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00:00:00Good morning everyone. Welcome to Wednesday morning.
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00:00:03It's Stephen Whiteside here from
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00:00:05theuptrend.com. Well, yesterday was an interesting day.
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00:00:08We saw the fear index rise.
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00:00:10It settled just on the edge of the upper
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00:00:13channel line, so any higher close would give us a buy signal.
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00:00:16Of course, a buy signal for the VIX is negative for stocks.
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00:00:20US dollar index closed in the channel yesterday.
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00:00:23Then we saw bond prices.
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00:00:24We saw a new closing high for the 30 year bond.
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00:00:27So the bond traders are putting downward pressure on interest rates.
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00:00:32And it's the yield curve that's hurting the financial stocks at the moment.
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00:00:37Looking at gold, gold held steady on Tuesday, looking for a close blow.
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00:00:421766.09 on Wednesday to give us a buy signal for gold stocks.
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00:00:48So far in the pre market, it's holding up fairly well.
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00:00:51Then we've got crude oil coming down to
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00:00:52last week's low, putting in a new closing low for this move.
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00:00:56If we take out last week's low, then 68.
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00:00:5875 is our next target.
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00:01:00And then we saw natural gas continue to move lower on Tuesday.
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00:01:05Now for the past month or so, we've been calling this rally a Risk Off trade,
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00:01:09certainly not the start of a new bull market or the end of the current bear
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00:01:13market, which will probably end sometime next year.
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00:01:17We saw the Dow poked its head out above the August highs.
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00:01:21Everybody got excited and that brought in the last of the retail investors.
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00:01:26And now we're starting to move back down.
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00:01:28We were able to poke out above the Flypaper Channel again, the Dow 30 stocks.
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00:01:34They have a certain profile, they're global institutions for the most part.
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00:01:39They're able to take advantage of currency
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00:01:42fluctuations, they're able to move money around the world.
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00:01:45And for the most part, Dow 30 stocks don't really pay a lot in taxes.
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00:01:49And so they are the least risky stocks on
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00:01:52the stock market, no matter what sector you're looking in.
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00:01:55And that's why people plowed into them.
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00:01:58They are now back on a sell signal as of Friday's close.
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00:02:01So the big pop that we saw last week off
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00:02:06the Fed speech, that faded fairly quickly as expected.
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00:02:10And so here we are back on the sell side of the market.
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00:02:13Now the S&P 500, of course a much broader take on the stock market.
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00:02:18It includes the Dow 30 stocks, but there's
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00:02:21a lot of other stocks and sectors in the S&P 500 that you don't find in the Dow.
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00:02:26And the S&P 500 did not get anywhere near the August highs last week.
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00:02:32We saw the gap get filled and then the
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00:02:36S&P 500 started to retreat from that point.
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00:02:38And here we are back on a sell signal.
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00:02:41Now if you were watching the market commentary last week, a lot of people got
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00:02:45very excited that the S&P 5 had started to trade above the 200 day moving average.
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00:02:51I looked at it and said, yeah, that's totally true.
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00:02:55We have started to trade and close above
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00:02:57the 200 day moving average, but what we didn't do was break away from it.
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00:03:02And that's also true for our price target of 406.25. We closed above it, we traded
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00:03:07above it, but we didn't break away from it.
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00:03:10And so once that open gap filled, I think
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00:03:12that was the last thing that the market wanted to do.
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00:03:15And then it started to reverse.
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00:03:17Now we are holding support.
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00:03:18We did not hit 393.63 yesterday.
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00:03:22We traded down to just a dollar and one penny above that level.
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00:03:27If we break down below that, our next mathematical target is 375.
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00:03:32But there's a nice big open gap there that could potentially act as not only a price
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00:03:37magnetic pulls down, but it could be a potential area of support.
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00:03:40We'll just have to wait and see how that works out.
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00:03:43Now the Nasdaq 100 rolled over yesterday's, back on a sell signal.
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00:03:47Now remember last week we had a sell signal and then the Fed chairman came out
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00:03:52and spoke and I said you should probably sit on your hands and wait and see if we
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00:03:56get any fall through to the upside, which we really didn't.
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00:03:59In fact, the next couple of days were lower volume than this big update.
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00:04:03So that was just a shortcovering day.
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00:04:06No new money came into the market and now we've rolled over once again.
