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Stock Market Trends – Weekend Edition 09042023

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

Hello, everyone. It’s Stephen Whiteside here from with this weekend’s edition of Stock Market Timing Television. Well, the weekend did pretty much as we expected. We were coming into a long weekend. We were coming into month end. Both of those traditionally have a bullish bias to them, and that’s exactly what happened this week. Now, coming into September, well, September is historically not the best month of the year. Historically, no matter who’s data you look at, September is going to turn out to be the worst month of the year. Whether you’re looking at the 40 years, whether you’re looking at ’54 to 2013, or you’re looking at the last 100, the last 50, or the last 20 years, all of them tell us to expect volatility to expand dramatically in the month of September. Now, knowing that about the month of September, you’d think I would just tell you to run for the hills or short the market on the first trading day of the week, but that’s not the case. We need to be flexible and anticipate that the market could go either way. As we’re coming into the first trading week of September, things are looking pretty bullish at the moment, so there’s no reason to get ahead of the market.

If you’re not an active trader and you’re not willing to short the market or try to take advantage when the market moves down buying the bear ETFs, then I’d advise sitting on your hands for the next 60 days and wait till we get past September and October. The sell-and-may-go-away crowd, the reason that that investment strategy works over time is specifically because people miss all of the volatility in September and October. If you’re not willing to go both ways, if you’re not willing to take a sell signal when it comes up, then it’s probably best if you just sit on your hands for the time being. Now, fear continues to fall. It has fallen for the last two weeks. The weekly VIX is back on a sell signal as a Friday’s close. The daily VIX has been on a cell signal for over a week now and came down and made a new closing low on Friday sitting just above the 12.50 level. We closed at 13:09. Now, if we go back in time, we can see that the 200-day moving average acted as resistance and that held the market in check. If the market is going to make a major move to the downside, we need the VIX out above the 200-day moving average.

Now, last time we were down the levels we’re seeing right now was back in late July. What happened then? Well, you can see the S&P 500 peaked right around that point. It is certainly possible, even though we’re projecting lower prices for the VIX and we’re projecting higher prices for the S&P 500, this could be the time and place that the market wants to take a break and pull back. Pulling back does not mean or guarantee making lower lows. It just means that the market might want to take a break for a few days or a few weeks. Now, moving on to a weekly index chart, starting with the iShares for the TSX60. We had a big move up this week, up nearly 4%. It looks like 29.69 is acting as support right now as expected. Now, we’re looking to see if we can take out 31.25, which is big been a big area of resistance during the year 2023. Now, if we can take out 31.25, then certainly a move back up to the highs from early 2022, up there at 3203 would certainly come into play, but we’re not there just yet. Now, of course, the energy sector has been holding up both sides of the market this year, whether you’re looking at the TSX or the S&P 500.

Here we are up at the previous high, so we could continue to move a lot higher from here. Then looking at the information technology, which is not a big component of the Canadian stock market, but has certainly done very well this week, up nearly 8% on the week. Now, financials have come back from the recent lows. They were up nearly 3% on the week. It’s going to be certainly a different marketplace if we can also get the financials to participate. We’ll be watching those closely. If the financials will participate with the rest of the market on the upside, then we could certainly take out the 31.25 level. Now, the Dow moved up this week, not enough to give us a weekly buy signal. The S&P 500 and the Nasdaq 100 both moved up generating new weekly buy signals. Of course, the energy sector has been helping the U. S. Market hold up this year. But of course, it’s been more about the technology sector, which is back on a weekly buy signal. The financials have been a drag. They were up over 2% on the week. Again, if we’re going to make higher highs this year, we’re going to need the financial sector to participate.

Now, what’s been holding the U. S. Market up? Of course, a handful of stocks. There we’ve got Apple up over 6% on the week back on a weekly buy signal, joining Invidea still on a weekly buy signal. Joining NVIDIA, still on a weekly buy signal and NVIDIA tapping the $500 level, looking to see if we can break out. There’s Google still doing well, making a new high for this move. What’s not working, of course, and could totally change the whole complexion of the market if the financials would start to participate, so we’re going to keep a close eye on Bank of America, Citi Group. Or if you’re watching the Canadian market, what about the Royal Bank and the TD Bank? Both having inside weeks this week, both closing higher, but still on a weekly sell signals. Now comparing two different investment strategies, we’ve got Berkshire Hathaway up just under two % on the week. Of course, he’s all about selling the losers and keeping the winners. And then if you want to sell the winners and keep the losers, then you’re doing the ARK Innovation, which was up nearly six and a half % on the week.

But certainly you don’t really notice it on the chart that much. So if I can leave you with just one thing, if we never meet again, if we never talk again, when you’re looking at your portfolio, always be upgrading. There’s nothing wrong with taking on rookie players, but after the first season, if they’re not doing well, it’s time to cut them. And then, of course, you’ve got to players that are just getting old and the market doesn’t really have an interest in them anymore and those have to be let loose as well. You should always be upgrading your portfolio. That’s what keeps the major stock market indices moving up over time. It’s not the stocks that they started with, it’s the stocks that they’ve stayed with and added to over time. When you look at the Dow, the S&P 500, the TSX60, you go back 20 years and you’ll notice there’s a lot of stocks missing from those indexes because they’ve come and gone and they’ve been replaced by newer and better stocks. Next up, I want to take a look at the percentage of stocks currently trading above their 20-day moving average. On this particular chart, we’re looking at the percentage of stocks on the TSX that are currently trading above their 20-day moving average, and we’re coming back up to an overbot condition.

