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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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Trade Ideas: BIO, TNC, ASHW, FVL, SMMX, BRY, CEO, ACO

The eight stocks for today were drawn from the last minute of trading. Other than TNC which appeared twice, every stock made a single appearance on the scan during this time.

BIO: Small hammer at the 20-day MA. Significant resistance at $68. Prior congestion around $63 should provide support. Point-n-figure target of $89 only for the patient. Short term traders more likely to benefit with a sale at $68.

TNC: Upside break of trading consolidation. Follow through price target of $63. Support at 50-day MA best place for support. Resistance at $55 a concern. Point-n-figure target of $74.

ASHW: Sideways consolidation followed with an upside breakout. Four day consolidation in the upper range of last weeks heavier volume buying provides a low risk opportunity with a stop on a loss of $10.10. Point-n-figure chart still shows the stock has plenty of work to do.

FVL: Tight action between $17.00-$17.25. 50-day MA below to provide support. Cautionary bearish divergence in money flow. Slow burner; unlikely to reap dividends for short term traders.

SMMX: Initial break of $29.50 was rejected but stock has held above $28.50 support. Slight increase in buying volume favors another bullish attack. Weekly chart holds to a bullish ascending triangle. Projected target of $42 which closely approximates the point-n-figure target of $43.

BRY: Mixed bag. The last 4-days of advance have the look of a bear flag which may mean a test of the 50-day MA. Weekly chart shows good prior support at the 40-week average (currently at $64.86). Point-n-figure target of $107 not outside the realms of possiblity given its steady advance from $40.37.

CEO: Bounce off the 50-day MA but remains vulnerable as the break of $88 resistance was rejected. The bullish cross of the 20-day/50-day MA looks to be fueling the current buying. Ride the 20-day MA up.

ACO: Plenty of heavy volume volatility. 50-day MA holds as support (stops can go just below). Point-n-figure target of $60.50 looks ambitious at this juncture. Look for a projected move to $41.




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Popular posts from this blog

Upcoming "Death Cross" for Russell 2000 ($IWM)

Image
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...
Read more

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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Sellers Accelerate Action As Confirmed Distribution Kicks In

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Aside from Bitcoin, we are not seeing too much technical damage, but we are seeing a pick up in the volume of seeling. Moving averages will be key in the near term before we have to start looking at horizontal price support and swing lows. The Russell 2000 ($IWM) undercut its 20-day MA, but hasn't yet challenged support defined by the December swing high. The MACD is on a 'sell' trigger and +DI/DI and On-Balance-Volume will likely do the same Monday if selling continues. Friday's selling registered as confirmed distribution, which is a worry for Monday. It's the strongest index, but if this falls under $257 we would likely be looking at a new trading range bound by $245 and $270 that could last a number of months.
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