Day Hagan Tech Talk: Something New
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Summary
We had seemingly moved past other issues, but renewed geopolitical tensions have led to a sudden increase in price volatility. Since the only constant is change, a dynamic landscape will continue to produce price volatility, up and down.
Friday the 13th
Just as it looked like some significant issues loosened their grip on the markets, something new arose. Tensions in the Middle East late last week produced a late-week decline. The decline in domestic equity market proxies last Friday the 13th was between 1% and 2%. Consequently, price volatility came to the forefront again and spilled over to the start of this week. On Monday (6.16.25), an array of domestic equity market proxies gained between 1% and 1.5%. On Tuesday (6.17.25), domestic equity market proxies declined approximately 1%, and 10 of the 11 S&P macro sector proxies closed in the red. One- or two-day moves, however, don’t equate to a trend. Any follow-through this week, especially after today’s Fed interest rate announcement and Q&A session, will be a key short-term directional guidepost. Aside from price, another way we will gauge follow-through is to see if New Highs and/or New Lows expand during rallies/declines. Short-term aside, our models and indicators currently indicate that investors maintain their benchmark equity exposure.
Figure 1: S&P 500 with a rising 50-day MA and 200-day MA. | With resistance looming not too far above, as expressed last week, pullbacks will occur.
Undervalued
The technical analysis community does not commonly use the term “undervalued” unless one applies ratio analysis (relative strength analysis) to chart configurations undergoing a bearish-to-bullish transition, as shown in Figures 2 and 3.
While Gold, the physical commodity, has rightfully received all the attention over the past few years, it now looks like the time is approaching for gold stocks (GDX and GDXJ) to try narrowing the relative performance gap with the physical commodity (GLD)—Figure 2.
Figure 2: Gold Miners (top frame) and Junior Gold Miners (lower frame) vs. Gold. | While the transition to “bullish” isn’t complete on a longer-term basis, you’ll see the transition occurring if you squint hard.
It's been at least a year since the relative strength trend of many semiconductor proxies peaked compared to many equity market-related proxies. However, it appears that specific semi-proxies have completed the bearish-to-bullish transition (Figure 3).
It will be interesting to see how and when the narrative fully embraces this transition.
Figure 3: Semiconductor proxy vs. NASDAQ and Capital Markets proxy. | Generally speaking, Wall Street likes it (more risk-on than risk-off) when semis outperform.
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Art Huprich, CMT®
Chief Market Technician
Day Hagan Asset Management
—Written 06.16-17.25. Chart source: Stockcharts.com unless otherwise noted.
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