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00:00:01Morning, everyone. Welcome to Friday morning.
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00:00:03It's Stephen Whiteside here from theuptrend.
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00:00:05Com. In the premarket this morning, stock index
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00:00:08futures and commodities are trading below fair value.
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00:00:11DOW futures currently down 150 points.
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00:00:14So far, it looks like we're going to see
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00:00:15some selling at the open on Friday morning.
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00:00:18Now, today is options expiration for the February options.
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00:00:23And you say to yourself, Well, I don't
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00:00:25trade options, so that doesn't affect me at all.
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00:00:28Well, it can affect you because a lot of
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00:00:31positions in the market are hedged using options.
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00:00:35And the reason they hedge those positions,
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00:00:37of course, is to reduce risk but also to increase leverage.
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00:00:41Investors can often take on much
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00:00:43larger positions if they use options to hedge those positions.
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00:00:48And if they unwind them today and don't put them back on right away, then that can
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00:00:53often affect the price of the underlying securities.
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00:00:58While speaking of options, of course, we
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00:00:59watch the VIX Index every day and it moved back into the channel.
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00:01:04Of course, being in the channel is a neutral zone.
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00:01:07So on Friday, we're looking for a close above $20.51 for the VIX.
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00:01:13Now, the VIX has been in a tight range for
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00:01:15months now, and this range has been bracketed by a bullish
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00:01:20reversal signal here and a bearish reversal signal there.
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00:01:24Neither one has been taken out so far.
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00:01:27So looking for a breakout of that range, and you can see the top of the range is up
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00:01:31there at 21.88 and we may be heading for that level on Friday.
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00:01:37And of course, if we start to break out
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00:01:38above that, that would certainly be negative for stocks.
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00:01:41Some other things that are negative for stocks.
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00:01:43Well, the US dollar index
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00:01:45made a new high for this move before pulling back ever so slightly on Thursday.
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00:01:50And then bonds continued to move lower on
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00:01:52Thursday, which means bond yields continued to move higher.
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00:01:56Whether you're looking at the 30 year or
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00:01:58the 10 year or any of them, they continued to move up.
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00:02:01And that, of course, can be negative for stocks.
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00:02:04Another thing that could be negative for
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00:02:06not only stocks, but the global economy is the Baltic Dry Index.
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00:02:10Now, this chart looks a little strange,
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00:02:13and that's because there's just one data point per day.
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00:02:16The open high low close, it's all the same.
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00:02:19And so right now, if you look at the bottom right hand corner of the screen,
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00:02:23you'll see that we are making new lows, and these are multi year lows.
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00:02:28And so if the Baltic Dry Index, which measures the
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00:02:31shipping capacity versus the supply of dry bulk carriers.
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00:02:36Now, what's a dry bulk carrier?
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00:02:37Well, these are ships that move around
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00:02:39materials that go into making other things.
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00:02:43So it could be wheat, it could be coal, it could be iron ore.
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00:02:46That's the type of things that dry bulk carriers carry around the world.
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00:02:51And a lot of people use it as a
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00:02:52measurement of the health of the global economy.
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00:02:56And looking at this chart, the patient is in major cardiac arrest at the moment.
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00:03:02If we look at a weekly chart of the
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00:03:05Baltic Dry Index, you can see we are breaking down below 625.
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00:03:10And so if you were in this business, you
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00:03:12could have got twice as much money for shipping stuff just a few month
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00:03:15ago, and three times as much money if you go back to just last September.
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00:03:22And of course, you can see you could have got a lot more money previously.
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00:03:26So this is not a good sign for that
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00:03:28particular industry, but it's also not a good sign for the global economy.
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00:03:33Now, we didn't get cell signals yesterday for the major index ETF, so we follow.
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00:03:38Looking at the SPY, you can
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00:03:40see we need a close below 407.14 on Friday, and that is certainly doable.
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00:03:45I noticed, going through the reports last night, that the iShares Canada ETF traded
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00:03:49in New York actually closed just a penny below the lower channel line after
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00:03:54putting in a lower high just a couple of days ago.
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00:03:58Some of the weakness in the Canadian
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00:04:00market was from the info tech sector, which had a big down day yesterday.
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00:04:06And that was probably due to Shopify, which had a huge down day on Thursday.
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00:04:12Now, we came in to Thursday morning seeing
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00:04:15that Shopify had generated a new buy signal.
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00:04:19And of course, I always tell you to look
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00:04:20and see what's happening in the premarket before you go ahead and take a signal.
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00:04:25And yesterday when we looked at Shopify,
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00:04:27and this chart is Shopify trading on the TSX, it was down over 10 %
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00:04:34or around 10 % in the premarket, and it ended the day down over 15 %.
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00:04:40So we saw some additional weakness once the market opened.
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00:04:43And if you're short Shopify
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00:04:45at the moment, then $56.25 and $50 are the next two targets to the downside.
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00:04:52Now, we're also watching Tesla and our next mathematical
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00:04:55price target was $218.75. We got as high as $217.65 yesterday.
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00:05:01And so we often tell you to put your order
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00:05:04in a little below what the price target is.
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00:05:07And of course, yesterday's trading activity, which generated a bearish
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00:05:11reversal signal, was stopped by the 200 day moving average.
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00:05:15So hopefully you're watching that as well.
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00:05:18Looking down on Friday
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00:05:20for Tesla, we need to close below 189.82. Now we're also watching
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00:05:26Apple and Apple put in a bearish reversal day a few weeks ago.
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00:05:30Now, we hit 156.25 again yesterday before pulling back, and so that would be
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00:05:36considered a lower high if we continue to move lower from here.
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00:05:40And also, we were watching Microsoft this
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00:05:42week, which traded down into the channel yesterday.
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00:05:45So looking for a close on Friday below 260.97. And you can see the bearish
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00:05:50reversal day marks the high for this particular move.
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00:05:53That's why we watch them.
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00:05:55That often happens, and that is certainly what's happening to Microsoft right now.
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00:06:01Okay, folks, that is all for this morning's presentation.
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00:06:04Stock index futures and commodities are trading below fair value.
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00:06:07So again, it does look like
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00:06:09we're going to see some selling at the open on Friday morning.
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00:06:12Enjoy your Friday, enjoy your weekend.
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00:06:15Next time you'll hear my voice
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00:06:17is on Sunday.