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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Bears counter 'bull flags' with ruthless efficiency

It was not to be for what had been a relatively orderly bounce from May lows.  Friday's trading drove the nail into the coffin of the 2-week long bull flags with a 'gap-and-run' lower, which now puts the May lows under pressure. If bulls are to get out of this with the prospects of a double bottom then today or tomorrow has to see a spike low, preferably one with a wide intraday range which capitulates the last of the weak hands.  But if we see another day like Friday, then it's back to the drawing board as to looking for a bottom.

For the Nasdaq, we have the May spike low of 11,035, but really, it's the candlestick real body support of 11,152 which has to hold on a closing price basis - spike lows below this are fine (and are to be welcomed). We have technical pressure with the uptick in bearish trend strength, the relative 'sell' trigger against the S&P, the 'sell' signal in On-Balance-Volume, and a weak 'buy' signal in the MACD which is close to reversing to a strong 'sell' (when the MACD line is below the zero line it's a weak 'buy' and strong 'sell'; vice versa in the reverse scenario).


The S&P is already at its real-body support of 3,887.  Note how Stochastics [39,1] never made it above the mid-line, confirming a bear market rally (when this metric is below 50 we have a cyclical bear market, and a cyclical bull market when above 50). The index also sits on the verge of a new strong 'sell' signal in the MACD.

There is a silver lining for markets and there will be few singing its praises, but the Russell 2000 ($IWM) continues to perform well (relatively).  Yes, it couldn't avoid the selling of Thursday and Friday, but it did manage a brief cross of the 50-midline in Stochastics (cyclical bull market territory) and its MACD is close to returning above the bullish zero line.  It has continually outperformed peer indices since the start of April - with that relative performance accelerating over the last couple of days.  This is an investors set-up; growth stocks is where the stealth buying is happening and markets are trying to keep this a secret.


The end-of-week market headlines will look bad for Monday, but the Russell 2000 ($IWM) is quietly doing better than the S&P and Nasdaq.  Take note, this is not a market to be selling - particularly for growth stocks which are (or are on the verge of) outperforming the Russell 2000.  

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?

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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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