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Canadian Stock Market Trends – 07262023

Good Morning, everyone, and welcome to Wednesday morning. It’s Stephen Whiteside here from with a midweek look at the Canadian stock market. Well, today’s all about the Fed. We are expecting a 25 basis point rate hike. If the Fed deviates from that at all, that could spark some market excitement. The VIX has been treading water for the past couple of days in anticipation of the Fed meeting. We need to close above 14.20 to tell us the market wants to go bearish. If we start closing below 13.55, that would be a sign that the market wants to continue to move higher. Now, the TSX and the TSX 60 had a small pullback yesterday. We are up at resistance. If we can take out the April highs, then we can look two lines up to a new playing field. The TSX 60 has not recovered as much as the TSX itself. That’s probably has a lot to do with the banking sector. So here we are up at 1234.38. We closed just below that yesterday. If we can take out the recent highs from two days ago, then we’re looking for a move up to 1250.

Now, while the TSX and the TSX 60 pulled back on Tuesday, midcap, smallcap, and microcap stocks were all higher on the day. Now, copper was up nicely yesterday, helped put a bid into the mining sector and HudBay led the mining sector higher up over 8 % on the day. We also had a big up day for Ero Copper, up over 4 % on the day. Moving on to the energy sector, a new high for the energy sector. On Tuesday, we saw crude oil continue to move higher. Crude oil is pulling back a little. We are at resistance of 75 38. If we can break out above that, then 81.25 comes into play. We’ve got natural gas stuck at resistance. Our price target is 2.73. We closed at 2.74 yesterday. If we can take out the at the June high, then 3.13 will come into play. Then looking at a couple of energy stocks, we got Crescent Point making a new high on Tuesday, new high for Canadian Natural Resources while Baytex pulled back slightly, having an inside day, so a day of indecision. Then moving on to the gold sector, fairly quiet. We’re in the channel, still on a buy signal here.

The price of gold still trading in the channel. It is up in the premarket this morning as is the price of silver. So both commodities are still on buy signals here. Looking at B2Gold, the most actively traded gold stock on the TSX on Tuesday, it is trading back in the channel. So a close above $4.88 would give us a buy signal on Wednesday. Barrick is still on a buy signal, and we also have Kinross still on a buy signal. Then looking at the financials, and this is the sector that probably led the market lower on Tuesday, you can see the new early warning signal up there at the top of the screen. And you can see on the right side chart that we did close below the previous day’s low. So that is bearish. Didn’t have a lot to do with the major insurance companies. Manulife was up. Sun Life was up on Tuesday. Had a lot more to do with bank stocks. BMOwas down on the day, did not close below the previous day’s low as Bank of Nova Scotia certainly did. Down 2.61 % on the day, which is a big move for a bank.

And we are back on a sell signal. We also saw weakness in Canadian Imperial Bank of Commerce, which was down over 1 % back in the channel. So close below $56.94 on Wednesday would give us a sell signal. We had an inside day for the National Bank, basically closing unchanged just up two pennies on the day. Then looking at the Royal Bank, yes, we pulled back, did not close below the previous day’s low unlike the TD Bank trading rating down to the upper channel line. So a close on Wednesday below $83.93 would give us a sell signal for the TD Bank. Then looking at the InfoTech Index, still on a buy signal here, but barely Shopify not helping back on a sell signal right now joining BlackBerry and Lightspeed already on sell signals. What’s working? Well, we’ve got Celestica still on a buy signal, closing higher on the day. We saw Constellation Software close slightly higher on the day and a big update for Coveo up over 6 % on the day, making a new high for this move. And last up, we had Open Text also higher on the day, up a little over 2 %, making a new high for this move heading towards the highs from early June.

Okay, folks, that is all for this morning’s presentation. Thank you very much for your time and attention. And of course, if you have any questions, just reply to this email and we’ll be happy to answer them as quickly as possible. Enjoy the rest of your day. I’ll be back a little later to look at the US stock market.

Stephen Whiteside
Wednesday, July 26, 2023

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