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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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Friday's action looks good on paper, but trading ranges remain

A healthy close to Friday's action saw confirmed accumuation across lead indices, but not all indices were able to escape the grasp of their trading ranges.  Best of the indices was the Dow Jones Industrials Average ($INDU).  It gained over 2% with a new ADX (trend) 'buy' trigger on higher volume accumulation, with new 'buy' triggers in the MACD and On-Balance-Volume in the works.  The only caveat is that momentum (slow stochastics) are in a bit of a no-mans land - I would want to see this cross the mid-line to restore bullish momentum. The Dow Jones is in the index best placed to drive new all-time highs and take other indices with it. 


The other index which could mount a rally from here is the Russell 2000 ($IWM). It too closed with a move outside of its trading range, on higher volume accumulation, supported by a new MACD trigger 'buy' and ADX trend 'buy'.  The index is outperforming peer indices and is offering a trading opportuntity; risk:reward can be measured from a loss of $170.34 ($IWM) with upside targets of the 200-day MA and $188 - resistance from November.

Where things go a little sour is in the Nasdaq. Yes, the index recorded a +2.5% gain on higher volume, but this wasn't enough to take the index out of its range and is still pegged by 20-day MA resistance. There was an ADX (trend) 'buy' signal and it's close to a MACD 'buy', but really, we need to see a shift in the On-Balance-Volume trend if a meaningful rally can come out of here. 

The S&P is in a similar position to the Nasdaq, with a gain that hasn't cleared resistance and technicals still net negative, it has much work to do. The S&P did manage to close above its 20-day and 50-day MAs, but it needs more early week if there is a chance of gaining some momentum off Friday's efforts. 


For tomorrow, we will want to see a positive start to the week, defending Friday's buying - because losses will only keep indices stuck in the mire and threaten the range breakouts for the Dow Jones Industrial Average and Russell 2000. 

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Investments are held in a pension fund on a buy-and-hold strategy.

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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