Day Hagan Tech Talk

DAY HAGAN TECH TALK

PATIENCE

SUMMARY

As domestic interest rates consolidate, similar to domestic equities, it is usually a bullish sign when the “average stock” participates during rally periods.

WRITTEN BY

Art Huprich, CMT

POSTED

August 23, 2016

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Beyond a second period of sideways price action since mid-July, which, amongst a number of variables, is a function of sector rotation, increasing complacency, and seasonal aspects, few signs indicate the rally that began coming off the “Brexit” lows has run its course. In other words, while the short-term price trend of the S&P 500 (SPX) is neutral and subject to further volatility and its intermediate-term price trend remains bullish, I am comforted by the fact that the “average stock” continues to participate during rally periods. Support for the SPX is as follows: 2168 (very short term) and 2148. More important to the intermediate-term price trend is a layer of support between 2135 and 2120.      

With Janet Yellen's speech this Friday at the Kansas City Fed's annual Jackson Hole Forum and central banks lurking in the background, the 10-Year U.S. Treasury Yield Index ($TNX) continues to consolidate. Instead of making a “directional call” before Yellen’s speech on Friday, I believe it is more prudent to be reactionary and see how the $TNX reacts to the news and corresponding resistance and support lines, shown in the second chart.


Using the Wilshire 5000 as a proxy for the "average stock", it is usually a bullish sign when the "average stock" out performs.
A move above teh 16.28 would equate to a short-term up side break out.

Have a great day.

Art Huprich, CMT
Chief Market Technician
Day Hagan Asset Management

— Written 08.23.2016. Charts courtesy of the following: Stockcharts.com.

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