ABSTRACT
The NDR S&P 500 Cycle Composite for 2022 shows very bumpy first months of the year, with lots of movement back and forth. Continue to manage volatility in equity and fixed income markets.
VOLATILITY 2022: INDEX & STOCK, INFLATION & EXPECTATIONS …
The cartoon above sums it up. We left 2021 expecting more volatility in 2022 in the following areas: stock indices and individual stocks, inflation and inflation expectations, and economic reports. In our Tech Talk on January 4, we asked how Wall Street would balance an overbought situation and defensive sectors outperforming in December, leading to a market pause / decline and “New Year’s inflows”. We feel like we got our answer.
During last week’s tape action, JPMorgan wrote: “Almost 40% of NASDAQ companies have seen 50% corrections from their 52 week highs.” Ned Davis Research pointed out a few weeks ago that more than 20% of S&P 500 stocks were down 20% or more from a one-year high, and Bespoke Investment Group said yesterday: “The stock Russell 3000’s average was already 27.2%. below its 52 week high.
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I would describe the current short-term state of the national stock market as washed out, with stock market volatility both at the index level and at the stock level. In my opinion only, stock market and the volatility of fixed income securities can at least partially be managed if it is coupled with the Day Hagan / Ned Davis Study Smart Sector With Catastrophic Stop Loss Strategy and the Day Hagan / Ned Davis Research Smart Sector Fixed Income Strategy. Please contact us for more details.
THANKS FOR KIND FOR LONG-TERM MOBILE MEDIA
we identify areas—Not necessarily a specific point — of underlying support (green highlights and blue arrows) and resistance zones (Red strong points).
Figure 1: NASDAQ Composite (COMPQ). | As the NASDAQ index itself recorded a new intraday low yesterday, on a stock basis the selloff was not as extreme as it had been when measuring falling volume and falling issues on the NASDAQ—a positive non-confirmation and a sign that the NASDAQ has been won. Yesterday’s bullish reversal was a case in point. More card repair work is needed, but support has been tested and maintained after major anxiety (volatility).
Figure 2: NASDAQ 100 Index (NDX). | Trading yesterday was like trying to discern the image of the NFL playoffs last weekend – LOTS of volatility with surprising results. However, like the NFL, there was an end result. The support for the moving average has been tested and, along with a lot of angst (volatility), has been maintained.
Figure 3: S&P 500 Large Cap Daily Index (SPX). | Almost at the right time, the 100-day long-term moving average (support) held steady. I would prefer that a new period of base build occur (price sideways movement), giving many charts time to repair themselves by working on excessive selling pressure.
Figure 4: IShares Russell 2000 ETF (Small cap proxy). | I apologize for the clutter of this graph, but I think it is necessary given the importance this complex plays in many internal measurement tools. Please reach out for a more in-depth discussion. Ask a friend: “Do I see a potential bullish reverse accumulation pattern developing (blue horseshoes)? “
Day Hagan Asset Management appreciates being a part of your business, whether through our research efforts or our investment strategies. Please let us know how we can support you further.
Art Huprich, CMT®
Chief market technician
Day Hagan Asset Management
—Written on 1.10.2022. Source of chart and table: Stockcharts.com, unless otherwise noted.
EVENTS TO COME
- Day Hagan Technical Analysis with Art Huprich, CMT, Jan. 18, 2022, 4:15 p.m. ET
- Day Hagan / Ned Davis Research Smart Sector 2021 Review and NDR Catastrophic Stop Update with Art Day, January 13, 2022 at 1:15 p.m. ET
- Day Hagan / Ned Davis Research Smart Sector 2021 Review and NDR Catastrophic Stop Update with Art Day, January 13, 2022 at 4:15 p.m. ET
- Day Hagan Market Update with Donald Hagan, CFA, February 9, 2022, 4:15 p.m. ET
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