Morning Market Outlook 11212023

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Well, good morning, everyone, and welcome to Tuesday morning.

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It's Stephen Whiteside here from theuptrend.com.

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Well, it's pretty early in the morning.

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Stock index futures are slightly below fair value.

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Commodities are mixed with crude oil lower while gold is higher on Tuesday morning.

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Now, we don't have a lot of economic numbers coming out on Tuesday.

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We do have US existing home sales coming out at 10 o'clock.

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That could put a little volatility into the market.

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The VIX closed lower yesterday, and we're going to stay short term bullish on the

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market as long as the VIX does not close above $15.24. Let's start off looking at

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the elephant in the room, and that's NVIDIA, which pushed over $500 yesterday.

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It's coming out with earnings this afternoon after the market closes.

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This is not only a semiconductor play, but an AI play.

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So if the earnings are received well and

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the stock moves up, that could pull the semiconductors and AI stocks with it.

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If it doesn't impress investors and it

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starts trading lower, that could take the semiconductors and AI stocks lower.

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We'll just have to wait and see.

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But a lot of stuff going on in the AI

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world over the weekend and the head of OpenAI got fired and Microsoft

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hired him and Microsoft made a new closing high on Monday.

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The US dollar continued to move lower on Monday.

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That's supportive for higher stock prices.

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We got a new closing high for the bonds on Monday.

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This is the 30 year bond and that put downward pressure on bond yields.

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Now, falling bond yields is currently supportive for higher stock prices,

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especially stocks that don't make a lot of money.

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Now, looking at a bond ETF such as the XBB, you can see we've had a nice run off

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the October lows and we've run right up to the 200 day moving average.

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That could continue to act as resistance.

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It's been quite a while since we've been up to the 200 day moving average.

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This could be interesting going forward.

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It could just stop the market in its

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tracks if bonds start pulling back from this level.

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We'll just have to wait and see.

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Now, just eyeballing this chart, it looks like it's had a nice move off.

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You can see the change in the moon cycle there.

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We made a low and we've had a nice move up to the 200 day moving average.

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But in percentage terms, that's not that big a move.

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It's important to

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know exactly what the percentage opportunity is for a particular symbol.

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Let's do a little Trade School this morning.

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Again, this looks like a nice move, but compare that to any other chart and you'll

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find out that in percentage terms, it's not that big a deal.

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When we look at the Fly Paper channel chart, the first thing you're going to

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notice is just how wide the Fly Paper channel is.

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Without knowing anything else, you can assume that the level of

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volatility for this particular symbol is rather low.

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Now, when we're looking at a futures contract, if it looks like this, then the

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opportunities can be made up by using margin.

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Anytime you're trading a futures contract,

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and especially in the world of commodities, you can get much higher

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leverage using margin than you can in the stock market.

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Typically, when we're looking at stocks and ETFs, the margin opportunity is not

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that big compared to the futures contracts.

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When we're looking at something like this particular bond ETF, the

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Average True Range or the difference between the average low and the high each

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day is only 0.65 %, so certainly over half a %, which is not that big a deal.

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Typically, a financial institution such as the Royal Bank or SunLife, their

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Average True Ranges are usually in the 1-2 % per day.

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Now, typically, these financial

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institutions pay a dividend, so that helps reduce their volatility.

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If you want to increase your volatility, increase your risk reward, you can always

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move to commodity or technology related stocks.

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Currently, Athabasca has an Average True Range of a little over 4%.

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That's also true for Shopify.

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And so you can see how wide the Fly Paper channel is.

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It gives you a feel for the long term volatility of a particular symbol.

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Of course, if a technology stock pays a

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dividend, then that's going to reduce volatility.

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So you can see Apple, the Average True Range is currently 1.56 %.

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Compare that to Roku, which doesn't pay a

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dividend, of course, and it fluctuates much more than Apple does.

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So just take a look at that chart versus this chart.

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And currently, Roku's Average True Range is 5.74 %.

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When you're comparing opportunities, you

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need to look at something like the Average True Range to give you an idea.

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Am I buying something that's a hand grenade and I'm pulling the pin?

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Or is it much more a calm, cool, collected

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symbol, such as most of the financial institutions?

