Monday Market Outlook 02122024

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Good morning, everyone.

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Welcome to Monday morning.

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It's Stephen Whiteside here from theuptrend.

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com.

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In the pre-market this morning, things are fairly quiet.

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We have stock index futures trading right around fair value.

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Commodities are trading lower with both

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gold and crude oil, down in the pre-market on Monday morning.

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We have no major economic numbers coming out today, so it's all about people

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getting over their hangovers from Sunday night's football game.

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Now, last week, the S&P 500 was finally

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able to close above 5,000, and did the week above that level.

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Hasn't broken away from 5,000 just yet, but it's still looking very bullish.

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Now, while the stock market is making all-time highs, you'd think the VIX would

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be making all-time lows, but that is not the case.

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We are still on a weekly sell signal here that's supportive for higher stock prices.

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That would change this coming Friday if we were to close above 14.

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80. Now, looking at a daily chart of the VIX,

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we're still on a sell signal here that's supportive for higher stock prices.

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Things would change on Monday today if the VIX were to close above 13.

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88.

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Now, if we stand back a bit, we can see that the VIX was able to head up over 15

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in January, and the market really didn't seem to be too concerned about that.

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We did not have a major sell-off in January, so we're really looking for a

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breakout above 15 to tell us that the market is really concerned about the

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prospects for the stock market going forward.

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Now, you may have seen or heard a headline

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like this over the past week, and we are in a unique period for the stock market.

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If we go back to October, we were looking for a seasonal low.

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We are looking for a move up into a

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Christmas rally, and then we weren't looking for much more than that.

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The market has surprised everybody and

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continued that Christmas rally into the new year.

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Here we are halfway through February, and we're still making higher highs.

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We haven't seen that in quite a while.

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Here's the rally that they're talking about in 1972.

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Now, we did not peak at that point in March of '72.

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If we look at a monthly chart here, we actually peaked later in the year.

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But once we peaked, we had a huge sell-off

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over the next couple of years, and we lost about 50% of the market's value.

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Now, I'm using a monthly chart here

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because I just wanted to show you another historical event, and that was the fact

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that it took 10 years to get back to where we were in late 1972.

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That is also another piece of history that people may not be talking about.

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It's one thing to talk about the major rally.

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It's another thing to talk about the major decline that happened afterwards.

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Now, a lot of people are talking about the

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Dot Com Bubble and looking at a potential AI bubble that's going on right now.

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And there are a lot of stocks doing really well at the moment.

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There are a handful of mega cap stocks

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that are also doing very well at the moment.

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So we've got Meta, we've got Microsoft, and of course, we've got NVIDIA.

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It's significant to watch these because they are huge, huge companies.

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It's not the fact that we've got a lot of

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companies doing well, it's that we've got these mega caps.

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Now, a year ago, it would have been Apple and Tesla that we would have been focused

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on, but they're not really in play in 2024.

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Now, if we go back to 2000 and look at that dot com bubble.

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Now, if NVIDIA is the backbone of the AI revolution, back in 2000, Cisco was the

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backbone of the Internet revolution, and technically it still is.

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All those data centers have Cisco equipment running them in the background.

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Now, Cisco eventually became a

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member of the Dow 30, so it is still a huge global company.

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Back in 2000, it peaked at a little over

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$80, and then over the next couple of years, it gave up everything.

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You go from a $10 stock to an $80 stock,

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you're doing pretty good, then you give it all up.

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Then Akamai, probably the start of the cloud computing revolution.

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This is a daily chart of Akamai.

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It was an IPO.

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I remember it coming out just like it was yesterday.

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It got as high as $344. 87.

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Then over the next couple of years, once the bubble burst, it gave up all of that

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and basically became a penny stock before recovering.

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Now, Yahoo, back in 2000, was the Google of its day, and it got as high as $125.

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03. And then over the next couple of years,

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after the bubble burst, we gave up all that, and it got down under $5 eventually.

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So history doesn't repeat itself, but it often rimes.

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And so we could see a AI bubble burst at some point.

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For that to happen, first of all, we need daily sell signals that turn into weekly

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sell signals that turn into monthly sell signals.

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That's when a bubble burst coming into Monday's trading action, We

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don't have daily sell signal, so nothing really to worry about on Monday morning.

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Now, looking at a weekly chart of the Dow

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Diamond, so we made a new closing high last week.

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A new closing high for the S&P 500 for the

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Nasdaq 100, even though equal related Nasdaq made a new high, and the next

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generation Nasdaq also made a new high last week.

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Who didn't make a new high?

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Well, iShares for the TSX-60 made a new

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high on the previous week and then pulled back ever so slightly last week.

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So No concern there.

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We're still closing above the upper channel line.

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Now, looking at the winners and losers for the week, it was the chip sector was the

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big winner, followed by biotechs, pharmaceuticals, and then the

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biggest winner in the Canadian market was the energy sector.

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But as you can see, we're not expecting a weekly change in trend this week.

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What didn't work?

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Well, anything that you mine basically got hit hard last week.

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Canadian gold stocks were the biggest

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losers, followed by the GDX followed by silver miners, followed by copper miners.

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So any ETF that was mining related, materials related, got hit hard last week.

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So no change in trend there.

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Now, looking at the world of commodities,

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we had crude oil move up last week and it's still on a buy signal here.

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No change in trend.

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We saw gasoline move higher, up over nine % on the week.

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At the same time, we had natural gas drop over 11 % on the week.

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So no change in trend for either of those two.

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The GLD pulled back.

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It's still on a buy signal here.

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Things would change this coming Friday if the GLD were to close below $185.

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84.

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No joy for Palladium making a new low.

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We saw platinum pull back.

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We saw silver close slightly lower on the week.

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No change in trend.

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We're still on a sell signal for silver.

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Now, somebody was asking me about

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commodity ETFs, and I haven't really explored them too much.

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We took a look at several that are on sell signals right now.

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Then there's one that's on a buy signal at

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the moment, and we were wondering what the differences were between those.

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When you look at this particular ETF, so we're looking at the GSG, it says it's a

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commodity ETF that doesn't actually own any commodities.

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It looks like all it owns at the moment is treasury bills.

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So that's a bit strange.

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I'm not sure how that exactly works, but I certainly wouldn't want to be using that

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to track the world of commodities at this time.

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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 a fairly quiet open on Monday.

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Let's see if the S&P 500 can hold 5,000 throughout the week.

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Have a great day, folks.

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Next time you'll hear my voice is on Tuesday morning, and at that time, we'll

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take a closer look at the Canadian stock market.

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