Day Hagan Tech Talk: Pre-Labor Day Celebration
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Summary
Labor Day is a celebration of the social and economic achievements of American workers. In my opinion, Wall Street is a similar celebration and reflection of the ingenuity and entrepreneurial desire of the human spirit. And last week, Wall Street celebrated.
Stuck in the Middle with You
Wall Street pulled up the next “card” in the deck we discussed last week: a move above resistance by equity market indices and lower interest rates. The equity markets’ response was favorable. For the week: The NYSE Fang Plus Index gained 4.3%. Aided by a strong move by the Regional Bank Index, a Small Cap proxy rallied 3.7%. NASDAQ jumped 3.2%, and S&P 500 added 2.50%. The DJIA advanced 1.4% and the 10-Year U.S. Treasury Yield Index fell over 1.5%.
Despite last week’s tape action, domestic equity market proxies remain rangebound: “Stuck in the Middle with You.” As my wife says during stressful times, “breathe and focus.” In that spirit, I have highlighted levels/ranges of support (green) and resistance (red)—Figures 1-5. A violation of support will imply a new leg lower, especially if it occurs in unison.
Figure 1: S&P 500 with supportive momentum (MACD, lower frame). | “Trends, like horses,” said John Naisbitt, “are easier to ride in the direction they are going.” In alignment with your willingness to manage risk, please use support and resistance accordingly.
In terms of timeframe and tolerance for risk, our models, including the NDR Catastrophic Stop Loss Model, view the SPX’s intermediate-term uptrend as intact.
Figure 2: NASDAQ with supportive momentum (MACD, lower frame). | “Trends, like horses...” Considering the rangebound domestic equity proxies, please use support and resistance accordingly. Reach out for specific levels.
Figure 3: Small Cap Proxy with supportive momentum (MACD, lower frame). | Considering the rangebound domestic equity proxies, please use support and resistance accordingly. Please reach out for specific levels.
Figure 4: DJIA with marginally supportive momentum (MACD, lower frame). | “Trends, like horses...” Considering the rangebound domestic equity proxies, please use support and resistance accordingly. Please reach out for specific levels.
Figure 5: Emerging Markets Proxy with supportive MACD (momentum, lower frame). | Reminds me of the current U.S. Open Tennis Championships—back and forth, back and forth. Considering the rangebound domestic equity proxies, please use support and resistance accordingly. Please reach out for specific levels.
Note: By now, EVERYONE knows that September is, historically, a poor month for equities. Our friend with the Carson Group, Ryan Detrick, offers a different perspective: “Yes, September is the worst month for stocks on average. The good news is when SPX is up 10% YTD or more, and down in August, September seems to be a decent month. September higher 8 of 10 times and up median 2.6% (since 1950).”
Black Gold
During our last two Chart Jamborees (June and July) we first identified support for Crude Oil ($85.55) in the upper $60s (June). This was followed by an upside objective of the low $80s, its April peak (July). This objective was achieved, and then some. Now what?
Figure 6: Light Crude Oil with 10-week MA (green) and 40-week MA (blue). | Based on the weekly chart below, including weekly momentum (MACD, lower frame), the low-to-middle $90s is a reasonable, initial objective.
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.
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 09.03-04.2023. Chart source: Stockcharts.com unless otherwise noted.
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