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Monday Market Outlook 03042024

Good morning, everyone, and welcome to Monday morning. It’s Stephen Whiteside here from In the pre-market this morning, stock index futures and commodities are trading below fair value. So so far, it looks like we’re going to see a little selling at the open on Monday morning. Let’s start off looking at a weekly chart of the VIX, and the VIX is still on a sell signal. That is supportive for higher stock prices on a long-term basis. If we look at a daily chart of the VIX, again, we’re still on a sell signal here. And as long as we close below 14.42 on Monday, we will remain short term bullish on the market. Now, on Friday, I was going to do a review of February, but unfortunately, I wasn’t feeling very well last week and couldn’t do it. So just looking at the charts from February, you can see the S&P 500 was up over 5 %. Looking at the seasonality chart, typically we peak in the middle of February and then sell off into the middle of March. We may or may not do that, but that’s what the seasonality chart tells us to expect.

Then looking at the Nasdaq, the Nasdaq was up again over 5 %, making a new high here. Again, we’re looking for a peak in the middle of February and then selling into March. So far, that certainly has not started and may not start. Seasonality charts are no guarantee. It’s just an average of what happens at this time of the year. Now, looking at the TSX, we are up 1.63% on the month. And looking at the seasonality chart, we usually get buying into the end of RRSP season, which ended last week, and now we expect the market to sell off into the middle of March. Again, that has not started. Then looking at a seasonality chart of the VIX, you can see the VIX Rockets sharply higher during the month of March. Again, there’s no guarantee that this is going to happen. If we look at the chart over the last year, you can see that we did spike at this time last year. And then if we go back two years, Just the whole first quarter, we saw the VIX being highly elevated, getting up over 38 before coming back down into the month of April.

Now, stocks to watch, one that I’m watching closely right now is New York Community Bank Corp, which gapped lower on Friday. It’s not something I’m going to trade or ever look at investing, but the market is certainly concerned about it. It’s something to keep in the back of your mind that this could fall apart and certainly cause a major pullback in the market. Now, at one point last year, we were talking about stocks making lower highs and lower lows, and Apple is starting to do that now, and that is a bit of a concern. You can see on a weekly chart of Apple, we made a new low for this move last week. Looking at a daily chart, we’re breaking down below the 200-day moving average. We haven’t broken away from it yet, but we are trading below it. When We are trading down in the pre-market this morning. So that is a concern for me. Apple is a stock I watch closely. It’s the most widely held stock in the world. And we are looking at the 181.25 level, and You can see we’re starting to break away from that heading towards the 175 level.

If things were to turn around on Monday, a close above $183.86 would give us a new buy signal for Apple. So far, we’re not expecting that to happen. And if it doesn’t happen on Monday, of course, that upper channel line is going to continue to move lower daily. Now, NVIDIA is still the stock to watch. It made a new closing high on Friday. It’s important to remember that we’ve been through this before. This is the AI bubble. We did have a. Com bubble, and NVIDIA looked like this going into the pop of the bubble, and then after it burst, it was down over 90% from the high. Just keep that in the back of your mind that these bubbles usually pop, and when they pop, it’s not usually very pretty on the way back down. Certainly no sign of that starting on Monday morning. Now, I always tell you to always be upgrading. That’s the only way you can keep up with the market. That’s why the major stock market indices continue to move higher over time. You’ve probably heard the term buy and hold. While buying and hold individual stocks is incredibly risky. It’s very hard to tell which stock is going to be successful?

And of course, we can always look back in time and see what would have been the right move. But what you don’t see when you look back in time is all the stocks that are gone. And I always tell the story about IBM back in the ’50s. Yes, it would have been a great investment to buy IBM in 1954. But would you have done that? I mean, there were other computer companies at that time competing with IBM. On average, you probably didn’t pick IBM. You would have picked something else which isn’t around anymore. You need to always be upgrading the stocks in your portfolio to make sure that they are leading. And so the S&P 500 has decided to kick a couple of stocks out. They’re kicking out Whirlpool and Zion’s Bank. Those are coming out of the S&P 500. And what’s going in? Well, Deckers is going in, and Super Micro Computer is also going in. Now, Super Micro is part of the AI bubble, and it has gone from $100 to $1,000 in less than a year. Now, looking at earnings this week, Costco is the one that I’m watching closely, and it hit our next price target last week of 750, which is both a daily and a weekly price target.

The pros have been in control since early November. We’re coming in on Monday on a buy signal. Things would change on Monday if Costco were to close below $732.22. Now, we’re almost done here. Looking at the commodities, we had the energy sector up last week. Energy stocks in the US were up 1.37%. In Canada, they were up over 5%. That’s a lot to do with one stock. Then gold miners were up on the week. No change on a weekly basis, but we do have new daily buy signals. We ran into this situation a month ago. The signal only lasted a day. Hopefully, it will last much longer than that this time. Let’s finish off just noting that a sell signal is not necessarily a sell signal for everyone. In this presentation on a daily basis, we’re looking at the Daily Right Side Chart, which is a short term trading tool, and it’s really designed for swing traders. On Monday, we’re looking for a close below $432.87. Now, if you’re not a swing trader, you’re going to need more evidence that the market is changing direction, and on Monday, We’re looking for a close below $423.

If you’re a long-term investor and you’re not checking the charts daily, you’re going to need a close below $412.26 this coming Friday. If you’re a long term investor and really don’t want to trade the market at all, then you’re going to be waiting for a close below $400 before you jump ship. If we were to get down below $400, that would certainly be the sign that we are entering a bear market. And none of those have happened yet, but the first one we’re going to react to, of course, is the right side chart. And then over time, we’re going to need these other ones to start to fall before we get overly concerned about the health of the market. And none of that has happened so far. When it does happen, when we get our initial sell signal in the Nasdaq or the other major indices, that’s going to be a short term sell signal, and it’s not going to be for everyone. Okay, folks, that is all for this morning’s presentation. We are for a little selling at the open on Monday morning. Not enough to do any major damage from what’s happening in the pre-market this morning, but we’ll just have to wait and see.

Have a great day, folks. Next time you’ll hear my voice is on Tuesday morning.

Stephen Whiteside
Monday, March 4, 2024


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