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Morning Market Outlook 06052024

Good morning, everyone, and welcome to Wednesday morning. It’s Stephen Whiteside here from In the premarket this morning. Stock index futures and commodities are currently above fair value. We’re being led higher this morning by the technology sector as Nvidia once again makes a new high. We’ve got energy inventories coming out later this morning that could certainly change the direction of the energy sector. A couple of countries in the news right now, both Mexico and India had elections. Looking at the Mexican chart, the traders were correct going into the election and it was already on a sell signal. Notice there are not very many gaps on this chart. Compare that to the Indian chart. There’s the iShares, there’s the Morgan Stanley ETF, anything that’s halfway around the world. Of course, North American investors are going to have a delayed reaction to whatever happens. So you will often see a lot of gaps in ETF’s tracking overseas markets that are not in our time zones. And whatever was going on with the traders ahead of the election, you can see that there was a huge move up and then a massive move down. So quite a lot of volatility related to the Indian election.

Now Nvidia is once again making new highs this morning. There should be psychological resistance at 1200, and if that breaks, then 1250 is our next mathematical target. It’s the current top of our projected trading range, but we can always break through that and continue to move higher. So we’ll talk about that if Nvidia does get to 1250. Now, bonds are in the news today. The Canadian central bank is probably going to cut interest rates. And you can see that the TLT has been up for the past couple of days. Rising bond prices equals lower yields. Compare that to the XBB trading in Toronto. So it’s kind of assumed that the Canadian Central Bank is going to lower interest rates this morning. Looking at the Canadian dollar, you can see it’s been treading sideways for a while now. So investors, not that skittish going into today’s announcement. Looking at the Canadian stock market, the TSX came down hard yesterday, traded below the recent low, but did not close below it. There’s the TSX 60 coming right down to the recent low. New low for this move for mid caps, for small caps, and now for micro caps, which are back on a sell signal.

What didn’t work yesterday? Well, it was materials, energies, and then financials were the big losers. There’s materials, there’s the energy sector continuing to move lower. And then there’s the financials still on a sell signal. No change in trend there. Then looking at the worst performers on the TSX 60, it was First Quantum, followed by Teck, followed by Barrick, and then followed by Kinross, which is now back on a sell signal as of Tuesday’s close. Looking at the US market, the VIX had another inside day of an inside day. Still looking for close below 12.72 on Wednesday to give us a new sell signal for the VIX. Now, the Dow moved up yesterday, still at the lower channel line. The S&P 500 is sitting right on the edge of a new buy signal. And the NASDAQ. If we close above yesterday’s high, that would also give us a new buy signal. Now, the rest of the market not as enthusiastic as the major indices, of course. We’ve got a handful of stocks back once again, pushing the market higher. But the rest of the market, equal weighted NASDAQ, actually closed lower on the day.

The Next Generation Nasdaq stocks were down over half a percent. And then looking at the Russell 2000, trading down over 1% yesterday. Then we had small cap stocks, a new closing low for this move for the small caps and micro cap stocks breaking down below the recent low. So, yeah, we had a positive day for the major indices, but the rest of the market not going in that direction. Looking at Homebuilders, a new closing low for homebuilders for this move. We saw the Banks come down yesterday and the Regional Banks coming back down to the recent low. So that’s kind of a bearish sign, but we’ll just have to see if the market can plow through that. Looking at commodities, and we’ll finish off just looking at the miners. We’ve got Copper making a new low for this move. Yesterday we had Copper Miners down nearly 5% on the day. Then looking at the price of gold and the GLD still on sell signals. No change there. We had the junior miners come down. They’re back on a sell signal as of Tuesday’s close, joining the GDX and the XGD on sell signals. Now. Then looking at the price of silver.

We’re back on a sell signal as of Tuesday’s close. The SLV already on a sell signal, so no change there. And then we’ve got the silver miners and now the junior silver miners, both back on sell signals as of Tuesday’s close. Okay, folks, that’s all I wanted to cover in this morning’s presentation. So far, it looks like the major indices want to open higher. What the rest of the market does, we’ll just have to wait and see. Have a great day. Next time you’ll hear my voice is on Thursday morning.

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Stephen Whiteside
Wednesday, June 5, 2024

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