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00:00:00Hello, everyone. It's Stephen Whiteside here from the
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00:00:03uptrend.com with this weekend's edition of Stock Market Timing Television.
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00:00:07Well, it was a holiday shortened week that was negative for the markets.
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00:00:11Let's start off today by doing a little history lesson.
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00:00:15Let's start off doing a little recap of
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00:00:18what's been going on for the past six months.
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00:00:20The market started off making a major low in October, and of course, that's a
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00:00:25seasonal time where you look for a major low.
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00:00:28Then we had a nice run into the end of November, early December,
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00:00:32depending on what symbol you're looking at.
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00:00:34The market was really led higher by a couple of major indices, the TSX 60, which
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00:00:40only has 60 stocks, and the DOW30, which only has 30 stocks.
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00:00:44If you take a broader look at what happened during that time period, yes,
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00:00:48most of the rest of the market was moving up, but not to the same intensity.
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00:00:53The S&P 500 was not able to break out above the summertime lows.
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00:00:58That's also true for the Nasdaq.
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00:01:00Then since that rally started to peter out, you can see we
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00:01:05had a nice decline into the end of the year.
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00:01:08Then at the start of the year, we had a nice run up into the end of January.
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00:01:12In February, we've had trouble and we've
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00:01:14been pulling back over the past couple of weeks.
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00:01:17What's been interesting in this last rally, a lot of the stocks
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00:01:21that didn't participate in the October to December rally started to participate.
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00:01:27They put in some amazing percentage returns.
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00:01:30To see the ARK Innovation ETF go from the low 30s
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00:01:34into the 40s, that's quite a tremendous return on a short term basis.
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00:01:40So for short term traders, this has been quite a time period the start of
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00:01:462023, if you're a long term investor, it really doesn't mean very much
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00:01:50looking at a monthly chart of ARC innovations or to look at Peloton.
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00:01:54I've got a subscriber that rides his Peloton every day and trades it,
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00:01:58and he's learned to trade it both sides, going long and then going short.
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00:02:04And the stocks had a tremendous
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00:02:06run in 2023 to come off the eight dollar level to go all the way up to 17.
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00:02:12That's over 100 % move and normally that would be something to be very proud of.
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00:02:19From a trading point of view, it certainly is.
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00:02:21From a long term investment point of view, there's not a lot to say about the stock.
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00:02:27The stock was up over 160 at one time and now it's trading at $12.
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00:02:32So if you're a long term investor, it hasn't been that great.
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00:02:36But from a short term
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00:02:37trading point of view, the January rally was quite intense.
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00:02:42Now, one of the big standouts in 2023 has been Tesla.
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00:02:46Tesla was a big failure in 2022.
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00:02:49You can see the skid marks across the bottom of the screen.
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00:02:51Here's a bunch of opportunities that failed very quickly.
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00:02:54And then we came down to the $100 level and we were contemplating whether
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00:02:58Tesla would break $100 dollars, but it did not.
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00:03:01And in short order, it came back and has
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00:03:03moved up over 100 % in a very short period of time.
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00:03:07So congratulations to anyone that's trading Tesla on the long side.
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00:03:11You can see the early warning signal up
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00:03:13there, but we haven't really had a lot of fall through to the downside just yet.
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00:03:17And it is certainly a standout against many other stocks in its sector.
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00:03:22Now, I don't know who flipped the switch,
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00:03:24but somebody flipped the switch on January first and took us from risk off to risk
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00:03:28on, which is bizarre because nobody wants to fight the Fed as the Fed
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00:03:32wants us to go into recession to fight inflation.
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00:03:37And there's a bunch of sectors that
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00:03:38traditionally don't do well during a recession, but they did well in January.
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00:03:42So whether you're looking at
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00:03:44financials, whether you're looking at consumer discretionary or retail stocks or
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00:03:49homebuilders, they all had nice runs in January.
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00:03:52They've all started to fade in February,
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00:03:54but they certainly put in some good numbers in January.
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00:03:57And that also includes real estate stocks.
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00:04:01So everybody's starting to fade now.
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00:04:03Who knows how much they're going to fade.
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00:04:04Only time will tell.
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00:04:07Now, one of the things that we've been concerned about is the fact we had those
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00:04:09nice rallies and the DOWtook us up and then stopped.
