Within the context of the intact primary uptrend, the S&P 500 (SPX/2779.60) is carving out important near-term tactical support. In light of the fact that only 45 percent and 60 percent of NYSE stocks are above their respective 50-day and 200-day moving average, a violation of this short-term support level on a closing basis will increase the odds of some type of “retest,” as discussed in our Tech Talk report dated 2/21/18.

In the meantime, to allow time for our price and sentiment indicators to settle down following the recent bouts of downside and upside volatility, we prefer a new trading range pattern developing over a period of weeks, not an immediate return to new highs.

If the current move results in new equity market highs without a consolidation period and market-segmented advance-decline lines fail to make new highs, this will be evidence of a “Tired Bull,” i.e., fewer stocks participating—a major warning sign. 

S&P 500 Large Cap Index. 2 emotional & "Algo" driven declines  red arrows. Retest was less pressure ridden than the first decline, which is positive. However, it took place over a matter of days. 2700 to 2675: Tactical support, which if violated on a closing basis, will increase the odds of a "retest" as described in my 2/21/18 report. 


The interest rate-sensitive Dow Jones Utility Average (UTIL/683.73) recently tested and held a structural support level (long-term support), as depicted in the monthly chart below.

In light of the violation of an uptrend line drawn off the 2015 low and a MACD sell signal (momentum indicator), a violation of structural support in the vicinity of 650+/- would imply a multiyear top and suggest implementing risk management strategies within this complex.

MACD (momentum indictor): Buy signals are the green circles. Sell signals are the red circles. 

Day Hagan Asset Management appreciates being part of your business, either through our research efforts or investment strategies.   

Art Huprich, CMT
Chief Market Technician
Day Hagan Asset Management

—Written on 02.26.2018. Chart sources:

Download PDF copy of article: Day Hagan Tech Talk 02.27.2018 (PDF)

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.