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Stock Market Timing Television – 05112023

Hello everyone and welcome to Thursday Morning. It’s Stephen Whiteside here from In the pre market this morning things are rather mixed. We’ve got the Dow down 130 points while the Nasdaq is higher in the pre market. So we are looking for a mixed open on Thursday morning. Now I’ve recently mentioned that the stock market was looking very sloppy and the reason I say that is that we’ve seen an enormous amount of gaps either to the upside or to the downside, much more than you would normally see during an earnings season.

And the reason for that is that investors are just keeping things on a very tight leash. They are waiting for confirmation, they’re waiting for the earnings to come out before they take action. I don’t know if that’s going to be profitable or not to rush in after the fact, but a lot of investors are doing that. And there is an underlying current of fear in the market that is not necessarily reflected in the stock market, but we can see it in other places. So fear is not reflected in the VIX.

We’re not seeing the major stock market indices sell off just yet. Now, while you and I watch the stock market every day, of course there are other financial markets going on around the world and we’re seeing that the smart money has been spending billions of dollars getting prepared for an upcoming financial crisis. Of course, we’ve all been watching inflation and the Fed fighting inflation by raising rates and that of course has put downward pressure on the regional banking sector. We’ve been watching that unfold for the past couple of months. But there are other financial markets that we don’t necessarily watch on a daily basis and one of them of course is the debt market.

You and I do not watch it that closely, but institutions and governments certainly do. And right now the cost of insuring US debt has gone up dramatically over the past few months. Now here’s a table of what the cost of what are called credit default swaps. This table shows some of the different countries. I couldn’t put all of them on this particular page, but we can start off by looking at the US and currently costs 65.30.

Right below that is the UK. That’s what it usually costs to insure US debt and that has gone up dramatically. Canada, which usually costs more than the US and the UK to insure, currently trading just under 40. Mexican debt much more expensive to insure. But then if you go down to the bottom of the page or the top of the page, you can see what it costs.

If you are not one of the big industrialized countries of the world, debt is much more expensive to insure. Now, if we look at what’s been going on in the last year, mexico has actually come down in price to insure their debt by nearly 20%. Canada has risen just 1.23%, while the US. The cost of insuring US debt has gone up 337%. That is a huge number, and that’s what it looks like on a chart.

And where does it go back to? Well, the financial crisis of 2008. Now, while you and I are watching the VIX down at recent lows and the Nasdaq up at new highs, there is a part of the financial world that is getting ready for a major financial crisis. Now, this crisis, of course, could be averted if the Republicans get their act together and come up with a solution for raising the debt ceiling. But so far that has not happened.

So while we’ve been dealing with the regional bank crisis, the US banks in general still not doing well. That, of course, is part of the financial sector. And holding that down, we’ve got broker dealers still in pain at the moment. Insurance companies holding up fairly well right now, still treading water. Canadian banks, Canadian financial institutions not doing well again, outside of the insurance industry, banks and regional banks are still being dragged down by, first of all, the raising of rates.

But then, of course, now we have the problem with the US debt ceiling. Looking at the Nasdaq, it is continuing to make higher highs. It stocks, tech stocks in Canada also making higher highs. But the rest of the market is in a pretty tight range. Here we’ve got the VIX, we made a recent low, recent high over the past two weeks, and we’re still on a buy signal at the moment.

Looking at the US dollar index, it’s trapped in the middle of a range. We’ve got Bonds trapped in the middle of a range. We’ve got Copper trading right down at the bottom of the range. So Dr. Copper not doing well at the moment.

Gold is still on a buy signal here, still trading above $2,000, but stuck in the middle of a range from the last two weeks. Then we’ve got crude oil. Crude oil trading up in the channel for the past three days, looking for a close on Thursday above 72.03 to give us a buy signal. Natural gas still on a sell signal. No change there.

Then looking at the Dow. The DOW right in the middle of a range from the recent high to the recent low. Looking at the S&P 500, you can see that we may have put in a double bottom there, but we are stuck in the middle of the range and looking for a close on Thursday above 412.99. Then looking at the chip sector, we went up, filled the gap and pulled back. We’re right in the middle of the range.

Looking for a breakout of that range. Then looking at the Ishares for the TSX 60. Again, we’re right in the middle of the range. We did generate a buy signal the other day. We talked about waving that off, waiting for the next close above the upper channel line before jumping in.

Okay, folks, that is all for this morning’s presentation. Looks like we’re going to get a lower open on Thursday morning. Have a great day. Next time you’ll hear my voice is on Friday morning.

Stephen Whiteside

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