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Good morning, everyone, and welcome to Wednesday morning. It’s Stephen Whiteside here from theuptrend.com. In the premarket this morning, stock index futures and commodities are slightly above fair value. So far, it looks like we’re going to see some buying at the open on Wednesday morning. Now, in today’s presentation, we’re going to do a couple of different things, but we were certainly going to start off looking at the VIX. The VIX is still on a daily sell signal and a weekly sell signal. Of course, both of those are supportive for higher stock prices. On a short term basis, things would change on Wednesday if the VIX were to close above $14.59.
Now, the Nasdaq hit a new high yesterday, and of course, a handful of stocks in the Nasdaq have been responsible for most of the gains in the North American stock markets this year. I had a question yesterday asking if the volumes of the bull and bear ETFs could help indicate possible change in market direction. And for the most part, I would say no. I would strongly encourage you to watch price action over everything else. Price action tells us intention, volume does not.
You’ve got a slight decline in the average volume for the triple bulls yesterday. And if we look at the triple bears for the Nasdaq, you can see the volume was slightly above average. So no major change yesterday. And I certainly wouldn’t spend much time looking at the volumes as opposed to the actual price action itself. Of course, the bull and the bear ETFs on the TSX look very similar. Of course, they have less volatility than the triples in the US.
Now, one of the things I’m watching closely, of course, we’re anticipating the end of the summer rally this week or next, and you can see that the percentage of stocks on the Nasdaq 100 currently trading above their 50 day moving average is coming up to the top of the range. If we take these three highs here, and I’m looking at those highs because they had the most negative reaction afterwards, they match up very nicely on this weekly chart to major turning points for the Nasdaq over the last couple of years. Here we are. We’re up at the top of the range and we’re looking for the summer rally to come to an end.
This is certainly the time and place for that to happen.
Now, this heat map is a year to date heat map of the S&P 500. And you can see, and we’ve been talking about this, this isn’t anything new, but you can see most of the gains are from over here. They’re certainly not from over here. And you can see how big these boxes are indicating the overall market value of each of these stocks. So a handful of stocks have been pulling the market higher this year. Now, as of Tuesday night’s close, 189 of the S&P 500 are still negative for the year. And one of the stocks that I watch closely, of course, is Goldman Sachs. And we’ll take a look at that in a second. But you can see that we’ve got NVIDIA up over 200 %, we’ve got Meta up over 150 %, then we’ve got Tesla up 138 % in change, we’ve got Apple up nearly 50 %, and we’ve got Microsoft up nearly 50 % for the year. At the same time, and I was shocked to see this, that BlackRock, the big asset manager and investment house, is up just a little over 4 % for the year.
One of the financial stocks that I follow very closely. I’m either long or short this stock is actually down 1.78 % for the year so far. Nowhere near anything that’s a reasonable gain for 2023. Of course, the biggest losers in 2023, a lot of them are the regional banks in the US, but there are other companies as well, such as Advanced Auto Parts, which is down over 50 % on the year.
Now, looking at the TSX, we’re only up a little over 5 % year to date. So all of the mutual funds that are attached to the TSX that use the TSX as their guidepost are up just a little over 5 % for the year, less, of course, the actual expenses. If we look at a heat map of the TSX, you can see how important Shopify is for the gains. But look at all this. All these banks are negative for the year. The railroads are negative for the year. Look at all this. That is a really ugly heat map if you think that you’re in a bull market, which is certainly what the major US indices are telling us. Right now, or as of Tuesday’s close, 84 of the 228 stocks on the TSX composite Index are negative for 2023.
Of course, the big winner on the TSX in 2023 has been Shopify, up over 88 % as of last night’s close. The biggest loser on the TSX is Telus International down over 50 % for the year. Now, yesterday, one of the big winners was the TD Bank. We’ve been watching that stock closely, made a new high for this move, and we saw a huge gain for Charles Schwab on a Tuesday up over 12 % on the day.
Now, let’s finish off with a couple of more charts. Bitcoin has pulled back over the past couple of days, and we’re looking at all the Bitcoin related stocks which have certainly outperformed the gains in Bitcoin. The stocks have done much better than the actual cryptocurrency itself. And you can see that as we go through the Bitcoin related stocks on the TSX, that they’re all pulling back and there’s the potential for a daily sell signal based on Wednesday’s close. Okay, folks, that is all I wanted to cover in this morning’s presentation. We’re anticipating the summer rally to come to an end. All good things come to an end if you look at stock charts and look at the percentage of stocks currently trading above their moving averages, when that’s going to happen, what the catalyst for that is going to be, of course, has yet to be determined.
Enjoy the rest of your day. Next time you’ll hear my voice is on Thursday morning.
Stephen Whiteside
Wednesday, July 19, 2023
