US Stock Market Trends 20190813

Good morning everyone and welcome to Tuesday morning. It's Stephen Whiteside here from with today's look at US stock market trends. In the pre-market this morning stock index futures are below fair value. Dow futures currently down a hundred points. That of course could change before the market opens, but so far it looks like we're going to see some selling at the open on Tuesday morning. So let's start off where we normally do and that is with the VIX or the Fear index. If you were with us on the weekend, we were looking at the VIX putting in an inside day on Friday. So Friday was a day of indecision or a pause day. And then we were looking to see if the market would give us a tell, whether we would break down below Thursday's low, which would be bullish for stocks, or a breakout above Thursday's high, which would be bearish for stocks.


So it does look like the VIX wants to go back up and retest last week's high. And of course a retest of last week's high in the VIX would be a retest in last week's low for the overall stock market. Looking at the spider ETF for the S&P 500 you can see that we're not that oversold yet. If we look at what happened last week, we didn't push down to the bottom of the chart here, as we did back in late June and so we're not extremely oversold yet. I'm sure the market wants to come down and retest last week's lows. If those break then we'd be looking for a move back down to retest the late May lows for the overall stock market. Moving onto sector ETFs, what's not working right now, well, the energy sector Energy Select Sector SPDR Fund (XLE) you know hasn't been working for awhile and Financial Select Sector SPDR Fund (XLF) has come down hard over the past week or so and are heading towards those June lows. And then we've got retail SPDR S&P Retail ETF (XRT) which is now breaking through the June lows and then we've got transports.


These are the weak sectors of the market at the moment. What's interesting about the transport sector SPDR S&P Transportation ETF (XTN) is we've taken out last week's lows, we closed below them. And so right now we're using the June low as support. If that breaks, then you can imagine we're heading back down to the May lows to retest those for the transport sector.


Looking at leveraged ETFs. Of course, when you're trying to make money on a falling market, you can be long in the VIX and you can do that in most retirement accounts. Now, you can be short stocks or ETFs that you can't really do in most retirement accounts. And of course, I am short, much of my portfolio at the moment. You know, my five stocks, I'm either long or short those stocks. And so I'm short right now. And then of course you can be lung, the bear ETFs, and of course this you can do in your retirement accounts.


And so I have been promoting these bear ETFs for a long time now because they can be used in retirement accounts. So just like, looking at the indexes, looking at the opposite of the bear ETFs. If you look at the indexes themselves, they're not extremely oversold and you can see that the bear ETF is not extremely overbought, as it was back in late May. And so we still have some room to the upside for the bear ETFs and if we take out last week's high, then you can imagine the opposite of what we are looking at in the spider ETF is that we go back up and retest the late May high for the bear ETFs.


Next up, let's take a look at the most actively traded stocks from Monday's trading action. And starting off with advanced micro devices which popped last week and this stock certainly helped hold up the Nasdaq last week.


It looks like we're giving up some of those gains on Monday. Looking at General Electric, you can see we've broken through the May lows so nothing there. Then we've got Bank of America. Now, Bank of America broke through the May lows last week and then recovered. Now if those lows don't hold, you can see that just below that levels an open gap and then of course we have the May low that could potentially act as a target and an area of support. Pfizer, one of the first major stocks to break down, certainly not looking for support from any recent trading action. And then we've got Ambev which gapped lower yesterday, came down to the bottom of the open gap so that could act as an area of support. And then we've got little miss sunshine here. Yamana Gold Inc. (AUY) is the gold stock I follow.


If you watch the Canadian presentation, I talk about that all the time. We traded back and closed in the channel yesterday. A close below $3.19 would give us a sell signal on Tuesday. And then the most actively traded ETF yesterday is the emerging market ETF. And you can see that we've broken down below the May lows, so that's not a good sign.


Next we'll take a look at what's happening in the world of commodities and really no joy for the energy sector with crude oil United States Oil Fund, LP (USO) still on a sell signal. That would change on Tuesday with the close above $11.49. No joy for gasoline United States Gasoline Fund, LP (UGA), not expecting a buy signal on Tuesday. And then we've got natural gas. Natural Gas United States Natural Gas Fund, LP (UNG) trading in the channel for the last three days. We need to close above $18.85 cents to give us a buy signal on Tuesday.


Looking at the metals, we've got gold making a new high yesterday with the price of gold popping out above $1,500. Then we've got palladium still on a sell signal, no change there and no change for silver still on a buy signal.


Let's finish off today's presentation with a quick look around the world. And of course Hong Kong is in the news every day. You can see we traded down to the May lows and then we gapped lower. That gap hasn't been filled, and then we've continued to gap lower, so not a good sign there. And then of course that's putting some pressure on the Chinese market. The Hong Kong market is connected to the Chinese market. Certainly the Chinese market is much larger, but it has broken through the May lows as well. Italy's in the news, some political instability there. The market is in a downtrend, certainly not crashing.


Then we had a a lot of political instability in Argentina. And you can see a big update on a Friday and then on Monday, we gapped dramatically lower. In the South American market Brazil is still holding up fairly well, while Chile and Peru are not doing that well at the moment. And then last up we're looking at the United Kingdom, and of course the UK has some political instability there, and certainly not looking to the May lows as support. So when we look at all these markets around the world, a lot of them are breaking those May lows so that, you know, tells us that it wouldn't be unreasonable for the US market to also break through those May lows.


Okay folks, that is all for today's presentation. Futures are still below fair value. Dow futures currently down 110 points. So again, we are looking for some selling at the open on Tuesday morning. Next time you'll hear my voice is on Wednesday morning, and in that time we'll take a closer look at the Canadian stock market.


Stephen Whiteside