Stock Market Timing Television - Weekend Edition 07092023

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Hello, everyone.

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It's Stepen White side here with this

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weekend's edition of Stock Market Timing, Television.

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Now, this was a holiday shortened week and

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the market does very focused on bond yields, which moved up sharply this week

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and looking to see if we can break out above the 2022 highs for bond yields.

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Of course, bond yields rising usually equates to bonds falling in price

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and the 30 year bond was down just a tick under two and a half % on the week.

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Now, there is a Fed meeting in the month of July, and it's almost 100 % consensus

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that the Fed is going to raise 25 to 50 basis points.

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So that's already baked into the market.

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But as you know, if you've ever watched

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any of the Fed meetings, it's not necessarily what they do.

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The market often overreacts to what they say afterwardss.

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Everybody will be keeping an eye on that,

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especially currency traders, which have been in basically trading water, whether

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you're looking at the US Dollar index, and of course, it's a weekly chart.

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They've been trading water in the channel.

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That's also true for the Euro.

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So currency traders really just taking the month of June off, waiting for something

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to happen in July before they put more money on the table.

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Now looking at the VIX.

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The VIX started to move up on Wednesday,

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peaked on Thursday and had a pull back on Friday, still on a daily buy signal.

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Of course, on a short term basis, that's negative for stocks.

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Looks like we're catching resistance at

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15.63, which is where we'd expect to catch it.

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If we can start breaking out and closing

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above 15.63, then 18.75 certainly comes into play.

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Now, of course, what's happening on a

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short term basis does not affect long term investors.

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Still looking for a close this coming

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Friday above $17.49. So it came down another 50 cents this week.

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If we get a close above 17.49, then yes,

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long term investors need to be concerned about what's going to happen next.

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Now, on the daily charts, we did get a

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sell signal for the TSX 60 and for the DOW 30.

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Still waiting for a sell signal for the S&P 500, the Nasdaq 100.

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Both of them did not generate sell signals

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this week, even though they traded down to the lower channel line on Thursday.

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We did see a big sell off in the mid caps

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and microcaps on Thursday, but they came back into the channel on Friday.

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There was certainly some interest in buying some margins on Friday.

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We'll have to see if that continues this week.

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Now, the market is, I would call it, very unstable at the moment.

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There's just a handful of stocks still holding the market up.

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What I would say to you is the first thing

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we're going to be looking for, of course, is a close below the previous week's low

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for Apple, for Meta, for Microsoft, for NVIDIA, and for Tesla.

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Tesla gapped higher this week and made a new high before pulling back.

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It's a bearish reversal signal, but again,

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we didn't close below the previous week's low, so not overly concerned just yet.

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But that is going to be the first sign

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that something new is happening if the market starts to give up on those stocks.

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Now, when I talk about those big cap tech

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stocks leading the market higher, they're leading it in several ways.

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First of all, their capitalization or the

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value of the companies have continued to increase.

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But also, oddly enough, they're the most actively traded stocks in the US.

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Tesla is eight out of 10 days is the most actively traded stock.

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When those stocks start to pull back and people start selling, that is going to

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cause a cascading effect for the rest of the market.

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That's what I'm overly concerned about.

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Now, at the same time that the stock market indices have been doing really well

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in 2023, being led by those big cap tech stocks.

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At the other end of the market, we've got

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the financials, which are still struggling here.

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On a bullish note, in March, we actually

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made a higher low for the SPDR Financial ETF.

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We've been on a buy signal for a month now, but still haven't gone anywhere.

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And a lot of that upward momentum has been

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from the insurance sector, not from the banks.

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So the pros still haven't taken control.

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When we look at US banks, we've been in the channel for the past couple of weeks.

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We have not generated a buy signal.

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The pros do not look like they have any interest in taking control right now.

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Remember, we're looking at weekly charts here, so a longer term view of the market.

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Regional banks, yes, they've come off

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their lows from a couple of months ago, but still haven't gone anywhere.

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The pros still haven't shown any interest in taking control at the present time.

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Now, what I'm probably seeing here is that the pros aren't aggressively selling

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anymore, but they haven't come back to buy either.

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With interest rates going to continue to rise, probably for the rest of the year, I

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don't see any hope that these are going to come back anytime soon.

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No interest of the broker dealers.

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We have seen some positive price action for the insurance stocks.

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But again, the pros have not taken control.

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When we look at the Canadian market, the

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financials have not generated a weekly buy signal yet, neither have the banks.

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The banks are still, the pros have shown no interest in taking control.

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They did back in April, but that only lasted a couple of weeks.

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Here we are looking for money to come back into Canadian banks.

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Certainly, the pros are not showing any

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incredible interest in the Royal Bank right now.

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In the US, Bank of America looks like this.

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The further you get away from those big national banks, then you get into the

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regional banks and the pros showing no interest in taking control at the moment.

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Now, there are certainly some stocks in

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the financial sector that have been doing very well.

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Berkshire Hathaway is one, and you can see

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the pros took control back at the end of March, and the stock's been moving higher.

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In Canada, the Canadian version of

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Berkshire Hathaway is is Fairfax and pros took control back in October.

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The stock has moved up

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nicely and you can see it looks like the pros are giving up control, but you can

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get this chart action with the pros not selling they just have stopped buying.

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As we got up towards $1,000 here, it looks like the pros have

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stopped out bidding the public for shares in this particular stock.

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That doesn't guarantee that it's going to go down.

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It'll probably go down with the rest of the market.

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But this is not necessarily a negative thing.

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We need to have confirmation of negative price action as well.

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And so far, we haven't got that.

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So let's just assume that the pros have stopped buying.

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That does not mean that they have started to sell.

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And we can see that as we haven't had any

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major negative price action over the past couple of weeks.

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Now, looking at Fairfax, you can see that

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investors since 2021 have been buying the dip.

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And so if we get a pullback here down to

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the $800 level, which would be about a 20 % pullback,

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we could still look for buying opportunities after a move down to the fly

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paper channel if that happens anytime soon.

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And of course, if we see a 20 % pullback

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in Fairfax, we'll probably see a 20 % pullback in the overall stock market.

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Let's finish off with a quick look at commodities.

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No trend changes here.

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Gold was up $3.10 on the week.

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Silver was up $0.26 in change.

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Trading up to the lower channel line, no change there.

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Crude oil traded up to the upper channel line looking for a close this Friday above

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72.87. And we had a pull back for natural gas into the channel looking for a close

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below 244 this coming Friday to give us a weekly sell signal.

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

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We've now moved into that time of the

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month where the market is going to be focused on the Fed meeting.

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They've already agreed that the Fed is going to raise rates.

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Of course, they'll be more concerned about what the Fed says than what it does.

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Enjoy the rest of your weekend.

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

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