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Morning Market Outlook 05142024

Hello, everyone, and welcome to Tuesday morning. It’s Stephen Whiteside here from In the pre market this morning, things are fairly quiet. Stock index futures and commodities are basically flat at the moment. We do have PPI numbers coming out at 8:30 this morning. That could certainly change the tone of the market. Now there is lots of action going on in the pre market on Tuesday morning. BlackBerry trading in New York is up over 26%. Tilray trading in New York is up over 15%. Both of these stocks are currently on buy signals in Toronto. Sunpower. I know several of our members are following sunpower. It’s up 14% in the pre market. We’ve got Home Depot out with earnings. It’s trading higher this morning, up another $6. Currently on a buy signal. Now, the VIX moved up yesterday to the lower channel line. A close above 14.49 would give us a buy signal on Tuesday. We saw a lot of bearish reversal signals in Monday’s trading action. Looking at the Dow Diamonds, it did not close below the previous day’s low. So that’s the first thing I would look for. It’s one thing to thrust higher and pull back.

It’s another thing to close below the previous day’s low. So while we hit a new high yesterday, we did see a pullback for the Diamonds. We saw a basically unchanged for the SPY, the SPY ETF inside day for the Nasdaq 100 inside day. For the Russell 2000. We saw the Small cap ETF make a new high before pulling back. So two bearish reversal days in a row. Again, we did not close below the previous day’s low inside day for microcap stocks. Looking at the Canadian market, the iShares for the TSX 60 just pulled back $0.10 yesterday. Cameco was the big loser on the TSX 60 back on a sell signal, as of last night’s close, we had a reversal for Nutrien, and we’ve got Restaurant Brands on its second day of a sell signal, so no change there. Now, looking at the Venture Exchange, we’re up at what seem to be new highs here, but it’s kind of deceiving. When we go back to a weekly chart of the Venture Exchange, you can see we’re still trading under the Fly Paper channel and looking to see if we can break out. If we could break out above the weekly Fly Paper channel, that could also give us a monthly buy signal.

And that’s something we haven’t had for a couple of years now. Let’s move on and take a look at the most actively traded stocks from Monday’s trading action. And this is a little deja vui. We’ve got AMC at the top of the most active list yesterday, and it was up over 78%. And of course, everybody’s calling that a short squeeze, and there’s no other explanation for it. There’s no takeover offer, and there’s certainly no major change in the movie theater business. So we’re up over 78%. We continue to move higher this morning. Now, we actually ended Friday on a sell signal. We closed at 2.91. You come in on Monday morning and you see that we’re going to open up at 3.52. There’s no reason for you to take that sell signal. And of course, it continued to move higher throughout the day. It’s actually up another 93% in the pre market this morning, trading up over $10 right now. So we went from 2.91 to over $10 in just two days. That is definitely a short squeeze. Now, I talk about shorting all the time, but I’ve got some rules. I don’t want to ever be involved in a short squeeze.

I want to short stocks that I want to own. So big cap stocks that I follow on a regular basis that I want to continue to own. Those are the stocks I short. I don’t short them because I don’t like them. I don’t short them because I think Apple or Visa or Goldman Sachs are going to go out of business. I short them because they go up and they go down. And so when they’re going down, why not make $ 5, $10 $20 while they’re going down? And then I’ve got that money allocated to buying them again. So, you know, I’m not, if I want to follow Apple, if I want to follow Tesla, it doesn’t matter, but I’ve got that money set aside. So when we get a new buy signal, I’m going to close the remainder of my short position if I haven’t already taken money off the table, and then I’m going to go long the stock. I want to short stocks off the top of the panic zones when most people are still bullish on the stock, even though it’s starting to move in the other direction. I want to short a stock when a right side sell signal has been generated.

That is a buy signal for a short position. I never short a stock because I think it’s going to go down or I don’t like the stock or, you know, I wish the stock ill will. I just do it because it’s part of the, the cycles of the market. Stocks go up, stocks go down. I just want to make money when they’re going down. I don’t think they’re going to zero. That’s not the type of situation I’m going to get myself into. Remember, gains are limited when you’re shorting a stock. When a stock is at $2.91, it can only go down $2.91. On the upside, losses are unlimited. As you can see, a stock that traded at $2.91 on Friday is now trading over $10. It can go to 20, it can go to 30, it can go to 40. Who knows how much these guys are going to squeeze the stock higher? But losses are definitely unlimited. So I want to short stocks that I don’t think are going to get taken over. You know, I don’t think Apple or visa or Goldman Sachs, I don’t think any of those stocks that I follow closely are going to get takeover offers anytime soon.

