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.


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:

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