Hey, good morning everyone and welcome to Friday Morning. It’s Stephen Whiteside here from theuptrend.com in the pre market this morning stock index futures are above fair value. So we are looking for a little buying at the open on Friday morning. Now yesterday was a very bad day for the stock market and we’ll start off with a couple of charts. US dollar index kept moving higher yesterday.
At the same time bond yields continue to rise across the spectrum from five year to 30 year. They all moved up on Thursday. Now Thursday was a bad day for the stock market even though the headline might not tell you. So we are coming up to a three day long weekend. We are coming up to month end.
Both have a bullish bias. Seasonally. This is also a good time to be in the stock market. You can see seasonally, we usually get a rally into the first week of June and then a pullback into the end of June. And of course the end of June is the end of the quarter and then we get the summer rally.
That’s historically what happens. So seeing some buying coming into Friday morning before a long weekend, not that unexpected. Of course we do have the debt ceiling negotiations hanging over our heads and that could actually crash the stock market if things do not work out. Now while most of the stock market was going down on Thursday, nvidia was leading the tech stocks higher once again. And of course this is one of those big cap tech stocks that has been keeping the market afloat in 2023.
And so yesterday we came in already at the top of the panic zones and so we saw a panic buying yesterday. A lot of that was probably short covering. I think they had over $9 billion worth of Nvidia stock shorted going into yesterday. And if you were short Nvidia for some strange reason, I have no idea why you would be short Nvidia. Apparently some people think the stock is overvalued.
Well if it was overvalued on Wednesday then it is certainly overvalued today. And so here we are making a new high for Nvidia. Where did we get to? Well, if we look at the weekly chart from last Friday, we knew that 343.75 is where the stock topped out in 2021 and then above that was 375 on the monthly chart. Our next price target was 375.
We were stuck at 312 50. We got to lock in profits there and then we popped yesterday. So if you had an order in at 343.75 or 375, they both got filled at the open which was up at 385.23. So congratulations to anyone who locked in some profits yesterday on Nvidia. I would be a seller of Nvidia if we started to break down below yesterday’s low.
Obviously our lower channel line is currently at 301.76 and you don’t want to give up all of those profits if we’re up over 375. So yesterday’s low was 366.35. I would liquidate the remainder of my position if Nvidia started trading below that level over the next few days. Then looking at the VIX, the VIX pulled back yesterday looking for a close on Friday below 17.07. Then looking at the Dow, we made a new low yesterday.
We made a new low for the TSX. The S&P 500 came back. Now we had a sell signal from Wednesday’s close. You come in on Thursday morning, you see we’re going to open at 414.74. So you can wave off that sell signal.
Or if you took the sell signal, you got to sell at a higher level. So congratulations there. And then of course, the Nasdaq made a new high yesterday. We saw a big move up for semiconductors. Of course Nvidia being a semiconductor.
Now the rest of the market, well, looking at Canadian small caps, they’ve started to break down below the March lows. We’ve got micro caps moving down yesterday in the US. Mid cap stocks are sitting right at the lower channel line. So any lower close on Friday would give us a sell signal for the Ishares for the Russell 2000 and the Ishares for the microcap sector. We are back on a sell signal as of Thursday’s close now.
Big move down yesterday for Consumer staples. Retail stocks trading below the March lows. Big down day yesterday for Healthcare. Biotechs back on a sell signal as of Thursday’s close. Big down day for pharmaceuticals.
Then we had materials, metals and mining making new lows. Utilities, big down day for utilities. So you can see that a lot of the market was heading in the opposite direction of Nvidia. Then looking at the Canadian market, of course it was all about financials and bank stocks. We had bank earnings out all this week and that’s put downward pressure on the financial sector.
Then energy stocks pulled back yesterday, still on a buy signal. That would change on Friday for the index with a closed blow 223.16. Then looking at gold stocks, they continued to move lower. So did global mining stocks and material stocks. All made new lows yesterday.
We saw a new closing low yesterday for Canadian real estate. Then we got telecom stocks down 1.77%. Big down day for the telecom sector. And then last up we had utilities making a new low for this move. Let’s finish off today’s presentation taking a look at commodity prices and copper held the previous day’s low yesterday.
I’d get more excited if we closed above the previous day’s high. There’s the price of gold making a new low. The price of silver making a new low. Crude oil pulled back into the channel. A close below 69.56 on Friday would give us a sell signal.
And there’s natural gas coming right back down and sitting on the lower channel line. So any lower close on Friday would give us a new sell signal. Okay, folks, that is all for today’s presentation. Looking for a higher open on Friday. Going into a three day long weekend.
US. Markets will be closed on Monday. Canadian markets will be open on Monday, but we’re not going to post any charts. Whatever happens to the Canadian market on Monday is kind of irrelevant since there’s not going to be any adult supervision from the US. Market.
And we’ll find volumes down probably about 40% on Monday. Enjoy the rest of the day. Next time you’ll hear my voice is on Sunday.
Stephen Whiteside
Friday, May 26, 2023
