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00:00:00Hello everyone, it's Stephen Whiteside here from theuptrend.com with this
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00:00:04weekend's edition of Stock Market Timing Television.
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00:00:07Well the 50th week of 2022 has come and gone.
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00:00:11It was another very noisy week.
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00:00:14We had some inflation numbers come out and the market overreacted to the upside.
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00:00:19We had the Fed announcement and the Fed
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00:00:22press conference and the market really underreacted to that.
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00:00:26And then on Friday we saw the real reaction to that Fed day with the market
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00:00:31selling off going into the close on Friday, the theme here is still the same.
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00:00:36The market is topping right now and we expect it to continue lower from here.
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00:00:41It may not do so this week, but we are expecting lower prices into 2023.
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00:00:47Now let's start off looking at the VIX.
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00:00:49The VIX is broken right now.
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00:00:50It actually closed slightly lower on the
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00:00:53week after trading up into the channel on the daily charts.
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00:00:57After the Fed announcement we came down
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00:00:59and actually generated a sell signal which is supportive for higher stock prices.
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00:01:03But I think with the
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00:01:06big options expiration day on Friday that the VIX is a little out of sync and may
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00:01:11take a couple of more days before it gets back in sync with the stock market.
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00:01:16Now we've been talking about the fact that the market has topped when the VIX has
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00:01:20come down towards 18.75 in 2022 and that appears to be what happened recently.
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00:01:28A couple of weeks ago we got down towards 18.75 and then quickly reversed.
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00:01:33And so we are expecting to continue higher from here.
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00:01:36The bear market is probably not going to end until we see the VIX back up over 40,
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00:01:42which would probably indicate some extreme panic selling and that would probably be a
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00:01:46good time to look at putting long term money back in the stock market.
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00:01:51Now looking at the weekly charts here we're starting off with the DOWdiamonds.
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00:01:56You can see that we put in a new early
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00:01:58warning signal there at the top of the screen.
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00:02:00We actually had a bearish reversal week.
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00:02:03We actually made a new high this week and
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00:02:04then pulled back closing lower on the week.
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00:02:06In fact we closed below the previous week's low, which is bearish.
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00:02:10And you can see down at the bottom of the screen there that the pros are giving up
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00:02:14control of the DOWand that's kind of important since the DOWhas really been
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00:02:19leading the market higher over the past couple of months.
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00:02:22Now we ran up to the 343.
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00:02:2475 level and reversed.
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00:02:26And where do we come down to this week?
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00:02:28Well our next mathematical target to the downside was 328.
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00:02:3213 and we closed at 328. 97.
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00:02:35So pretty close.
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00:02:37So we are looking to see if we break that this week and then 312.
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00:02:4050 would be our next target to the downside.
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00:02:43Looking at the S&P 500 ETF the SPY,
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00:02:48our target was 406.25. We certainly had time to lock in some profits up there.
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00:02:54And now we're coming down towards 375, this nice downtrend line.
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00:03:00A lot of market technicians are watching this line closely, and once again, we
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00:03:04failed at trying to break out above that trend line.
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00:03:08Now looking at the weekly right side chart for the SPY, we did come right down to the
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00:03:13lower channel line, did not close below it.
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00:03:16We're a couple of dollars away from closing below 380 35 this coming Friday.
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00:03:22Now looking at the Nasdaq.
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00:03:23The Nasdaq really hasn't participated in the recent rally.
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00:03:27It did pull back again.
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00:03:28It closed below the previous week's low, which is bearish.
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00:03:31The pros have not taken control over the past couple of months.
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00:03:35Unlike the DOWand the S&P 500, this week was a bearish reversal week.
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00:03:40So we are expecting to go down and retest the recent lows or even break them.
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00:03:46We are looking for a close this coming Friday below 274.10.
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00:03:52We closed at 274. 25.
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00:03:54So we're right on the edge of a new weekly sell signal.
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00:03:58And then looking at the Ishares for the TSX 60.
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00:04:00Nice new early warning up there.
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00:04:02We traded up to the 31.
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00:04:0425 level and reversed and came back down.
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00:04:07Our first target is 29.
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00:04:0969 and we closed at 29.
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00:04:1264.
