Canadian Stock Market Trends - Weekend Edition 07232023

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Hello, everyone.

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It's Stephen Whiteside here from theuptrend.

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com with this weekend's edition of Stock

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Market Timing Television, the Canadian edition.

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Let's start off this weekend's

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presentation looking at a couple of daily charts.

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The TSX certainly ended the week on a

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bullish note, we are coming up to not only our next daily target of 20,625.

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This was a major area of resistance back in April and into May,

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and you can see that this week's activity actually generated a weekly buy signal.

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I wouldn't be too excited about taking it.

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As I mentioned, we're coming up to the next daily and weekly price target, and

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that level has held us in check all through 2023.

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It looks like we might be coming to the end of the summer rally, and we'll look at

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that in a little more detail in a few minutes.

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If we can take out the 2023 highs and

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let's say that commodity started to push higher, then

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we're looking at an opportunity to move up to 21,875.

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And as you can see, that's where we peaked out in early 2022.

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Let's move from daily and weekly charts to some monthly charts.

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And if you're feeling like things aren't

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going well in 2023, that is certainly true for the average investor.

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The TSX is only up 6 % so far this year.

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And you can see by looking at the monthly

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chart, we're not really trending on a long term basis.

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It's still bullish, but we're really not going anywhere.

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The DOW is just up 6.28 %, so the average

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Canadian, the average US investor, not really feeling the love this year.

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When we look at the TSX 60, we're looking at gains a little less than the overall

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TSX at 5.57 % so far, and you can see we're still in the channel.

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Now, when we look at midcap stocks, so you

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take the TSX composite, you take out the TSX 60, the stocks you're left with

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have been performing better than the overall market, up 7.81 %.

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Then looking at small cap stocks, we're up just under 3 % for the year.

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Then looking at the microcap stocks in the Venture Exchange, we're up 8.13 %.

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No love here.

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We're still on a monthly sell signal.

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And as you can see from the peak to the

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trough, which was about a 50 % decline, we really haven't recovered that much.

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Now, what's been working?

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Well, InfoTech technology, Big Cap

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technology stocks have done very well in 2023.

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So far, the TSX Information Technology index is up over 40 % so far.

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A lot of that has to do with Shopify, not

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the only winner in this index, but certainly when you look at the market cap

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of Shopify compared to some of the Bitcoin stocks which have done incredibly well in

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2023, we're looking at Shopify, we're up over 84 % for the year so far.

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Now, the Nasdaq 100 is up over 41 %,

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and of course, we're looking at the Nasdaq 100 here.

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The Nasdaq composite, which has over 2,500 stocks, is up over 34 %.

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In both cases, a lot of the gains come from a handful of big cap stocks,

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including NVIDIA, which is up over 200 % so far this year.

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We've got Meta up over 144 % and then Tesla up over 111 %.

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Now, Meta and Tesla ended the week with bearish reversal signals.

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This is a possible time and place where

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the summer rally could be coming to an end.

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Now, Tesla has had a couple of has had a

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previous bearish reversal signal a couple of weeks ago.

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You can see the Pros are starting to give up control.

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They have not abandoned buying Tesla, but they are certainly giving up control.

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Previously, when we had bearish reversal

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signals, it marked the top for these particular moves in

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Tesla, and that could be the case, right, that this is starting right now.

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Once again, that the next leg down for Tesla has started.

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Of course, if Meta and Tesla are putting

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in bearish reversal signals, we're also seeing the Nasdaq 100 put in a

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bearish reversal signal and semiconductors put in a bearish reversal signal.

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I think the summer rally is coming to an end right now.

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We'll just have to wait and see if that is true.

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We certainly don't have a lot of weekly sell signals to deal with.

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Now, one of the reasons I think the summer rally is coming to an end for the TSX

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itself, if we look at the percentage of stocks currently trading above the 20 day

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moving average, you can see that this index is up at the top of the range here,

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and this is where things start to slow down.

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If we overlay the TSX itself

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over the index, you can see in this particular example where the index peaked

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and then it took a couple of weeks for the actual TSX to peak.

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That's also true here.

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Took another week or so before the TSX peak.

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But it's very hard for a market to continue to move higher from here.

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It certainly does not guarantee that all sectors are going to pull back.

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We could see gold or crude oil spike up

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this week and take the energy sector higher or the gold sector higher.

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There's not a guarantee that

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all the market is going to turn around, but it's usually what happens.

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And if you've been with me for any length

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of time, I always say that the air is getting pretty thin up here.

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It's just harder to make money up at these levels.

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You're probably not going to see the

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overall market to be able to move much higher from here at this present time.

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Now, when the index is down below 20, of

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course, that's when we look at low risk opportunities.

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When it's above 80, that's when we consider the market to be high risk.

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Again, no guarantees, we could continue to move higher for the next week or so.

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It's not a complete...

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The fact that you get to point A, something happens.

