Good morning, everyone, and welcome to Friday morning and thanks for joining me for breakfast. In the pre market this morning, ahead of the employment numbers coming out at 8:30, stock index futures are slightly above fair value so far. It looks like people are willing to wait for those numbers to come out before deciding what to do next. Now, the other day we got a buy signal in the VIX and when fear is rising, that is a dangerous sign for the market and that is exactly what happened. So the VIX popped yesterday.
Things would change on Friday if the VIX were to come down and close below 13.34. Now, coming into yesterday’s action, we already had the Dow on a sell signal. Huge down day yesterday for the Dow. The Nasdaq 100 was on a sell signal. We also had the Russell 2000 on a sell signal.
What wasn’t on a sell signal? Well, the S&P 500 was still holding up. It is now back on a sell signal as of Thursday’s close. Now, with energy stocks and gold stocks performing the way they have over the past month, the TSX is still holding up fairly well. It came down yesterday just a little over a third of a percent and sitting right on the edge of a daily sell signal, but certainly holding up better than the US markets right now because of the commodity situation.
Now the Fed is still focused on fighting inflation and I don’t think they’re too concerned about coco, which has been in the news a lot lately. And you can see why coffee has been up recently. I don’t think the Fed is concerned about coffee. They are more concerned about copper. They’re more concerned about lumber.
They’re certainly more concerned about crude oil. Now, if you’ve been watching our videos for a while, you know, 8750 is our next target for crude oil and we’re up at that level now and looking to see if we can break through it or not. If you were with us yesterday, we were looking at the GLD having trouble at 212.50. It was the top of our projected trading range. The trading range has now been expanded.
And if we continue higher from here, then 218.75 is our next target to the upside. Next up, let’s take a look at some weekly charts. And these are handmade. They’re not on the website. But I like to take a look and see what’s happened so far this week and if it’s going to affect long term investors at all.
And certainly we can see options. Traders are spooked. The VIX is back on a weekly buy signal as of Thursday’s close. And Friday’s close is the most important. Thursday really doesn’t mean much.
I’m just taking a look to see what could possibly happen depending on how Friday goes. Looking at the S&P 500, we’re down a little over 2% on the week. We are trading below the previous week’s low right now. If we were to end here today, that certainly would be a very bearish bar for the S&P 500, but certainly not a sell signal. And we’re still trading and closing above the upper channel line.
Now the Nasdaq has been struggling over the past few weeks and here we are trading back in the channel as of Thursday’s close. Again, it’s Friday’s close that we really care about. I’m just trying to get an indication of, you know, has any major damage been done this week? And we can see that damage has been done. We are trading and closing below the previous week’s low.
That is also true for the Russell 2000, which is down three and a third percent on the week so far. And then looking at semiconductors now. Semiconductors peaked five weeks ago and we haven’t been back up to retest that. So that could be a bearish sign for semiconductors. And right now we’re having an outside reversal week for the semis.
And again, we’re still on a buy signal here, no change. And then looking at the TSX, the TSX made a new high this week and we’ve pulled back a little over half a percent and still trading and closing above the previous week’s low. So the TSX looking much more bullish than the other major indices. Now what’s helping out the TSX of course, is the fact that crude oil has been on a weekly buy signal for the last eleven weeks and gold has been on a weekly buy signal for the last six weeks. And that’s helping the TSX.
Now certainly energy stocks can help the US market. The S&P 500, they don’t really help the Dow much or the Nasdaq. And then gold stocks certainly don’t help any of the major us indices. With only one gold stock in the S&P 500 now, everything could change at 8:30 this morning with non farm payrolls coming out and I think the consensus is 200,000. We’ll have to see how the market reacts to whatever the number is.
Yesterday we saw the marijuana stocks lead, the markets lowered. Now when I say that, it’s kind of in jest. The marijuana sector is very small, doesn’t affect the overall stock market at all. It is an area that I know a lot of our subscribers watch closely, but the rest of the world isn’t really watching the marijuana sector. But in our world, it was the biggest loser.
Now, the marijuana sector is very volatile compared to the rest of the market. So it often shows up as the best performer and the worst performer and really isn’t moving the needle that much for the rest of the market. Now, what is moving the rest of the market? Well, semiconductors were the second biggest loser yesterday, followed by biotechs, which have been on a sell signal for a month now. Then, looking at the individual sectors on the TSX 60, it was George Weston was the biggest loser yesterday.
On the TSX, it was Nova Gold. Still on a buy signal that would change on Friday with a close below $3.83. Then we’ve got Salesforce on the Dow was the biggest loser yesterday. On the Nasdaq 100, it was Advanced Micro Devices, which has been on a cell signal for almost a month now. And then on the S&P 500, it was Lamb Weston fell out of the sky.
Obviously an individual stock situation. This is a stock I’ve never seen, I’ve never looked at once in my life. Here it is showing up on the worst performer list from Thursday’s trading action. Okay, folks, that is all for this morning’s presentation. Yesterday was a terrible day for the market.
What we’re seeing in the pre market this morning is a little sign of hope, but certainly nothing that will reverse yesterday’s action. And we’ll have to see how the market reacts to the employment numbers coming out at 8:30 this morning. Thank you very much for your time and attention and support. Have a great day. Have a great weekend.
Next time you’ll hear my voice is on Monday morning.
Stephen Whiteside
TheUpTrend.com
Friday, April 5, 2024
