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Canadian Stock Market Trends 10032023

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Good morning everyone and welcome to Tuesday Morning. It’s Stephen Whiteside here from in the pre market this morning, stock index futures and commodities are below fair value. So so far it looks like we’re going to see some selling at the open at 930 Tuesday morning. Well, Monday turned out to be an interesting day for the most part it was negative, and it was negative enough to take the TSX and the Russell 2000 negative for 2023. So those big cap tech stocks are still playing a big role in keeping the Nasdaq, the S&P and the Dow higher for 2023.

Now looking at the TSX, we are down 1.86% on Monday. The TSX 60 was down a little less at 1.82%. Then mid cap small caps and micro caps were all down over 2% on the day. Now we saw the US dollar index continue to move higher on Monday, putting downward pressure on all the major currencies. Of course the first one we think of is the Euro, but we also saw downward pressure on the Canadian dollar which came right back down to the September lows.

We also saw bond prices continue to move lower on Monday, putting upward pressure on bond yields. And of course that put downward pressure on all the interest sensitive sectors. The most damage was done to the utility sector on Monday on both sides of the border and then of course, financial institutions, including the major banks. There’s the Bank of Nova Scotia. There’s the Royal Bank.

Both making new lows on Monday. And we saw weakness across the board, including the insurance sector. And there’s Manulife making a new low for this move on Monday. Let’s move on to the world of commodities and we’ll start with the energy sector. We’ve got crude oil back on a sell signal as of Monday’s close, joining natural gas already on a sell signal.

Canadian energy stocks pulled back, generating a sell signal on Monday. We’re looking at the Ishares for the TSX Energy Sector and we can see that we put in a lower high on Thursday. On Friday we pulled back in the Channel. On Monday we rolled over. Now we talked about this continuation trade.

There was recently a bunch of new buy signals in a lot of energy stocks and this continuation trade was a high risk trade. We knew that ahead of time. Low risk trades come off the bottom of the Panic Zones where pressure zones have formed. If you had money in this trade from back here, then you don’t mind risking it up here to see if we could push the market higher. But obviously you don’t want to be stepping in with new money up at the top of the panic zone and that’s also true for the overall market.

Now looking at this Panic Zone chart, we don’t have an early warning signal up at the top of the screen just yet. So we haven’t had a major breakdown so far, we are projecting down towards the $15 level. Of course, to get there, we’ve got a breakdown below a lot of different levels of support, including an open gap, but there is lots of support there at the $16 level. Of course, projections don’t know what they don’t know, and they evolve over time. The crude oil market could certainly reverse tomorrow and head right back up and take the rest of the energy sector with it.

But that’s not what we’re dealing with on Tuesday morning. We’re looking at lower stock prices and lower energy prices on Tuesday morning. Looking at the Stockhouse bull boards. Baytex is still the most popular energy stock on stockhouse, and Baytex reversed yesterday and is back on a sell signal as of Monday’s close. Athabasca made a new high yesterday before reversing.

Looking for a close on Tuesday below $3.93 to give us a new daily sell signal. Looking at Pipestone, we’re back down at the August lows, trying to find support at 195. If that breaks, then 176 would be our next target to the downside. Then looking at Uranium Energy, we’re back on a sell signal as of Monday’s close, joining Tamarack Valley,

already on a sell signal, so no change there. Currently holding support at 3.71. If that breaks, then 3.52 would be our next target to the downside. Looking at the big cap energy stocks, the most actively traded was Canadian Natural Resources. We need to close on Tuesday below $85.84 to give us a sell signal, and then that would join Suncor, which generated a sell signal as of Monday’s close.

Next up, let’s take a look at the mining sector. And we’ll start off with commodities. And we’ve got copper down at last week’s low, so no change in trend there. New low for the price of gold. It was down $18.90 yesterday.

It’s down $3 or so in the pre market this morning, heading towards our next level of support at 1812.50. Of course, if that breaks, then 1750 comes into play. There’s. The price of silver down nearly 5% on the day, so no change there. Now, looking at the Ishares for the TSX Global Gold index, we were down 2.65%, making a new low for this move.

Now, the opposite of this, of course, is to be long the HorizonS BetaPro Bear ETF for the gold miners. And it made a new high yesterday, ran up and hit our next price target of 7.81. Now, if we continue to move higher from here, our chart of course, is going to expand and bring new targets in. The easiest way to find the next new major target is just to look at the weekly chart and you can see that as of last Friday, our next target was 7.81. That’s where we peaked out earlier in 2023.

If we keep going from here, then 9.38 would be our next target to the upside. If we start breaking out above 7.81, now looking at individual gold stocks. We’ve got Barrick making a new low. We’ve got Ignico Eagle making a new low, new closing low for B two gold. Then we’ve got Eldorado making a new low, starting to break down below the August lows.

Kinross continuing to move lower, so no change there. And then new low for new gold. And then out of all of those gold stocks, the one that looks the nicest to trade or the easiest to trade would be Eldorado. So that’s the one I’m going to be watching on the way back up. Of course, there’s no reason to be looking to buy it on Tuesday morning.

We had new closing low. Yesterday, we dipped below the August lows. And the first sign that something new is happening, of course, is going to be the first close above the previous day’s high. And not expecting to see that on Tuesday. Okay, folks, that is all for this morning’s presentation.

Looking for some selling at the Open on Tuesday morning. Have a great day. Next time you’ll hear my voice is on Wednesday morning.

Stephen Whiteside
Tuesday, October 3, 2023

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