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Timing The Canadian Stock Market 04182024

Good morning, everyone, and welcome to Thursday morning. It’s Stephen Whiteside here from In the premarket this morning, stock index futures are trading above fair value. Commodities are mixed with gold higher, while crude oil is lower. On Thursday morning, in this morning’s presentation, we’ll start off with a quick overview of the US market, and then we’ll do a deep dive into the canadian market. Now, the VIX is still on a buy signal here. That, of course, is bearish for stock. The VIX had a small pullback yesterday, still trading above the upper channel line. Things would change on Thursday if the VIX were to close below 15.32. Now, the Sox index dipped down below the March low, so that is no longer a potential area of support. That support has now been broken. We saw a lot of negativity in the chip sector yesterday. Advanced Micro Devices making a new low for this move. We’ve got Nvidia back on a sell signal, down over $33. Then we had a huge move down for the company that makes the equipment, that makes the chips, ASML. It was down over 7% on the day, and that is not a good sign for the chip sector going forward.

Now, looking at the Dow, it was down yesterday, making a new low for this move. We had a new low for the S&P 500, for the Nasdaq 100. We had a new low for the Russell 2000, a new low for the small caps, and a new low for the micro caps on Wednesday. So absolutely no reason to change your bias coming into Thursday’s trading action. Next up, let’s take a look at timing. The Canadian stock market. And right now, the Canadian stock market is outperforming the US stock market because of commodity prices. And when we look at the top ten most actively traded stocks from Wednesday’s trading action, eight out of the top ten were directly commodity related. Of course, the profits of the major banks have a lot to do with what’s happening in the commodity sector as well. Now, when we look at commodity prices coming into Thursday’s trading action, we still have copper on a buy signal, gold on a buy signal, silver on a buy signal. What’s not working right now? Well, the energy sector has just rolled over with crude oil down yesterday. It’s down again in the premarket this morning, joining natural gas still on a sell signal.

So no change there. So we’re expecting to see more weakness in the energy sector. Now, the TSX has started to roll over. Of course it’s on a sell signal right now, we are projecting lower prices here. That is also true for the TSX 60, for mid caps, small caps and micro caps. We’re projecting lower prices across the board, but they’re still holding up much better than their us counterparts. You know, if we, earlier in the presentation, we looked at us micro caps compared to the venture exchange. The venture exchange is doing much better than us micro caps at the moment. Now, when we divide the Canadian market up by sectors, the biggest sector, of course, is the financials. Typically they have the least amount of volatility. But here we are, we’re on a sell signal right now, and the biggest player, of course, in the financials is the Royal Bank, followed by the TD Bank, which was up yesterday and closed above the previous day’s high. So that could be the start of something. Nothing to do here on Thursday morning. Then the Bank of Nova Scotia made a new low yesterday. And then the fourth biggest player in the financials is Manulife.

Manulife closing down just $0.03 on Wednesday. Then looking at the energy sector, the index itself generated a sell signal the other day. Not all stocks are on a sell signal right now. The biggest player is Canadian Natural Resources. It’s on a sell signal. We’ve seen Suncor trade up into the channel for the last two days. Close above $52.60 would give us a new buy signal on Thursday. That’s not something I would chase. All the easy money has been made in this sector, and if it were to go up at this time, it would be a high risk opportunity. It’s not something I would be interested in. And then looking at Cenovus, we’re on a buy signal right now. That would change on Thursday with a closed blow, $28.35. And then we’ve already got imperial oil on a sell signal. The stock that people trade the most is Baytex. And Baytex is on its third day of a sell signal, then looking at industrials. We’ve been on a cell signal for a couple of weeks now. The biggest player in the industrial sector are the railroads there. We’ve got CN back on a sell signal, joining CP already on a sell signal, then Thomson Reuters.

Don’t know why it’s in the industrial sector, but it is the third biggest stock in that sector. And we’re looking for a close on Thursday below $208.40. And that would join waste already on a sell signal. So no change in trend there. Now, Air Canada was up sharply yesterday. I’m sure that was in sympathy with what was going on in the US market, but still not enough to give us a buy signal. We would need a close above $19.37 to give us a buy signal on Thursday. Then, looking at materials, we’re still on a buy signal here. The biggest player in the materials sector right now is Agnico Eagle, still on a buy signal here. And the reason for that, the reason it moved up in the world is because Barrick has sold off over the past few days and it is still on a sell signal. Nutrien is the third biggest player in this sector. And then we’ve got tech resources still on a buy signal here. Tech would need a close on Thursday below $64.15 to give us a new daily sell signal. Now, oddly enough, the big winner in this sector over the last month has not been a gold stock, but a silver stock.

Pan American Silver, I believe, is up 32% and change in the last month. Now, anything that’s not commodity related, of course, has not been doing well lately. So when we look at Infotech, we’re still on a sell signal here. No joy for Shopify trading up to the channel, lower channel line yesterday, then coming back down. Then we’re looking at Constellation Software back on a buy signal here. Constellation Software, not really a stock you want to trade more of a buy and hold, or at least use the weekly charts to manage Constellation Software. Then CGI trading back in the channel yesterday, it closed above 145.67. Would give you a buy signal on Thursday. And then no joy for Open Text making a new low yesterday. And then of course, looking at the, the telecom stocks, they’ve been in the doghouse all year. No change in trend on Thursday for the index or for Bell. And then Telus is now more valuable than Rogers right now. It is still on a buy signal here. That would change on Thursday with a close below $21.63. And then we’ve got Rogers still on a sell signal. No change there.

And then Quebecor, unfortunately has rolled over and is back on a sell signal as of Wednesday’s close. Okay, folks, that’s all for this morning’s presentation. As you can see, anything that’s not commodity related is not doing well at the moment that is in sync with what’s going on in the US market. And so those commodity stocks are holding up the major canadian indices. At some point they could roll over and chase the rest of the market lower. Certainly that’s starting to happen in the energy sector. It hasn’t really happened in the gold sector just yet, but it could any day now. Of course, the other way to play this market is the leveraged ETF’s and being long the bear ETF’s for the major indices is the right place to be. And on Friday morning we’ll take a look at those leveraged ETF’s. Enjoy the rest of your day again. Next time you’ll hear my voice is on Friday morning.

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Stephen Whiteside
Thursday, April 18, 2024

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