Day Hagan Tech Talk: A Broken Record
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Summary
Last Friday, news of lower unemployment and rising hourly earnings heightened inflation expectations, while ongoing tariff concerns added to market volatility. As a result, equity market proxies pulled back, reflecting continued selling pressure around resistance levels—Figure 1.
The Beat Goes On
To paraphrase Ned Davis Research, rapid news flow out of D.C. has kept investors on their toes. In the long run, enacted policies will drive financial markets. Higher inflation via tariffs and tighter fiscal policy via budget cuts are potential hazards, but the market has been taking those risks in stride so far. In brief, tune out the noise and look at the weight of the evidence. From that perspective, most but not all internal measuring tools have held up, and the S&P 500’s (SPX/6068.50) primary uptrend (higher price troughs and price peaks) remains intact. However, the multi-month negative NYSE Advance-Decline Line non-confirmation remains a conditional warning.
A lot of price volatility has surrounded the SPX’s frumpy short-term chart configuration (dull, drab, and boring). Yet, there has been no upside or downside price progress. An old Wall Street adage states, “Wear them out or scare them out.” I’m exhausted. You?
Figure 1: S&P 500 with upper price labels (resistance) and lower price labels (support). | Near-term resistance and support levels are shown differently. Reach out for a chart that includes lines.
Despite America First policies and tariffs, the global equity market has improved from a pure price perspective. While U.S. stocks in the S&P 500 are up year to date, the S&P 500 is trailing an overseas proxy year to date (Figure 2).
Figure 2: Year-to-Date Performance Overseas Markets and the U.S. | Overseas proxy outperforms a U.S. proxy by almost 2.25% year to date.
Figure 3: Global Advance-Decline Line and Overseas relative to U.S. | Bearish to bullish relative chart configuration—lower frame.
The Day Hagan Smart Sector International strategy recommends overweighting several countries, including Germany, Canada, and Italy.
Figure 4: Germany, Canada, and Italy proxies – 18-month daily chart with 200-day MA. |Bullish absolute price chart configurations.
Rotation Guidepost:
The Mag 7 has stopped moving as a unified block of stocks and instead splintered. However, since they tend to influence the direction of the Large-Cap Growth/Technology-oriented domestic equity market indices, it still pays to follow them.
Figure 5: Big Tech ETF (Mag 7 proxy) with 21-day MA and 50-day MA. | “Rollin’, rollin’, rollin’.”
The Day Hagan Smart Sector Strategies incorporate built-in risk management parameters relating to sector allocation and equity versus cash allocation. Please let me know if you would like to schedule a call to discuss the process and discipline underpinning our Smart Sector with Catastrophic Stop, Smart Sector International, and Smart Sector Fixed Income strategies. Disclosures and Fact Sheets can be found here: https://dhfunds.com/literature.
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Art Huprich, CMT®
Chief Market Technician
Day Hagan Asset Management
—Written 02.10-11.2025. Chart source: Stockcharts.com unless otherwise noted.
Disclosure
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