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Stock Market Trends – Weekend Edition 08202023

This video has been translated into Arabic, Chinese, French, German, Hindi, Japanese, Korean, and Spanish.

Hello, everyone. It’s Stephen Whiteside here from I hope you’re having a wonderful weekend. It is Sunday, August 20th, 2023. Now, for the last month, we’ve been trying to bring you in for a soft landing. It all started a month ago where we were posting images of the percentage of stocks currently trading above their 20-day moving average. We did that for the TSX, the S&P 500, and the Nasdaq 100. At that time, we were up at the top of the range. It’s typically where the market starts to pull back. As I showed that it doesn’t pull back automatically. Sometimes it takes several weeks before the market realizes where it has gotten itself to and then starts to pull back. What has happened in the last month? Well, when we were up there, I was saying the air was pretty thin and it’s hard to take a buy signal up at those levels. I know that lots of new buy signals came up. Most of them have now failed. Not all of them, but most of them have. One of that we were watching closely was Amazon, which gapped higher and has now come back and almost filled the open gap, but it certainly didn’t continue to move higher from the time that it popped.

Here we are today. We’ve come down over the past couple of weeks, and this is the TSX, the percentage of stocks currently trading above their 20-day moving average. We are coming down to the bottom of the range. And what we’re looking for is a move down below 20%. Now, that is not an automatic buy signal, but it certainly tells us that this is the time in place we should start looking for the market to start to reverse. So no matter how much bad news there is out there, this is the time you look for buy signals, no matter how much bad news is out there. Now, it was three weeks ago that the VIX gave us a weekly buy signal. And that would change this coming Friday if the VIX were to close below $13.79. And what do you do when the VIX gives a buy signal? Well, the first thing you do is you stop buying. You might not necessarily have to sell things, and over time, you may have to sell things. And that has certainly been the case for the major technology stocks that we follow. But you certainly want to stop buying until things start to settle down.

Now, the VIX on a daily chart made a new high on Friday. Things would change on Monday if the VIX were to close below $15.33. Now, I’ve been waiting for the VIX to break away from the Fly Paper channel, and so far it has not done it. It has poked its head out above the fly paper channel, but we’re still stuck to it. You can see the low on Friday is still attached to the fly paper channel. We traded through the 200 day moving average on Friday, but did not close above it. And we hit our next price target of 18.75. So we may have seen the bottom for this move in the market on Friday. Only time will tell. I’m not going to do anything based on that information, but I’m certainly mentally prepared to take action if the market wants to reverse from where we are right now. Now, in preparation for bringing you in for a soft landing, we were watching the weekly bearish reversal signals. And for the SOX index, which has been very important in 2023, especially within NVIDIA, five weeks ago, we got our first bearish reversal signal. Then two weeks later, we got our second bearish reversal signal.

Five weeks ago, we got a bearish reversal signal for the Nasdaq, for the Nasdaq 100. Four weeks ago, it was the DOWutilities. Three weeks ago, it was the DOW itself, then the DOW Transports, and the Russell 2000 and the TSX60 also generated a bearish reversal week. Now, all of those are still in play. They mark the top for each of those indexes. Now, we’re watching to see how low the market will go. Now looking at the TSX60, we are looking to see if we could break out above 1250. That didn’t happen. We also noted that we made a high, a lower high, and now we’ve put in another lower high. That’s a very bearish sign. Now we’re going to have to see what happens on the downside. Do we start to make lower lows or does support, especially at the 1156.25 level, does that hold? Now, it’s been a rough time for the Canadian stock market. While we’ve had energy stocks continue to move higher, a lot of the mining sector has continued to move lower, including the gold sector. As you can see, we’re trying to hold support right along 260. We closed at 260.05 on Friday.

If we start to break down and the lows from earlier this year don’t hold us any longer, then it wouldn’t be too surprising to take a run at the lows from last fall. Just keep an eye on the gold sector and see if the market can get its act together and turn around from this point, or if we continue to make lower lows from here. Let’s finish off with a quick look at technology stocks. We’re going to use daily charts here. The Apple made a new low on Friday. Now, we did see a lot of bullish reversal signals on Friday. A lot of money came into the market late in the day, turned the market around, giving us bullish reversal signals. But what you’ll note is that we did not close above the previous day’s high. So as bullish reversal signals go, it wasn’t a very impressive Friday. Even though we had a lot of signals, they weren’t very impressive. There’s Amazon coming down and it’s almost filled the open gap. But you can see that the day it popped on earnings and then ever since it’s been starting to fade down and we are on a sell signal right now.

Meta has continued to move lower, making a new low on Friday. It landed on our next price target of 281.25, closed at 283.25. If we take out Friday’s low, a move down to 250 would not be surprising. Then looking at Microsoft, new low on Friday hit our next price target of 312.50. So hopefully, you locked in some profits. If you’re short Microsoft, hopefully you had an order in down there and it got filled on Friday and you got to buy back part of your position. Then, invidia hasn’t been selling off aggressively over the past couple of weeks. It’s still on a sell signal. Invidia, earnings come up very soon, and that will certainly be an extremely volatile day for the market. Then, Shopify in New York and Shopify in Toronto both made new lows on Friday. We’ve broken through 75, heading towards 68, 75. The top of the open gap has been broken, so the bottom of the open gap is above the 62.50 level, that could be a target. Then, of course, our mathematical target is 62.50. Last up is Tesla. Tesla made a new low on Friday, and we got down and traded below 218.75.

If you had an order to buy shares back at 218.75, those got filled. Now we’re looking to see if we continue to move lower from here. Of course, 200 is going to act as psychological support. If that breaks, then 187.50 would be our next target to the downside. Now, as the percentage of stocks trading above their 20-day moving average continues to move lower, a couple of things we need to be aware of: we are coming up to the end of the month and there’s a bullish end of the month bias. We’re also coming up to the September long weekend, and that also has a bullish bias to it. So I wouldn’t be surprised if you were to see the market start to move up from here and then continue to move lower in September into October and that’s where we could get our major buying opportunity to run up into year end. But right now, none of that has happened just yet. We’re coming into Monday’s trading action on a lot of sell signals, a lot of downtrends, a lot of new lows were made on Friday. And that’s what’s happening with the market. And until the VIX starts to turn around, I’m not going to get overly excited about looking up.

I’m going to continue to look down from here. Enjoy the rest of your weekend. Next time you’ll hear my voice is on Tuesday morning.

Stephen Whiteside
Sunday, August 20, 2023

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