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Hello everyone, and welcome to Wednesday Morning. It’s Stephen Whiteside here from TheUpTrend.com. Well, we’re coming up to 08:00 A.M. on the East Coast and stock index futures are above fair value. The market’s rather mixed.
We’ve got Nvidia up slightly while Tesla is trading lower in the pre market. Now, yesterday we saw the US dollar index and bond yields continue to move higher. That’s not going to help the stock market over the long term. Everybody’s still watching the big shiny object which is Nvidia. Nvidia pulled back yesterday after running up and retesting the July high.
We’ve got earnings coming up for Nvidia and that is certainly going to add some volatility to the market. Now, Nvidia is the Apple of 2023 and Apple is still on a sell signal, so that has not changed. Now, while everybody’s looking at Nvidia up at all time highs, a lot of the market is looking down sharply at the moment. And the biggest concern, of course, is the financial sector. And financials made a new low yesterday.
US banks, US regional banks both made new lows yesterday. Now when we look at individual symbols, they’re going to look a lot weaker than these charts. And of course, when you’re looking at an ETF, things are smoothed out because the ETF contains a basket of stocks. Yesterday I mentioned Goldman Sachs is a stock that I follow closely and it wasn’t looking very healthy. It actually made a new low on Tuesday.
Then look at Citigroup. And of course we expect any of these stocks to try to hold support at recent lows. So the July low is taken out, the June low is taken out, the May low is taken out. We’re just heading lower at the moment. There’s no major areas of support ahead of us in the short term.
Then looking at the big regional bank Trust, it’s a regional bank holding company and it made a new low yesterday. New low for Capital One Financial. Then looking at insurance, the Travelers Group. And then looking at Charles Schwab. Now Charles Schwab came down to fill the open gap and tried to find support there for a couple of days, and then yesterday that support broke.
So looking for lower prices here, then looking at the Canadian side, not looking any healthier here. There’s the TSX Financials, TSX Banks looking to try to find some area of support here. When we look at the bank of Montreal, we’re right down at the early June, late May lows. Then looking at Bank of Nova Scotia, which on the way up, when these banks were rallying, the Bank of Nova Scotia looked the weakest and now it’s looking the weakest on the way back down, breaking down through the June lows, we’ve got the Royal Bank heading down towards the May lows. It had a nice run up.
Now it’s having a great rundown. And the TD Bank, which looked the strongest on the way up, is still holding up fairly well. Now, speaking of insurance companies, we’ve got Manulife and SunLife looking fairly weak. Manulife’s trying to find footing at the June lows. SunLife said goodbye to those June lows a long time ago and heading down to see if we can hold support at the May lows.
Then what didn’t work? Well, Nuvia is the biggest loser in the Canadian financial sector, down, I think, 47% in the last month. What’s working? Well, the Berkshire Hathaway equivalent in Canada, Fairfax, is positive for the month of August and it was up yesterday. Now, a close below yesterday’s low would generate a new sell signal for Fairfax.
Then looking at the VIX, and the VIX is still on a buy signal here trading in the channel. If we want the stock market overall to start making lower lows, we need the VIX to break out above the top of the range right now, which is right at the 200 day moving average. Now, looking at the major index ETFs that we fall, they’re all on sell signals right now. We’ve got the Ishares for the TSX 60 making a new closing low yesterday. The Dow had an inside day on Tuesday.
SP 500 traded up into the Channel before reversing, as did the Nasdaq. So the Nasdaq is the closest to generating a buy signal on Wednesday. And of course, depending on what Nvidia does, that could certainly happen. It could also happen for semiconductors, which also moved up into the Channel yesterday and then pulled back. Looking at the commodity world, we saw the price of gold move up yesterday, just $3, and the price of silver continued to move higher.
Now, that hasn’t really helped silver stocks, they were up yesterday, but no new trend. No new trend for the XGD and no new trend for the GDX so far. Then looking at the energy sector, we had crude oil pullback slightly. We’ve got natural gas making a new low for this particular move. And we saw Canadian energy stocks pull back still on a buy signal, while US energy stocks are still on a sell signal from five days ago.
And let’s finish off today’s presentation looking at the world of bitcoin. Bitcoin made a new closing low for this move yesterday, as did Ethereum. And then all the bitcoin related stocks are still on sell signals. No change in trend for bit farms, for Coinbase, for Hive, for Hut 8, or for Marathon. No changes of trend at all.
And still looking very weak. And they all look like they’re going to head lower from here. Okay, folks, that is all for this morning’s presentation. The world awaits Nvidia and Jackson Hole Nvidia is certainly going to add some volatility to the market. Whether it’s going to change the overall direction of the market.
I’m not sure of the damage that higher yields and higher interest rates are doing on many sectors of the market is probably not going to be undone by one earnings report. And you can certainly see how broad the damage is from financials to the cryptocurrency market, they’re all being hit at the moment. Enjoy the rest of your Wednesday. Next time you’ll hear my voice is on Thursday morning.
Stephen Whiteside
Wednesday, August 23, 2023
