Good morning, everyone, and welcome to Thursday morning. It’s Stephen Whiteside here from theuptrend.com. In the premarket this morning, stock index futures are very quiet. DOWfutures currently unchanged while the Nasdaq is slightly higher in the premarket on Thursday morning. Let’s start off this morning’s presentation doing a recap of the month of May, and we can start off looking at the S&P 500. Nothing new here. All the big cap tech stocks were the winners for the month of May, and you can see the majority of the S&P 500 actually closed lower for the month. T hat’s a problem we’ve been dealing with for a while now. There’s the DOW pulling back into the channel down 3.38 %. S&p 500 closed up just under half a % and is back on a monthly buy signal. Joining the Nasdaq, which was up nearly 8 % on the month. Then looking at the Sox or the chip sector, which has been on a buy signal for six months now, was up 14.3 % for the month. Looking at the Canadian market, and this chart isn’t as helpful, this particular heat map is not based on the month of May’s trading, but the trading for the last 30 days.
You can see the tech stocks where the winners over here. You can see that one bank actually is positive, but that’s based on 30 days for the month of May. It was actually down on the month, so not as much fun in the Canadian market, which was down. The I shares for the TSX 60 were down 5.32 % for the month, still on a monthly buy signal, so no change in trend there. Now, we’ve been quite concerned about banks in the financial sector in 2023. US Bank stocks were down just a tick under 7 % for the month. Regional banks continue to move lower, down 8.65 %. So they’re not getting as much media attention, but they’re continuing to move lower. Canadian financials were down 5.37 % while Canadian banks were down 6.45 % for the month. So in both cases, still on monthly sell signals. Now, what worked well in the US on the S&P 500, it was NVIDIA, which was up 36.34 %. What didn’t work on the S&P 500 was Advanced Auto Parts. It’s been on a monthly sell signal for a while now, down 41.93 % and actually just right down at the lows from back in early 2020.
What worked in Canada? Well, it’s hard to notice on the chart, but we do have BlackBerry back on a monthly buy signal up 38.07 % for the month. The big loser, Canopy Growth, which was down 35.43 %. The TSX is decommissioning the Canadian Cannabis Index. You can still, of course, trade the ETFs. You’ve got the Horizons Marijuana Life ETF, which was down 9.94 % for the month. And then in the US, Alternative Harvest, which was down 9.34 % for the month. Now, if you’re following marijuana stocks and you’re still looking to play them on the long side, you really need to just narrow your focus quite a bit in your expectations. We should have found support at the $10 level, and we’re now trading at $3.10. So that area of support has broken. You need to just eliminate all this previous trading action. This market is probably never going to come back into that range. If we look at the weekly fly paper channel, you can see that we’re coming down to the $7 level, and that’s really your trading range. So if you’re looking up in any of these charts, and if they do start to turn around and you do start to get buy signals, the stuff over at the left is just a dream that will never happen again for this particular sector.
The sector is probably just going to get eaten up by drug companies, and you’ll never have to worry about how the highs from 2020, 2021, those will never come back into play. Looking at gold, gold was down over $35 for the month, still on a monthly buy signal, no change there. Crude oil was down 9.14 % for the month, still on a monthly sell signal, no change there. Now, moving from monthly charts to daily charts, of course, we’re still waiting to see if the debt ceiling can get resolved. In the news this morning, we’ve got Salesforce out with earnings. Now, Salesforce is still on a buy signal here, making a new high yesterday. Looking for a close on Thursday below 208.60. So far, we were trading down not as low as 208. 60. We’re trading down to 21106. Last time I checked, of course, that number is going to be different when you check out Salesforce in the premarket. Our next price target was 225. We hit that yesterday. So chitchat, ng, congratulations. You got to lock in some profits at 225 before the pullback. Now, I always like to look at the midterm chart to see if there’s any difference between the right side and the midterm.
Right now, they are very close together. So we’ll have to see how Salesforce makes out on Thursday. Looking at the VIX, the VIX is still on a buy signal that’s supportive for lower stock prices. If we get a close below 1728, that would open up the market to go higher from here. Looking at the US dollar index, we made a new high for this move. At the same time, bond prices moved up nicely again on Wednesday, giving us a buy signal for the 30 year bond and a sell signal for bond yields. Then looking at the price of gold, gold moved up yesterday, looking for a close above $2,002.90. That would give us a new buy signal on Thursday. Gold stocks moved up on both sides of the border, but not enough to give us a buy signal. Then we saw crude oil move down yesterday, 1.88 % for the day and energy stocks also moved down over 2 % on the TSX, 1.76 % on the S&P 500. Then looking at the iS shares for the TSX 60, new low for this move on Wednesday. Looking at the DAO, the DAO closed slightly lower yesterday, still on a sell signal.
S&P 500 pulled back to the upper channel line for the SPY, we’re looking for a close below 413.92 on Thursday. Then we’ve got the QQQ’s still up in the sky well away from any potential sell signal on Thursday. Then looking at the chip sector, you can see the big reversal that we had and we did make a new high. We did run up and tag 212.50. So if you had an order in up there, that got filled. And of course, if we look back, you can see we previously peaked back at the 212.50 level a few months ago. Let’s finish off today’s presentation looking at a stock that came up during a one on one tutorial on Wednesday, and that’s Ambarella. It collapsed yesterday but did not give us a sell signal. So we’re looking for a close below $70.57. And you can see that it actually opened below that level yesterday and traded below that but did not close below that level. It closed at 72.32. So even though it was a big down day, not enough to give us a sell signal. Now, if we go back to when this trade started, and of course, it’s the first close above the upper channel line, gives you a buy signal.
And then we’re looking for the first close below the lower channel line to totally kick us out of a trade. Now, while we’re waiting to be kicked out, we want to try to take some money off the table. 68.75 would have been far too close to use as a price target. So then you look up $75 and 81.25, those would have been your next two targets. That would be your playing field. $75, is that a legitimate target? Well, there’s lots of support over here. And so, yeah, that’s a legitimate target. So you would have put an order in to sell half of your position at 75, then you would have put an order in to sell half your position at 81.25. Any history at that level? Yes. So that’s certainly a legitimate target to the upside. And then, of course, you could have put another order in up there at $87.50 once the $81.25 order was filled. It doesn’t look like we’re going to get up to that level. You did have a chance to lock in profits at $75 and then $81.25. Now you’re just sitting with a partial position looking to see if the market will recover or if we do go down and close below the 70.57 level.
That’s the number we’re looking for on Thursday. And if we close below that level, then you get to sell the remainder of your position after already locking in profits. Okay, folks, that is all for this morning’s presentation. I see the futures have slipped a little bit, but it’s not going to get anybody overly excited. Have a great day. Next time you’ll hear my voice is on Friday morning. And on Friday morning, we’re going to take a closer look at the Canadian stock market.
Stephen Whiteside
Thursday, June 1, 2023
