Six Weeks Of Stock Market Fear 10302023

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Hello, everyone.

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It's Stephen Whiteside here from theuptrend.

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com, and welcome to this weekend's edition of Stock Market Timing television.

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Well, the stock market ended on a low on Friday.

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If you're looking at the S&P 500, the Nasdaq hit a low on Thursday for the month

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of October, and then Friday was an inside day.

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And for the iShares for the TSX 60, we also hit our October low on Friday.

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So not a pretty picture going forward.

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Now, we came into October knowing that the seasonalities were weak, whether you were

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looking at the S&P 500 or they're much easier to spot on the TSX.

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Then from this point on, the market is

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usually pretty bullish, but we don't know exactly when it's going to start.

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October is not only seasonally weak if we

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look at the last 20 years, but if we go back in time, there's a lot of negative

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historical events that have happened in the month of October.

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Going back to the panic of 1907, then, of

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course, the crash of '29, the crash of '87, I was trading back then, and it's

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when I flipped over from being a fundamental trader to a technical trader.

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Then, of course, the Asian Financial

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Crisis and then the Global Financial Crisis in 2008.

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Now, we are coming up to the end of

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October, and that's when the sell in May crowd comes back.

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One of the most successful investment strategies in history, of course, is the

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selling on May first and coming back and buying on November first.

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It's often called the Halloween indicator.

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And that could kick in in the not so distant future.

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We also have a full moon this weekend and we're coming up to month end.

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And traders typically don't like to trade

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against the automatic money that comes into the market at monthend.

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Now, as a long term investor, we want to remain long term bearish on the market as

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long as the VIX does not close below $15.22 this coming Friday.

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So for the last six weeks, the VIX has been on a weekly buy signal.

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That, of course, is long term bearish for stocks.

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And we've seen that work out throughout the month of October.

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The pros are still in control on a weekly basis.

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We're projecting higher prices here on our panic zone chart.

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And if we go back in time, you can see

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that back in March of this year, the VIX got all the way up to 3,125.

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If we go back to last fall, we got up to

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34.38. Then nearly two years ago, we're up at the 37.50 level.

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Technically, there is a lot more room to go on the upside based on recent trading

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activity, but the bears could be running out of time here.

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We'll just have to wait and see.

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The first sign that something new is

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happening is going to be a change on the daily chart for the VIX.

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And coming into Monday's trading action, we're looking for a close at the end of

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the day below $18.66 on the VIX for the S&P 500.

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That would be the first sign that

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something new is happening on the bullish side of the market.

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And of course, if that doesn't happen on

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Monday, that lower channel line is going to continue to move higher daily.

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Now, 2023 has been all about the Nasdaq-100 and a handful of stocks.

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When we look at the Nasdaq-100, it's

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currently clustering around the 200-day moving average.

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When we look at what's been working in 2023, Citia has been the big winner.

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It's a $400 stock.

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It was recently a $500 stock, and it's

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currently up 177 %, followed by Meta up 146 %, and then Tesla at 68.29 %.

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Those are huge, big cap stocks that have been holding the market up.

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The rest of the market is not looking for any moving average support.

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Whether you're looking at the Russell 2000 or you're looking at the TSX,

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there's no potential support from the moving averages right now.

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The big line in the sand is that 200-day moving average on the NASDAQ.

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Now, when we look at what's not been

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working, some stocks have just been crushed this year.

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I believe the biggest losing stock on the

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S&P 500 is SolarEdge, down 72 %, generated a sell signal back in March of this year.

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Then on the NASDAQ-100, it's end phase,

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which is down 69 %, big sell signal back in late 2022.

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On the Dow 30, it's Walgreens, which also

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came in with a sell signal right at the start of the year, down over 43 %.

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On the TSX, the big winner on the TSX-60

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is Cameco, up over 71 %, gave us a weekly buy signal back in April of this year.

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Now on the TSX, only 24 of the TSX60 stocks are currently positive for 2023.

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So it's been really hard to find winners in 2023.

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And I guess the biggest disappointment for me, and there's not stocks that I actually

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trade, but just watching the financial stocks disintegrate in 2023.

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And here's the

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Canada's biggest bank, the Royal Bank, making a new low this week for 2023.

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Now, the Royal Bank and all the major banks are widely held.

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You know when you see a chart like this

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that the average investor, whether they're actively involved in the market or if

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they're in long term mutual funds, they're getting hurt at the moment.

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Now we've been following the same script, the same movie, the same book, the same

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theme for months now in which we've been making lower highs and lower lows.

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It's going to take some work to change

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that because not only do we need a nice rally into November, but then it's not the

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rally that tells us what's going to happen, it's what happens after.

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And what we're going to want to see is a

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rally above recent highs followed by a pullback above recent lows.

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And so it's a two step

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approach to actually change the theme of lower highs and lower lows.

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Now, while the world is watching the Nasdaq, I've been watching the Russell

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2000, and we've been talking about this for quite a while.

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The Russell 2000 has been in a tight range for almost two years now.

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Looking at the IWM, $200 at the top of the range, $162.50 at the bottom of the range.

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Speaking of lower highs and lower lows, there was a high back in the middle of

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2022, a lower high in early 2023, an even lower high in the summer of 2023.

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Now we're looking to see what happens at the bottom of the range.

