5 Weeks Of Fear 10232023

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Good morning, everyone, and welcome to Monday morning.

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It's Stephen Whiteside here from TheUpTrend.com. In the pre-market this

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morning, stock index futures and commodities are trading below fair value.

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Dow futures currently down to 180 points.

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Well, the title of this video is Five Weeks of Fear.

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It's been five weeks since the VIX gave us

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a weekly buy signal, and that tells us that options traders are

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concerned about the direction of the stock market.

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On Friday, the VIX closed at a new high for this move.

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We are going to remain long term bearish on the stock market as long as the VIX

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continues to trade and close above $14.75. If on Friday we close below

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$14.75, we are going to turn from being long term bearish to long term bullish.

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Now, during the past five weeks, the stock market has tried to rally and of course,

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it has been those big cap tech stocks that have led the market higher.

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And if we look at just who's in control,

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you can see that on the Nasdaq-100, the Pros did come back and take control.

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They're starting to give up control right now.

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Now, the rest of the market didn't perform as well.

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And you can see on the S&P 500, yes, the

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Pros did take control, but have given up control.

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On the Dow, that never happened.

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That never happened on the TSX-60, the Pros never took control.

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That is also true for the Russell 2000, the Russell MicroCap

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Index and on the TSX Venture exchange, we saw no sign of the Pros taking control.

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If we go back to the US MicroCaps, you can

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see the Pros gave up control back here in August.

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That's also true on The Venture Exchange,

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but they did come back once for a couple of days to take control, really didn't see

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a lot of price movement in the index itself.

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And as I've mentioned many times over the years, the stock market is a lot more fun.

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It's a lot easier to make money when microcap stocks are trending higher.

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Now, we've talked about the Russell 2000

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several times over the past couple of months where I've looked at this chart.

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

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And on the IWM, $200 has been the top of the market, $162.50 has been the bottom.

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What's interesting, of course, is we made

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a high here, a lower high, and then recently another lower high.

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And a series of lower highs and lower

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lows, that's a bearish scenario, that's a bearish theme, and that has not changed.

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You can see the midpoint here, and we've

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been trading below the midpoint for the past couple of weeks, we're treating

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towards 1.62.50, and that'll be very important for the market.

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If we hold and bounce off that level, that

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could certainly be the catalyst for the year end rally.

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Otherwise, if we start to break down, the market might accelerate to the downside.

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Now looking at the Canadian market since

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the start of 2023, we've been in a tight range and about 90% of the trading

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activity has been between two waypoints here.

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Recently, while the VIX has been elevated,

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the market has started to break down and we are heading towards 18,750.

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That will be our first line of defense.

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Otherwise, if we start breaking down below 18,750.

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You can see the next line down is major support from 2022.

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Now, year to date, the TSX is negative.

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It's down 1.39% for 2023.

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Now, in the next part of the presentation,

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we're going to be focusing on the Fly Paper Channel chart.

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I'm going to use the Dow 30 just to do some very quick market analysis.

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Of course, there's winners and losers, and winners are typically stocks trading above

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the Fly Paper Channel in which investors are willing to buy the dips.

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That is certainly true of Amgen.

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Amgen made a new high last week before

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starting to pull back at the end of the week with the rest of the market.

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A loser is a stock trading in or below the

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Fly Paper Channel in which investors are willing to sell the rips.

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American Express is a good example of that.

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Anytime a stock is trading below the Fly Paper Channel, we assume the

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Fly Paper Channel is going to act as resistance.

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For us to go

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from a bear market to a bull market or to start a year-end rally, we need a lot of

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these stocks to start breaking out above the Fly Paper Channel.

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That did not happen over the recent rally that we saw in the market.

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Now, Apple, of course, is the biggest,

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most important stock in the world, and it was doing really well until late July.

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It came back, found support in the Fly Paper Channel.

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They bought the dip.

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We could only get it up into the open gap, and then we came right back down.

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Now, one thing you're going to notice, of course, when you're looking at Apple, is

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the fact that we are now starting to make a series of lower highs and lower lows.

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Now, we made a lower low in September.

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We'll have to see if that holds as support.

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If it can hold the support, that could

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hold up the rest of the market if it starts to break, that may be one of the

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catalysts for the market to accelerate to the downside.

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Now Tesla, on the other hand, which is not

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a Dow 30 stock, but of course, is the most actively traded stock out there.

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You can see that we came down hard into August and then we came back up.

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And where do we get to?

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Well, we couldn't fill the open gap.

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We got up to the bottom of it before pulling back.

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And again, look at the major chart pattern that's going on here.

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We're making lower highs and on Friday we made a lower low.

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And so that is a bearish chart pattern and

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that should continue going forward until it is broken.

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No hope for Tesla on Monday.

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Now, NVIDIA is still holding up fairly well.

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We did recently put in a lower high. We noted that.

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And of course, that was the set up for the market starting to pull back last week.

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We are still holding the recent lows.

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That could change on Monday.

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Now, Canadian natural resources, any of

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the energy stocks have been doing well recently.

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Most of them have been finding support in the Fly Paper Channel.

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People have continued to buy the dip.

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That has not changed.

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We made a new high last week,

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and most energy stocks look like this at the moment.

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Now, the bond yields have continued to move higher.

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This morning, or on Friday, you can see on the 10-year yield, the high was 4.993.

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For a little while this morning, it was trading over 5%, and that certainly helped

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pull stock index futures down this morning.

