CURRENT OBSERVATIONS

 

Price Peaks and Price Troughs: Within the context of the current longer-term uptrend, the odds favor that there will be countertrend pullbacks and/or periods of sideways consolidation. It is during these shorter-term moves, during which equity market volatility picks up, that tactical positioning may occur. Within this context, while I believe seasonal influences should be incorporated as second-tier indicators, they currently imply that the period between mid-July and September is historically choppy—weak.

S&P 500 (SPX/2469.91) and Russell 2000 Index (RUT/1438.05): A very short-term support level (where buying interest exists) for the SPX and RUT is in the area of 2450 to 2440, and 1400 to 1396 respectively. More important levels of support exist in the 2400+/- and 2350+/- area for the SPX, and between 1360 and 1351 for the RUT. In terms of resistance (where selling pressure exists), recent new highs make it difficult to discern resistance because there are no "disappointed holders." Within that context, approximately 2500+/- for the SPX, and 1452 for the RUT represent areas of resistance. Regardless, please don't use a rising market as a reason to dismiss risk management strategies.

10-Year U.S. Treasury Yield Index (TNX/22.54 [2.25%]): After having bounced up off of important support at 21.03 (2.10%), TNX rallied up to and pulled back from initial resistance "in and around" 24 (2.40%). A violation of either end of this shorter-term range will likely dictate the next directional move of interest rates and domestic bond prices—higher interest rates equates to lower bond prices, and vice-versa.  While I believe the longer-term trend of TNX is higher, since the beginning of 2017 this opinion has been wrong, or very early. In light of this, I don't believe the longer-term uptrend will exert itself until TNX gets above 26 (2.60%), minimum.

Light Crude Oil (continuous contract/$46.34): Crude Oil has been locked in a range between $52 to $55 resistance, and $43 to $42 support over the past 12 months. Currently, with the commodity trading towards the lower end of this range, the odds would seem to favor some type of upward movement, especially since there is a small window of favorable seasonal influence between now and late September.  

Gold (continuous contract/$1254.30): Similar to Crude Oil, Gold has been locked in a multi-month trading range, but in this case, it has only been since March. Currently, a close above resistance "in and around" $1300 will be necessary in order for a sustainable uptrend to occur. In the meantime, important near-term tactical support exists in the area between $1204 and $1194.

ADDITIONAL OBSERVATION

While much of Wall Street has focused on the Financial sector, in previous reports and prompted by Willie Delwiche, I have drilled down deeper within the Financial complex and discussed the Broker/Dealer Index (XBD/232.07). While the price trend shown (lower frame) is bullish, I'd be even more enthused about equities moving higher, if the relative strength trend (upper frame) closed above trend line resistance highlighted in "red."

XBD Relative to S&P 500

Have a wonderful start to your week. Please know that Day Hagan Asset Management appreciates your support and hard work!

Art Huprich, CMT
Chief Market Technician
Day Hagan Asset Management

—Written 7.24.2017. Chart sources: Stockcharts.com.

Disclosure: The data and analysis contained herein are provided "as is" and without warranty of any kind, either expressed or implied. Day Hagan Asset Management (DHAM), any of its affiliates or employees, or any third party data provider, shall not have any liability for any loss sustained by anyone who has relied on the information contained in any Day Hagan Asset Management literature or marketing materials. All opinions expressed herein are subject to change without notice, and you should always obtain current information and perform due diligence before investing. DHAM accounts that DHAM or its affiliated companies manage, or their respective shareholders, directors, officers and/or employees, may have long or short positions in the securities discussed herein and may purchase or sell such securities without notice. DHAM uses and has historically used various methods to evaluate investments which, at times, produce contradictory recommendations with respect to the same securities. When evaluating the results of prior DHAM recommendations or DHAM performance rankings, one should also consider that DHAM may modify the methods it uses to evaluate investment opportunities from time to time, that model results do not impute or show the compounded adverse effect of transactions costs or management fees or reflect actual investment results, that some model results do not reflect actual historical recommendations, and that investment models are necessarily constructed with the benefit of hindsight. For this and for many other reasons, the performance of DHAM's past recommendations and model results are not a guarantee of future results. The securities mentioned in this document may not be eligible for sale in some states or countries, nor be suitable for all types of investors; their value and income they produce may fluctuate and/or be adversely affected by exchange rates, interest rates or other factors.

Investment advisory services offered through Day Hagan Asset Management, an SEC registered investment advisory firm. Accounts held at Raymond James and Associates, Inc. (member NYSE, SIPC). None of the entities listed here in this disclosure are affiliated.