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It's just general indication that the air is getting thin.

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It's going to be harder to make money in

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the overall market for the next couple of weeks.

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Now, the only thing that can really help

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the Canadian market right now is commodity prices.

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And if we look at copper, we saw copper pulled back into the channel this week.

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Copper had an inside week or a week of indecision.

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With copper trading higher over the past

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couple of weeks, the Pros have not taken control on the weekly chart, so I don't

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have a lot of hope for copper at the present time.

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Similar situation for gold.

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Gold is still trading in the channel, so we have not seen a buy signal.

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We need to close above last week's high

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this week to give us a new weekly buy signal for the price of gold.

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The Pros have turned around, but they

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still have not taken control, unlike silver.

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Now, silver has been on a buy signal for the past two weeks.

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It's having trouble up here.

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It's put in a bearish reversal signal.

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It closed below 25.

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The Pros have taken control.

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They've been in control for a while now, but really not going anywhere.

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We were hoping we could start moving up above 25 and take a run at the highs from

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a couple of months ago, but that isn't what's happening.

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Now, a lot of people are looking at the fact that this is a very bullish chart.

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You can see we made a higher low here, then a higher low, then a higher low.

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We made a higher high, higher high.

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And so this channel is looking very bullish to a lot of people.

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But we're looking at price targets, and

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so far, $25 has been a roadblock for the price of silver.

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Hopefully, if we can start moving higher from here and continue, 28.12 would be our

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next target if we can take out the highs from back in April.

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Then looking at the energy sector, crude oil was up on the week.

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Moving from a weekly chart to a daily

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chart, you can see we're stuck at the 200 day moving average.

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That does not guarantee

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that the market is going to reverse here, but we had trouble dealing with the 200

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day moving average back in April, and so far that's held us in check.

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If we can continue higher from here, then 78.13 is certainly a legitimate target.

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That's where we peaked out back in April, just above that level.

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And then if we can take out the highs from April, then 81.25 would certainly be a

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reasonable target to the upside for the price of oil.

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Now, looking at natural gas, we've been building a base for a long time here.

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We're still trading in the channel.

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We need another close this Friday above

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2.76. You can see the Pros are getting very close to taking control.

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Last time they took control is back here,

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and you can see that natural gas took off like a rocket.

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If we start continuing to move higher from

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here, then 4.69 would certainly be a legitimate target.

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That doesn't seem like a lot, but that would be about a 70 % increase from where

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we are right now if natural gas can continue to move higher from here.

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With the heat waves going across the world at the moment, you would imagine that

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natural gas is in high demand at the moment.

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I know supply is high, but demand is also high at the same time.

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Now, lumber isn't as important to the

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Canadian stock market as it used to be, but you can see we had an inside week.

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We're still on a weekly sell signal here right down at the 2023 lows.

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And you've probably heard a lot about the

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price of wheat with what's going on with Russia and Ukraine.

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Yeah, we're up over 5 % on the week, but

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we didn't take out the high from four weeks ago.

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So nothing exciting going on for wheat.

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We're still on a weekly buy signal here, no change in trend.

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Now, the Fed is...

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We're coming up to another Fed meeting.

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Everybody's expecting the Fed to raise interest rates.

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Once again, they're trying to fight inflation and you can see the price of

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gasoline is starting to break out heading towards the highs from early 2022.

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And so if we're trying to fight inflation, gasoline would be a great place to start.

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And that's not working out so well right now.

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Let's finish off looking at the fear index and looking at a weekly chart of the VIX.

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Fairly quiet trading this week, inside week for the VIX.

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Long term investors can remain bullish on

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the stock market as long as the VIX does not close above $16.79 this coming Friday.

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Now, if you're a short term investor or trader, short term investors can remain

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bullish on the stock market as long as the VIX does not close above $14.27 on Monday.

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Now, the upper channel line is pretty flat right now, so that number, you could

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probably use that number for most of this week.

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Heads will turn, the talking heads will

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turn if we start to break out, if the VIX starts to break out above 18 dollars.

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And you can see back earlier in the year, we had a couple of runs at breaking out

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above the fly paper channel, that didn't work.

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We recently ran up to the bottom of the fly paper channel and that reversed.

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So the market is pretty comfortable with

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the VIX trading below the top of the fly paper channel.

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If we start to poke out above it, that's when investors are going to get very, very

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nervous about the direction of the stock market.

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And we're certainly not there.

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We're down at a recent low.

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So this is what we need to look for.

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It's not what's happening yet.

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The VIX is on a weekly and a daily sell

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signal that is still bullish for the market.

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We saw reversal signals in the market on Friday and this week, and we'll need to

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see if there's follow through to the downside.

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If there's follow through to the downside, the downside and the VIX starts to move

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up, then we'll start to get bearish on the stock market.

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Enjoy the rest of your weekend.

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Next time you'll hear my voice is on Tuesday morning.

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