Day Hagan Tech Talk: Are We Talking Missouri?
A downloadable PDF copy of the Article: Day Hagan Tech Talk: Are We Talking Missouri? (pdf)
Summary
Small caps broke out and pulled back—false breakout? Maybe, though I believe a small-cap (and DJIA) breakout will eventually stick. Sector rotation (Health Care led last week)? Until we get an answer, bullish price trends are in control. For the Bears, it remains “show me.”
Show Me the Trends
Missouri is the “Show Me State,” highlighting a character of skepticism and the need for proof before accepting something. Wall Street also needs to be shown proof to accept something as accurate. Consider the following:
Don Hagan’s recent statement, which appeared in his weekly insights and Catastrophic Stop Loss update relative to our models, indicators, and the overall price trend—please reach out for a copy.
“Our perspective has not changed significantly over the past few weeks. The excessive optimism we observed three weeks ago has moderated, but it continues to decline. Historically, when sentiment and technical indicators are reversing from peaks, it is advisable to follow the trend…
“We expect a consolidation phase as our indicators move directionally toward more normalized levels. This consolidation phase may appear as a sideways market or a minor pullback, both of which would support the long-term uptrend. Our long-term indicators remain positive overall, reinforcing a constructive outlook for the market in the long term.”
In the first paragraph, Don was speaking of sentiment and indicator trends when he advised to “follow the trend.” In his next paragraph, however, his reference to supporting “the long-term uptrend” pertained to the price trends of equity market proxies.
While Don’s insights are clear and straightforward, I wonder: could we see a pause or a pullback? We could, but the market so far has been quick to bounce back. When the bullish pattern of higher price troughs and higher price peaks changes (see 8.13.25 report for a visual), and negative divergences (a condition, not a signal) recur multiple times, amplifying their impact (e.g., December 2024–February 2025), conditions will become more difficult and dicier.
We review the price trends of a select group of domestic equity market proxies, which are generally bullishly configured. See Figures 1 through 4.
To corroborate Don’s claim of the long-term uptrend, and consistent with Susan Berge’s astute advice (“Let someone else have the first 10% and let someone else have the last 10%. You take the 80% in the middle.”), let’s turn to Figures 1 through 4. These charts provide the “Show Me” proof, identifying support levels (green lines) and resistance (red lines) to capture the “80%.” By avoiding fixation on the final “10%,” especially when paired with a strategy rooted in disciplined risk management, we align with the demand for clear, actionable evidence for success, e.g. Day Hagan Smart Sector and Day Hagan Smart Buffer strategies.
The charts include the 50-day MA. Besides what is noted inside the chart, one near-term guidepost will be when the direction of the 50-day MA starts to change direction or declines in earnest.
Figure 1: Domestic Equity Market Indices/Proxies. | Green lines = support. Red lines = resistance.
Figure 2: Domestic Equity Market Sector Proxies. | Green lines = support. Red lines = resistance.
Figure 3: Domestic Equity Market Sector Proxies. | Green lines = support. Red lines = resistance.
Figure 4: Domestic Equity Market Sector/Group Proxies. | Green lines = support. Red lines = resistance.
Note: “The focus at the end of the week will be on Fed Chairman Powell’s speech at Jackson Hole (Friday at 10:00 am). The market is pricing in a cut at the next meeting (September 16-17). If he (Fed Chairman Powell) says anything that seems to contradict that view, we expect a negative market response.” ~Don Hagan.
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Art Huprich, CMT®
Chief Market Technician
Day Hagan Asset Management
—Written 8.18-19.25. Chart source: Stockcharts.com unless otherwise noted.
Disclosure
The data and analysis contained herein are provided “as is” and without warranty of any kind, either express 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. 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.
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