very often, and then
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the rest of the Magnificent Seven, most of them generated sell signals.
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We're looking at Amazon, we're looking at
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Meta, Microsoft, Nvidia, and then Shopify on both sides of the border, back on a
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sell signal, joining Tesla already on a sell signal.
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Looking at the Canadian market, the ice price for the TSX 60 had a fairly quiet
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day, closing down just nine cents on the day.
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On Wednesday, we're looking for a close
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below $31.59 to give us a new sell signal for the iShares for the TSX 60.
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What worked on the TSX?
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Well, the energy sector was up on the day, but as you can see, we're in the channel,
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so we're not trending at the moment, even though we're on a buy signal.
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We do have an open gap above the recent
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high that could act as resistance going forward.
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And so far, it does not look like the pros are interested in taking control.
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Yes, we're on a buy signal, but we're in
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the channel, which is not trending and the pros have not taken control.
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That's not looking like it's going to work out.
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What worked?
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Well, First, Quantum was the biggest winner on the TSX.
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Of course, this is a very High Risk stock.
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It is on a buy signal right now.
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The pros are starting to take control.
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We hit our next price target of 12.50.
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15.63 and 18.75 are the next two targets to the upside.
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If we look at the Fly Paper Channel, you
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can see it's up at $20, but it is coming down daily.
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So it is going to intersect with that 18.75 level over the next few days.
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So that is the opportunity.
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But remember, it is a very high risk opportunity.
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This company is one press release away from being a zero.
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Then looking at what didn't work.
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Well, Brookfield was a big loser yesterday.
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It is still on a buy signal that would change on Wednesday with a close below 5
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1.70. Then we've got Open Text back on a sell signal.
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We had a big down day for Lightspeed trading down to the lower channel line.
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So a close below $25.53 would give us a sell signal on Wednesday.
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Then Nuvei is back on a sell signal as of Tuesday's close.
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Now last up this morning, looking at the
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biggest Canadian stock, which is the Royal Bank.
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We've had several early warning signals up there.
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It still hasn't moved much.
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It was only down to five cents yesterday.
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We're looking for a close below 131.78 on
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Wednesday to give us a sell signal for the Royal Bank.
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The pros don't look like they want to give up control at the moment.
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We hit the 134.38 level a couple of weeks ago, and now we're looking at our next
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price target, which is 137.50, which is also our next weekly target.
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You can see that we got a little higher than that back at the start of 2023.
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A year ago, we were up at that level.
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The Royal Bank might want to stretch up to
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the 137.50 level before starting to pull back.
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But so far, coming into Wednesday's
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trading action, we don't really have anything to be concerned about.
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Okay, folks, that is all for this morning's presentation.
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So far, it looks like we're going to see
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some selling at the open on Wednesday morning.
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We came into this week very overbought, and we certainly had some panic buying in
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late December, and we need to work that off.
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Whether that turns into a longer term downtrend is yet to be determined.
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But so far from Tuesday's trading action,
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we did generate a lot of daily sell signals.
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Enjoy the rest of your day.
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Next time you'll hear my voice is on Wednesday morning.

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