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Morning Market Outlook 11172023

Good morning, everyone. Welcome to Friday morning. It’s Stephen Whiteside here from In the premarket this morning, stock index futures and commodities are above fair value. So far, we’re looking for some buying at the open on Friday morning. We do have a US housing numbers coming out at 8:30 this morning. I don’t think they’ll have much effect on the market, but we’ll just have to wait and see. Looking at the VIX, the VIX made a new low yesterday before closing slightly higher on the day. That would be a bullish reversal day. We’re looking for a close on Friday above 15.74, not expecting that to happen. There’s the VIX for the Nasdaq closing slightly lower yesterday, and the VIX for the Russell, certainly not trending to the downside still on a sell signal that’s supportive for higher stock prices. We know that the Russell has been trailing small mid-cap, micro-cap stocks have all been trailing. Not a lot of excitement in the Russell so far. Compare that to the Nasdaq. And of course, if we take those big cap, magnificent seven stocks out of the Nasdaq, it looks more like this. And then, of course, if we leave the big cap stocks and look at the smaller cap Nasdaq stocks, you can see it looks like this.

And we talked about the Nasdaq Next Generation stocks hitting, running up to 25 and reversing yesterday. And it pulled back again on Thursday. So a potential for a short term top, we’ll just have to wait and see. We’re not seeing that type of action in the premarket this morning. I’m looking at the I-share for the TSX 60, just up two cents yesterday, and it was a real mixed picture. But the Canadian market is acting very similar to the US market right now, where we’re being led higher by big cap stocks, mid-cap, small caps and micro caps are trailing at the moment and it would be nice to see those micro cap stocks start to pick up. Now, gold moved up yesterday. It’s back on a daily buy signal, joining silver already on a daily buy signal. Best performing stocks on the TSX on Thursday, Wheaton followed by Kinros. What didn’t work? Well, energy continued to move lower. We’ve got crude oil up in the premarket this morning. It was down $3.70 yesterday. It’s up a dollar in the premarket. We also are trying to hold 71.88. If that breaks, then 68.75 would be our next target.

Not expecting to head down to those levels on Friday. Natural gas made a new low for this move. We’re looking for support at 3.13 and hopefully that will hold. Suncor is back on a sell signal and this is a really bearish chart. We had a high, lower high, lower high, and now we’ve put in another lower high. That’s extremely bearish. It may turn out that Suncor will start to look more like Cenovus or a Tourmaline over the next couple of weeks. Then looking at what’s working this morning, well, the GAP is in the news this morning and it’s popping higher in the premarket. So if you had an order in 15.63, you don’t have to worry about it. It’ll get filled at the opening price. And then we may take a run up to 17.19. Let’s finish off this morning’s presentation with a little trade school. And let’s talk about Walmart because if you bought here, this looks like a losing trade, but that’s not the way it’s supposed to work. If we go back in time to October 13th, that’s when Walmart generated the latest buy signal. And of course, at that time, we’re coming off the bottom of the Panic Zones.

We had some panic selling. We had a Pressure Zone form. This is the time and place you look for a low risk buying opportunity. Low risk does not mean guaranteed. Nothing’s guaranteed. Every time that we’re down the bottom of the panic zones and we get a Pressure Zone, you can look for a low risk buying opportunity and we’re going to run it up until we see an early warning signal at the top of the screen. Now back on October 13th, our price target chart looked like this. So once you got an order filled, you’ve got confirmation that those shares are in your account. Let’s say for the sake of argument, you bought 100 shares of Walmart. I would want to go back into the account right away and place an order to sell 50 % of those shares at 162.50, then put another order in to sell 50 % of the remainder, so 25 shares at 165.63. Now you don’t have to put the orders in at these exact numbers. You can put it in a little lower. And so 165.49 or 169.55, something like that would probably be a good order to put in.

Remember, these price targets are also potential areas of resistance. Then next, I would put an order in to sell half of the remainder. If you’ve got 25 shares left at that point, remember, none of these orders have been filled. You’re just planning ahead. We’re going to sell 12 shares at 168.75 or 168.69 would be good. Then up here at the top, we’ve got 13 shares left. We want to sell half at 171.88. We’ve got 13 shares left. We’re going to sell six at 171.88. We never want to completely liquidate a position. You don’t know how far a stock can run. If it can continue to run higher, you want to take advantage of that. But what happened? Well, the stock fell out of the sky, and we are used to stocks falling faster than they rise. That has just always been the case. We need to sell on the first close below the lower channel line, and that is certainly the first close below the lower channel line since October. You can see that we hit our first target at 162.50, we hit the second target at 165.63. We hit the third target at 168.75, but we did not get up to the fourth target.

What have you got left? You’ve got 13 % of your original position. You’ve got 13 shares left in your account and you need to take the loss on those 13 shares. For those 13 shares, it will be a losing trade. Now, if you’ve ever heard me use the term, we were waiting to get kicked out of the trade. Well, getting kicked out of the trade is the first close below the lower channel line. And that certainly happened yesterday. So if you’re a long Walmart, you need to liquidate that position this morning at the open. And luckily, Walmart is actually trading higher. I’m back in the premarket this morning. Let’s finish off with a customer question. If you could only trade five ETS versus five stocks, what would they be? Well, if you go into the stocks menu, you’ll first of all see my five stocks, which I trade as a basket either long or short. And then if you go down, you’ll see the Canadian 2X pairs and the US 3X pairs. I always recommend that people start trading pairs. So you’re either long the bull or long the bear. Or the opposite of that is you can be short the bull or short the bear, depending on which way the market’s going.

But I would certainly out of all the ETFs, I would want to be trading those for the most part. You don’t have to worry about which way the market’s going, and you don’t have to worry about anything like what happened to Walmart yesterday because they are ETFs. The risk is spread over a whole bunch of stocks. If you look at the US ETF volume leaders right now, and if you include the leveraged ETFs, you’ll see that the the most actively traded ETFs are actually the triples for the Nasdaq, and then you’ve got triples for semiconductors and triples for the biotech sector. Volume wise, they’re very actively traded. Of course, I always talk about the fact that the SPY and the triple Qs are the big monsters because the SPY is currently trading at $450 versus there’s a $3, there’s an $8 ETF of 40, 16, 26. This is the big monster in the room. But they’re all very actively traded. If I had limited resources and I was looking to what exactly should I be doing, I would be trading pairs of the major leveraged ETFs, the 3X in the US and the 2X in Canada.

The fact that they are 2X and 3X doesn’t make them unstable. They pretty well have the same volatility as the major technology stocks that we’d love to follow. Okay, folks, that is all for this morning’s presentation. Have a great day. Have a great weekend. Next time you’ll hear my voice is on Monday morning.

[00:00:00]: Market Analysis and Opening
[00:01:13]: Nasdaq and Next Generation Stocks
[00:02:22]: Market Trends and Stock Performance
[00:03:31]: Trade School: Buying and Selling Strategies
[00:04:36]: Setting Price Targets and Planning Ahead
[00:05:53]: Evaluating Trade Outcomes
[00:07:05]: Trading ETFs versus Stocks
[00:08:21]: Leveraged ETFs and Trading Strategies

Stephen Whiteside
Friday, November 17, 2023

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