Day Hagan Tech Talk: Big Sky
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Summary
During my four days in Montana for a wedding, I was struck not just by the state’s beauty but the similarities Montana shares with the condition of certain parts of the domestic equity market.
Just Sayin’
Montana is known for its diverse terrain, beauty, vastness, and wide-open spaces. If we define “beauty” as the extremely bullish price trends of certain parts of the domestic equity market and “vastness and wide-open spaces” as the distance between the current price and their next significant support level(s), then we can also say that Wall Street’s 2024 start has been diverse, beautiful, and vast.
Bob Farrell would say, “Exponential rapidly rising or falling markets usually go further than you think, but they do not (usually) correct by going sideways.” To this I reiterate, “Bulls make money, Bears make money, Pigs go broke.” Yesterday morning J.P. Morgan wrote (paraphrase):
With the FOMC meeting and quarterly Treasury refunding announcements on Wednesday, several employment reports culminating with January nonfarm payrolls on Friday morning, peak week of the Q4 earnings season, with ~40% of the S&P's market cap on the calendar—we do not have a strong view on this week’s Mega-Cap Tech earnings and, where possible, would consider buying downside index protection in 1-week or 2-week tenor [emphasis mine].
Figure 1: Performance Since October 2022 – figures in white box on right. | Identify price support (please see NOTE below) while implementing a risk management discipline. I feel the odds favor that the rate of ascent will/should slow and, at some point, change. Especially if the equity market broadens again and the recent negative divergences are alleviated.
NOTE: The green horizontal lines shown above and below represent performance support levels, not price support levels. Please reach out for the price support levels of any of the charts shown.
Figure 2: Performance Since October 2022 – figures in white box on right. | Identify price support while implementing a risk management discipline. I feel the odds favor that the rate of ascent will/should slow and, at some point, change. Especially if the equity market broadens again and the recent negative divergences are alleviated.
Figure 3: Performance Since October 2022 – figures in white box on right. | Identify price support while implementing a risk management discipline (tighten stop loss points, at a minimum) if you are involved in any of these. I feel the odds favor that the rate of ascent will/should slow, and at some point, change. Especially if the equity market broadens again and the negative divergences are alleviated.
Figure 4: Performance Since October 2022 – figures in white boxes on right. | Identify price support and tighten stops, minimum. I feel the odds favor that the rate of ascent will/should slow, and, at some point, change. Especially if the equity market broadens and the negative divergences are alleviated.
Figure 5: Performance Since October 2022 – figures in white box on right. | Identify price support and tighten stops, at a minimum. I feel the odds favor that the rate of ascent will/should slow, and at some point, change. Especially if the equity market broadens and the negative divergences are alleviated.
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Art Huprich, CMT®
Chief Market Technician
Day Hagan Asset Management
—Written 01.29.2024. Chart source: Stockcharts.com unless otherwise noted.
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