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Split Markets At 200-day MAs

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It's hard to know what will come next as some markets work bounces off their 200-day MAs, while others struggle below it. The Russell 2000 ($IWM) successfully managed a test of its 200-day MA before rallying, while also leaving a 'bear trap' at $245. Buyers who took advantage of $245 will be sitting pretty, although traders with a shorter time frame may wish to site this out. Today's test of the 20-day MA may instead offer a shorting opportunity, particularly if there is a gap down on Thursday's open. Technicals are slowly recovering, although the MACD trigger 'buy' is a weak signal given the crossover below the bullish zero line.
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Upcoming "Death Cross" for Russell 2000 ($IWM)

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There was some modest buying today from the open, but volume was light and markets are below trading range support established during the latter part of 2024. It's hard to see where the buyers are going to come from given the chaos of Trump. I should add, I listened to Josh Brown's The Compound podcast and he showed an interesting chart of market returns in April-May in the year following a strong return in markets; in essence, selling to pay capital gains tax. Given the precarious nature of markets, and the possibility for this seasonal factor to play out, it's likely we have a couple more months of downward action before value buyers return. If we look at individual markets, the Russell 2000 ($IWM) is looking like the first to signal a long term shift in favor of bears with an upcoming "Death Cross" between the 50-day MA and 200-day MA - perhaps completing before the end of the week. Technicals are net bearish and the volume trend has collapsed since the st...
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Markets Dont Trust Trump

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It was an interesting finish to Friday; some indices successfully tested their 20-day MAs - others did not. Pure technical traders could have taken a pop on Friday in the Russell 2000 ($IWM), and equal-weighted S&P ($SPXEW) at their 200-day MAs, knowing that other lead indices were undercutting their 200-day MAs, but it would be a big ask in the age of Trump (unless you were insider trading). Well, markets reacted positively to the announcement that Trump wasn't going to bomb Iran's energy infrastructure, but over the course of the day the majority of market participants didn't believe him, and sellers returned in force. The Russell 2000 ($IWM) managed a picture perfect tag of the 200-day MA on Friday, but on Monday, the higher volume accumulation racked up by the close of business came with a sizable inverse spike.
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Gap Down Selling Threatens Breakdown Across Indices

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After yesterday, I was looking for big red candlesticks across indices, and today - they delivered. Those who took the opportunity to go short can place a stop at yesterday's close. The Russell 2000 ($IWM) experienced a higher volume distribution day on net bearish technicals. Today's loss finished on $245/6 support, but another day's worth of selling will open up for a test of the 200-day MA and maybe a potential follow through move down to $228.
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Insipid Rallies For Lead Indices After Retest Of Range Support

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Not Good. Indices remain under pressure after selling into support has only resulted in a weak bounce. It won't take much to tip the S&P, Nasdaq and Russell 2000 back into the red. The Russell 2000 ($IWM) is the canary in the coal mine. Today was a second narrow doji after Monday's. Volume was down, reflecting the disinterest by buyers. Technicals are net negative and last week's gap down has finally closed. Don't be surprised if we see a solid red candlestick before the week is out. Even if there is a rally, the 20-day MA will be there to add its own pressure.
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Sellers Add Pressure To S&P and Equal Weighted S&P In Particular

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The problem when you trade off what Trump says, is that you are only in for disappointment. Monday's reversal that delivered what should have been a tradeable bullish engulfing pattern has devolved into a distribution sell off across lead indices. The Russell 2000 ($IWM) gapped down but was at least able to hold onto $245 support. Technicals are net negative, but not fully oversold, so I would be looking for another day of selling that should take it into a test of its 200-day MA.
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Trading Ranges Expand As Traders Seek Answers

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Markets are reflecting the turmoil in the Middle East by being as indecisive as the Administration in its goals for the region. Headlines talk of significant declines, but that's not what we are seeing. The Nasdaq has been particularly resilient despite the added pressure from a possible AI bubble. I have marked in declining resistance from January, that intersects with today's close, and marks a possible short trade (stop on a close above today's nasty looking spike high). There is a weak 'buy' signal, but other indicators are bearish, despire the sharp acceleration in relative performance to the Russell 2000 ($IWM).
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Trading Ranges Breakdown - Finally...

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It was not a guaranteed thing, and if Monday sees gains (unlikely), then a bear trap can't be ruled out. It was not a wholesale disaster, but it will set the tone for the week. The Russell 2000 ($IWM) gapped down but wasn't able to build on the opening loss. The end-of-day finish as a doji leaves it in a bit of a no-mans land, but if there is a gap higher and a closing white candlestick tomorrow, then we have a bullish morning star reversal pattern. Stochastics (momentum) is not entirely oversold, which you would like to see for a reversal pattern. Technicals are now net negative, so it does point towards further losses, but do watch for an opening gap higher that could offer a long trade.
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