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00:04:13And we also closed just below the lower channel line.
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00:04:17So the TSX, if you're using the Ishares for the TSX 60 to track the Canadian
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00:04:22market, we are back on a weekly sell signal as of Friday's close.
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00:04:27Now, I've been hammering home the risk off trade for the past month or so.
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00:04:31And the reason for that is there's a huge divergence in the market.
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00:04:35Yes, the DOWhas had a really nice rally over the last couple of months.
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00:04:39That's wonderful.
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00:04:40And we should encourage that always.
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00:04:42But at the same time, the rest of the market was not following along.
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00:04:46So that's a big red flag telling us that this rally is probably not sustainable.
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00:04:52Remember, the DOWis only 30 stocks and they're very unique stocks.
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00:04:56Most of them are global, most of them are not paying any taxes.
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00:05:01So they don't have as much geographical risk as a lot of other stocks do.
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00:05:07Yeah, seeing the DOWmove up like that, that's a wonderful thing.
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00:05:11It's just the fact that the rest of the market wasn't following.
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00:05:15So the DOWis doing very well this year.
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00:05:17It's only down 6.82%. You'll see that?
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00:05:20That's not a lot when we look at some of the other areas of the market.
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00:05:24Now, of course, you can divide the market up by market cap.
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00:05:27And so when you look at the small stocks, the micro cap stocks, you can see that
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00:05:31really no participation in the recent rally.
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00:05:35Yes, we were able to generate a buy
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00:05:36signal, and now this week we've generated a sell signal.
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00:05:40So that's over with.
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00:05:41So the fact that some money came back in was not that big a deal.
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00:05:46We were looking for sectors of the market to start taking out recent highs.
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00:05:51You've got to start changing the pattern of lower lows and lower highs.
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00:05:55You've got to change the pattern, you've got to start putting in higher highs.
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00:05:58Now the DOW was able to do that, but again, not the rest of the market.
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00:06:03So more and more money was going into fewer and fewer stocks.
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00:06:07And that's the recipe for disaster.
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00:06:10Now US Microcap stocks, according to the
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00:06:12Ishares Microcap ETF are down 22.45% for the year.
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00:06:17Back on a weekly sell signal looking north of the border.
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00:06:21No participation whatsoever in the recent
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00:06:24rally, even though the TSX was able to move in step with the Dow.
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00:06:29No interest in microcap stocks whatsoever.
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00:06:31And we're down 38.73% on the Venture Exchange for 2022.
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00:06:38Now, last week we talked about IPO stocks.
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00:06:40Again, no participation in the recent rally, down over 55% on the year.
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00:06:46Then of course, another ETF you can use to
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00:06:50track what's been going on is the Titanic, I mean the ARK Innovation ETF.
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00:06:55It's down 64.86% on the year.
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00:06:58And as you can see, there's been no new
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00:07:00money coming to this ETF over the past couple of weeks.
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00:07:04Now, every day I've been showing Apple and Tesla.
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00:07:07The reason for that is these stocks have not participated in the recent rally.
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00:07:12That was a big warning sign.
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00:07:14Apple is down 26.1% on the year.
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00:07:17Tesla is down 62.44% on the year.
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00:07:21It held above 150 on Friday, but after hours it started to break down below 150.
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00:07:26So I wouldn't be surprised if it got down to $100 in 2023.
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00:07:32Of course, I'm not going to take any
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00:07:34financial positions based on that theory, but now that we're down below, starting to
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00:07:39head down below 150. 100 seems to be the next logical target to the downside.
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00:07:45We've got some mathematical targets in
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00:07:47between, but I wouldn't be surprised if in 2023 we saw Tesla down towards $100.
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00:07:54Now, what is Tesla?
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00:07:55Tesla is a series of lower highs and lower lows.
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00:07:58And until that pattern changes, then the
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00:08:00conversation is always going to be about lower prices.
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00:08:05Let's take a look at those megatrends.
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00:08:07And no changes this week we saw bonds continue to move higher.
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00:08:11I tracked the third year bond, but of
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00:08:13course there's the TLT and the XBB both closing slightly higher on the week.
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00:08:18So money is not coming out of the bond market to save the stock market right now.
