Day Hagan Tech Talk: Stay (Just a Little Bit Longer)
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Summary
The domestic equity market has experienced a fair amount of volatility over the past few months, including two large, short-term intraday reversals (Figure 2). Considering the uptrend by equity indices most affected by the “Growth Index Movers” (S&P 500, NASDAQ, NASDAQ 100) and the favorable position of the Catastrophic Stop Loss Model, many domestic equity market indices remain confined to large trading range patterns, staying a bit longer than desired and frustrating many.
Home on the Range
In the late 70s, Jackson Browne released “Stay (Just a Little Bit Longer).” It has an outstanding rhythm and vocals, and I highly recommend a listen. Per Lyrics Layers, “The song speaks to… a shared desire to prolong the magic of the moment.” While I wanted to extend several magical moments in my youth—and the market seems to be doing something similar—I have to believe that many on Wall Street would prefer resolve to the multi-month trading range patterns exhibited by many non-growth-oriented equity indices—Figure 1.
Figure 1: Domestic Equity Market Proxies. | Using support (green & blue lines) and resistance (red lines) as a guidepost for future directional moves, these patterns will “stay, just a little bit longer
Note: Dow Jones Industrials, Transports, Utilities, and NYSE Composite exhibit similar-yet-different “home on the range” patterns. Please reach out for the charts.
Figure 2: S&P 500 with emphasis on two recent intraday reversals. | Short-term, a violation of resistance or support highlighted in the chart would be a catalyst, at least in part, for SPX’s next directional move—higher if resistance is violated and lower if support is violated.
Interesting to Note (what we are watching)
Figure 3: Uranium proxy (URA) – weekly data. | Please refer to the verbiage inside the chart.
Figure 4: Energy and support (green lines). | As a former colleague and friend loved to say, with a twinkle in his eye, “Leave us Hope.”
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Art Huprich, CMT®
Chief Market Technician
Day Hagan Asset Management
—Written 6.03.2024. Chart source: Stockcharts.com unless otherwise noted.
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