You remember back in June, we were oversold, looking for the market to move up in that summer rally. Then in July, we were overbot. We were looking for it to pull back into August. In August, we were oversold, looking for it to move back up. Here we are, we’re getting back up to the top of the range. There’s certainly no indication of a cell signal just yet. If you’re a member and you want to find these charts in the site, just go over to the menu on the right-hand side of the screen and just go down. You’ll see the TSX, S&P 500, and the Nasdaq 100 are all there. When you bring them up, there are several things you can do. You can change how much data you’re seeing on the screen, whether you’re seeing six months, a year, two years, five years. You can also overlay individual stocks, or in this case, I’m overlaying the TSX60. Now, it’s important to note that the fact that we get to a certain point does not automatically guarantee that the market reverses. It’s just telling you to expect things to change. It’s not telling you that things have changed, but you should expect them.

And looking at the TSX, we’re coming back up to those levels. Now, when we apply the TSX60 over this indicator, so we’re applying an index over top of an indicator, you can see when the indicator peaked, it took a few weeks before the actual index started to move back down. What happens is that a certain number of stocks will take the market up and pull the rest of the market with it. When those stocks that didn’t really participate, when the laggards start to move down, it brings the indicator down. But because all the money went into a handful of big cap stocks, those stocks are still holding the index up, and it takes a while before people actually end up selling those stocks. People will hold on to their winners longer than their losers. When this indicator is going down, you can see it’s being led lower by the losers themselves. Here we are, we’re getting up to the top of the range once again, give it another week before the market wants to take a break. Now, the indicator itself will go from being overbought to oversold up and down, up and down over time.

That doesn’t mean the index itself will do that as well. In a bull market, what we’re looking for is for a new high to be made followed by a higher low, followed by a higher high and a higher low. In September, what we’re going to be looking for is do we take out the August highs? Yes. Then what happens when we pull back? We can pull back in September. It doesn’t have to be significant. In fact, if it’s higher than the previous low, then that is a bullish sign for the rest of the year. We’ll just have to keep an eye on that and see how things work out. But on the TSX, we’re getting back up to an overbought condition on the S&P 500. We haven’t got there yet. That’s also true of the Nasdaq 100. But in both cases, you can see that we had a big decline in August, then we started to turn around off the bottom of the range. Now, what’s rather unique is when we look at the percentage of stocks on the Nasdaq 100 that are currently trading above their 20-day moving average and then overlay the Nasdaq 100 on top, you’ll see that the peaks and the valleys aren’t as easy to spot as they are on the TSX chart.

Why is that? Well, it’s rather unusual. But this year, we only have a handful of stocks really pulling the market higher. As we talked about recently, the number of stocks that are positive for the year is just over 50% on most indices. In the Nasdaq, it’s more than that. But again, it’s really those big cap stocks that haven’t pulled back that much. Anytime that we’ve seen a pullback in the percentage of stocks currently trading above their 20-day moving average, when that indicator is pulled back, it really hasn’t pulled back the market because this market is made up of fewer and fewer stocks than it normally would be. This is a current anomaly that has happened before, but doesn’t happen that often. This is not a normal year for the stock market. Let’s finish off this weekend’s presentation with a little housekeeping. We’ve been doing some database cleaning over the past few weeks. We’ve deleted a whole bunch of symbols. I’d like to continue that. If you have any suggestions, please let us know. What we’ve been doing is going through and just cleaning out some very thinly traded ETFs, for example. I thought the steel ETF would be more popular, and I’m not talking about with our members, but just the market itself.

The steel ETF had a volume of 7,000 shares and change on Friday. Global Water ETF, nearly 16,000 shares on Friday. That’s nothing. There’s lots of China ETFs out there. We got rid of a few of them. You’d think the S&P, China ETF would have more volume than this. But on Friday, it was just nearly 53,000 shares. That’s nothing for a global ETF. Then we got rid of some country ETFs, the iShares for Austria. Nobody cares about the Austria market with only 1,862 shares traded on Friday. We got rid of all the currency ETFs. I’ve always suggested to people that they don’t trade the currency ETFs because there’s really no opportunity for capital gains. The average true range on a currency ETF is not very high. If you want to trade currencies, use the futures contracts, use forex, use something with a lot more leverage than you can get from an ETF. The Australian dollar ETF only traded 2,091 shares on Friday, and that definitely does not belong in our database. If you have any suggestions of anything we could delete from the database, I would really, really, really appreciate hearing from you. We’d love to get rid of another 50 symbols if we could.

We’re going to be adding more symbols this fall, and I’d like to make room for them. The more symbols we have, the longer it takes us to complete our update every day. The more symbols we have, the more chances we could have errors in the database. Your suggestions are very, very welcomed. Okay, folks, that’s all for this weekend’s presentation. August ended on a positive note. September is historically very volatile. I wouldn’t be surprised if the market traded higher for the first week or so and then started to sell off going into the end of the month, not expecting the market to bottom in the middle of the month and end on a positive note. For the month of September, I expect it to probably top in the middle of the month and head lower going into the end of the month. Enjoy the rest of your long weekend. The next time you’ll hear my voice is on Tuesday morning.

Stephen Whiteside
Monday, September 4, 2023

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