Stock Market Trends - Weekend Edition 09042023

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Hello, everyone.

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It's Stephen Whiteside here from

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theuptrend.com with this weekend's edition of Stock Market Timing Television.

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Well, the weekend did pretty much as we expected.

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We were coming into a long weekend.

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We were coming into month end.

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Both of those traditionally have a bullish

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bias to them, and that's exactly what happened this week.

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Now, coming into

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September, well, September is historically not the best month of the year.

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Historically, no matter who's data you

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look at, September is going to turn out to be the worst month of the year.

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Whether you're looking at the 40 years,

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whether you're looking at '54 to 2013, or you're looking at the last 100, the last

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50, or the last 20 years, all of them tell us to expect volatility

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to expand dramatically in the month of September.

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Now, knowing that about the month of

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September, you'd think I would just tell you to run for the hills or short the

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market on the first trading day of the week, but that's not the case.

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We need to be flexible and anticipate that the market could go either way.

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As we're coming into the first trading week of September, things are looking

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pretty bullish at the moment, so there's no reason to get ahead of the market.

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If you're not an active trader and you're

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not willing to short the market or try to take advantage when the market moves down

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buying the bear ETFs, then I'd advise sitting on your hands for

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the next 60 days and wait till we get past September and October.

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The sell-and-may-go-away crowd, the

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reason that that investment strategy works over time is specifically because people

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miss all of the volatility in September and October.

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If you're not willing to go both ways, if

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you're not willing to take a sell signal when it comes up, then it's probably best

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if you just sit on your hands for the time being.

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Now, fear continues to fall.

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It has fallen for the last two weeks.

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The weekly VIX is back on a sell signal as a Friday's close.

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The daily VIX has been on a cell signal for over a week now and came down and made

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a new closing low on Friday sitting just above the 12.50 level.

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We closed at 13:09.

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Now, if we go back in time, we can see that the 200-day moving average

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acted as resistance and that held the market in check.

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If the market is going to make a major

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move to the downside, we need the VIX out above the 200-day moving average.

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Now, last time we were down the levels

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we're seeing right now was back in late July.

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What happened then?

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Well, you can see the S&P 500 peaked right around that point.

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It is certainly possible, even though

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we're projecting lower prices for the VIX and we're projecting higher prices for the

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S&P 500, this could be the time and place that the

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market wants to take a break and pull back.

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Pulling back does not mean or guarantee making lower lows.

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It just means that the market might want

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to take a break for a few days or a few weeks.

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Now, moving on to a weekly index chart, starting with the iShares for the TSX60.

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We had a big move up this week, up nearly 4%.

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It looks like 29.69 is acting as support right now as expected.

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Now, we're looking to see if we can take

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out 31.25, which is big been a big area of resistance during the year 2023.

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Now, if we can take out 31.25, then

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certainly a move back up to the highs from early 2022, up there at

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3203 would certainly come into play, but we're not there just yet.

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Now, of course, the energy sector has been holding up both sides of the market this

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year, whether you're looking at the TSX or the S&P 500.

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Here we are up at the previous high, so we

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could continue to move a lot higher from here.

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Then looking at the information

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technology, which is not a big component of the Canadian stock market, but has

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certainly done very well this week, up nearly 8% on the week.

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Now, financials have come back from the recent lows.

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They were up nearly 3% on the week.

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It's going to be certainly a different

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marketplace if we can also get the financials to participate.

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We'll be watching those closely.

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If the financials will participate with the rest of the market

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on the upside, then we could certainly take out the 31.25 level.

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Now, the Dow moved up this week, not enough to give us a weekly buy signal.

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The S&P 500 and the Nasdaq 100 both moved up generating new weekly buy signals.

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Of course, the energy sector has been helping the U.

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S. Market hold up this year.

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But of course, it's been more about the

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technology sector, which is back on a weekly buy signal.

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The financials have been a drag.

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They were up over 2% on the week.

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Again, if we're going to make higher highs

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this year, we're going to need the financial sector to participate.

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Now, what's been holding the U. S.

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Market up? Of course, a handful of stocks.

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There we've got Apple up over 6% on the

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week back on a weekly buy signal, joining Invidea still on a weekly buy signal.

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Joining NVIDIA, still on a weekly buy

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signal and NVIDIA tapping the $500 level, looking to see if we can break out.

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There's Google still doing well, making a new high for this move.

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What's not working, of course, and could

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totally change the whole complexion of the market if the financials would start to

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participate, so we're going to keep a close eye on Bank of America, Citi Group.

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Or if you're watching the Canadian market, what about the Royal Bank and the TD Bank?

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Both having inside weeks this week, both

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closing higher, but still on a weekly sell signals.

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Now comparing two different investment

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strategies, we've got Berkshire Hathaway up just under two % on the week.

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Of course, he's all about selling the losers and keeping the winners.

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And then if you want to sell the winners and keep the losers, then you're doing the

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ARK Innovation, which was up nearly six and a half % on the week.

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But certainly you don't really notice it on the chart that much.

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So if I can leave you with just one thing, if we never meet again, if we never talk

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again, when you're looking at your portfolio, always be upgrading.

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There's nothing wrong with taking on rookie players, but after the first

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season, if they're not doing well, it's time to cut them.

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And then, of course, you've got to players

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that are just getting old and the market doesn't really have an

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interest in them anymore and those have to be let loose as well.

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You should always be upgrading your portfolio.

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That's what keeps the major stock market indices moving up over time.

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It's not the stocks that they started

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with, it's the stocks that they've stayed with and added to over time.

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When you look at the Dow, the S&P 500, the TSX60, you go back 20 years

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and you'll notice there's a lot of stocks missing from those indexes because they've

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come and gone and they've been replaced by newer and better stocks.

