Good morning, everyone, and welcome to Thursday morning. It’s Stephen Whiteside here from theuptrend.com. In the pre-market this morning, stock index futures are currently trading down across the board, but we do have PPI numbers and jobless claims coming out at 8:30 this morning, and they could certainly change the direction of the market. Now, yesterday, we saw some huge moves, and we’ll start off with currencies, the biggest market in the world, and you can see the US dollar index spiking higher. That’s on the back lower prices for the Euro, for the Canadian dollar, for the British pound, and the Japanese Yen, all moving sharply lower on Wednesday. Now, yesterday’s big theme was probably that the bond gods were spuked, and of course, the bond market being much bigger than the stock market. You can see the TLT and the XBB both gapping lower and making new lows for this move. Huge change in direction for the emerging market bonds. You can see we moved up and generated a buy signal on Tuesday and a complete reversal on Wednesday. Then the junk bonds had a huge down day yesterday, and that is the risk off trade. That is probably not a good sign for the stock market going forward.
Now, if bonds are falling, that means bond yields are going in the opposite direction, and they were up across the board on Wednesday. You can certainly see the dramatic move up in the five-year yield yesterday, up over 5% on the day. That is a huge move. That is going to affect certain areas of the market more than others, and that’s going to become apparent in a couple of seconds. Now, we’ve had our hard hat on. We’ve been expecting lower prices for over a week now, so that has not changed. The VIX is still on a buy signal here. That would change on Thursday if the VIX were to close below 14.15. So far from what we’re seeing in the pre-market, that’s not likely to happen on Thursday. Now, there’s the Dow breaking down below the recent low yesterday. It was led led lower by a retail stock, Home Depot gapping, lower down 3% on the day. S&P 500 holding up a bit better, did not close below the recent low, but again being led lower by a retail stock, Deckers. Then the Nasdaq 100 held up fairly well, hasn’t broken down below the recent low.
Fairly quiet trading yesterday being held up by NVIDIA, one of the few stocks to end the day higher. Certainly no change in trend, but NVIDIA is so big that it can certainly help buffer a down move in the stock market. And again, what was the biggest loser on the Nasdaq 100? Another retail stock, Walgreens, gapping lower, making a new low for this move. Then, of course, looking at the mid-caps, small caps, and micro-caps, they all got hit hard yesterday. They’re overly sensitive to rising interest rates, as most of them do not have money in the bank, and they’re living off borrowed money. So not good for any of those stocks in those sectors. Now, what worked yesterday, well, in the US, it was the energy sector up less than a third of a %. Yesterday was yesterday. So that’s how much it takes just to get a win on Wednesday. In the Canadian market, the energy sector was up nearly 2% on the day, holding up the Canadian market. The TSX-60 still trading in the channel. Things would change on Thursday with a close below 33.52. And that could certainly happen on Thursday. What helped hold the market It up yesterday, while on the TSX-60, it was the big uranium stock, Cameco, was the big winner yesterday.
And on the TSX itself, it was Kelt Exploration, up 6.72% on the day, so a huge move up for that stock. Congratulations to anyone owning Kelt. And then what didn’t work yesterday, well, real estate, of course, is interest rate sensitive, and it was down nearly 2.5%. Then we had technology stocks making a new low for this move. We had the financial sector roll over, and the most actively traded financial stock yesterday was the TD Bank making a new low for this move heading down towards the lows from February. Now, let’s finish off today’s presentation taking a look at the world of commodities And Coco made a new high for this move on Wednesday. We had a new closing high for coffee. Cotton, on the other hand, made a new closing low. So at least we’ll be able to buy cheaper underwear as prices continue to rise. And there’s a lumber making a new high for this move before reversing, closing slightly lower on the day. No change in trend for crude oil. This is probably the thing that the Fed is watching the most, and it was up on the day. And natural gas was also up on the day.
Not that significant, less than 1%, so no major move for natural gas on Wednesday. We had copper basically close unchanged. It was down just a couple of cents on the day, so no major move for copper. Then looking at the price of gold, it pulled back $14. It’s up $6 last time I checked in the pre-market, so nobody’s rushing out of gold on Thursday morning. Then the price of silver made a new high for this move and closed slightly higher on the day, so certainly no change in the status for the price of silver. Okay, folks, that is all for this morning’s presentation. I’m doing this ahead of those economic numbers coming out at 8:30 that could certainly change the direction of the market. But so far, it looks like traders want to continue the selling that they did on Wednesday, and that might not be over yet. Of course, we’ll be watching the VIX closely to see how options traders react to the news. Enjoy the rest of your day. Next time, you’ll hear my voice is on Friday morning.
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Stephen Whiteside
TheUpTrend.com
Thursday, April 11, 2024