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00:04:13That's the 34,375 level.
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00:04:16We've come back to support at 32,8,12.50.
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00:04:18We've been here before, and now we're going to see what happens next.
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00:04:23Do we start to take in out those lows from
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00:04:25a couple of months ago, or do we reverse and move higher from here?
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00:04:30TSX 60 moved up to 1250 and then started to pull back.
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00:04:34We were also looking at the Nasdaq, which moved up to 12,500.
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00:04:39This is the Nasdaq 100.
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00:04:41We were watching the Russell 2000 turn back at 2000.
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00:04:45We were watching the SOX index turn back at 3,125.
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00:04:50And then we were looking at microcaps.
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00:04:51And US microcaps peaked
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00:04:53four weeks ago, did not make it to 125, and we've been pulling back ever since.
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00:04:59Now, that peak from four weeks ago is lower than the previous peak.
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00:05:03So that is a bearish sign.
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00:05:05And then a bearish sign for the Canadian market.
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00:05:07The Venture exchange did move up to the
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00:05:09625 level over a month ago and it has been treading water ever since.
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00:05:14So yes, some of the market has
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00:05:16moved up nicely in 2023, and some of the market has not.
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00:05:20But we are looking at those levels of resistance.
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00:05:23We wanted to see, could the market punch through those?
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00:05:26And if they could and start making higher
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00:05:28highs, that would be overall bullish for the market.
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00:05:31Of course, some people want to know why?
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00:05:33Why is all this going on?
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00:05:35There are several markets that are much bigger than the stock market.
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00:05:39And if you start off with currencies, you can see that since the October lows in
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00:05:43the stock market, the US dollar has been falling.
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00:05:46That stopped happening about four weeks ago and we've been moving up ever since.
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00:05:50And the US dollar index is back on a weekly buy signal as of Friday's close.
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00:05:56Of course, with the US dollar moving up, you have other currencies
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00:05:59around the world such as the euro and the Japanese yen moving lower.
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00:06:03Now, another market that's much bigger than the stock market is the bond market.
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00:06:07And you can see it peaked four weeks ago and has been moving down ever since.
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00:06:12Falling bond prices puts pressure on yields and yields have
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00:06:16been moving up over the past couple of weeks.
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00:06:19And that could put pressure on the stock market.
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00:06:21Now, what's interesting, what's happening
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00:06:22right now is the bond yield curve has inverted.
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00:06:27And historically, financial institutions
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00:06:29like longer term 30 year yields to be higher than shorter term yields.
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00:06:35And right now, the yield on the 30 year bond is 3.93 %.
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00:06:41On the 10 year, it's 3.94 %.
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00:06:44And then on the five year, it's 4.21 %.
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00:06:48So when you've got short term yields
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00:06:51rising over long term yields, that's a bond yield inversion.
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00:06:54And historically, when bond yields invert,
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00:06:57it suggests that investors expect weak economic growth and
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00:07:02possibly even a recession, which can lead to lower corporate earnings and
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00:07:06reduced demand for stocks, causing a decline in stock prices.
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00:07:11That's the world we live in right now, and that's probably why stock prices have had
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00:07:15trouble making higher highs over the past few weeks.
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00:07:20Now, moving on to the VIX of the fear index.
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00:07:22It certainly spiked above the upper
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00:07:25channel line this week, but did not close there.
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00:07:27So we're going to remain long term bullish
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00:07:29on the market as long as the VIX does not close above 22.63 this coming Friday.
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00:07:36Now, looking at the daily charts of the
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00:07:37VIX, you can see the 200 day moving average has been acting as resistance.
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00:07:42And unless the VIX can get up and over
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00:07:44that, the the decline in the stock market may come to an end soon.
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00:07:48Now, we are watching the VIX trade above
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00:07:502,188, but on Thursday and Friday, it came back and closed below that level.
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00:07:55And we're sitting right at the upper channel line as of the close on Friday.
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00:08:00Things would change on Monday
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00:08:02if the VIX were to close below $20.05. If that doesn't happen on Monday,
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00:08:07of course, that lower channel line is going to continue to move higher daily.
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00:08:11Now, looking at a daily chart of the S&P 500, we made a new low on Friday.
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00:08:15We're not only on a right side sell signal, but we're also on a mid term sell
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00:08:20signal for the S&P 500, and we're starting to trade below all the moving averages.
