Stock Market Trends - Weekend Edition 07302023

00:00:00

Hello everyone and welcome to this

00:00:02

weekend's edition of Stock Market Timing Television for Sunday, July 30th, 2023.

00:00:08

My name, of course, is Stephen Whiteside from theuptrend.

00:00:11

Com.

00:00:12

Now, Thursday was a wild day in the market.

00:00:14

We made a new high, pulled back, closed lower on the day.

00:00:18

It didn't generate a sell signal for most of the major indices.

00:00:21

On Friday, we did close higher on the day,

00:00:25

inside day, but a new closing high for the S&P 500.

00:00:29

Now, we are coming up to month end, and of

00:00:31

course, month end has a bullish bias to it.

00:00:34

Having a bullish bias does not guarantee success.

00:00:36

If there is negativity, the bullish bias could help dampen that negativity, but I

00:00:42

certainly wouldn't bent against the market coming into month end.

00:00:47

Now, looking at a seasonality chart of the

00:00:49

SPY, you can see that the month of July is usually bullish.

00:00:54

We are looking for the summer rally to end

00:00:56

last week as the market was very overbought.

00:00:59

It continues to be overbought and we

00:01:01

continue to move higher right into Friday's close.

00:01:05

The month of August usually has a pullback as the summer rally ends.

00:01:09

It's not usually a major pullback, but in certain years it has been.

00:01:13

And if we go back and look through the last 10 years, you'll notice that there

00:01:17

have been some very bullish trading in the month of August.

00:01:22

If we start off with 2013, you can see

00:01:24

that we peaked right at the end of July and then sold off into August.

00:01:29

In 2014, we started selling in late July into

00:01:34

August before recovering in the second week of August and moving back up.

00:01:40

Looking at 2015, we got some aggressive

00:01:44

selling going into the second and third week of August.

00:01:48

Then looking at 2016, really not much

00:01:52

downside pressure until we get into September.

00:01:55

Then looking at 2017, you see we peaked in the middle of the first week of August and

00:02:01

then saw some selling for the next couple of weeks.

00:02:04

Then in 2018, it was a pretty bullish year.

00:02:07

We caught a couple of small blips, but for

00:02:09

the most part, the market continued to trade higher into the end of August.

00:02:13

Then in 2019, it was a more typical month

00:02:16

where the selling started at the end of July into the late August.

00:02:22

In 2019 and 2020, very bullish year, no

00:02:26

disturbance whatsoever in the month of August.

00:02:28

Then looking at 2021, very bullish year.

00:02:32

You go back into June, there was a couple of days of distress.

00:02:36

In July, similar situation into August,

00:02:39

and the market just kept moving higher through 2021.

00:02:43

Then in 2022, we peaked in the middle of August and saw that pull back

00:02:48

and then started to move up into the first week of September.

00:02:53

Then things fell apart once again.

00:02:55

That's what the seasonality of the month of August looks like for the S&P 500.

00:03:00

Now, if you've been watching the stock market for any length of time, you know

00:03:03

that we're in a constant state of uncertainty.

00:03:07

We're uncertain about what the market is focused on.

00:03:10

We're uncertain about how the market is going to react to a certain situation.

00:03:14

Are they going to react the same way they did before?

00:03:18

Have the major topics they've been focusing on?

00:03:21

Is that still an issue?

00:03:23

Right now, is inflation still an issue?

00:03:25

I know inflation is still out there.

00:03:27

It's affecting me and my family every day.

00:03:29

Watching the price of gasoline head up to

00:03:32

the highs from 2022, I like to watch gasoline as a

00:03:38

measure of inflation because it affects the most people.

00:03:42

If we look at a number like let's say

00:03:44

what's the value of luxury homes in Los Angeles, if they go up or they go down,

00:03:49

that doesn't affect the overall population.

00:03:51

I'm not sure I really would care much about analyzing that as part of inflation.

00:03:57

But here we've got inflation is still an issue.

00:04:01

Is it an issue to the market?

00:04:03

It may be an issue to consumers, but is it an issue to the market?

00:04:06

Is it an issue that the Fed still wants to deal with?

00:04:09

Now, when we look at the bond yields on

00:04:11

the 30 year bond, and this is a weekly chart, you can see we've been in a fairly

00:04:15

narrower range for the past year and a half.

00:04:18

We peaked back in 2022, and then we've

00:04:21

come back a bit and basically been trading sideways.

00:04:24

There's no indication that bond yields are

00:04:26

going to go down and interest rates are going to go down anytime soon.

00:04:29

Is that still a concern of the market?

00:04:32

It's really have no idea.

00:04:34

And so that's why we just like to watch price action as opposed to trying to

00:04:38

analyze and guess which way the market is going to go next.

00:04:41

Now, it's often said that the market is

00:04:43

forward looking, and yes, part of the market is forward looking, but

00:04:47

the market tripped and fell on its face on Thursday because of news out of Japan.

00:04:52

So is that very forward looking?

00:04:54

That if the Bank of Japan says something

00:04:56

and the market stumbles, that isn't very forward looking at all.

