Protect Your Portfolio 20190803

Hello, everyone. It's Stephen Whiteside here, from with this week's edition of Protect Your Portfolio. In this weekly presentation, we take a longer-term look at the North American markets using weekly charts. Now we use weekly charts to help filter out all that market noise from Monday to Friday. So we're left with just one decision point, and that, of course is the closing price from 4:00 PM Friday afternoon.


Let's us start off today's presentation with a quick reminder. Our offices are going to be closed this week for summer vacations. So no charts, no reports, no videos until next Saturday, August 10th, and at that time we'll do a complete weekend update of the site.


Our first chart today is a daily chart of the VIX, and the VIX popped on Tuesday, giving us a buy signal. So options traders in Chicago were ahead of the volatility that we saw on Wednesday, Thursday, and then on Friday. Friday, we had a small pullback at the close, but we made a new high for the VIX on Friday, nowhere near the recent high that we saw. You can see that on the weekly chart, and so now we're back on a weekly buy signal. That of course is negative for stock prices.


We did see major pullbacks for the major U.S. indices, but not enough to give us weekly sell signals just yet. So whether you're looking at the S&P 500, the Nasdaq 100 or the Russell 2000, we did see a new weekly sell signal for the Zacks Microcap Index, and obviously this index has not been participating in the recent rally, nowhere near making new highs recently. We made those highs back in February and haven't come near them since.


Looking at bank stocks, bank stocks came down hard this week, down nearly 5% and not enough to give us a weekly sell signal, but certainly the bank stocks are having a hard time making higher highs at this time.


What really broke down this week were things that are hard and hard to move, hard to ship and have a big export market. So Dow Jones U.S. Aluminum Index (^DJUSAL), Dow Jones U.S. Forestry & Paper (^DJUSFR) and Dow Jones U.S. Coal Index (^DJUSCL) were down hard on the week.


Looking north to the border, things look a little weaker. If you've been with us lately, we've been waiting to see if the Canadian market could break out above the April highs. So far it has not been able to do that, and now we're back on a weekly sell signal for the TSX and the TSX 60. The TSX 60 looking a little weaker because the bank stocks (S&P/TSX Equal Weight Diversified Banking (TXDE.TS)) play a bigger role. Bank stocks never generated a new weekly buy signal recently, and so we're still on a weekly sell signal. That has not changed. The question now is, do we take out the May lows, or are they going to act as support?


And then looking at the financial services (S&P/TSX Capped Financial Index (^SPTTFS)), this index is now back on a weekly sell signal. So the financial services, of course, is a more diversified index compared to the bank stocks themselves, and there's insurance and other types of financial institutions in that mix. But we are back on a weekly sell signal, so that takes up quite a bit of the TSX 60.


Energy stocks continued to motor lower, so even though we saw some life on the daily charts, that did not last very long. And then a global mining stocks (S&P/TSX Global Mining Index (TXGM.TS)) came down hard. A lot of that has to do with the price of copper, while gold stocks ended the week higher.


So a lot of volatility during the week. Some stocks gave sell signals. Some are back on buy signals. A lot of gold stocks never generated sell signals this week. So a little whipsaw action in the gold sector, but you can see how big that bar is. We are trying to get out above the previous week's high. That would certainly be a very bullish sign, if we could do that.


And then the big winner the week were the marijuana stocks (Horizons Marijuana Life Sciences Index ETF (HMMJ.TO)). But as you can see, there is no trend starting when we just came off of a lower low. So some bargain hunters in there, but certainly there is no change in trend for the marijuana sector.


Now the volatility, of course, in the VIX does not just contain itself to the stock market. We saw a huge move in currencies this week, especially the U.S dollar and the euro. It looks like both of them want to reverse right now, and so we'll just keep an eye on that and see if that happens, with the U.S. dollar topping and the euro bottoming. The Canadian dollar, of course, was down with the rest of the currencies on the week, and we are back in the channel and still on a buy signal. But if we keep going at this rate, remember all governments around the world want their currencies lower at the moment to stimulate exports, and so I wouldn't be surprised if the Canadian dollar just kept going at this time.


Now the bond markets certainly took the brunt of the volatility after the Fed meeting, and there is a huge spike in the bonds, the 30 year bond. There's a huge spike in the TLT, and Canadian bonds were higher as well. Not to the same extent, but there's the XBB moving higher, making a new high for this move.


Let's finish off today's presentation with a look at commodity prices. And starting off looking at the metals, we've got copper making a new low for this move, coming up to the low that we set back here. Of course, if we break that low that's not going to be a good sign for copper, and a lot of people use copper as a global economic barometer, and we are making a new low for this move. That's not a good sign. That's not a good trend for the global economy.


Looking at the price of gold, gold had an inside week last week, and now we've got a big wide range bar with a close to the top of that bar. That's a very bullish sign. So we're looking for higher prices for the price of gold, heading up towards $1,500. The first sign that something new is happening, of course would be a close below this week's low and not hopefully not going to see that this week.


Then we've got the price of silver pulling back. Silver, it's always two sides of a coin. Half the people who follow silver think it's an industrial metal. Half the people who follow silver thinks it's a precious metal, and of course, it looks like the people who think it's an industrial metal won the week.


Looking at the energy sector, crude oil pulled back. It's just under 1% on the week. You can see a lot of volatility. Again, the last week, just like gold,, was fairly quiet and then a lot of volatility this week, down just under 1%, still on a weekly buy signal.


Gasoline on the other hand, down just under 5% on the week and now back on a weekly sell signal, joining natural gas which continued to make lower lows this week.


Okay folks, that is all for today's presentation. We've got a VIX back on a weekly buy signal. That's negative for stocks going forward. That could dissipate fairly quickly. It could accelerate to the downside. I've got some sell signals in the Canadian market, waiting for new weekly sell signals in the U.S. market.


We'll be back next Saturday to see how things work out. Have a great day. Have a great weekend, and we'll talk to you again next Saturday.


Stephen Whiteside


Canadian Stock Market Timing Service