Market Bounce 11062023

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Hello, everyone, and welcome to Monday morning.

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It's Stephen Whiteside here from theuptrend.com.

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In the pre-market this morning, stock

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index futures are trading right around fair value.

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So far, it looks like we're going to have a fairly quiet open.

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Commodities are mixed with crude oil

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higher while gold is down in the pre-market on Monday morning.

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Now, last week was a historically volatile

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week for the market, and luckily enough, it was to the upside.

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I thought we'd do a little recap of how we got here this morning.

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Remember, we were back in August, we were

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looking for buying into the middle of September, looking at the seasonality

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chart of the TSX, and then some selling into October.

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From the October low, we were looking for

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a move up into November, which would hopefully lead to a year-end rally.

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Now, October is a very spooky month for the stock market.

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Some of the biggest declines in history have happened in October.

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You find a lot of people on edge during the month of October.

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Now, a week ago, we were still watching

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the same movie, which was lower highs and lower lows.

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That had not changed.

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A week ago, I asked you to lock in profits on short positions, whether you were short

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stocks or long-bear ETFs, just to make sure you had already done that.

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From that point on, the market moved higher.

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Why did I tell you to lock in profits down at that level?

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Well, we were very oversold at the time down at the bottom of the Panic Zones.

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We were coming into a weekend that had a full moon.

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We were also coming into month end.

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You don't want to trade against that month end of the money.

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We were also coming into November first.

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Now, November first is significant because

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

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If traditionally people who are selling in May, they come back on November first or

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around that date, depending on the calendar.

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Of course, we don't want to trade against those people if they come back and think

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this is the time and place to get back into the market.

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Now, for six weeks, we were constantly talking about market fear.

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The reason for that was that we had the VIX on a weekly buy signal.

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Of course, when the VIX is rising, we know that portfolio managers are willing to pay

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higher prices for portfolio insurance using options.

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For six weeks, we were expecting lower stock prices.

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Last week, what happened?

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Well, things turned around sharply.

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Now, when the VIX is elevated, the least you should be doing is just stop buying

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and stop looking for buying opportunities in the market because you know the

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probabilities are that the market is going to go down.

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Now, if we look at the seasonality of the VIX, you can see that it usually peaks in

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October and then starts to come down coming into year end.

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And so it is this trend in the VIX to come down over the next month or so is what

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helps fuel the stock market rally into the year end.

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So now that we've got the VIX back on a

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weekly sell signal, we're going to go from being long term bearish to long term

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bullish on the market and we'll continue to be long term bullish

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on the market as long as the VIX continues to close below $19.50 this coming Friday.

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Now, if you're trading the market on Monday, we're going to remain short term

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bullish on the market as long as the VIX doesn't close above $19.81 on Monday.

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You can see that that upper channel line is starting to point down and is going to

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continue to move lower daily until we do close above that upper channel line.

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Now, we've been talking about a range

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bound market and we were talking about the TSX.

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If we go back a month, you can see the TSX was trading in a tight range and we were

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looking to see if the TSX could hold support at 19,375.

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If that wasn't the case, then we would

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expect it to come back down to our next price target at 18,750.

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Move ahead a month and you can see over

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the past two weeks, we've been holding support at the 18,750 level.

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Last week, we completely reversed and started to head back up.

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That's what price targets are for.

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They're not only for resistance, but

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they're also for potential areas of support.

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And of course, if you were short the market, you would be wanting to take some

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money off the table down at a price target like that.

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Now, we're also looking at the Russell

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2,000, which was range bound for much longer than the TSX.

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And we were looking to see if it would break out above 200 or break down below 16

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2.50. A month ago, we were looking to see if it was going to hold the 175 level.

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If it didn't, we were expecting to find support at the 162.50 level.

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And that's exactly what happened.

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We came down for two weeks.

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We used 162.50 as support.

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And last week, we headed back up.

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Our next price target is 175, and we landed at 174.49 on Friday.

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So it looks like the movie might start to change.

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We've got the remote control away from the cat, and we might be changing from lower

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highs and lower lows to maybe higher highs and higher lows.

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And that's what we're looking for.

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We want the year end rally to start.

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Now, I mentioned last week that I thought the rally was based on short covering.

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And at the end of the day, it really doesn't matter.

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When the market goes up, it goes up and it affects everybody equally.

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And that's what happened last week, short covering.

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That's why it was so sharp and so fast,

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because what happens is that people get sucked in.

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When they see the market trading down at

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these levels, they just think it's going to continue to move lower.

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There's nothing wrong with going short, but you're going short at the wrong time.

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We want to be shorting off the top, off

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the start of the trend to the downside, not at the end, but it is at the end where

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people get emotionally involved in taking a short position.

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And that mistake of getting in at the last minute is what causes shortcoming rallies

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to be so quick because the people who shorted down here have no profits in the

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trade and have to get out as quickly as possible.

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Now, nothing's guaranteed.

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The fact that the seasonality has changed, the fact that we've come off lower lows

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and moved up sharply, nothing's guaranteed.

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We just have to work with what we've got.

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What we've got is a lot of resistance to the upside.

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If you've been watching our videos SPY, our next resistance is at 437.50, and then

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just above that is the top of an open gap that hasn't been filled yet.

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That's a potential wall for the market to have to climb over.

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Now for the triple QQQ's,

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367.19, that was resistance, and we traded up and closed just above that on Friday.

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Our next target is the October high.

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Then looking at the Russell 2.000, our

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next target was 1.75, and we peaked out in October just above that level.

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That's going to be an important area of resistance to get over.

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Now, the iShares for the TSX 60 actually

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started to trade above the October highs on Friday.

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You can see just above that, not only do

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we have a price target of 30, 47, but we have an open gap to deal with.

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It could act as a price magnet to pull us

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up and it could act as an area of resistance.

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Now, probably the most important chart to watch this week is Apple.

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Apple did not get hit hard during the month of October.

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It held up very well.

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It had very weak earnings out last week and did not get hit hard to the downside.

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And so we're looking to see if Apple, the most broadly held stock in the world, if

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it can hold and maintain a buy signal at this time, that should be supportive for

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the overall market to continue to move higher from here.

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So on Monday, we're looking for Apple to

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not close below $170.74, and hopefully, it will continue to move higher this week.

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

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We've got to go from being overly bearish to being overly bullish.

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We have to wait and see if the market can

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continue to break out above resistance and if we can start to change the movie

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script from lower highs and lower lows to higher highs and higher lows.

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Enjoy the rest of the day.

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

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