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Morning Market Outlook 05102024

Good morning, everyone, and welcome to Friday morning. It’s Stephen Whiteside here from Well, it seems to be a happy Friday. We’ve got stock index futures and commodities trading above fair value. We’ve got gold up over $40 in the premarket this morning. So it looks like we’re going to have a happy Friday. We’ll start off taking a look at some things happening in the pre market. We’ll move on to some weekly charts that I just printed off this morning and then the daily charts. And we’ll end up taking a quick look at the energy sector. I’m going to come back on the weekend and take a look at the gold sector starting off in the pre market. Novavax has some news out this morning, and the stock is up 181% at the present time. So a dollar four stock moving up over $12. That’s quite a move. It’s not a stock I’ve ever traded. If you own it, congratulations. Next up, let’s take a look at a couple of weekly charts. And I like to take a look at these on Friday morning just to get a look at how the week is coming to an end.

A lot of times you can get wrapped up in the day to day news and you lose focus of the big picture. And this is kind of a way for me to clean the palette going into the weekend. Looking at the VIx, the VIX is down on the week nearly 6%. So that keeps us long term bullish on the market as long as the VIX doesn’t close above 16.86 this afternoon at 4:00 p.m. So that’s looking pretty bullish for the market. Then we’ve got the Dow up 1.84% on the week. It is back on a buy signal at that point if it closes that level. That’s also true for the S&P 500, which is up 1.68%, not so much for the Nasdaq. It’s only up one and a quarter percent on the week. And we still need a little work to do on Friday to get us a new weekly buy signal. Then looking at the TSX, TSX is trading back up at recent highs. Still on a buy signal here. No change in trend. Crude oil made a new low for this move this week and then bounced. It’s up 1.3% on the week and that is going to continue to move higher at the open on Friday morning.

And then gold so far is having an inside week, but that’s going to change this morning, gold is up $31.70 so far, and then we’re going to add it looks like another $35, $40 at the open on Friday. So that’s still looking pretty good. Moving from weekly to daily charts, you can see the VIX is still on a short term sell signal. And last week, if you were with us, there was quite a divergence between the VIX and what the markets were doing. The markets were selling off, the VIX barely moved. And so we knew there was a divergence between options traders in Chicago and stock traders in New York. And that divergence was going to resolve itself with either the VIX moving higher or the stock market moving higher. And it turned out to be the stock market moving higher as the VIX continued to move lower. We’re going to remain short term bullish on the market as long as the VIX does not close above 15.13 this afternoon at 4:00 p.m., now, of course, if that doesn’t happen, that upper channel line continues to move lower daily. Now, yesterday was a nice big update for the Dow.

We’re heading towards 388.44 on the ETF. That’s our next price target and that’s where we topped out back in March. Of course, it would be great if we could continue to move higher and we would expect some psychological resistance at 400, but so far that is our next target and that’s what we’re going to deal with. The big winner yesterday on the Dow was Home Depot up a little over 2.5% on the day. Caterpillar is back on a buy signal as of Thursday’s close. And Goldman Sachs made a new high on Thursday, up another 1.93%. Then looking at the S&P 500, it had a nice move up yesterday, starting to break away from the 515 63 level, heading towards 531.25 with probably a stop at the recent high up there at 424 61. The big winner yesterday was equinix. It was up over 11% on the day, popping higher then. We had NRG energy having a nice update yesterday, trading back up to the recent high. And then we’re looking at Steris. Steriswas up over 7.5% on the day. So congratulations. If you’re trading Steris, then looking at the Nasdaq 100, ended up being a fairly quiet day, up less than a quarter percent on the day

We’re heading up towards 445.31 and we topped out just above that level back in March. So that is our next price target for the Nasdaq. 100 ETF. Constellation Energy was the big winner yesterday. Putting in a new high. Booking was the next big winner, followed by The Trade Desk, which was the big loser on Wednesday. So still on a buy signal here. No change in trend. Looking at the Canadian market. New high for the TSX 60 heading towards 34.38. Yesterday morning. We were waiting for earnings from Canadian Tire, and it was the best performing stock on the TSX yesterday. So congratulations if you own Canadian Tire. Kinross continued to move higher. Then we had a huge update for Manulife, up for 4.73% on the day. And then looking at the TSX itself, we’re heading towards 22,500. That’s our next mathematical price target. And we were watching Telus yesterday morning, coming out with earnings, a small pullback. We would need to close below 22.13 on Friday to give us a sell signal for Telus. For Cineplex. Had a big wide bar yesterday. It ended the day on a sell signal. If you’ve been trading or owning Cineplex on the way up, you know, it just closed slightly below the lower channel.

There’s nothing wrong with waiting another day to see if we get a confirmation close above, below the lower channel line there. We hit a few price targets on the way up. So if you were taking money off the table as we went higher, congratulations. And now you’re sitting with a small position. No reason why you can’t continue to sit with that. Until we get another close below that lower channel line, let’s finish off looking at the energy sector. We’ll start off looking at crude oil, which traded up yesterday. We had a reversal day on Thursday, and we’re back up above the 78.13 level. So starting to break away from that, heading towards 81.25. We’ve got natural gas on a short term buy signal here. As I’ve mentioned previously, we’ve got the pros coming back to take control, but I really want to see more from natural gas before I get excited about it. And we’re trading right up to the tether line there. We may actually get a buy signal on the midterm chart on Friday. If natural gas can continue to move higher, then looking at the stocks themselves, starting off with the ishares for the TSX energy sector, we are back on a buy signal here.

So there seems to be a little difference between what the market’s looking at at the moment. They seem to be more interested in small cap energy stocks as opposed to those big cap energy stocks. There’s always a little optical illusion when you’re looking at charts and let me just explain it, because I talk about the fact that it’s, you know, harder to make money up at these levels. When a stock is trading at $10 and it moves up a dollar, that’s a 10% gain. So let’s just imagine back here, this was a $10 stock. Now we’re up here, and let’s say we’re up at $20. A $1 move is now 5%. So you’re taking on more risk up here to make less money. Now, you can change the chart format to see that better, but unfortunately, it’s harder to work with when you do post those type of charts. Then looking at what worked, International Petroleum has been the big winner over the last week, followed by precision drilling and then Birchcliff. So those are the best performing stocks over the last week in the Canadian energy sector. Now, the worst performing Canadian Energy stock that we follow is Kelt, and it’s starting to dip below the April lows.

Then looking at the US market, the XLE is still on a sell signal. That would change on Friday with a close above 94.69. So it looks like there’s a little more interest in small mid cap energy stocks than there are in big cap stocks at the moment. The best performing us energy stock over the last week, that’s in our database is Apache, followed by Cotera. And then we’re looking at Marathon Oil. Those are the best performing stocks over the last week. And for marathon, we’re still looking for a close on Friday above $27.31. The worst performing big cap stock that we follow is Occidental, and it’s still on a sell signal. Had an inside day yesterday, so no change in trend there. Okay, that’s all I wanted to cover this morning. I don’t want to keep you here all day. I really appreciate your time and attention. Have a great Friday. It looks like we’re going to see some buying at the open. Enjoy your weekend and I will drop by over the weekend and do a presentation on the gold sector. Otherwise, if you’re busy on the weekend, next time you’ll hear my voice is on Monday morning.

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Stephen Whiteside
Friday, May 10, 2024

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