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Next up, I want to take a look at the

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percentage of stocks currently trading above their 20-day moving average.

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On this particular chart, we're looking at

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the percentage of stocks on the TSX that are currently trading above their 20-day

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moving average, and we're coming back up to an overbot condition.

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You remember back in June, we were

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oversold, looking for the market to move up in that summer rally.

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Then in July, we were overbot.

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We were looking for it to pull back into August.

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In August, we were oversold, looking for it to move back up.

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Here we are, we're getting back up to the top of the range.

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There's certainly no indication of a cell signal just yet.

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If you're a member and you want to find these charts in the site, just go over to

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the menu on the right-hand side of the screen and just go down.

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You'll see the TSX, S&P 500, and the Nasdaq 100 are all there.

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When you bring them up, there are several things you can do.

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You can change how much data you're seeing

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on the screen, whether you're seeing six months, a year, two years, five years.

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You can also overlay individual stocks, or in this case, I'm overlaying the TSX60.

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Now, it's important to note that the fact that we get to a certain point does not

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automatically guarantee that the market reverses.

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It's just telling you to expect things to change.

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It's not telling you that things have changed, but you should expect them.

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And looking at the TSX, we're coming back up to those levels.

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Now, when we apply the TSX60 over this indicator, so we're applying an index over

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top of an indicator, you can see when the indicator peaked, it took a few weeks

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before the actual index started to move back down.

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What happens is that a certain number of stocks will take the

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market up and pull the rest of the market with it.

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When those stocks that didn't really

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participate, when the laggards start to move down, it brings the indicator down.

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But because all the money went into a

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handful of big cap stocks, those stocks are still holding the index

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up, and it takes a while before people actually end up selling those stocks.

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People will hold on to their winners longer than their losers.

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When this indicator is going down, you can

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see it's being led lower by the losers themselves.

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Here we are, we're getting up to the top of the range once again,

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give it another week before the market wants to take a break.

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Now, the indicator itself will go from

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being overbought to oversold up and down, up and down over time.

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That doesn't mean the index itself will do that as well.

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In a bull market, what we're looking for is for a new high to be made followed by a

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higher low, followed by a higher high and a higher low.

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In September, what we're going to be

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looking for is do we take out the August highs?

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Yes.

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Then what happens when we pull back?

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We can pull back in September.

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It doesn't have to be significant.

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In fact, if it's higher than the previous

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low, then that is a bullish sign for the rest of the year.

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We'll just have to keep an eye on that and see how things work out.

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But on the TSX, we're getting back up to an overbought condition on the S&P 500.

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We haven't got there yet.

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That's also true of the Nasdaq 100.

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But in both cases, you can see that we had a big decline in August, then we started

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to turn around off the bottom of the range.

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Now, what's rather unique is when we look at the percentage of stocks on the Nasdaq

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100 that are currently trading above their 20-day moving average and then overlay the

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Nasdaq 100 on top, you'll see that the peaks and the valleys

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aren't as easy to spot as they are on the TSX chart.

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Why is that?

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Well, it's rather unusual.

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But this year, we only have a handful of stocks really pulling the market higher.

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As we talked about recently, the number of

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stocks that are positive for the year is just over 50% on most indices.

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In the Nasdaq, it's more than that.

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But again, it's really those big cap stocks that haven't pulled back that much.

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Anytime that we've seen a pullback in the

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percentage of stocks currently trading above their 20-day moving average, when

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that indicator is pulled back, it really hasn't pulled back the market because this

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market is made up of fewer and fewer stocks than it normally would be.

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This is a current anomaly that has

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happened before, but doesn't happen that often.

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This is not a normal year for the stock market.

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Let's finish off this weekend's presentation with a little housekeeping.

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We've been doing some database cleaning over the past few weeks.

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We've deleted a whole bunch of symbols.

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I'd like to continue that.

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If you have any suggestions, please let us know.

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What we've been doing is going through and

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just cleaning out some very thinly traded ETFs, for example.

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I thought the steel ETF would be more

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popular, and I'm not talking about with our members, but just the market itself.

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The steel ETF had a volume of 7,000 shares and change on Friday.

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Global Water ETF, nearly 16,000 shares on Friday.

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That's nothing.

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There's lots of China ETFs out there.

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We got rid of a few of them.

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You'd think the S&P, China ETF would have more volume than this.

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But on Friday, it was just nearly 53,000 shares.

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That's nothing for a global ETF.

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Then we got rid of some country ETFs, the iShares for Austria.

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Nobody cares about the Austria market with only 1,862 shares traded on Friday.

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We got rid of all the currency ETFs.

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I've always suggested to people that they don't trade the

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currency ETFs because there's really no opportunity for capital gains.

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The average true range on a currency ETF is not very high.

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If you want to trade currencies, use the futures contracts, use forex, use

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something with a lot more leverage than you can get from an ETF.

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The Australian dollar ETF only traded 2,091 shares on Friday, and that

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definitely does not belong in our database.

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If you have any suggestions of anything we could delete from the database, I would

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really, really, really appreciate hearing from you.

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We'd love to get rid of another 50 symbols if we could.

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We're going to be adding more symbols this fall, and I'd like to make room for them.

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The more symbols we have, the longer it takes us to complete our update every day.

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The more symbols we have, the more chances we could have errors in the database.

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Your suggestions are very, very welcomed.

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Okay, folks, that's all for this weekend's presentation.

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August ended on a positive note.

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September is historically very volatile.

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I wouldn't be surprised if the market traded higher for the first week or so and

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then started to sell off going into the end of the month, not expecting the market

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to bottom in the middle of the month and end on a positive note.

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For the month of September, I expect it to probably top in the middle of the month

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and head lower going into the end of the month.

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Enjoy the rest of your long weekend.

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