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Stock Market Timing Television – Weekend Edition 06042023

Hello, everyone. It’s Stephen Whiteside here from with this weekend’s edition of Stock Market Timing and Television. Well, it’s Sunday evening. Stock Index futures have started to trade. So far, they’re trading down below fair value, but not by too much, so they haven’t been overly spooked over the weekend. Commodities are mixed. We’ve got crude oil higher while gold is lower on a Sunday evening. Now, Friday turned out to be an incredibly interesting day. It all started off with some very impressive employment numbers out of the US. Some of the previous numbers reported this year were also revised higher. That sent the stock market heading sharply higher. It wasn’t that big a deal at the open, but the market certainly continued higher throughout the day. So there’s the DAO Diamond’s back on a buy signal. There’s the iShares for the TSX 60 closing one penny above the upper channel line right at the bottom of that open gap from a couple of weeks ago. And we also saw quite wide participation on Friday. There’s the iShares for the Russell 2000 popping up, closing above the previous high from a couple of weeks ago.

So that’s back on a buy signal. We’ve got microcaps back on a buy signal. Now in 2023, the story, of course, has been all about the big cap technology stocks. So it was quite interesting on Friday to see all boats rise. That could be the start of something new. But on Friday, I think stock market investors forgot what story was being told, what movie they were watching right now. What happened on Friday was a bit like watching the sound of music and right in the middle of the movie, aliens attack. That’s what happened on Friday because the Fed is still in charge and they want to fight inflation. And what they want to see is the economy slowing down. They don’t necessarily have to run us into recession, but they want to see evidence that inflation is pulling back and the economy is slowing down. And the numbers they saw on Friday aren’t going to help that story at all. So I’m not sure how much further the stock market can go up from here. Some people are talking what happened on Friday is a blow off top. Only time will tell. We’ve been looking at the seasonality charts for the past few weeks about the TSX, the S&P 500, and the Nasdaq, and they all tell us basically the same thing.

Historically, markets peak in the first week of June and then pull back into the third week of June. Is that what happened on Friday? Was that the peak, the seasonal peak? Seasonality charts, they’re averages, basically. What you don’t see here is the one year where the stock market had a huge move up in the month of June, and you also don’t see that one year where the stock market had a huge pullback in the month of June. This is all averaged out, so it just gives us an indication of historically what could happen. But of course, this year is different than previous years in a lot of ways, and we never had AI before to deal with, and big cap tech stocks leading the market higher. That doesn’t happen all the time. But here we are in 2023, ending the first week of June, and this is what we’re expecting on a seasonal basis. Now, looking at the VIX, if you’re a long term investor, the VIX has continued to move lower. It was down 18.66 % on the week. And so we would go from being long term bullish to being long term bearish if the VIX were to close above $20.57 this coming Friday.

If you’re trading the market, then on Monday will remain bullish on the market as long as the VIX does not close above $18.48. And you can see the upper channel line is starting to curl down. So if we don’t close above that level on Monday, when we come back here on Tuesday, that upper channel line will be lower. Now, what happened this week? Is it the beginning of the end or the end of the beginning? We don’t know. Only time will tell. But it is certainly quite interesting to see how the market overreacted on Friday. Now, moving on to the weekly ETF charts. Starting off with the SPY, it was up 1.88 % on the week. Heading towards our next daily price target of 429.69. The high on Friday was 428.74, so pretty close to it. Then our next daily target is 437.50, which is also our next weekly target. Just below that is the high from last summer at 431.78. So to get to 437.50, we’ve got to get through 431.78, and that’s only a couple of dollars away from where we closed on Friday. Looking at the Nasdaq, the Nasdaq does not have that target.

That target was already taken out a couple of weeks ago. And so here we continue to move higher. Our next daily target is 359.38. And if we can take that out, our next daily and weekly target is up there at 375. And you can see that we peaked just below that level back at the start of 2022. Looking at the ishares for the TSX 60, we traded up to the lower channel line, so we’re up 0.43 % on the week, certainly no major change in trend. We did make a new low and reverse off that. So we’ll have to see if that new low can hold. Of course, we’ve been watching the chip sector, which had a huge move up for the previous two weeks. This week it was very quiet down a little over half a %. And then NVIDIA, the big winner from the previous week, was up just under 1 % on the week after making a new high. And it did trade up above 400, then came back and closed at 393.27. So it looks like $400 is acting as resistance. Now, the financials were all up across the board. No new buy signals for US financials or US banks or regional banks or broker dealers or insurance companies.

They were all up nicely on the week, but certainly no long term changes in trend. That is also true for Canadian financials and Canadian banks. In both cases, they made new lows for this move and banks certainly made a new low. They are still holding the lows from October of last year. Those haven’t broken just yet. Next up, let’s take a look at commodity prices. We saw a copper move up this week at 1.24 %, still trading and closing below the lower channel line. Gold was up 0.33 % while silver was stronger up 0.16 %, no change in trend. You should be able to find bacon on sale while hamburger meat and the rest of the beef products are going to be quite expensive this summer. Then looking at lumber, things are fairly quiet inside week for the price of lumber, still on a sell signal, no change there, and no change in trend for the energy sector with crude oil down 1.16 % and natural gas down another 10 % this week. Natural gas still in a long term downtrend. Let’s finish off this weekend’s presentation with a little life lesson. If you’ve been with us for any length of time, in fact, if you’ve been with us for all of the 23 years we’ve been doing this, you know that I believe that news is noise.

All we’re really here to do is follow the money and ignore everything else. Now, I do keep up on the news because I have a public persona. Reporters call here and ask me for my opinion on things, and I want to have something intelligent to say to them. So I do keep up, but I would never use news as a catalyst to move my money in or out of the market. Now, here’s a perfect example out of today’s news. I watch what’s going on in Argentina because we have previous employees that live there and they’re going through some economic hell at the moment. It’s just probably the worst in the world, except there might be a couple of African countries going through a worse economic crisis at the moment. If you go to Google and just type in Argentina economy, here’s the type of headlines you’re going to get. And really, the big thing is that inflation is up at 100 %, interest rates are at 100 %. This economy is falling apart. People can’t afford rent. There’s thousands of people sleeping in the airport in Buenas Ares. And it’s just a horrible, horrible, horrible, horrible human tragedy.

What does that mean for you and I as investors? Well, Argentina is the best performing market in the world at the moment. Year to date, the market is up 74 %. Now, how do you match that up with the news headlines that we just talked about and the reality? The reality on the street is they’re dealing with 100 % inflation. Their currency is worthless. The US dollar is the currency of choice for anybody there, not condone by the government or the banking system. But if you want to go there and you want to buy something, it’s best to do it in US dollars than it is in local currency. And with all that economic crisis, with all those negative headlines, we are talking about the best performing stock market in the world in 2023, up over 74 %. So that’s the end of today’s Life lesson. That’s all for this weekend’s presentation. Stock index futures are down slightly on Sunday night, so nothing’s overly spooked the market at all. I’m not totally convinced that Friday was the start of anything new. I think Friday may be the end of the current up move in the market.

It might have been a blow off top. We’ll just have to wait and see. Only time will tell. Have a great day. Next time you’ll hear my voice is on Tuesday morning. it.

Stephen Whiteside
Sunday, June 4, 2023

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