Popular posts from this blog

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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Another good finish to the week

Markets have effectively cleared the first hurdle of the most recent swing high. Speculative indices - the Nasdaq and Russell 2000 - have also started to outperform the more conservative, S&P.

The S&P is about to edge past declining resistance defined by the March-April highs (4,637), something the Nasdaq has already achieved, but the Russell 2000 has yet to do.  When it does it will soon come up against the 50-day MA, then the next real challenge is the 4,300 level, which was resistance at the end of April/beginning of May. 


The Nasdaq has some fresh air to play with as it looks to mount a challenge on 13,000 resistance (also from the end of April) and its 50-day MA.  We still have the MACD trigger 'buy', but On-Balance-Volume, ADX and Stochastics remain on the bearish side of the fence.  However, the relative performance gain over the S&P should attract more buyers.


The Russell 2000 has been outperforming peer indices since April, and we are seeing that strength translate to other technicals.  Once price makes it past declining resistance, which is also near the 50-day MA, it will open up a big gap to next real resistance at the 200-day MA. 

Markets continue to work through a rally off a bottom, kicked off when breadth metrics were heavily oversold.  We may still be looking at a bear rally, but bear rallies can last a while and investors shouldn't be concerned about bear rallies at this stage (given the losses already incurred to get to this point).  I still think we have a decent market bottom, but it feels like a minority view...

You've now read my opinion, next read Douglas' blog.

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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

"Dead Cat" Bounce or Something Better?

Image
It's still a little too early to say, but the bounce is in play and "long" is the place to be. There is a huge amount of overhead resistance and the risk:reward remains tight with moves back to Thursday's lows well within expectations. For the S&P, I would be looking for a rally back to test the 200-day MA, or a fast-falling 20-day MA, whichever is the lowest. Real supply won't kick in until 5,700 is tested, and maybe it will have the juice to get to 5,775 before volume selling makes its presence felt. As the index makes this move I expect to see a decent On-Balance-Volume 'buy' signal, alongside what will be a weak MACD 'buy'; other technicals are likely to remain bearish.
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Sell The News. Nvidia Can't Save Market - Worse To Come?

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The pre-market optimism didn't last long, but when markets are coming off an extended high it's hard for buyers to return there, even off the back of 'good news'. The Russell 2000 ($IWM) opened bang on resistance at $237, and then it was all down from there. Volume surged in confirmed distribution, leaving the 200-day MA as the next logical support level.
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