Day Hagan Tech Talk: Into Year-End
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Summary
In November, domestic equity market indices—including capitalization, equal-weight, small, mid-, large cap, value, and growth—closed higher. With complacency (excessive optimism) building and a potentially sloppy start to 2025, price momentum is supportive until the month’s end.
Steady As She Goes, With Bouts of Volatility
Last week, we highlighted a Four-Year Presidential Cycle chart for the DJIA and its potential meaning for 2025 (please reach out for the chart). Let’s highlight a potential scenario for the year-end. Even if, as I hope and expect, we get a pullback or consolidation early this month, it would be historically unusual for domestic equities to completely fall out of bed between now and month-end—Figure 1.
From my experience, which was noted recently by Ed Clissold, is the belief that “Momentum leads price.” In other words, and within the context of the S&P 500’s price action in 2024, what is up tends to stay up. When “the rate of change slows, the risk of a shift from an uptrend to a downtrend increases,” according to Clissold.
Figure 1: S&P 500 Index December Returns When Up Over 20% Through November. | Bouts of volatility aside, this is bullish through the end of 2024.
Figure 2: Dow Jones Industrial Average and S&P 500. | Please refer to the verbiage inside the chart.
Sentiment: Semis and China
Asking for a friend: “Does anyone know of a sentiment chart for the semis or China?” Figures 3 & 4.
Figure 3: Semiconductor Index. | Before discerning the next significant directional move, the trend remains neutral until a break occurs, either up or down.
Note: The Day Hagan Smart Sectors International strategy is overweighted China for December.
Figure 4: China – Technology proxy. | Have the weak holders capitulated? Price labels (green line) depict initial support.
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Art Huprich, CMT®
Chief Market Technician
Day Hagan Asset Management
—Written 12.02-03.2024. Chart source: Stockcharts.com unless otherwise noted.
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