Good morning everyone and welcome to Thursday Morning. It’s Stephen Whiteside here from theuptrend.com with today’s edition of Stock Market Timing Television. In the pre market this morning, stock index futures are mixed. We’ve got the Nasdaq up around 2% on news from Nvidia, while the Dow and the TSX are currently trading below fair value. So we are looking for a mixed open with a heavy emphasis on the technology sector on Thursday morning.
Now we are coming up to a three day long weekend in the US. Markets will be closed on Monday. That doesn’t guarantee success, but it certainly takes some downward pressure off the market if the market gets bad news. Now the market is dealing with some good news in the technology sector this morning. It’s also seeing some bad news.
Some of it is US focused, but we have been waiting for the US to go into recession and it looks like Germany is leading the Europeans into recession right now. So that’s happening over in Europe. We certainly expect it to happen in North America in the not so distant future. We just don’t know exactly when. Now on Wednesday’s trading action, the TSX continued to move lower, gapping lower on Wednesday.
We also saw the Dow make a new low for this move. We have the S and P 500 back on a sell signal as of Wednesday’s close and the Nasdaq still on a buy signal here. It pulled back yesterday just to tick over half a percent. It is going to be zooming higher at the open. So our semiconductors, semiconductors pulled back into the channel yesterday.
They’re up in the pre market looking at the Semiconductor ETF. Not as much as you would expect considering that Nvidia, which traded back in the channel yesterday, has popped all the way up over $375. Now it’s impossible to tell from sitting on the sidelines what exactly is happening at the moment. Is new money coming in to buy Nvidia shares or is it part of the $9 billion that it’s currently short Nvidia? Are those people coming in to cover their losing short positions?
Now why were they short the stock? Well, for some reason they believe that Nvidia was overvalued and they were expecting it to come back down. Well if it was overvalued yesterday and they were happy shorting the stock, wouldn’t they be more happy today now that the stock is even more overvalued? According to their math, to me it’s fuzzy logic. There was no reason to be short this stock on a short term or long term basis.
But that’s just the way some people operate. So if I owned Nvidia shares this morning and I’ve taken money off the table last at 312.50, I may have had an order in at 343.75 and 375. If you had orders in at those levels, they’re going to get filled at the open at the opening price. If I didn’t have any orders in, I’d want to sell at least half of my remaining position this morning because it’s really a coin flip to figure out whether this is new money coming in or just people shorting. Now, if it’s just people shorting, once they’ve covered their shorts, they have no reason to buy the stock again.
So here we are making a critical decision. If you’re an Nvidia shareholder, I’d be selling some shares at the open on Thursday morning. Now, here’s another headline that may affect the market over the coming weeks. Fitch is putting the US. Credit ratings on credit watch.
Other credit rating agencies are probably going to do this over the next few days, and that’s probably not going to be good for the stock market or the economy. Now. The US. Dollar index continued to move higher on Wednesday. Bonds continued to move lower.
So no change in those major trends. Now, speaking of major trends, let’s take a look at commodities. And copper made a new low for this move. So for those people who believe copper is a good global economic indicator, it’s not going in the right direction at the moment. And we’ve got the TSX Global Mining Index and the S&P 500
Metals and Mining ETF both making new lows for this move on Wednesday. Then, looking at the price of gold, it closed lower yesterday. Gold stocks looking at the GDX or the XGD, both traded lower yesterday. The price of silver also moved down more aggressively than the price of gold. And silver stocks also moved down on Wednesday.
Looking at the energy sector, the USO. Closed higher yesterday. Gasoline, unfortunately, continued to move higher on Wednesday, and natural gas was up. Natural gas still in the channel, looking for a close on Thursday below 6.79 to give us a new sell signal. And looking at energy stocks in Canada, small pullback inside day on Wednesday.
Looking at the US. They closed higher, just under half a percent on the day. Okay, folks, that is all for this morning’s presentation. It looks like we’re going to have a big pop in the technology sector on Thursday. Not sure if the rest of the market is going to go along for the ride.
Enjoy the rest of your day. Next time you’ll hear my voice is on Friday morning.
Stephen Whiteside
Thursday, May 25, 2023
