Good morning, everyone, and welcome to Thursday morning. It’s Stephen Whiteside here from theuptrend.com. In the premarket this morning, stock index futures are down across the board. So, so far, it looks like we’re going to see some selling at the open. At the same time, we do have economic numbers coming out this morning, including us jobless claims that could certainly help change the direction of the market. Now, commodities are mixed. We’ve got crude oil, natural gas, basically unchanged, while gold is down another $6 in the pre market. Well, yesterday we saw fear starting to rise. We’ve got the VIX back on a buy signal that is negative for stocks. If that continues, things would change on Thursday if the VIX were to close below 12.28. Now, yesterday morning, we knew that American Airlines was going to gap lower at the open. And as you can see, it didn’t really gain anything back. It closed near the low of the day. We’re also watching Air Canada yesterday morning, and it gapped lower as well, heading down towards those lows from back in March. Now, last week I brought up the Dow Transports, something to look at as a canary in the coal mine.
I didn’t know American Airlines was going to come out with the earnings that they came out with yesterday. So here we have the Dow transports making a new closing low on Wednesday. Now anytime that you look at a chart and you see it’s made a lower low and a lower high, you know, that is a very weak hand. What the market does with that hand, whether it starts breaking down and making lower lows below the previous low, you know, that’s always yet to be determined. But you know right from the get go that the market is playing a very weak hand for this particular sector. Now, I also brought up the Dow last week. It got hit really hard and has not recovered at all. And it has continued to move lower. So Dow 40,000 has come and gone for the time being. Of course, it can always get back up there. But that party was very short lived. Now, what hurt the Dow yesterday was Unitedhealthcare was the biggest loser, gapping lower already on a sell signal, and then Intel was the second biggest loser. Can you imagine what the Dow would look like if we got rid of, if they got rid of the chipmaker of yesteryear for the chipmaker of tomorrow, which, of course, is Nvidia, which actually ended the day up on the day.
Now, looking at the pros versus the public, the public and the media loves the Dow. You know, when Mike Eppel (680 News) mentions how the market is doing, they’re always going to quote the Dow because it’s been the oldest index out there. But as far as the pros are concerned, it’s not that big a deal. Whether you’re following the futures contract, the index, the e mini or the SPY, which is what we follow on a daily basis. That’s what the market is focused on, not the Dow. Now, all of those are sitting on the edge of a new daily sell signal. We may get that on Thursday. And if you look at what the market’s looking at, when we look at volumes, the SPY was the second most actively traded ETF yesterday with over 45 million shares. It’s usually up in the top five every day. The Dow diamonds, which we certainly look at on a daily basis, was the 124th most actively traded ETF yesterday. In the, with the 2.7 million shares traded. Now, what was most actively traded ETF from Wednesday? Well, it was actually the TLT which gapped lower. And if bonds are moving lower, bond yields are moving higher.
That can help put downward pressure on the stock market. Now, of course, the SPY is up at the top of the most active ETF list. So are the triple qs. And they ended the day down 0.7%, still closing above the upper channel line. So we may see a new sell signal for the SPY on Thursday. We may not see it for the triple qs then looking at the ishares for the TSX 60, they came into yesterday already on a sell signal, gapping lower. That had a lot to do with the Bank of Montreal. And when I looked at the pre market activity for the Bank of Montreal in New York yesterday morning, it was not down anything like this. So that is just a huge move for a bank. And here we are down, closing below the lows from earlier this year. So that is just a terrible, terrible chart. Now, if you were trading Bank of Montreal, if we go back in time to May 14, just as an example, we had the next two price targets as 131.25 and then 134.38. We move ahead a week or so and the targets are still there.
They have not changed. And then right up until the previous day, up until Tuesday, we got as high as 131.40. So you had a chance to lock in some profits up there before the stock fell apart. So the stock came right down and got as low as just above the 118.75 level. So we had the chance to take some money off the table. But it is still a terrible sell off for a major bank stock. You don’t see that every day. Now, speaking of bank stocks, the financials themselves are on a sell signal. They came into yesterday already on a sell signal. So a big move down for the financials. A lot of that, of course, had to do with the Bank of Montreal. Now, we may see some money come back into financials this morning. Yesterday, the Royal Bank was down on the day and is back on a sell signal as of Wednesday’s close. You come in this morning and you see the news and in New York, it’s actually trading up over $6 in the the pre market. So we’re going to wave off that sell signal and just hold on and remain long.
The remainder of your position in the Royal Bank. Then looking at what’s not working this morning. Well, Salesforce is coming into Thursday’s trading action already on a sell signal and it is down sharply. It’s moving down past a few of our price targets, currently trading down around the 229 level. Of course, that number is going to be different when you look at your screen, but it is certainly a major sell off and a major reason why the stock market’s futures are down in the pre market. Path is also down this morning. That is a bigger loser than Salesforce, which of course is a Dow 30 stock. So has a lot more influence on the overall market than path does. But Path is down nearly 30% in the pre market. So it’s still all about Nvidia. Nvidia is still holding up fairly well, but the rest of the market is starting to pull back. You know, it’s overdue for a pullback. Whether it’s going to turn into something major or not is yet to be determined. But we are going to take our sell signals for the Bull ETF’s and individual stocks. And of course sell signals in the Bull ETF’s can equal buy signals for the Bear ETF’s.
We certainly have that for the TSX and we’ll have to wait and see if we get it for the S and P 500 and the Nasdaq 100. Okay, folks, that is all for this morning’s presentation. Have a great day. Next time you’ll hear my voice is on Friday morning.
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Stephen Whiteside
TheUpTrend.com
Thursday, May 30, 2024