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00:08:22Then we've got the US dollar.
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00:08:24It made a new low this week and I would
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00:08:27imagine the volatility was around the inflation numbers in the Fed meeting,
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00:08:32but it came back and closed just slightly lower on the week.
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00:08:36So this could be the time and place that the US Dollar wants to move back up again.
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00:08:42Then, looking at the metals, we've got copper pulling back.
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00:08:45Now, copper had a bearish reversal week a
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00:08:47few weeks ago and we have not traded through that high.
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00:08:50So that bearish reversal week is still in play.
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00:08:53Notice that the pros are starting to give up control here.
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00:08:56They haven't abandoned Copper yet, but they're starting to give up control.
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00:09:00Now. They have given up control on Gold, and
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00:09:03Gold was down $6.40 on the week, so no major selling yet.
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00:09:08But the pros have given up control and
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00:09:12they look like they want to give up control on silver.
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00:09:14It'll take a while for them to get down to
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00:09:17that level, but Silver has been leading Gold over the past couple of weeks.
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00:09:21So this rally may have come to a stop this week.
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00:09:25And then looking at energy, Crude Oil, nothing going on there.
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00:09:28Pros still no interest in taking control and certainly no interest in taking
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00:09:32control of Natural Gas at the present time.
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00:09:36Let's finish off.
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00:09:37Could there be a Christmas rally?
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00:09:39Yes, there could be.
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00:09:41I've been talking about the percentage of
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00:09:43stocks currently trading above their 50 day moving average.
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00:09:46What we want to do is see it come down,
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00:09:48back down to the lower area, the lower range down here.
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00:09:53We're starting to make our way down there.
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00:09:55But if we also take a shorter term view,
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00:09:58if you take a look at the percentage of stocks on the TSX currently trading above
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00:10:02their five day moving average, we've come right down to the bottom of the range.
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00:10:06So, yeah, there could be a rally this week.
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00:10:09Of course, the first sign that something
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00:10:10new is happening is if we close above the previous week's high, and I doubt very
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00:10:15much we're going to be able to do anything like that.
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00:10:17So, yeah, there could be some buying going
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00:10:19into Christmas on a very short term basis, but it's probably not going to generate a
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00:10:23lot of new buy signals on either the daily or weekly charts.
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00:10:27Now the same is true for the S&P 500.
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00:10:30We've been looking at a market in which was very overbought where the percentage
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00:10:35of stocks currently trading above their 50 day moving average was up at the top of
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00:10:39the range and we were expecting it to come down.
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00:10:41You can see this week that it has come down.
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00:10:43This is a daily chart, but at the same time, while that's been coming down, the
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00:10:48percentage of stocks on the S&P 500 currently trading above their five day
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00:10:52moving average has come right down to the bottom here.
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00:10:55So there's no guarantee we can cluster down here for a week or so.
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00:11:00There's no guarantee that you're going to
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00:11:01get an immediate return, but we are very oversold on a short term basis.
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00:11:07We are not oversold on a longer term basis.
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00:11:10So yeah, we could certainly get a bounce
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00:11:12this week and get some sort of Christmas rally into year end.
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00:11:16We'll just have to wait and see.
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00:11:18I am betting that we are going to continue to move lower into 2023.
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00:11:24Okay, folks, that's all for this weekend's presentation.
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00:11:27If you run out of gift ideas, you can
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00:11:29always donate blood and give the gift of life.
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00:11:32If you've got some time over the Christmas holidays, I'm sure there's some blood
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00:11:36donors clinics somewhere near you and holiday schedule.
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00:11:40We're going to do a regular schedule this week.
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00:11:43I'm not sure when.
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00:11:45I'm going to post a video next weekend and then the week between Christmas and New
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00:11:49Year's, I think we'll publish just on the Wednesday and then we'll do a weekend
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00:11:55update on the following on the New Year's weekend.
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00:11:58But I'm not sure that we're going to be
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00:12:00around much over the week between Christmas and New Year's.
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00:12:05Okay, folks, thank you very much for your time and attention.
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00:12:07Of course, if you have any questions, please send me an email.
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00:12:10And next time you'll hear my voice is on Tuesday morning.
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00:12:44Thank you.