Day Hagan Tech Talk: Happy Birthday, America
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Summary
As we recognize and celebrate the birth of our wonderful nation later this week, I think back to one of the things I have learned over four-plus decades on Wall Street.
Politics, Religion, and Volatility
Decades ago, I was advised to “never discuss politics and religion when speaking in public.” It was sage advice and is even more pertinent now. Regardless, I have to say, when it comes to last week’s presidential debate, “WOW.” We know being uncomfortable and dealing with the unknown can compel many Wall Street participants to sell, reduce, or hedge. Yet, after Thursday, has any of the “unknown” been settled? Is it possible that tax cuts will be extended, immigration and border issues more fully addressed, and corporate regulation lessened? Is a potential Trump win the reason interest rates moved sharply higher and the S&P 500 pulled back after tagging resistance?
Figure 1: S&P 500. | Large Cap Growth/Technology continues to record a bullish price pattern of higher troughs and higher peaks—an uptrend.
Short-term: Please use the direction of the 13-day MA and short-term support accordingly—green box and short green line in thumbnail chart on right.
Non-trading: Use the green uptrend support line accordingly.
With the conclusion of the second quarter and first six months of the year, and despite an increasingly interesting (geo)political backdrop, it was more of the same: mixed performance within global markets, domestic capitalization sizes (Figure 2), sectors, and across asset classes, plus mixed signals from many domestic equity market internal measuring tools.
Figure 2: Year-to-Date Performance (through 6/28/24). | 2024 hasn’t been as rosy as the “Index Movers” (Large Cap Growth/Technology) would have you believe. Considering this, a strategy benchmarked to the S&P 500 and including objective indicators designed to identify high-risk periods for the equity market may support your efforts—reach out for details about our Smart Sector strategies.
Speaking of Controversial Topics
Another topic that tends to get investors and traders lathered up is cryptocurrencies, and in this case, Bitcoin.
The direction of Bitcoin can be used to measure certain Wall Street participants’ willingness to take on risk or remove it from their portfolios. Renaissance Macro Research, which is excellent research, goes further and states, “As support for Bitcoin fades, marginal liquidity tends to be a liability for the Nasdaq....” As a means of measuring liquidity and speculation, it behooves us to monitor Bitcoin’s price chart, which has been weakening.
Figure 3: Bitcoin (weekly chart) and declining 10-week MA. | Bitcoin, like the current domestic equity market’s negative breadth divergences, could make a stand and rehabilitate itself. But currently, it has a lot of work to do and is exhibiting chart characteristics similar to its 2022 top. And we know what happened to Technology that year. Therefore, please respect any decisive violation of support—blue arrows and price labels.
Please let me know if you would like to schedule a call to go over the process and discipline underpinning our Smart Sector with Catastrophic Stop, Smart Sector International, and/or Smart Sector Fixed Income strategies. Disclosures and Fact Sheet information can be found here: https://dhfunds.com/literature.
Day Hagan Asset Management appreciates being part of your business, either through our research efforts or investment strategies. Please let us know how we can further support you.
Art Huprich, CMT®
Chief Market Technician
Day Hagan Asset Management
—Written 6.29.2024-7.1.2024. Chart source: Stockcharts.com unless otherwise noted.
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