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00:04:11Now stepping back, looking at the big
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00:04:13picture, I've been calling this a risk off trade.
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00:04:15Well, one of the reasons it's a risk off trade is a the Dow led us higher, but we
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00:04:21didn't get a lot of participation from the riskiest end of the market.
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00:04:26So whether you're looking at the Nasdaq 100 with all those tech and biotech stocks
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00:04:31or you look at the broader Nasdaq Composite Index which has approximately
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00:04:363700 companies in it, neither one really participated in this recent rally and
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00:04:42certainly got nowhere near those August highs.
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00:04:45So for a bear market to end and a bull
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00:04:48market to start, you really need participation from these 3700 companies.
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00:04:54And until investors are willing to go and
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00:04:56do the research and look at these companies and look for opportunities and
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00:05:01put money into those opportunities, this bear market is not going to end.
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00:05:07Now, one sub sector of the Nasdaq that I was excited about was the chip sector.
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00:05:12Of course, on the news that Warren Buffett had made that big investment in Taiwan
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00:05:16Semiconductor, that attracted a lot of money.
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00:05:18We were able to move up above the Flypaper Channel, but unfortunately we've been
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00:05:24trading sideways ever since and so no continued upward momentum.
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00:05:29If you're bullish, it looks like people
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00:05:32have been accumulating chip stocks up in this level.
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00:05:37If you're bearish, it looks like distribution, it looks like people have
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00:05:41been unloading their chip stocks up at this level.
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00:05:44What's going to be interesting to watch is if we continue to move lower from here.
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00:05:49Does the stocks index go with us?
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00:05:51And do we break down below the flypaper channel?
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00:05:55We'll just have to wait and see.
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00:05:57Now, looking at the Canadian market, just like the Dow, the TSX and the TSX 60 was
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00:06:01able to trade above the August highs, but not break away from them.
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00:06:04Here we are, we are coming back down.
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00:06:07We're back on a sell signal as of Tuesday's close.
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00:06:10Now, just like in the US.
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00:06:12Canada has its own version of the Nasdaq Composite, and that is the TSX Venture
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00:06:18Composite Index, which has about 400 microcap small cap microcap stocks.
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00:06:23And as you can see, it did not participate in the recent rally, even when we had that
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00:06:29nice rally in the TSX and the TSX 60 over the past month.
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00:06:33So you're going to need to see these type
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00:06:36of stocks start moving up with the rest of the market or even leading the market up
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00:06:41before a bear market is going to end and a bull market is going to start.
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00:06:47Now, I've been watching the energy sector closely.
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00:06:49Of course, in 2022, this has been the strongest sector.
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00:06:52What led us up may lead us down.
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00:06:54And as you can see for Canadian energy
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00:06:58stocks, they broke down below the recent low.
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00:07:00That is also true in the US.
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00:07:02And so we're seeing people unload their energy stocks right now, whether this
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00:07:07continues or not for any length of time, we'll just have to wait and see.
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00:07:11Now, looking at bank stocks, and we talked about the US.
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00:07:15Bank stocks recently, and it looks like a total mess.
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00:07:18And US.
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00:07:19Bank stocks are being led lower from by bank of America.
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00:07:23Looking at Canadian bank stocks, they're holding up a little better still on a sell
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00:07:27signal, though, being led lower by the CIBC.
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00:07:31Now, oddly enough, with its huge US.
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00:07:33Exposure, the TD Bank is still on a buy
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00:07:36signal that would change on Wednesday with a closed blow.
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00:07:3989. 84.
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00:07:41Last up, apple.
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00:07:42Apple looks like it put in a lower high on Monday.
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00:07:47So you've got a high, got a lower high lower high, lower high, lower high.
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00:07:51That's a very bearish chart that will be
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00:07:54confirmed if we start breaking down below this recent low here at 140.
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00:07:57And then, of course, we've got the lows from November as a potential target to the
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00:08:02downside for Apple, but Apple's not looking very bullish right now.
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00:08:06And then Tesla, tesla is back on a sell signal as of Tuesday's close.
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00:08:11Tesla's, another stock that popped last week on that Fed speech, and it fizzled
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00:08:17out fairly quickly, as many other stocks did as well.
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00:08:22Okay, folks, that is all for Wednesday morning.
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00:08:26Next time you'll hear my voices on
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00:08:27Thursday morning, have a great day and we'll talk to you again soon.