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Morning Market Outlook 12042023

Hello, everyone, and welcome to Monday Morning. It’s Stephen Whiteside here from In the pre market this morning, stock index futures and commodities are trading below fair value. So so far it looks like the market wants to do a little selling at the open on Monday morning. And that’s not surprising. We had an amazing week last week.

The month end has come and gone. And so to see a little selling this week wouldn’t be that’s surprising. In the pre market this morning, Uber is trading higher. The reason for that is it’s being added to the S&P 500. Here’s what the weekly chart of Uber looks like.

Here’s the weekly chart of the stock it’s replacing. Looks like, and as we always say, always be upgrading. That’s why the stock market indices continue to move higher over time. Now, we’re going to be looking at a lot of weekly charts. We’ll flip back to a couple of daily charts, but for the most part, we’re looking at weekly charts.

In this presentation, the VIX actually closed slightly higher on the week, really had an inside week. We’re going to remain long term bullish on the market as long as the VIX does not close above $17.96 this coming Friday. Looking at a short term view of the VIX, we’re going to remain short term bullish on the market as long as the VIX does not close above $13.79 on Monday. Now, if it doesn’t close above that level, then that upper channel is going to continue to move lower. We’re going to have trouble seeing the VIX break down from here.

We are down to long term support at the 12.50 level. This is where we bottomed in September and the market started to pull back from that point. We’re not looking for a huge pullback here. If we look at the daily Fly Paper Channel chart, you can see in the summer, we spiked up to the Fly Paper channel and came right back down. I’m expecting something like that to happen over the next two weeks in early December here before we go into the rest of the year end rally.

But we’ll just have to wait and see. Looking at a weekly chart of the US. Dollar index, it closed slightly lower on the week after making a new low. That’s supportive for higher stock prices. Bond prices continued to move up and bond yields continued to move lower last week.

That’s supportive for higher stock prices. Crude oil was down on the week. That helps the inflation picture. That helps bond yields continue to move lower. At the present time, it’s not so helpful for the Canadian stock market.

Natural gas was down over 6% on the week, so no change in trend there. Now here’s something interesting. Gold was up sharply on the week and it went into the weekend moving up towards that 2125 level. Now overnight, there was a huge spike in the price of gold and then it completely evaporated. And we’re actually trading slightly lower in the pre market at the time of this recording.

So we actually traded up over 2125 overnight and then came right back down. So technically gold might have peaked overnight. We’ll just have to wait and see how the market digests that move over the next couple of days. For silver, we’re looking for a move up to 26.56 for our next weekly price target. Now the TSX moved up nicely.

It’s heading up to long term resistance up at the 20,625 level. We’ll have to see how the market reacts to that if we can push through it or not. The Dow certainly has pushed through resistance and is starting to trade above our next mathematical price target. We haven’t broken away from it, we’ve just been able to trade above it. Looking at the S&P 500, we still got a ways to go before we get to our next weekly target.

But we have come up to our daily target and that’s where we peaked out back in the summer. So looking to see if we can break through the 4609.38 level and then looking at the Nasdaq 100, we’re pretty well unchanged on the week, and we’ve come up just below resistance at 16,250. Similar situation for the Nasdaq composite at 14,375. Now, looking at a daily chart of the Russell 2000, we had a huge update on Friday which took us up over the resistance we’ve been following for the last couple of weeks. That’s bullish for the market.

It’s telling us that the rally is starting to broaden out, so we’ll look to see if that can continue. Our next target on both the daily and weekly chart is 1875. For the Russell 2000, we also saw the Nasdaq Next Generation stocks also break out on Friday and break out above the $25 level. We were up nearly 2% on the day. So that’s bullish for the overall stock market.

Looking at the TSX and we’re looking at weekly charts here, you can see mid cap stocks were up back on a weekly buy signal, small cap stocks are back on a weekly buy signal, and the micro cap stocks in the Venture exchange were also up on the week, ending the week on a weekly buy signal. So that’s bullish for the market that the rally is starting to broaden out. What might happen between now and year end is we might see some sector rotation in which money comes out of those big cap tech stocks and goes into the undervalued sectors of the market. We’ll just have to wait and see if that happens. Certainly month end has come and gone, so that bullish bias is no longer with us.

Wouldn’t be surprised if we saw a pullback, especially in those big cap tech stocks over the next week or so before the year end rally gets going. Once again, enjoy the rest of your day, folks. Next time you’ll hear my voice is on Tuesday morning.

[00:00:00]: Market Overview
[00:00:36]: Uber’s Addition to S&P
[00:01:26]: VIX Analysis and Market Outlook
[00:02:12]: Impact of Dollar Index and Bond Yields
[00:02:53]: Gold and Silver Price Analysis
[00:03:16]: TSX and Dow Market Update
[00:03:44]: S&P and Nasdaq Analysis
[00:04:21]: Russell 2000 and Next Generation Stocks
[00:04:46]: Broadening Market Rally and Sector Rotation
[00:05:29]: Closing Remarks

Stephen Whiteside

Monday, December 4, 2023

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