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S&P Trades Tight Handle With Excellent Risk:Reward For Longs

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Bullish setups continue to present themselves for traders. Best of these look to be in the S&P, but there are good setups all around. The S&P is trading a narrow handle just above its initial breakout. Technicals are net bullish and showing no sign of negative divergence. Volume has been declining across this narrow pattern, as expected, but should pick up on the breakout. If there is a caveat, watch for the fakeout; this will show as a spike low - possibly as soon as tomorrow - with a close back in the range. The index should break higher the day after this happens. A fakeout spike would be an nice buy. Any fakeout shouldn't need to undercut 7,600.
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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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Bulls Take Friday's Finish As Breakouts Offer Excellent Risk:Reward Plays

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It was a good close to the end of week. Bulls have set things up nicely for next week, to the point that even buying at the open might be worth a shot (assuming no major gap higher). The Russell 2000 ($IWM) offers good risk:reward using a stop on Thursday's lows.
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Equal Weighted Nasdaq 100 Falls Back Inside Base

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It came, it saw, it conquered, then retreated. The equal weighted Nasdaq 100 edged a breakout earlier in the week, but has returned inside its base following the selling of the past few days. I have redrawn resistance as a result. The index has switched to a 'sell' in On-Balance-Volume, but other indicators are still bullish.
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Breakouts in Equal Weighted Nasdaq 100 and S&P

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There was good news across indices, but the big winners were the equal weighted Nasdaq 100 and S&P. The S&P posted a solid gain on modest volume. Technicals are net bullish, negating the 'bear flag' in the process. Interestingly, just as the S&P breaks from its summer consolidation, it starts to underperform relative to the Nasdaq. The equal weighted Nasdaq 100 has managed to return to a net bulllish technical picture with a relative performance gain over the equal-weighted S&P. The index has met the measured move target of the May breakout, but there is a good chance it will do so here. The equal-weighted S&P had sucessfully defended breakout support, posting a secons gain to bring it to new all-ttime closing highs. Technicals have retained a net bullish picture. There is no overhead supply bar psychological resistance at 10K. The Russell 2000 ($IWM) hasn't yet posted a new breakout, but it came very close to doing one today. As with...
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Potential 'Bear Trap' in Nasdaq as Equal Weighted S&P Tests Breakout Support

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Last week's winner was the equal-weighted S&P as it marked a clear breakout, but the index came back to breakout support (and stayed there) by Friday's close. The better news is the last two days have seen two doji/hammers with rebound support off the 20-day MA. Technicals have dropped out of a net bullish state with a MACD trigger 'sell'. It's a buying opportunity with a stop on a loss of Friday's low.
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Bitcoin Successfully Tests 50-day MA on Bullish Hammer

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Bitcoin is holding to a bullish setup with a nice looking bullish hammer/doji on the 50-day MA. When we look at reversal candlesticks we want to see these occur when momentum is oversold; and in the case of a bullish trend, this oversold state occurs at the midline (50), not sub 20. Bitcoin had suffered heavy selling to bring it to July lows, and while action since then has been a little scrappy, I still like bullish trades, particularly long term (6 months+).
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Scrappy Support Holds For Indices As Bitcoin Trades Near 50-day MA

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Summer trading dominates as indices trade near support levels while Bitcoin comes back off June highs. The equal weighted S&P recovered 8,600, returning its outperformance to the weighted S&P, a better scenario for the long term health of the S&P (weighted or unweighted). The recovery was enough for it to poke its head above its 20-day MA. The MACD continues to decline from its weak MACD trigger 'sell' but a couple more up days may be enough to see a new, strong 'buy' signal. Aggressive buyers could look to get in here to pre-empt this signal; a stop goes on a loss of 8,560.
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