Protect Your Portfolio 20190929

Stock Market Trends

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. 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.


Now, of course, the a media was focused on a huge new story this week and that, of course, is the possible impeachment of the US president. And a as far as I'm concerned, it's just another news story and it means absolutely nothing to me and it should mean absolutely nothing to you in regard to your investment decisions. On Saturday, we posted 33,000 new charts, and for this presentation, I've pulled out 30 that I think you should take a look at. And, of course, we start off, always start off by looking at the VIX.


Last week, at this time, we were going to remain bullish on the market as long as the VIX did not close above $19.45 on Friday at 4:00 PM. The VIX was up on the week, certainly not enough to give us a new buy signal, but it was up over 12% on the week. And so our upper channel line has come down a bit. So, this coming Friday, we're going to remain bullish on the North American markets as long as the VIX does not close above $19.23. Now, there is a little bit of stress in the market right now. The VIX popped on Tuesday and basically ended the week where it closed on Tuesday, and so there is a little bit of tension short term. There is an open gap just above where we traded on Friday, and we'll have to see if that opening gap acts as resistance on the way up if the VIX is going to continue to move higher this week.


Looking at a weekly chart of the S&P 500 cash index, we traded back in the channel and closed there on Friday, so we're having trouble breaking out above the summer highs. Looking at a daily chart, we are currently on a daily sell signal. There's an open gap that we've traded into and that came off the highs that we saw during August. And so you'll remember that we had a series of highs. We're looking to see if the market could break out above those highs. We did gap higher and then continue higher. Now, we're coming back and we're trading in that gap. So, the top of that gap is not acting as support. We'll have to see if the bottom of that gap, if they close that gap, will that act as support? Otherwise, we're heading back down to retest the summer lows.


Looking at the NASDAQ, the NASDAQ is a bit weaker, trading down towards the lower channel line. So, this isn't looking very good. Again, we're having trouble breaking out above the summer highs. Now, I'm looking at a daily chart of the NASDAQ 100 and I'm looking for a possible area of support. It's easy enough just to throw your hands up and say, "We're heading down to the summer lows," but if you look at this particular bar on this particular day in late August, we came down, we filled the open gap. And then from that point, that's where the rally started into September. So, now we're coming back down and that low may provide a target and an area of support for the NASDAQ. We'll just have to wait and see. Obviously, if we break that point, break that fill of an open gap, that's going to show us that we've got a very weak hand here and we're probably going to go back down and retest the summer lows.


Looking North of the border, the TSX is still on a weekly buy signal here after making a new high on the previous week. Now we've come back and we're still trading above the upper channel line, so that's still looking very strong. Unfortunately, on the daily chart, the TSX rolled over and generated a sell signal on Friday and joining its US counterparts. Looking at bank stocks, a lot of people still looking at the possible double top there. Unfortunately, in September, while we had an amazing rally, we didn't even bother to retest those recent highs. So, that's showing us that we have a weak hand there. Looking at a daily chart of US banks, we're still on a daily buy signal; that hasn't changed this week. Looking at Canadian banks, we ran up to retest the highs from April, haven't broken through them yet. Still trading above the upper channel line, so Canadian banks looking stronger than US banks at the moment.


Chip stocks are still holding up fairly well compared to the NASDAQ itself. On the weekly chart, on the daily chart, we're on a daily sell signal and coming down to fill a gap from the start of September. Again, we had quite a move up, a couple of days that we gapped higher on this September rally. And so if the first line does not hold the bottom of that open gap, there's another open gap below that that could potentially act as a magnet and a possible area of support. Then looking at energy stocks, unfortunately we're pulled back in the channel on US energy stocks. And so we continue to make a lower high and a lower low here, which is bearish. So, that pattern has not changed and a similar situation in the Canadian market. The Canadian market, we filled an open gap this week and we'll have to see how the market handles that. It could be a time in place where we reverse and go higher or they could just be filling the open gap on the way back down.


Looking at gold stocks, it was a negative week on both sides of the border. The XAU is down 3.73%. TSX gold index down 3.68%. Both indexes are still on weekly buy signals here, but things are not looking very healthy. And then looking at marijuana stocks, unfortunately we've broken through the previous lows from back in December. That's not a healthy sign, of course. And we've got a nice downtrend line there, and a lot of traders are going to be looking for a breakout of that downtrend line as a sign to get back in this market. Otherwise, we're still making lower lows here, so no reason to try to buy a falling knife.


And then we're looking at the bonds. Bonds traded higher this week. US dollar index traded higher. We saw the price of gold come down just $8, closed just under the $1,500 level. So, we're still stuck to that level. No major breakdown. We're at the top of the channel. We need to close this coming Friday below $1,463.46 to give us a weekly sell signal. And our last chart today is crude oil. Crude oil was down on the week 3.75%, trading back in the channel. So, no joy for crude oil. We had that big pop based on the attack on the Saudi oil fields, and now we're giving up all of those gains.


Okay, folks, that is all for this weekend's presentation. Just looking over my shoulder, the stock index futures have started trading electronically on Sunday night. And so far, they're looking pretty bullish. The NASDAQ, the Dow, the S&P 500 are all higher. Dow futures are currently up 90 points. That's no guarantee that's what's going to happen on Monday morning at 9:30, but it certainly tells us that nothing that's happened between 4:00 PM Friday afternoon and this evening, nothing has happened to spook the market. So far, things are looking pretty bullish, and let's hope that continues into Monday's trading action. Have a great day, and the next time you'll hear my voice is on a Tuesday morning, and at that time, we'll take a closer look at the US stock market.

Stephen Whiteside


  • CBOE Volatility Index (^VIX)
  • Dow Jones Industrial Average (^DJI)
  • S&P 500 (^GSPC)
  • NASDAQ 100 (^NDX)
  • Energy Select Sector SPDR Fund (XLE)
  • Financial Select Sector SPDR Fund (XLF)
  • XSD, SPDR Semiconductor ETF



  • S&P/TSX Composite index (^GSPTSE)
  • S&P/TSX Equal Weight Diversified Banks Index (^SPTSXEWDB)
  • S&P/TSX Capped Energy Index (^SPTTEN)
  • S&P/TSX Global Gold Index (^SPTTGD)
  • Horizons Marijuana Life Sciences Index ETF (HMMJ.TO)