Quick Market Update 20190801

Well good morning everyone and welcome to Thursday morning. It's Stephen Whiteside here and my copilot Mini, from theuptrend.com with a quick North American market update. Well yesterday was the second day of the Fed meeting and people used it as an excuse to sell. The VIX generated a buy signal on Tuesday, so option traders in Chicago were certainly preparing for lower stock prices. We got those yesterday, nice big spike in the VIX and a nice big down day for the Dow, for the S&P 500 and for the NASDAQ-100, and so we'll have to keep a close eye on yesterday's lows.


So now that these indexes are back on sell signals without systematically going through all the stocks in those indexes, we know that the majority of them are now on daily sell signals at this time based on Wednesday's closing price. Looking at the Canadian market, the TSX came into yesterday already on a sell signal, but had a huge recovery off yesterday's low.


Now yesterday's low is going to be very important for the Canadian market. We'll take a look at that in a second. Now, one of the interesting things to happen yesterday, and there were several, was that the gold stocks rolled over, and it's mostly the big-cap gold stocks such as Barrick Gold Corporation (ABX.TO), while a lot of mid-cap and small-cap gold stocks such as Yamana Gold Inc. (YRI.TO) held up fairly well, and so there's Yamana, it was down on the day but still above the upper channel line. So on Thursday we're looking for close below $3.67 to kick us out of the remainder of our position in Yamana.


Now one of the things I wanted to look at was what was yesterday, what impacted did yesterday's trading action have on our weekly charts? And I made these by hand this morning, they're not on the website. You can see that the VIX traded up to the upper channel line, so if we close higher on Friday at 4:00 PM than we did on Wednesday at 4:00 PM we're going to get a weekly buy signal for the VIX. That of course is negative for stocks.


The S&P 500 and the NASDAQ-100 both held up fairly well yesterday on the weekly charts, both closing above the upper channel line, so we still have a ways to go before we get anywhere near a weekly sell signal for those two major indices. Of course, if we have huge selloffs on Thursday and Friday, that would be a different situation, but based on Wednesday's trading action, we're still far away from weekly sell signals. Now the TSX on the other hand, which has still not been able to break out above April's highs, looks a lot weaker, and yesterday's low is rather important because we traded down to the lower channel line yesterday. So if we close below yesterday's low on Friday at 4:00 PM, we're going to get a new weekly sell signal for the Canadian market.

Let's finish off this morning's presentation with a quick look at currencies and certainly the White House did not get what it was expecting from yesterday's interest rate cut. Typically when you cut interest rates, money leaves your country looking for a country with higher rates. That's not what happened yesterday where we saw a nice big spike in the U.S. Dollar Index against the Euro, which made a new low for this move and put downward pressure on other currencies like the Canadian Dollar, which wasn't hit too hard compared to, say, the Australian Dollar, which was down a larger percentage than the Canadian Dollar. So that was rather odd. That may correct itself today, but certainly that's not what people were expecting on Wednesday.


Okay, folks, that's all for this morning's presentation. Lots of new daily sell signals for members to deal with this morning and not enough damage yesterday for long-term investors to be concerned so far. That of course could change between now and Friday, but in the pre-market this morning, stock index futures are slightly above fair value. Certainly no bargain hunting this morning, but no panic selling either. Looking at commodities, we've got gold and crude oil down slightly this morning. That can't help the Canadian market.


Okay, thank you very much for your time and attention this morning. Depending on what happens, I could be back on Saturday with a Protect Your Portfolio. If nothing major happens, then I will send out an email on Saturday morning, have a great day, folks, and we'll talk to you again soon.


Stephen Whiteside


Nasdaq Market Timing Service