Protect Your Portfolio 20190825

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 of that market noise from Monday to Friday, so we're left with just one decision point, and that is the closing price from 4:00 PM Friday afternoon.


Well, let's get the big headline out of the way, and that,` of course, is the fact that the S&P 500 had an inside week, or a week of indecision. That's the big headline. Of course, coming into this week, the VIX was elevated. It was currently on a weekly buy signal. That, of course, means you're going to have a volatile weeks, and last week at this time we were going to stay bearish on the North American markets, as long as the VIX didn't close on Friday below $13.71.


Well, it did not do that. In fact, the VIX closed higher on the week up, over seven and a half percent. You'll notice that we spent a lot of time during the week in the channel. At no time did we come down to the lower channel line. So, the lower channel line is now starting to curl up, and now, this coming Friday, we're going to remain bearish on the North American markets, as long as the VIX does not close below $14.06.


Now, if you are watching the market during the week, the VIX actually generated a daily cell signal on Monday. That, of course, is supportive for higher stock prices. It stayed on a sell signal through Friday, and then Friday we came back with the VIX up nearly 20% on the day. And so, while we were looking at the VIX and expecting higher prices on Tuesday, I was talking about the fact that we were really stuck in a range from the recent low to the recent high in the past couple of weeks, and we're looking to see if we could break out of that range. And, unfortunately, we ended the week without being able to break out to the upside or to the downside. So, really, a pause week for the market.


I noticed just the last four weeks how big the range is, and we are not trying at all to get back. Here's where we closed four weeks ago, and so far, we have not been able to close above that level in the past four weeks. So, that is not a very a bullish sign at all.


Now, another bearish sign is the fact that the market hasn't looked for the significant highs as an area of support. And so, in the past month, we've come down here in the month of August and we took out this high, we've taken out this high, and so what we have to assume is that the market is going to try to use the recent lows from 2019, 2018, all the way back to early 2018. These are possible significant lows that the market might want to target and use as potential areas of support.


Of course, if the low from just a couple of months ago breaks, that would be a very bearish sign, and that would tell us that the major move, up move that we've seen since last December, is now over.


Looking at the Canadian market, the TSX is using a significant high as support, and has been for a couple of months now, and that is the high from early in 2017. We've come down to that level and we found support there for the past four months. If we break that, then the next area of significant lows is way down here, and there are a few that we are going to be able to use, but that is certainly a major decline for the market if that starts to happen.


Now, we'll take a quick walk through our regular weekly right-side charts. We've only got one major trend change this week. We came into this week with the S&P 500 on a weekly sell signal. The NASDAQ 100 has now joined the S&P 500 on a weekly sell signal. I notice that we'd been down four weeks in a row, so that is certainly a trend to the downside. And then, of course, we're joining the Russell 2000 and the Zacks Micro Cap already on weekly sell signals.


So, we saw the smaller stocks roll over before the big cap stocks did. Gold and silver stocks is still doing well, no change there. The semiconductors came down and traded down to the lower channel line at the weekend, coming into Friday's close. So, not enough to give us a weekly sell signal, but certainly enough to drag the NASDAQ 100 down and over that lower channel line.


Now, what's not working? Of course, bank stocks still not working on both sides of the border. We had an inside week for the KBW Banking Index. We've been overlooking the Canadian market. The TSX is still on a weekly sell signal, still holding support from a couple of months ago. No joy for the energy sector, down 1.77%. No joy for bank stocks, down just under 1% on the week. And just like in the U.S., we had an inside week. Gold stocks making a new closing high for this move on Friday. And then, moving from the Canadian stock market to the bonds, the bonds closed slightly lower on the week. Inside week for the bond market.


Looking at the U.S. dollar index, we pulled back into the channel once again. No change in trend there. And then we saw the Euro move up into the channel. No change in trend there. No change in trend for the British pound, but up two weeks in a row, and then the Canadian dollar ended the week on a weekly sell signal, but certainly no momentum to the downside. Still holding 75 cents as support.


Looking at commodities, we've got gold closing higher this week. We've got silver closing higher, but copper continues to close lower, and that is not a good sign for the global economy. Crude oil is still on our weekly sell signal. Natural gas still on a weekly sell signal. No change there.


Okay, folks, that is all for this weekend's presentation. We had an inside week or a week of indecision. You don't want to overanalyze an inside day or an inside week. The market's telling you that nobody's overly confident which way the market's going next. The trends that we had in place last weekend are still there. We added the NASDAQ to the downside, so it is now on a weekly sell signal. I think the market's going lower, but we still have to wait and see what happens. The VIX is elevated. It is still on a weekly buy signal. That, of course, means we should expect price volatility. Whether that turns out to be a change in direction is yet to be determined.


Have a great day. Next time you'll hear my voice is on Tuesday morning. At that time, we'll take a closer look at the U.S. stock market. Thank you very much for your time and attention, and we'll talk to you again soon.


Stephen Whiteside

.VIX,VIX S&P 500

DIA,Dow Diamonds


QQQ,Nasdaq 100 ETF

IWM,iShares Russell 2000

IWC,iShares Russell Microcap Index

.BKX,KBW Bank Index

.GSPTSE,TSX Composite Index

.TSE60,TSX 60 Index

.SPTSEM,TSX Midcap Index

.SPTSES,TSX Smallcap Index

.SPCDNX,TSX Venture Composite Index

.SPTTFS,TSX Financial Services Index

.GSPTXDE,TSX Diversified Banks Index

.SPTTEN,TSX Energy Index

.SPTTGD,TSX Gold Index


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