Stock Market Timing Service


Canadian Stock Market Trends

Monday, June 20, 2022


Good morning, everyone, and welcome to Tuesday Morning. It's Stephen Whiteside here from with today's look at Canadian Stock Market Trends. USA markets were closed on Monday. Futures are up in the pre-market this morning. Dow futures are currently up around 400 points.

We've got commodities mixed, with crude oil higher, while natural gas and gold are lower in the pre-market on Tuesday morning.

Let's start off this morning's presentation with a quick look at Wall Street. And the VIX had a quiet day on Friday with an inside day, closing above the upper channel line. Things would change on Tuesday if the VIX were to close below 27.80.

Looking at the SPDR S&P 500 ETF Trust (SPY) ETF, we are trading higher in the pre-market this morning we are trading above Friday's high. That's not going to get us anywhere near the upper channel line, which is currently at 391.29 and falling daily. Over the weekend, we did talk about the open gaps, and we're certainly not going to deal with any of those on Tuesday. 
Now the stock in the news this morning is Kellogg (K). Not a stock I've ever traded, it certainly likes to use the price target lines for support and resistance.

We are trading up above the 71.88 level this morning, and that is the biggest winner on Wall Street on Tuesday morning. 

Moving on to Bay Street, the Canadian market was open yesterday while the US. Market was closed. A lot of professionals take the day off, and you'll notice that volumes were much lower on Monday than they were on Friday. Now on the weekend, we took a look at the seasonality chart for the S&P 500.

Here is the seasonality chart for the TSX. Notice that we're expecting a low coming into the end of June. And then from there, that's where the summer rally starts. And that could be what's starting to happen this week. 

Looking at the percentage of the TSX stocks currently trading above their 20 day moving average, you can see we're right down at the bottom of the range.

And so this is the time and place where we could look for new buy signals. Of course, we're in a bear market, so we're expecting the pattern of lower highs and lower lows to continue. Now looking at the TSX itself, it's down to the bottom of the panic zones. The pressure zone has formed. 

Unfortunately, on the way back up, there's a bunch of open gaps that could potentially act as resistance.

So a summer rally here could continue the pattern of lower highs and lower lows. We'll just have to see how things work out. And of course, there's a lot of resistance up there at the 21,000 level. And that could certainly be a huge line in the sand for the Canadian market. 

Now, looking at price targets, we ran down towards the 18,750 level last week and started to bounce back.

We haven't started a new trend or anything. We've just bounced off that level and we'll look to see if that holds. And you can see we can move up this week to the 20,000 and see if that resistance holds or not. Looking at the pre market action for the TSX 60, we're up $5.20, which takes us up into the open gap that was created last week. So we'll have to see if we can fill that gap and move higher on Tuesday.

Next up, let's take a look at the sector action. And the big winner on Monday was the telecom sector S&P/TSX Capped Telecommunications (GSPTTTS) moving up into the channel. And of course, it had a lot to do with two stocks, Shaw Communications (SJR-B.TO) and Rogers Communications (RCI-B.TO), which are getting one step closer to having their takeover deal approved. And of course, the easy money in this trade was made a long time ago. There's no reason to chase this particular action unless you're an institution or a hedge fund.

Next up, it was the energy sector S&P/TSX Capped Energy Index (^SPTTEN) was the big winner and had an inside day on Monday. So nothing new going on there. It'll probably continue to move higher on Tuesday. Big winner for the energy sector on Monday was Secure Energy Services Inc. (SES.TO), then bank stocks. And the big winner on Monday was the National Bank of Canada (NA.TO).

And then the big loser on Monday, well, it was kind of a little loser was the Gold sector S&P/TSX Global Gold Index (^SPTTGD) down just under half a percent. An inside day for this index. So again, nothing going on there. 

Let's finish off today's presentation walking through some of the TSX most active from Monday's trading action. And what we'll see as we go through here is support can be found in different locations. You just have to look for it.

Canadian Natural Resources Limited (CNQ.TO) had an inside day on Monday trying to hold support at the 68.75 level, trading below it on Friday and Monday, but closed above it yesterday. If Friday's low breaks, then 62.50 comes into play. Now we've come down to the 200 day moving average and that is acting as support at the moment.

Then we're looking at Athabasca Oil (ATH.TO) and it's finding support at the 50 day moving average. And we made a new low yesterday.

Then we had an inside day for Suncor Energy Inc. (SU.TO) and Suncor didn't find support at 43.75. We did not get down to that level. We did not get down to the 100 day moving average. We did get down into the middle of the Fly Paper Channel. And so far that is acting as support.

And notice that the Fly Paper Channel has acted as support a few times over the past six months. And so there's certainly the opportunity for us to find some support here and start to move back up. Of course, it'll be quite a tell if we start breaking down now. 

Baytex Energy Corp. (BTE.TO) had an inside day yesterday. It was supposed to find support at the 7.03 level and that was where we found resistance back in April and early May. And we've broken through that level, we're still kind of stuck to the 7.03 level. The high yesterday was 7.03, so we haven't broken away from it. If we take out Friday's low, then move down to 6.25, should be expected. 

Now, looking at Barrick Gold Corporation (ABX.TO), we're looking at a very bearish chart here. You can see that we recently put in a lower high and last week we put in a lower low.

Still holding support at $25. If that breaks, 23.44 and 21.88 come into play. 

Next up, we're looking at Crescent Point Energy Corp. (CPG.TO) having an inside day yesterday. Trying to hold support at 10.16 and the Fly Paper Channel. And so this is the time and place you're looking for the bulls to come back and take this stock higher. 

And then last up, looking at Cenovus Energy Inc. (CVE.TO)  having aninside day yesterday, trying to hold 25.

We traded below it for the past two days. If that breaks, 21.88 comes into play. Now we're holding support at the 100 day moving average. And if you look at the Fly Paper Channel, if we go back a week, we are looking to see if we could find support at the $24 level. And that's exactly where we came down to a week later.

Well, as you can see, a lot of the energy stocks have come down to major areas of support. And this week we'll find out if they can hold it or not. Now, on Tuesday morning, we've got crude oil trading up 2% while natural gas is down 4%. With stock index futures trading higher this morning, I wouldn't be surprised if money went back into the energy sector on Tuesday. Unfortunately, it's not going to be enough to change the overall direction of the energy sector on Tuesday.

OK, folks, that's all for this morning's presentation. Have a great day. Next time you'll hear my voice is on Wednesday morning. Bye, for now.