In August, sector narratives were shaped by tariffs, macroeconomic indicators, earnings revisions, and interest rate developments. Overall, the tariff landscape tightened as several actions taken earlier in the summer resulted in a higher effective tariff burden by early August.

Last week, I discussed short-term headwinds for equities, which are now evident in several factors: overbought conditions, fading systematic flows, all-in CTA positioning, corporate buybacks in a dry spell, and seasonal issues for equities and the Volatility Index (VIX).

The DH Catastrophic Stop model declined to 59.09% from 72.7% last week. The model indicates that investors should maintain their benchmark equity exposure.

Our perspective has remained relatively unchanged over the last three weeks: The excessive optimism noted four weeks ago has slightly moderated, and we have been anticipating a consolidation phase as sentiment and technical indicators trended toward more normalized levels.

Watch the August 2025 Day Hagan Technical Analysis Webinar Replay as Art Huprich, CMT® delves into current market trends, highlighting supportive factors like global participation and bullish thrusts while addressing headwinds such as seasonal volatility and non-confirmations.

The DH Catastrophic Stop model level is 50.0%, unchanged from last week. The model indicates that investors should maintain their benchmark equity exposure. Our perspective also remains largely unchanged from last week.

Small caps broke out and pulled back—false breakout? Maybe, though I believe a small-cap (and DJIA) breakout will eventually stick. Sector rotation (Health Care led last week)? Until we get an answer, bullish price trends are in control. For the Bears, it remains “show me.”  

The DH Catastrophic Stop model declined to 50.0% from 59.09% last week. The model indicates that investors should maintain their benchmark equity exposure.

The S&P 500 cut through resistance like a hot knife through butter, closing at a new high. Index Movers and Small Caps participated. Yet, domestic A/D Lines recorded a second non-confirmation (Figure 1), and New High readings, though not a good timing tool, reflect a diverging backdrop.

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.

The DH Catastrophic Stop model declined to 72.7% from 77.27% last week. The decline stemmed from our breadth thrust composite turning neutral, as the initial bullish signal’s impact was programmed to diminish over time, consistent with historical patterns.  The model indicates that investors should maintain their benchmark equity exposure.

July was a telling month for global investors, as regional divergences in central bank policy and underlying economic momentum became increasingly impactful on relative currency moves. The U.S. dollar reached its trough on July 1, and the subsequent rally into the end of the month reduced international equity returns (in U.S. dollar terms).

July began with the index reaching record highs, bolstered by strong earnings expectations and optimism surrounding trade negotiations. However, caution emerged as market breadth and participation indicators diverged from price gains, hinting at the potential for increased volatility.

Watch the July 2025 Day Hagan Technical Analysis Webinar Replay as Art Huprich, CMT, delves into ongoing market trends, sentiment extremes, non-confirmations, and sector rotations amid overbought conditions and seasonal headwinds. Discover insights on global participation, commodities outlook, and Smart Sector.

The Day Hagan Catastrophic Stop model level is 77.27% as of today’s open, unchanged from last week. The model indicates that investors should maintain their benchmark equity exposure.

The S&P 500 closed over 6,300, yet New Highs contracted and A/D Lines are diverging—a condition, not a sell signal. Index-wise, a similar splintering exists. Until there is some resolve, define risk tolerance and implement an investment strategy with risk management parameters.

The Day Hagan Catastrophic Stop model level is 77.27% as of today’s open, unchanged from last week. The model indicates that investors should maintain their benchmark equity exposure.

The market remains overbought, with sentiment still relatively complacent, as I noted last week. When combined with proximity to resistance, the ingredients are still in place for a pause/pullback.

The Day Hagan Catastrophic Stop model remains unchanged at 77.27% from last week. The model indicates that investors should maintain their benchmark equity exposure.