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Now not only do we provide

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Average True Range %, which you need for comparing symbols, but we also show you

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what the Average True Range is in a dollar amount.

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And currently for Roku, it's a $5.46 per day.

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You can't use that to compare one symbol to another.

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But certainly, once you're trading the

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symbol, knowing that the average range is $5.46, you can use that

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in your daily calculations, especially if you're trading options.

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Now moving on, let's take a look at a couple more bond ETFs.

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The TLT made a new closing high yesterday.

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We saw a new closing high for emerging

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markets and a new closing high for the junk bonds.

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And so the fact that money is going into

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all of these different bond sectors is a good sign for the market.

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People buying bonds is going to help put pressure on bond yields.

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And of course, that's going to help the stock market move higher.

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Now, we're looking at the Nasdaq-100, we

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made a new high yesterday, which is what everybody's talking about.

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We were up 1.22 %, but notice that the equal weighted Nasdaq ETF is up 1.23 %.

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So that tells us that the rally is broadening out.

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That's a good thing.

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We also saw the Russell 2000 and the Russell Microcaps move up yesterday.

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We also saw Canadian small caps and

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Canadian microcaps continue to move up yesterday.

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That's a good sign.

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We want to see the market, the rally broaden out into year end.

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We don't want it to just be those big cap seven technology stocks.

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Now the SPY hit its next target yesterday, so congratulations.

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You got to take some money off the table.

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The Nasdaq 100 also hit its next target yesterday.

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Again, congratulations.

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You got to lock in some profits up there.

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Of course, you're not going to completely liquidate a position.

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The Nasdaq-100 is up at the top of our trading range.

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You can do the math and figure out where the next targets are.

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If we continue to move higher from here, then the trading range will expand.

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That hasn't happened yet to get a feel for what the next target could be.

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If you look at the weekly chart, you can see that 406.25 is our next target.

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At the same time, $400 would certainly be

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a potential area of psychological resistance.

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Now, another positive note from yesterday's trading action is the

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semiconductor ETF has started to trade above $200.

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We haven't broken away from it, but a new high is a new high.

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And $212.50 could be our next target to

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the upside if we break away from the $200 level.

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There is a little gap up here that could also act as a potential price magnet.

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Then looking at the iShares for the

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TS X60, you can see we're still projecting higher prices here, but we are coming up

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to long term resistance up at 31.25. That held us in check earlier this year, so

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that could be a major line in the sand for the TSX going forward.

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Now, a lot of these charts have open gaps,

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and I always tell you to don't worry about a gap that's behind you.

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If the market's moving up, you don't have to worry about gaps behind you.

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But we're going to see a pullback at some point and a logical place for the market

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to find support is at the top or the bottom of an open gap.

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We'll be watching for that going forward.

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It has nothing to do with Tuesday's trading action, but as you're looking

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through your charts, you should know where those open gaps are, and we'll be watching

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to see what the market does when it does start to pull back.

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Let's finish off this morning's

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presentation with a quick look at the commodity ETF starting with the USO.

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It traded right up to the upper channel line yesterday.

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A close above 72.81 would give us a buy signal on Tuesday.

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Currently, Crude oil is trading down in the premarket.

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No hope for natural gas on Tuesday, a new low on Monday.

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Then looking at the metals, we've got the GLD on a buy signal that would change on

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Tuesday with a close below 181.70. So far in the premarket, gold is trading higher.

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Palladium is on its second day of a buy signal, trading up to the open gap.

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Then we've got platinum trading up over two % on the day.

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So nice big update for platinum.

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And then silver pulled back yesterday, a

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close below $20.99 would give us a sell signal on Tuesday.

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Silver ran up to the 21.88 level, put in a bear reversal day and has pulled back.

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The high from Friday or from Thursday is the one to break out above.

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Then, of course, we can see that we made a high previously back in August, and that

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would certainly be the next target to the upside.

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If silver wants to continue to move higher

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from here, you can see the pros are still in control at the present time.

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And of course, if Silver wants to continue

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to move lower on Tuesday, we're looking for a close below $20.99.

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Okay, folks, that is all for this morning's presentation.

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Have a great day.

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

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