Day Hagan Tech Talk: Trifecta
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Summary
Last week, Wall Street experienced a triple blow: a negative “Outside Reversal Day,” above-average volume “Exhaustion,” and hard downside selling. As a result, the Large Cap Growth indices registered a short-term price peak, finally establishing a level of resistance.
Catlike Behavior
Have you ever focused on a cat's behavior? They sneak around, waiting and watching. Suddenly, they pounce on their prey. That describes how Wall Street’s short-term-focused Bears have been acting recently—sneaking around, waiting, and watching. Then, though our intermediate-term models and indicators leaned favorably towards equities, the Bears pounced starting last Thursday (July 29, 2025)—Figure 1.
Along with this catlike behavior, the domestic equity markets tape action this year reminds me of Martin Landau saying, “Life is a roller coaster. There are ups; there are downs. There are hills; there are valleys, peaks, and so on.” And why not now, as the trifecta in the summary can be coupled with the short-term headwinds addressed in our recent Chart Jamboree? That said, let me reiterate that the Day Hagan Catastrophic Stop Loss Model focuses on the S&P 500 and suggests investors maintain their benchmark equity exposure, even if a seasonal period of choppy/weak price action continues, which we expect.
Figure 1: S&P 500 with a rising 50-day MA. | Support hasn’t been violated yet. Be willing to acknowledge potential downside volatility this month, as August and September are known for volatility.
Note: DJIA has support in and around 43,000+/-. Small Cap proxy (IWM) has support in the area between approximately $213 and $209. NASDAQ has support between 20,500 and 20,000.
Bearish to Bullish
I wanted to highlight this for a second time. Do you view this as a positive reflection of the housing market or a potential economic/inflation headwind?
Figure 2: Lumber. | This weekly chart includes a rising 10-week (50-day) MA (dashed blue line) above a rising 40-week (200-day) MA (solid green line).
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Art Huprich, CMT®
Chief Market Technician
Day Hagan Asset Management
—Written 8.04-05.25. Chart source: Stockcharts.com unless otherwise noted.
Disclosure
The data and analysis contained herein are provided “as is” and without warranty of any kind, either express or implied. Day Hagan Asset Management (DHAM), any of its affiliates or employees, or any third-party data provider, shall not have any liability for any loss sustained by anyone who has relied on the information contained in any Day Hagan Asset Management literature or marketing materials. All opinions expressed herein are subject to change without notice, and you should always obtain current information and perform due diligence before investing. DHAM accounts that DHAM, or its affiliated companies manage, or their respective shareholders, directors, officers and/or employees, may have long or short positions in the securities discussed herein and may purchase or sell such securities without notice. The securities mentioned in this document may not be eligible for sale in some states or countries, nor be suitable for all types of investors; their value and income they produce may fluctuate and/or be adversely affected by exchange rates, interest rates or other factors.
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