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Is It Time To Sell- 09072023

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Good morning, everyone, and welcome to Thursday Morning. It’s Stephen Whiteside here from the in the pre market this morning, stock index futures are below fair value, being led lower by the Nasdaq. We do have jobless claims coming out at 830, and that could certainly add to the pre market volatility. Now, on Wednesday, we saw the VIX continue to move higher. That’s not good for stocks on Thursday.

We’re looking for a close above 15.51. Now, with the VIX moving up over the past couple of days, it’s been enough to roll the Dow over. The Dow is back on a sell signal as of Wednesday’s close. Now, the biggest hit to the Dow on Wednesday was Apple. Apple came down sharply, bounced off the lower channel line.

So a close below yesterday’s low on Thursday would give us a sell signal for Apple. Now, the other stocks that pulled the Dow down were already on sell signals, whether you’re looking at Boeing, followed by Amgen, followed by Johnson Johnson, then McDonald’s and American Express, and then we’ve got Merck and Goldman Sachs, all already on sell signals, all moving lower, pulling the Dow down on Wednesday. Now, all of that selling was not enough to give us a sell signal for the S&P 500. So again, a close below yesterday’s low would give us a sell signal on Thursday. And the Nasdaq still holding up fairly well, closing at the upper channel line.

So while the Nasdaq is leading us lower in the pre market, it looks like the S&P 500 will be the next to roll over. Then we’ve got the Russell 2000 sitting right on the lower channel line, so not too much farther to go for a sell signal. And that would join micro caps that rolled over on Wednesday. Now, looking at sectors, the biggest drag on the US. Markets on Wednesday were the regional banks, followed by the banks themselves.

And of course, there’s lots of talk out there that some of these banks are going to get downgraded soon, and I guess investors are trying to get ahead of that happening. Of course, the biggest tell is going to be if we can hold the August lows as we move lower in September. Then looking at the Canadian market, we saw a lot of weakness yesterday. The TSX, the TSX 60, mid caps and small caps all pulled back into the channel, while the micro caps are back on a sell signal as of Wednesday’s close. What worked yesterday?

Well, Magna was up. We saw Canadian Apartments move up yesterday. We saw a new high for this move for Sun Life. Then we’ve got Saputo moving up slightly on the day, still on a buy signal here that would change on Thursday with a close below $28.47. Then Sonovis made a new high for this move on Wednesday.

Then looking at what didn’t work, well, Enbridge was the biggest loser yesterday, gapping lower, I guess they disappointed investors. Then we’ve got Algonquin Power back on a sell signal. We’ve got restaurants, brands back on a sell signal. We’ve got TC Energy just holding above the lower channel line, so a close below 48 42 on Thursday would give us a sell signal. Then looking at Emera hitting a new low for this move.

It’s been on a sell signal since late July. Last up a quick look at bond yields. And bond yields moved up on Wednesday whether you’re looking at the five year or the ten year, and that can certainly spook the market if that trend continues. And of course, if bond yields are moving up, we may see bonds move lower. The TLT actually ticked up yesterday, the XBB ticked up yesterday.

What didn’t work was the emerging markets and junk bonds were both down on Wednesday. Okay, folks, that’s all for Thursday morning. Still waiting for jobless claims. They could certainly add to the pre market volatility, but so far it looks like the market wants to do some selling at the Open on Thursday morning. Thank you very much for your time and attention.

Next time you’ll hear my voice is on Friday morning.

Stephen Whiteside
Thursday, September 7, 2023

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