Hello, everyone, and welcome to Thursday morning. It’s Stephen Whiteside here from theuptrend.com. well ahead of the jobless claims numbers that are coming out at 8:30 this morning. Stock index futures are mixed right now while commodities are trading higher on Thursday morning. Let’s start off as we usually do with the VIX.
The VIX closed above the upper channel line last night. We are looking for a close on Thursday below 18.38. If that were to happen, our view on the stock market would certainly change. We’re going to spend some time looking at the SPY this morning and starting off with the Panic Zone chart. We’re obviously oversold here.
We’re not extremely oversold. We haven’t seen any panic selling just yet. Yes, we gapped lower on Monday, but it wasn’t the worst thing that could have happened. Remember, when the Dow is down 1000 points, when it’s up near 40,000, that’s a lot different than when the Dow was at 10,000 or 5000. You know, in percentage terms, it wasn’t a major decline.
Now, you can see we’re still projecting lower prices here. So we wouldn’t be surprised if we take out Monday’s low to head down to the $500 level. That would be our next logical place to head. Now, looking at what’s happened over the past couple of days, it certainly hasn’t encouraged the pros to come back and take control, especially yesterday where we closed near the low of the day. Now we are coming down to the 200 day moving average that could potentially act as support.
And that is above the $500 level. We are holding the bottom of the Flypaper Channel and it’s called the Flypaper Channel because we usually get stuck to it. It will act as support when you’re trading from above. When you’re trading from below, it often acts as resistance. So if we start getting down towards 500, we could break away from the flypaper channel and that would be bearish for the market going forward.
Now, going back to our weekly chart from last weekend, 562.50. That was our profit target. We hit that and then started to pull back over the past couple of weeks. Friday we ended just above the 531.25 level. So that was support.
And unfortunately, this week we’ve broken down below it. And our next weekly target is dollar 500. When we look at our daily price targets, you can see on Friday we closed just above the 531.25 level. On Monday we gapped lower. Tuesday we clawed our way back.
And on Wednesday we traded up to 531.25 level. In fact, we got a little above it at 531.59 before quickly reversing and heading straight down. Now looking at our daily right side chart, you can see on Thursday we need to close above 542.75 to give us a new daily buy signal. If that doesn’t happen on Thursday, of course, that the upper channel line is continuing to move lower daily. Now looking at the Equal Weighted S&P 500, you can see we had similar trading action yesterday where the whole market came down going into the close.
That was also true for the Nasdaq 100. It was also true for the Russell 2000. So a big bearish reversal day yesterday and looking at semiconductors, they had an outside reversal day. We made it all the way up to the lower channel line and then came right down. So we’re really looking to see if those Monday lows hold.
Now looking at the Canadian market, we had a huge pop in Shopify yesterday. That wasn’t enough to hold the market up and it actually closed slightly lower on the day after having that big move up at the open. Then looking at the Financials, they moved down yesterday, actually made a new low for this move on Wednesday. And then Energy stocks tagged the lower channel line before reversing, still closing higher on the day. Unlike Gold stocks which made a new low for this move.
Now the price of gold is up higher in the pre market this morning. That may or may not help the sector. If the stock market starts to head down on Thursday, the sector may go with it. Now, looking at the Magnificent Eight, the ETF itself is holding up fairly well. Didn’t take out the previous day’s low.
Some of the stocks in the Magnificent Eight actually closed higher yesterday, including Apple, which was up on the day hitting the lower channel line. I get concerned about a potential buy signal when a stock trades into the channel and closes in the channel. That did not happen for Apple. We also had Amazon up on the day, nowhere near a buy signal. Looking at Alphabet, it also closed slightly higher on the day.
What didn’t work yesterday? Meta Meta was down on the day. It’s still on a buy signal here. Again, not something I want to be a part of at the moment. Then looking at Microsoft closing slightly lower on the day after trading higher during the day.
That was also true for Nvidia had an outside reversal day on Wednesday. Shopify popped yesterday on both sides of the border. Not something I would chase at the time. At this particular time, we’ve got the rest of the market having trouble. I don’t think Shopify is going to be able to hold these gains for very long.
I could be wrong, but that’s just what my gut tells me. And then Tesla. Tesla actually closing lower on the day. So no changes in trend outside of Shopify. So shopify the big winner yesterday and unfortunately it’s not the time and place to be chasing Shopify.
Let’s finish off looking at commodity ETF’s and we had crude oil trade up into the channel yesterday so a close above 75.95 would give us a buy signal on Thursday. Looking at gasoline we need to close above 65 on Thursday to give us a buy signal. Natural gas is sitting right on the upper channel line so any higher close here would generate a buy signal on Thursday. No joy for the GLD from Wednesday’s trading action. We did see Palladium trade up into the channel so a close above 83.67 would give us a buy signal on Thursday.
No joy for Platinum still on a sell signal here and no joy for Silver making a new low on Wednesday. Okay folks, that is all for this morning’s presentation. I don’t think we’re going to know which way the market’s going to open till after those jobless claims come out at 830. Have a great day. Next time you’ll hear my voice is on Friday morning.
Stephen Whiteside
TheUpTrend.com
Thursday, August 8, 2024