00:04:59

But now what we might be seeing right now is the stock market looking past

00:05:06

dealing with inflation and looking past the Fed rate tightening cycle

00:05:12

and looking at what the world is going to look like beyond that.

00:05:14

And that could be why the stock market is continuing to move higher at this time.

00:05:19

Now, one of the other topics we've been dealing with in 2023 is US bank failures.

00:05:23

And we had another one this week, really

00:05:26

small bank in Kansas City, just a couple of branches.

00:05:29

But banks are continuing to struggle.

00:05:32

And I think we're going to see a few more

00:05:34

bank failures in 2023, including probably a major one at some point if the Fed is

00:05:40

going to continue to raise rates into the end of 2023.

00:05:44

But now, the market isn't really reacting too much to China these days.

00:05:48

Maybe they are and we don't notice it.

00:05:51

But China is not doing very well.

00:05:54

It hasn't been for a while.

00:05:55

It's got a housing crisis, it's got a bank crisis.

00:05:58

Neither of those those two issues have gone away.

00:06:01

One of the ways they're dealing with the housing crisis is by demolishing hundreds

00:06:06

and hundreds of condo buildings or apartment buildings.

00:06:10

And that's one of the ways to deal with the problem.

00:06:14

Now, looking at the charts this weekend,

00:06:15

one of the ones I'm concerned about is the TSX and the ishares for the TSX 60.

00:06:20

The TSX is traded up to previous

00:06:22

resistance on the daily chart and the weekly charts.

00:06:25

That's also true for the ishares for the TSX 60.

00:06:28

Our Magic number is 31.25 on the daily and weekly chart, and we closed at 31 23.

00:06:36

We closed very close to where we opened this week.

00:06:39

Looking to see if we can break out above the recent highs from earlier this year.

00:06:45

If we go back to the TSX chart and look at

00:06:47

the daily chart, two lines up takes us up to 21,250.

00:06:51

If we can start breaking out above resistance and above the highs from back

00:06:55

in April, then looking two lines up is realistic.

00:06:58

That would be one line on the weekly chart, so 21,250.

00:07:03

Then if we look at the ishares for the TSX 60, if we can take out the high from

00:07:07

April, then 32.03 would be our next target and 32.03

00:07:12

would be our next target on the weekly chart as well.

00:07:17

That's where I think the markets could go

00:07:19

if we can punch through the resistance that we're dealing with right now.

00:07:23

To do that, I'm pretty sure we'd have to see commodities continue to move higher.

00:07:28

Of course, if they're moving higher, that means inflation is still an issue.

00:07:33

Looking at the VIX, and the VIX is still

00:07:35

on a weekly sell signal that's supportive for higher stock prices.

00:07:38

The VIX is a bit harder to deal with at

00:07:40

the moment because it's contracted so much.

00:07:43

So on the weekly chart, we are looking for a close this coming Friday above

00:07:47

$16.45. When we look at the daily chart, I really want to break out above the top of

00:07:53

the fly paper channel, which is currently at $17 and change.

00:07:57

On the daily right side chart, we had a wild day on Thursday.

00:08:01

We made a new low, came back, closed above

00:08:03

the upper channel line, and then reversed all that on Friday.

00:08:07

So we're back to where we were on Wednesday according to the VIX.

00:08:12

Now, when we look at a daily chart of the VIX, you can see in April we came down and

00:08:17

we were range bound for a couple of months.

00:08:20

Then in June we came down.

00:08:22

Now we've been range bound for a couple of

00:08:24

months, and now we're looking to see if we can break out of the range.

00:08:27

The recent low was 12.73. The recent high

00:08:30

was 17.08. Now we're looking to see if we will break out of that.

00:08:35

If we break down, that is bullish for the stock market.

00:08:38

If we start breaking out above 17.08, of

00:08:40

course, that would be bearish for the stock market.

00:08:43

Last up, the seven stocks to watch.

00:08:45

Nothing broke this week, so the stock market has not broken.

00:08:49

Inside week for Apple, making a new closing high.

00:08:53

Big up week for Alphabet.

00:08:55

Then we had Amazon after dipping in the

00:08:59

channel, it came back and closed higher on the week.

00:09:02

Meta made a new high on Friday, had a wild week.

00:09:05

Then looking at Microsoft, Microsoft peaked last week.

00:09:08

It came back this week.

00:09:10

So Microsoft looks like it's the weakest stock of the seven.

00:09:14

Then looking at NVIDIA, we had a new closing high for NVIDIA this week.

00:09:20

And then looking at Tesla, Tesla had a

00:09:22

fairly quiet week, still trading above the upper channel line.

00:09:26

No change in trend for Tesla.

00:09:29

Okay, folks, that's all I wanted to say for this weekend.

00:09:31

No major trend changes.

00:09:33

The VIX is in a very tight range, looking for a breakout of that range.

00:09:38

Otherwise, enjoy the rest of July, and the

00:09:41

next time you'll hear my voice is on August first or Tuesday morning.

Transcription