Day Hagan Tech Talk: Independence Day Celebration
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Summary
When America won its independence, it was no longer constrained by British rule. Similarly, much of Wall Street is not constrained by overhanging selling pressure, as the “Index Movers” led several domestic equity market indices and proxies to new all-time highs.
2H25 Chart Configurations
In recent reports, we noted the following:
Dow Jones Industrial Average… a decisive move above… 42,800+/- would be very bullish.
Don’t be surprised… a period of digestion… followed by… potentially strong, rally.
Unless our models suggest otherwise, or we experience another string of negative A/D Line non-confirmations, new all-time highs are in the making for Large Cap equity indices (and ultimately Small Cap equity proxies/indices.)
Semi-proxies have completed the bearish-to-bullish transition… Wall Street likes it (more risk-on than risk-off) when semis outperform.
These observations are now all hindsight. While we continue to focus on our models and indicators as we move into the back half of 2025, to gauge the staying power of the current uptrend and the dominance of the “Index Moving” once again, our attention shifts to key charts and relative strength relationships. Shown below are a handful of many we are following:
Figure 1: Consumer Discretion versus Consumer Staples (cap weight and equal weight). | The rising line, which has reached a critical resistance level (red horizontal lines), reflects an environment conducive to equities moving higher. I believe resistance will eventually be violated on the upside.
Figure 2: S&P 500 (Cyclical) versus Defensive. | Rising lines depict a cyclical bias (risk-on). If the lines roll over, as they did at the beginning of 2025, it will imply a pullback or backing and filling.
Another critical decision concerns allocating resources between domestic and overseas markets. While the multi-year trend still favors the world ex-U.S. (please reach out for the chart), the short-term trend has shifted to neutral—Figure 3.
Figure 3: S&P 500 vs. All Country World index ex U.S. proxy. |A move above resistance (red horizontal line) would have bullish short-term implications for U.S. stocks. Don’t anticipate a breakout; instead, wait to see if it occurs and then act.
Interest rates remain contained. The red horizontal lines in Figure 4 represent significant resistance, while the green horizontal lines indicate substantial support.
Figure 4: CBOE 10-Year U.S. Treasury YIELD Index (TNX). | A decisive move above 46 resistance would pressure equities, especially if it is rapid.
Figure 5: U.S. Dollar Index Bullish Fund (UUP). | Considering the impact the U.S. Dollar’s directional moves have on many intermarket relationships, please watch this closely.
Figure 6: Dow Jones Industrial Average. | Would a pullback be surprising? No, especially considering the recent advance and proximity to resistance. However, an initial price target of 47,800 is possible, based on the depth of the base that was completed (42,800 minus 37,800 = 5,000). 42,800 + 5,000 = 47,800.
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Art Huprich, CMT®
Chief Market Technician
Day Hagan Asset Management
—Written 6.30.25 and 7.01.25. Chart source: Stockcharts.com unless otherwise noted.
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