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On Friday, we actually closed below the level.

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We closed up 162.21, so that was our price target.

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If we continue to move lower from here, then 150 and 137.50 could certainly come

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into play, and that would be very ugly for the overall stock market.

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Looking at the Canadian market, the TSX has been in a tight range in 2023.

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Looking at this chart from a month ago, what we were looking for was, could we

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break out above the highs of 2023, which were just above the 20,625 level?

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Again, look at this pattern.

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There's a high, lower high, and then in

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the summer, we put in an even lower high, bearish all the way across.

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We are trying to hold support.

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We actually penetrated below the 19,375 level, but the market always came back.

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That's where we were looking to find support and move ahead a month.

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What happened?

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Well, we were looking to see if the 19,375 level would hold.

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If it didn't, then 18,750 would be our next target.

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Where did we end on Friday at 18,750?

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Nope, we ended at 18,737 and change, so just below this level.

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And of course, if we continue to move

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lower from here, we can go back to the lows from 2022 down at 18,825.

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That would certainly be a logical move to

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the downside if we keep going lower from here.

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Now, if we do want to change the movie to

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change the channel, we need to get the remote control away from the cat.

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To do that, we're probably going to need

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bond traders to change what they've been doing in 2023.

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The third year bond hit a new low this

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week and actually closed higher on the week.

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But what it didn't do, it did not close above the previous week's high.

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So nothing going on there so far.

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The pros: nowhere near taking control.

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But that doesn't mean they can't bid up bonds.

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That just means that we're not going to have a new uptrend start anytime soon.

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Now, the TLT also made a new low this week and also closed higher on the week, but

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again, did not close above the previous week's high.

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Bond yields pulled back.

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Whether you're looking the 30 or the 10 or the 5, they all pulled back, but again,

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did not close below the previous week's low, so nothing has started just yet.

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Now, if we can get bond traders to get

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back in there and start buying bonds, that could also put pressure on the US dollar

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index, which actually closed higher on the week while the euro closed slightly lower

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and the Japanese Yen was slightly higher after making a new low this week.

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No change in trend for any of the major currencies.

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Next up, let's take a look at commodities.

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Crudeoil had another wild week trading down to the lower channel line.

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We need to close this coming Friday below

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$81.88. That would give us a new weekly sell signal.

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We're looking for intraweek support at the $81.25 level.

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If that breaks, then $75 would be our next target to the downside.

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Energy stocks got hit hard in the US down over 6%.

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That had a lot to do with just two stocks.

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Looking at the Chevron, which was down

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13.47% and Hess, which was down 12.1% on the week.

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So both of those putting huge downward pressure on the US energy sector.

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Canadian energy stocks were down, but not by that much, down 2.35%.

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Looking at the iShare's TSX energy ETF, and you can see Sunnovus traded right down

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to the lower channel line, but did not close below it.

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This coming Friday, we would be long term bearish on Sunnovus if it were to close

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below $26.33. Now, the gold futures contracts traded up to 2,000 again.

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Now, depending on where you look, what

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futures contract, whether you're looking at spot or cash, gold has been able to

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trade above $2,000, but has been unable to break away from it just yet.

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The GLD closed at a new high for this move

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on Friday, and we're trying to get to 187.50, and that's where sellers started

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to come in back in March and April of this year.

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Looking at gold stocks in the US, they

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closed down nearly 1 % on the week, still on a weekly sell signal, no change there.

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Canadian gold stocks were down just a tick

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on the week and still on a weekly buy signal, so no change there.

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Let's finish off today's presentation with a quick look at financial institutions.

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You've probably heard me say this, but US

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insurance companies have held up very well over the past couple of months.

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That came to an end this week.

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The previous week, we made a new high and traded above the early 2023 high.

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This week, we came down hard.

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We're back on a weekly sell signal, joining the rest of the financial sector.

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Now,

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the S&P 500 financial ETF has not broken down below the 2023 lows or retested them.

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That's also true for US banks and US regional banks.

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That could happen before the market starts to turn around.

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But it's important to remember that during

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a rate tightening cycle, the Fed usually breaks something.

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It's often a financial institution.

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Sometimes it's a whole country.

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You just have to wait and see what happens.

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It's still very risky to be in any US financial stock.

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It might even be more risky to be in a Canadian financial stock right now.

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Look at the TSX financial ETF.

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It's breaking down below the lows from a year ago.

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If we start breaking away from 40, 63,

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then 3750 comes into play for the iShare's financial ETF.

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Then looking at Canadian banks, this is the BMO equal weighted bank ETF.

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We broke down below that low a while ago.

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We're looking to trade down to the bottom of our weekly projected trading range for

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this ETF, which would be all the way down at 20, 8, 13.

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Remember, we started way over the

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left-hand corner of the screen back at $42.

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That's quite a move for Canadian banks.

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But right now, they're looking weaker than

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the US banks, and that could present a problem going forward.

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Okay, folks, that is all for today's presentation.

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We're going to be watching the VIX closely

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to see if options traders start giving up their hedges against lower stock prices.

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If that starts to happen, that could be the first sign that something new is

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happening and it could be the potential sign that the year-end rally has started.

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But coming into Monday's trading action,

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we're not expecting that to happen on Monday.

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Enjoy the rest of your day.

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

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