Canadian Stock Market Trends - 06202028

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Morning, everyone. Welcome to Wednesday morning.

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Stephen Whiteside here from theuptrend. com.

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In the premarket this morning, stock index futures are slightly below fair value.

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Commodities are mixed with the energies

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higher while gold is lower on Wednesday morning.

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Well, we are coming up to month end, quarter end, and a long weekend, and all

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of those usually have a bullish bias to them.

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So even if there's bad news over the next

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couple of days, I don't expect to see any aggressive selling this week.

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When we look at the seasonality chart, and

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typically we get selling in June, which we did in the Canadian market, not so much in

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the US market, which is a little concerning.

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Then in July, we usually get a summer rally.

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So we'll have to see how that works out this year.

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But the US market is certainly not in sync with the seasonalities in 2023.

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Now, the TSX had a nice big up day yesterday.

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Not enough to give us a buy signal.

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We are trading a little lower in the

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premarket this morning than we see that the TSX 60 also moved up into the channel.

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When we take the TSX 60 out of the TSX, you're left with the midcap stocks and

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they traded up to the bottom of an open gap yesterday.

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So that could hold us in check.

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Then we had a small gain for small caps

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and a nicer gain for the venture exchange trading up into the channel.

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So there was some interest in microcap stocks on Tuesday.

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Now, if we look at what worked on Tuesday,

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we had consumer discretionary followed by infotec, followed by real estate.

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What didn't work was energy.

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Not by much, though.

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We had an inside day for energy stocks, then materials, and consumer staples.

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So consumer discretionary in, consumer staples out.

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So consumer discretionary is back on a buy signal.

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In percentage terms, the big winner yesterday was Sleep Country.

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In market cap terms, it was Magna.

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Not enough to give us a buy signal, but trading up into the channel.

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Then looking at InfoTech,

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it was really the Bitcoin stocks that were the big winners yesterday.

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Hut 8 and Bitfarms were the big winners in percentage terms.

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You can see Bitfarms had an inside day on Tuesday.

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Then looking at real estate, the index moved up to the lower channel line.

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The big winner in percentage terms was Primaris, then followed by Firstcap.

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So as you can see, Primaris back on a buy signal.

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I'd be waiting to see if it could take out the high from a couple of weeks ago.

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Then looking at energy stocks, had an inside day yesterday.

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We saw TC Energy pulled back.

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We saw a little bit of selling in Suncor,

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but an inside day and a little bit of selling in Canadian Natural Resources.

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Again, having an inside day or a day of indecision.

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Then looking at gold stocks, looks like we're holding the low from four days ago.

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We had the Barrick trade slightly higher.

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A close above 22.07 on Wednesday would give us a buy signal.

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Not expecting to see that.

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B2 Gold was down yesterday.

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Kinross was also lower on the day.

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Then looking at financials, a big up move yesterday for financials.

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Looking for a close above 351.12. We close at 350.

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67. We could certainly see a buy signal for

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financials and a buy signal in bank stocks.

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We do have the TD Bank back on a buy signal as of Tuesday's close.

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No joy yet for CIBC and certainly no joy for Manulife, both higher on the day.

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Let's finish off looking at commodity prices.

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And copper has been on a sell signal for the last two days.

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That, of course, is not helpful for the overall mining sector.

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Gold was down $10 yesterday.

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It's down $7 and changed this morning.

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So starting to break away from $1937.50,

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you can expect psychological support at $1900.

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Then our next mathematical target is $1875.

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And if you look back to the month of

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February and March, you can see we traded below that.

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Those lows could certainly be a legitimate

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target to the downside and a potential area of support.

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You can also see that the pros have had no interest in gold since the middle of May.

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That has not changed.

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They did have a little bit of interest in

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the price of silver, and so silver has been holding up better.

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We are looking at silver closing at the lower channel line.

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A close above 23.75 would give us a buy signal on Wednesday.

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Not expecting that to happen.

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Here's a quick little tutorial.

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Historically, silver has been much more volatile than the price of gold.

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One of the reasons, of course, is silver

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is only trading in the 20s where gold is trading up near $2,000.

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Now, when you look at the average true range of silver, it's currently at 2.78 %.

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When you compare that to the price of gold, the average true range for gold is

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currently at 1.26 %, so less than half of the volatility of silver.

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If this was a stock, I'd certainly

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tell you not to consider trading it because there's not enough volatility to

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make money compared to other options that you have in the stock market.

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But we're not looking at a stock, we're looking at a futures contract.

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And when you're trading futures contracts, you get a lot more bang for your buck with

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your margin than you do in the stock market.

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So there's a lot more risk reward in

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trading actual futures contracts than there is in the stock market.

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And remember, those two words are equal.

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Risk and reward are much greater trading futures contracts.

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And so that's why you can trade something

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that has an average true range of only 1.26 %.

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It's like being a currency trader.

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When you're trading currencies, the margin

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and the leverage in currencies is much higher than the stock market.

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Now, when you look at currency ETFs,

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they're not worth considering as a trading option.

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But when you look at the currency futures

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contracts, they have a lot more leverage and they are certainly worth trading.

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And they're probably one of the biggest trading instruments in the world.

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Now, looking at the price of lumber,

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somebody was asking me about the price of lumber.

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Yeah, we're making new lows here.

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If we were going to get a buy signal here,

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then move up to 400 would certainly be a legitimate target to the upside.

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Now looking at the energy sector, we've

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got crude oil working its way into a nice little triangle there.

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So looking for a breakout or a breakdown.

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Right now, it looks like we're going to

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see a breakdown and probably a retest of the low from early May.

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It's been very sloppy trading over the

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last month and you can tell the pros in the public are intertwined.

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Nobody really wants to make much of a

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commitment in the crude oil sector at the moment.

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You probably want to give it more breathing room.

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Use the mid term chart instead of the

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right side chart and just give it more room to breathe because nobody knows which

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way they want the market to go at the present time.

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Now, compare that to natural gas.

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When we look at the mid term chart for natural gas, we are starting

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to see some bullish signs here, which is probably a good thing.

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In 2023, natural gas hasn't done much.

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Certainly, it has

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had a lot of volatility in a much smaller range than it has over the past few years.

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So we are looking for a nice big up move in natural gas.

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Pros are currently in control, so we're

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looking to see if we can continue to move higher from here.

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Okay, folks, that is all for Wednesday morning.

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Have a great day.

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Stay out of the smoke.

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It's pretty smoky out there this morning.

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Nice little haze over the city and you can certainly smell it.

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

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Enjoy the day and we'll talk to you again soon.

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