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Morning Market Outlook 05082024

Good morning everyone, and welcome to Wednesday morning. It’s Stephen Whiteside here from And thanks for joining me for breakfast. In the pre market this morning, stock index futures and commodities are slightly below fair value. So so far it looks like we’re going to see a little selling at the open on Wednesday morning. Well yesterday the VIX continued to move lower. Things would change on Wednesday if the VIX were to close above 15.87. Now last week we saw a lot of selling in the market and the VIX remained steady, did not push up and we were looking to see how the market would resolve. And of course the market has flipped over and it resolved in favor of the VIX. So options traders obviously had a better handle on things than stock traders did last week. Now yesterday the market stopped on a dime. The S&P 500 got up to 5200 and pulled back. Not a major pullback just yet, but certainly an indication that 5200 is an important number to the market. The high yesterday was $5,200.23. Now we pulled back, we’ve got a pressure zone that’s bearish. We bounced off 5000, we traded slightly below it and then started to move back up.

So we’re heading towards the previous high which is up there at 5264.85. And if we can take that out then 5312.50 does come into play. Now we bounced off the 100 day moving average. We’ve moved back up above the 50 day moving average. We’re still projecting higher here. The Flypaper Channel acted as support. Now we were oversold, we’re moving back up. We’re not overbought just yet. So all of that looks bullish at the moment. The problem is that the market is still in risk off mode. And the reason I say that is over the last 30 days the best performing sector has been the Utilities, not Semiconductors, not technology. It’s been the Utilities followed by Consumer Staples, not Consumer Discretionary. So Consumer Staples of course are those products that you need no matter what happens. And those stocks have been rising and they’ve been winning. What hasn’t been winning? Well the Transports are the least productive major sector out there after some of the commodity sectors. And yeah, that’s the way the market looks right now. The headline of the S&P 500 hitting 5200 is one story. There’s something else going on in the background we should be aware of.

Now let’s move on. Take a look at commodity ETF’s this morning and we’ve got crude oil making a new low for this move in the pre market. So we’ve been on a sell signal for a few weeks now, and that move down in crude oil is helping push gasoline prices lower a little bit into natural gas over the last couple of days. And going back from the ETF to the futures contract, I do want to see more positive activity in natural gas before I get overly excited about it. You know, it’s very hard to trade natural gas for a reason and it has very high volatility and you can get suckered into a trade very easily. So we want to give natural gas a little more breathing room, even though technically it is on a short term buy signal on the ETF. Then looking at the metals. Gold still on a sell signal. Trading slightly lower in the pre market this morning. Things would change on Wednesday for the GLD if it closed above $215.77. Then looking at Palladium, we’re looking for a close above $90.13 on Wednesday. And if that happened, that would join platinum already on a buy signal, making a new high for this little move.

Heading up towards the high from back in April and then looking at the price of silver. The SLV is on a buy signal right now. That would change on Wednesday with a close below $24.49. Next up, let’s walk through the New York most actives from Tuesday’s trading action. First up we’ve got Palantir, which got whacked yesterday. And we had several opportunities to take money off the table at $23.44 and $25. So you should have a partial position left, which you’re going to liquidate at the open on Wednesday morning. Next up, we’re looking at Marathon inside day yesterday. No joy there. Looking at Tesla pulling back in the channel. A close below $172.45 would give us a new sell signal on Wednesday. Then looking at Apple. Small gain there for Apple. Then we’re looking at Neo. And Nio pull pulled back closed below the previous day’s low. No change in trend there. Then we’ve got Soundhound having an inside day. A close below $4.24 on Wednesday would give us a sell signal. We made a new high for Pfizer yesterday before pulling back. And you can see that we moved up to an area where we peaked back in March here.

So you’ve had several opportunities to take money off the table and waiting for a pullback here. We’re still well above the upper channel line. So not concerned about a sell signal on Wednesday. Then looking at Sofi, no joy. Looking for a close above $7.30. On Wednesday to give us a sell signal. And then GameStop’s come into focus once again. It’s on a buy signal right now. Ran up to the 17.19 level a couple of times, so hopefully you got some orders filled up at that level. But it looks like that is a major wall of resistance right now. And then last up, we’re looking at American Airlines. We’re on a buy signal. Inside day yesterday, no joy. There could be something new happening. We made a slightly higher high. We made a higher low here. So something could be brewing for this stock. We’ll just have to wait and see. Let’s finish off with a quick look at the TSX most actives from Tuesday’s trading action, starting off with Enbridge. Enbridge made a new high for this move on Tuesday. Unfortunately, the TD Bank not going anywhere right now. Inside day on Tuesday then looking at Manulife reversal there, I guess the air is getting pretty thin up here.

Trading up towards the high from back in March. That’s also true for the Royal Bank. Had a pullback yesterday, coming up towards the highs from early April. Then we’ve got Suncor back on a buy signal as of Tuesday’s close. Personally, I wouldn’t chase any of these buy signals up here. We’re up at the top of the panic zones. It’s a lot harder to make money up here, especially when crude oil is heading in the opposite direction. Inside day for Bayte, no change in trend there. Then we’ve got Cenovus, still on a sell signal. No change there. Then we’ve got caliber mining, still on a buy signal. No change in trend. No change in trend. For Tourmaline. It traded up through the upper channel line again. I’m not going to chase these up here. We need to wait until we’ve had a substantial sell off before we want to start chasing these again. Then looking at Bank of Montreal, we’re on a buy signal right now. Had a pullback yesterday, no change in trend. And then last up, Air Canada dropped out of the sky last week. We had several opportunities to take some money off the table, so hopefully you didn’t get stuck with a complete position.

When we look at the panic zone chart, we are projecting way down towards 16.50. To get there though, we’ve got to be able to take out the recent low from April and then take out the recent low from March. So you’ve got to give those some weighting. It’s not an automatic move down to these levels. You’ve got to break through those levels of support. And if you look across here, there was a lot of trading going on around the $18 level. So it’s really, you know, it’s going to take a lot of work and a lot more bad news to get it all the way down there. It is possible, and that’s what we’re projecting. But you’ve got to look backwards and see, okay, well, how much resistance or support is going to be between where we are to where we think we’re going to go. And there is a lot of congestion along here. So it’s not an automatic. It is what we’re projecting. But there’s a lot of work on the downside to do before that happens. Okay, folks, that’s all for this morning’s presentation. Just looking over my shoulder, I see the stock index futures are still fairly quiet, slightly below fair value.

Commodities are mixed. I’ve got crude oil down $0.60 while gold is up $0.50. So it looks like we’re gonna have a fairly quiet open on Wednesday morning. Have a great day. Next time you’ll hear my voice is on Thursday morning.

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Stephen Whiteside
Wednesday, May 8, 2024

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