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00:08:25The 200 day moving average is no longer acting as support, and we are hanging on
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00:08:30to the 100 day moving average at the present time and projecting lower prices.
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00:08:36Looking at the weekly panic zone chart for
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00:08:38the S&P 500, you can see we've got an early warning signal up there.
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00:08:42So we're anticipating
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00:08:44lower prices right now based on that off that early warning signal.
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00:08:48And we traded down into the channel.
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00:08:50So a close below this week's low this
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00:08:54coming Friday would give us a weekly sell signal.
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00:08:56That's also true for the Canadian market.
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00:08:58Looking at the TSX it too traded down to the lower channel line.
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00:09:02So a close below this week's low
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00:09:05coming up this Friday would give us a new weekly sell signal.
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00:09:08That's also true for the TSX 60.
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00:09:12Now, a couple of weeks ago, I mentioned that there was four stocks I was watching
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00:09:16closely, and three of the four actually made new lows for this move on Friday.
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00:09:22Apple has filled that open gap, so that open gap is no longer in play.
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00:09:26There's the new low on Friday.
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00:09:28Certainly recovered going into the close.
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00:09:30We made a new low for Microsoft, a new low for Shopify on Friday,
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00:09:36and this gap looks like it's been filled as of Friday's close.
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00:09:41Then we've got Tesla. Tesla is still holding up.
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00:09:43It traded below the lower channel line on Friday but did not close below it.
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00:09:47On Monday, we're looking for a close below 194.43. Now, one interesting thing that
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00:09:53happened during the week, we saw NVIDIApop on Thursday.
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00:09:58I mentioned that I wouldn't chase that.
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00:09:59In fact, I'd probably fade it if I was trading NVIDIA.
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00:10:03It did pull back on Friday.
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00:10:06The chip sector certainly got a pop on
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00:10:08Thursday, but you can see AMD faded that on Friday.
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00:10:13And we saw Intel, which actually closed up on Thursday, but then made a new low
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00:10:17and is now breaking down below the December lows.
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00:10:21So that big up move for NVIDIA on Thursday
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00:10:24really didn't help the market on a long term basis.
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00:10:27Now, let's finish off with commodity prices.
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00:10:30We saw copper pulled back 4 % on the week.
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00:10:33So an outside reversal week for copper.
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00:10:35Still on a buy signal here, no change in trend.
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00:10:39Gold continued to move lower, down 1.8 %.
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00:10:43We see the bearish reversal signal a
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00:10:44couple of weeks ago, marking the high, and we've pulled back down to support at 18
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00:10:4912.50. Lots of history of support at this level over the past year or two.
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00:10:55And then if that breaks, you can see that
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00:10:58back last summer, the 1750 level did act as support.
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00:11:02So certainly a legitimate target to the downside.
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00:11:05Now, we've been talking about the fact
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00:11:06that silver has been leading the markets lower.
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00:11:09And once again, it was down more than gold, down 4.53 %.
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00:11:14It's broken down below 2187.50 heading towards 1875.
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00:11:19And then looking at the energy sector, crude oil not doing anything, the pros not
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00:11:23doing anything, and natural gas might have made a significant low this week.
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00:11:28We had a bullish reversal signal.
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00:11:30The pros have not...
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00:11:32They're not close to taking control.
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00:11:34But when you look at this, you've got to
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00:11:36assume that the pros are probably not aggressively selling any longer, and they
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00:11:41may be getting ready to start to accumulate.
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00:11:43And then, of course, when they do, we look for a nice up move in natural gas.
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00:11:48So that could happen over the next few weeks.
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00:11:52Okay, folks, that is all for this weekend's presentation.
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00:11:55A lot of people want to be very bullish on the stock market.
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00:11:58The Fed is trading against against us, the
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00:12:00currencies are trading against us, and the bonds are trading against us.
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00:12:05So I'm not sure what percentage chance the market could move higher from here.
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00:12:12I think we have to go down before we go up.
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00:12:15And previously, we looked at the seasonality of the VIX, which is to move
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00:12:20higher from this particular time, and that could
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00:12:24put some weight against the stock market moving up over the next month.
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00:12:28Enjoy the rest of your weekend.
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00:12:30The next time you'll hear my voice is on Tuesday morning.