Day Hagan Tech Talk: Who’s To Blame?
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Summary
Everyone is blaming the Fed, two nonvoting FOMC participants, and related economic reports for yesterday’s sell off and last week’s price swings, including a lot of stock-specific weakness. For me, it was the continuation of prevailing conditions: overhanging selling pressure (resistance) making itself felt (Figure 1) and upward trending interest rates. As Wall Street debates the issues, I expect further volatility and for equity market proxies continue to consolidate/pullback—SPX 4000+/- to 3950+/-.
Head On A Swivel
I played lacrosse into the fall semester of my freshman year in college and my son later played defense in the game. Thus, I am very familiar with the term “head on a swivel,” used by defensemen (and the coaches) to remind the player to watch both the man he is defending as well as the ball. More generally, head on a swivel means to always be aware of your surroundings. In Wall Street terms, please use support and resistance appropriately.
Figure 1: Domestic Equity Market Indicators & Proxies with Resistance (red lines). | Resistance has been standing its ground for the past few weeks. I expect it to continue for a bit longer.
Figure 2: Dow Jones Industrial Average. | As the DJIA coiled (sideways activity with prices fluctuating between two converging trendlines), which ended yesterday with a move below the lower support line, I’ll say again: head on a swivel. Be aware of your surroundings—use support (shown below) & resistance (red lines) appropriately.
Figure 3: S&P 500 with rising 150-day MA (currently 3946). | A pullback that has relieved the previous overbought conditions and short-term sentiment extreme (too much bullish optimism) is consistent with the seasonal calendar: weakness into month-end/first week of March.
Meanwhile
Figure 4: Energy Proxy – Relative (top frame), Absolute (lower frame).
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Art Huprich, CMT®
Chief Market Technician
Day Hagan Asset Management
—Written 2.20-22.2023. Chart and table source: Stockcharts.com unless otherwise noted.
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