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Now, with the yields going up, any of the

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financial institutions have been having a hard time.

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There's CIBC making a new low on Friday.

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You can see Bank of America

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has been trading below the Fly Paper Channel for some time now.

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That's also true for Citi Group.

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You can see that we were trying to poke

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our head out above the Fly Paper channel, but couldn't break away from it.

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That's a high over here, a lower high, lower high, lower high.

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And what do you know?

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Recently, we put in more lower highs and lower lows.

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So a series of those is a very bearish sign.

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Now looking at the Dow 30 stocks, we've

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already looked at a couple, but Boeing are not looking healthy at the moment.

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There's Caterpillar starting to break down below the Fly Paper channel.

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We've got Salesforce stuck to the Fly

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Paper channel right now, but again, we're looking at a series of lower highs and

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recently a lower low in September and a lower high last week.

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So not looking very bullish.

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Cisco system still holding the Fly Paper Channel.

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It hasn't broken yet.

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That could change on Monday.

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Now, Chevron is in the news this morning.

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It looks like it's buying Hess,

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and that'll probably put downward pressure on this stock.

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If you look at how wide this

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Fly Paper Channel is, it tells us that long term volatility is very low.

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And so this is certainly not a stock that you would want to be trading.

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There are much better energy stocks out

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there with a lot more volatility that are worth risking your money on than Chevron.

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Then Disney has been in a bear market for a while now, and you can see last week, or

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over the past couple of weeks, we've driven up to the Fly Paper Channel.

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Once again, it acted as a resistance, and now we're starting to pull down.

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There's Dow trading below the Fly Paper Channel.

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There's Goldman Sachs making a new low last week.

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Then Home Depot, and you can see the nice big rally that looked like the summer

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renovation season starting on June first and ending on September first.

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Then the stock started to roll over.

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Looking at Honeywell, you can see the

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direction of the Fly Paper Channel, so nothing to talk about there.

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Ibm, the Fly Paper Channel has started to flatten out for a while there.

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You can see investors were willing to buy any dips.

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Now we're oversold and looking to see if the low from last week is going to hold.

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Then looking at Intel, Intel has been a big surprise in 2023.

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It has been hated for a long time, but has

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done fairly well in 2023, still holding up.

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Flypaper channel still pointing higher.

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Then looking at Johnson & Johnson, new low last week for this move.

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And you can see we're trying to hold the lows from back in March of this year.

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Then looking at JPMorgan, flat Fly Paper Channel.

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This was a little anomaly, this pop here.

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Otherwise, we would have been in the channel for a couple of months now.

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And now we're looking to see if we can hold the September low.

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No joy for Coca-Cola, no joy from McDonalds.

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Then looking at 3M, pretty ugly here.

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We put in a high, put in a lower high.

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That was a warning signal.

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Then, of course, once you take out the

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previous low, it tells you that bad things are probably going to happen.

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That was certainly the case for 3M.

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There's Merck, a new low last Thursday.

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Then looking at Microsoft.

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Microsoft is still holding up, but look at what happened.

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We put in a high, a lower high.

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We put in a lower, lower, low.

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I'm pretty sure that Microsoft is going to be heading lower from here.

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Then looking at Nike.

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Well, Nike has started to break down back in May of this year.

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They took it up to the Fly Paper Channel.

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They took it up to the Fly Paper Channel.

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Now they've taken it up to the Fly Paper Channel.

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What do you think is going to happen next?

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Do we break out or start to pull back?

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I believe we're going to start to pull back.

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Then Proctor & Gamble, we're trading up into the Fly Paper Channel.

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You can see that we're trading up to previous resistance, and that's probably

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as high as we're going to be able to go at this particular time.

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Then the Travelers group, again, there was a one day anomaly where we popped up

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through the Fly Paper Channel and quickly reversed, so no joy there.

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Unitedhealthcare made a new high last

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week, so that stock is still loved at the moment.

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And then no joy for Visa trading up into

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the Fly Paper Channel now starting to pull back.

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No joy for Verizon.

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It's been a dog all year and the

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Fly Paper Channel has continued to act as resistance.

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So if we can continue to move higher, we

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would expect the Fly Paper Channel to continue to act as resistance.

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Walgreens has also been a dog in 2023. No joy there.

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Looking to see if we can hold the September Low, which we tested on Friday.

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And given what the future is doing in the

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premarket, we'll probably start to break down below that on Monday.

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And last up, looking at Walmart.

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Walmart recently put in a lower low.

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It looks like we put in a lower high last week.

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So wouldn't be surprised if Walmart continued to move lower from here.

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Let's finish off with the daily VIX.

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And again, we made a new High on Friday.

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On Monday, we're going to remain bearish

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on the market on a short term basis unless the VIX starts to close below 17.36.

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Of course, we're also going to be watching to see what the Pros do with the VIX.

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Right now, the Pros are in control.

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If they start to give up control, that

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would certainly turn us from being short-term bearish to short-term bullish.

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

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Obviously, the recent rally didn't change the overall tone of the market.

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Bigcap tech stocks are still leading the market higher.

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Outside of Bigcap tech stocks, there's a

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handful of winners, but it's not really broadly based.

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It's still looking pretty gloomy for the market in the month of October.

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Hopefully, that could change in the not so

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distant future, but it's not going to change on Monday morning.

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Have a great day, folks.

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And the next time you'll hear my voice is on Tuesday morning.

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