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Lower HIghs, Lower Lows 09272023

Good morning, everyone, and welcome to Wednesday morning. It’s Stephen Whiteside here from In the premarket this morning, things are fairly quiet, stock index futures are slightly above fair value, crude oil is higher while gold is down another $7 in the premarket. We’ve got a durable good orders coming out at 8:30 this morning. Then we’ve got energy inventories coming out later in the morning. Let’s start off with a little apology. I’ve been off for the last couple of days. I’ve had to take some unscheduled time off. I recently had the Shingles vaccine and it did not agree with me at all. It’s put me on my back for a couple of days now. Here we are back at work on Wednesday morning. Now looking at the VIX, unlike the stock market, which is making lower highs and lower lows, the VIX is starting to make higher highs. If we just go back across, we go back into the start of July, we made a high, then a higher high, higher high, and another higher high. Of course, that is bearish for the stock market. We’re trying to break away from the 18.75 level. Our next mathematical target is 20.31.

If we were to break away from 18.75, we’d also break away from the 200-day moving average. If we continue to move up, that, of course, would be bearish for the stock market. Now, the US dollar index isn’t helping the stock market that much at the moment. It made a new high yesterday, and it’s gaining strength against not only the Euro, but a lot of other major currencies around the world, including the British pound and the Japanese Yen. Looking at the bond market, the bonds continue to move lower on Tuesday. Bond yields continue to move higher on Tuesday. That, of course, is not good for the stock market. Looking at crude oil, we’re coming off a new early warning signal up at the top of the panic zones here. We’re trying to break down below 87.50. That hasn’t happened yet. We’ve traded below it, but we haven’t closed below it. We’re trying to break out above 93.65. If we can do that, then 83.75 would be our next target to the upside. We’re trading higher in the premarket this morning, so there’s certainly a possibility of making a higher high on Wednesday. Now looking down on crude oil, if we want to see a sell signal here, we need to close below 87.16 on Wednesday.

That would give us a new Sell signal for crude oil. And if that were to happen, that, of course, would join natural gas already on a Sell signal starting to break down below $2.93. Our next mathematical target would take us back down to the lows from early June down at 2.73. And if we want to buy signal and natural gas, we need to close on Wednesday above $2.99. Looking at the metals, Copper made a new closing low yesterday. We’ve got a new closing low for this move for gold. It’s taken up the earlier September low, and now we’re looking to see if we can find support at the August low. Silver holding up a lot better than gold at the moment, but it is back on a sell signal as of Tuesday’s close. Now, month end is just ahead of us, and of course, that has a bullish bias for the stock market. But in a down market, that doesn’t guarantee that we’re going to close higher. It can often just help take off some of the downward pressure that we’re seeing during a down market. Now, looking at the DOW itself, it has broken down below the August lows, so has the S&P 500 heading towards our next target of 421.88 on the SPY.

Then looking at the QQQ’s, they’re starting to break down below the August lows. Our next mathematical target is 351.56. Now, the semiconductors held up fairly well yesterday. They were down nearly 2 % but didn’t take out the recent low. They’ve certainly taken out the August lows but there’s a lot of sectors that have also done that and are looking fairly weak. Even the Russell 2000 or the MicroCaps, they broke down quite a while ago. Then when we look at consumer staples or retail or real estate or transports, they’ve all broken down below the August lows. Much of the market is slipping away at the moment. Can we get a bounce here going into month end? Well, if we do get a bounce, it probably won’t be enough to give us any new daily buy signals. Now moving over to the Canadian market, wasn’t that long ago we were looking to see if we were going to take out the summer highs, but that quickly reversed. Now we’ve taken out the summer lows for the TSX, the TSX-60 for mid caps, small caps and micro caps. The August lows are no longer in play. Then looking at some of the sectors, energy is still holding up fairly well.

It traded up into the channel. I saw some energy buy signals for individual stocks yesterday, financials heading down with the US market. We’re also seeing a weakness in the gold sector, of course, and global mining or the base metals all were down yesterday making new lows. We also saw a new low for industrials and a new low for this move for the infotech sector. You can see we’re just coming right down to the August lows. We’ll have to see if we can find some support there. Then trading right through the August lows is the real estate sector and telecoms also have traded through the August Lowe. Okay, folks, that is all for this morning’s presentation. Just a quick reminder and a prod. If you’re short the market right now or you’re along the bear ETFs, please make sure you take some money off the table and lock in some profits. We don’t know when exactly the market is going to turn around or what the catalyst is going to be. I have absolutely no guarantee. There’s no crystal ball that tells us that the market is going to head sharply lower from here. You don’t need to liquidate a position.

There’s no reason to abandon a short positionposition or to abandon a long, bare ETF position. But it is important to systematically take money off the table as we go. That’s all I wanted to say this morning. Enjoy the rest of your day. Next time you’ll hear my voice, we’ll hopefully be on Thursday morning.

Stephen Whiteside
Wednesday, September 27, 2023

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