So, you know, those are the stocks I want to short. I don’t want to short penny stocks. I don’t want to short stocks that could be get a takeover offer or new management that could shoot the stock higher tomorrow. That’s not the type of shorting I’m getting involved in. And I’m certainly not going to be shorting AMC if I was going to short it. Off the top of the Panic Zones, early warning signal went off. The chart started to turn red. We got a Right Side sell signal. That’s the time and place I want to get out when it’s oversold, when you’ve got an elongated Pressure Zone here telling you that it’s broken. These are the stocks that get set up for short squeezes. And here we had another pressure zone. The chart started to turn blue. That’s the time in place where you don’t want to be involved in a short position. That’s also true for GameStop. GameStop has been on a buy signal for a couple of weeks now. It was up to 74%. It’s continuing to move higher on Tuesday morning. Novavax was also up yesterday, up another 47, 48% on the day.

So that one’s continuing to move higher in the pre market this morning. Now Nio is still on a buy signal. No change there. No change for Apple. Try to hit 187.50. If we can clear that, then 193.75 comes into play. No joy for Tesla. Still looking for a close above $179.04 on Tuesday. We still have Rivian on a buy signal. No change there. Ford still on a sell signal, trading in the channel once again, a close above $12.48 would give us a new buy signal. Now we talked about Ford recently, the fact that we are projecting lower prices here. But you’ve got to take into account any previous areas of support, and we’re certainly looking at that at the moment. Still holding $12. Some people are looking at a possible head and shoulders here that would certainly come into play if we broke the dollar twelve level and started moving lower. Of course, before we get down to this projection down here, there’s also another level of support just below, below $11. So that hasn’t come into play yet. Neither has our projection. We’re still holding $12. Now, Sofi traded up through the upper channel line.

A close above 7.21 would give us a buy signal. Would I take that? No, absolutely not. So far, still a very weak looking stock. We made a high here, lower high, a lower low, lower low, lower high, lower high, lower low. And the last two buy signals failed very quickly. So not a stock I’m interested. Compare that recent pullback in Sofi to this one soundhound. I had a nice down move for a month or so and then started to move back up. So when you get down here, you got to figure most of the people that hate the stock have had the opportunity to sell. And now you’re looking to see if the fans can come back. And so far that looks like it’s the case. We had an inside day yesterday. We had lots of inside days on Monday. Those are days of indecision. Traders probably waiting to see how the PPI numbers look this morning. Then intel. Intel might actually walk itself into a buy signal. Channel is continuing to move lower. Intel’s continuing to move sideways. So we may see a buy signal here. Would I take it? No, I’d rather follow the winners and buy them on a pullback than chasing something like Intel, a stock that nobody wants at the present time.

Then moving on to the Canadian market there we’ve got Enbridge, an inside day on Monday. So no change in trend there. A little reversal for Manulife. Manulife. We were looking for a move up to 34.38 and then 35.94 last week and we’ve almost got to 35.94. So we’re trying to. Obviously that is a level of resistance and we’ve got sellers coming in just below that. And the high yesterday was actually 35.72. So hoping if we can tag that on Tuesday, that would be great. But otherwise it’s certainly had a nice run over the past couple of weeks looking at Cenovus treading water up here. No change in trend. We’ve got a new high for the Royal Bank heading towards the top of our projected trading range on the daily charts of 143.75. If we take that out, then 150 would certainly come into play. No joy for ARC still treading water up here. Again, I’m not really interested in chasing a lot of these resource stocks that are already up at the top of the panic zones. That includes Suncor on a buy signal right now. No change in trend. No change in trend for Baytex making a new low for this move on Monday and a new low for Shopify.

Unfortunately, we also saw a new low for bit farms yesterday and we’ve got Kinross up there at the $10.50 level trying to break out through it. Look at the big updates we had on Wednesday and Thursday. Friday very quiet, quiet day. Monday, very quiet day. So looking to see if we can punch out above 10.50 for Kinross. Okay folks, that is all for this morning’s presentation. Still quiet out there in the pre market this morning, waiting for those PPI numbers to come out and tell us which way the market is going to go next. Enjoy the rest of your day. Next time you’ll hear my voice is on Wednesday morning.

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Stephen Whiteside
Tuesday, May 14, 2024

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