Day Hagan Tech Talk: What We Saw and What We Are Watching
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Summary
Following the “Powell Pivot” last week, Wall Street continued to favor the Non-Index Movers (non-growth/technology/value type) over the Index Movers (large cap growth/technology). Consequently, we have a lot to focus on.
Have & Have Nots: Past 5 Trading Days
The increasing number of stocks rallying may continue due to okay earnings growth/profitability, economic growth that is decelerating but still positive overall, and Fed rate cuts. This was evident last week when, on 8.25.24, daily Upside Volume was more than 10 times daily Downside Volume. Historically, this is bullish based on a one-month, three-month, and six-month timeframe, according to Ned Davis Research.
Figure 1: Performance Past 5 Trading Days. | The equity market’s reaction to NVDA’s EPS report will affect these figures and, more importantly, provide a good tell.
Bottom Line: The S&P 500’s uptrend is intact, and the Catastrophic Stop model is positive. Our quantitative outlook confirms that economic growth is decelerating yet positive. Inflation pressures continue to diminish. As our indicators shift, we will adjust portfolios accordingly, up or down.
What We Are Watching
Global Stocks: Rotation into overseas opportunities continues, thanks in part to a weak U.S. Dollar. Figure 2. Reach out for details about the Day Hagan Smart Sector International strategy.
Figure 2: Global Advance-Decline Line and Global vs. U.S. Relative Strength Trend. | Global strategies should be considered because overseas opportunities exist.
Interest Rates: Bob Dylan once wrote, “The Times They Are A-Changin’.” While a bounce could occur at any point (sell the news following the August employment report on 9.6.24 or before), if these chart configurations were for stocks, would you own them? Or not?
Figure 3: Interest Rates. | Completed and/or looming tops suggest focusing on green support lines.
Consolidation phases are healthy and normal, especially if the equity markets experience internal rotation, as opposed to investment dollars leaving the market. Consequently, please use the following levels for the S&P 500: Initial resistance is between 5639 and 5651, followed by 5667.20 (all-time closing high) and 5670 (all-time intraday high, rounded). Initial short-term support is 5561+/- followed by gap support and rising 21-day MA between 5501 and 5463 (green circle)—Figure 4.
Figure 4: S&P 500 with rising 21-day MA. | Please refer to the verbiage above and inside the chart.
From Last Week
Semiconductor relative strength: After breaking down and then moving up to the breakdown level (resistance), it turned back down—Figure 5. We remain laser-focused here as discussed last week and prior to NVDA’s EPS report.
Figure 5: Semiconductor proxy vs. S&P 500 proxy. | Please see verbiage inside the chart.
Please Note: Going forward, the weekly Tech Talk reports will be released on either Thursday or Friday. They will no longer be released on Tuesday.
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. Disclosures and Fact Sheet information can be found here: https://dhfunds.com/literature.
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Art Huprich, CMT®
Chief Market Technician
Day Hagan Asset Management
—Written 8.27-28.2024. Chart source: Stockcharts.com unless otherwise noted.
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