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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Weekly Chart Review

I haven't talked much about the weekly charts, although they are still part of my free stockcharts.com public list. When you are getting spun around by daily charts, it's always good to fall back on weekly charts to see the big picture.  If you are an investor, then the weekly charts are all you need.

I have been waiting for a confirmation of the breakout on dailies, but these just keep flipping back-and-forth on that timeframe.  On the weekly chart, there is a well established break of the bearish trend, but this hasn't yet shaped the move to build the right-hand-side of a new base.  In the case of the S&P, the summer high is the more important resistance level (currently at 4,325).  Technicals are moving out of bearish territory, in particular, the MACD is working its way above the bullish mid-line.  On-Balance-Volume is also about to turn bullish (on the weekly time frame).  The caveat, as a weekly chart, it could be the end-of-the year before we even see a challenge of 4,325, but I do see this chart as more bullish.


The Nasdaq also breached declining resistance, but unlike for the S&P it's struggling at its 200-week MA, which is not ideal.  The 200-week MA (in essence, a 4-year MA) can be viewed as a cyclical bull/bear market switch, so if it's trading (and staying) below this moving average, then it could be there for a long time.  However, there are bullish flags, particularly in technicals, with stochastics about to return to a bullish market along with a cross above the zero line in the MACD.  While I view the Nasdaq as more bullish on a daily time frame than the S&P, it's more bearish on the weekly time frame.

The Russell 2000 ($IWM) has a well established resistance its knocking up against. On the daily chart, we are working support of November, but on the weekly chart, we have already tested summer resistance and are well positioned to start a right-hand-base.  The Russell 2000 has a strong weekly chart and excellent technicals.  It's also well above its 200-week MA.  Again, as an investor, there is little to dislike here. 


Going forward, there is solid strength in the Russell 2000.  This index is well placed to form a right-hand-base (on a push above psychological resistance of $200 in $IWM), which in itself, won't take much to see a test of all-time highs.  If this index can lead out, it will help bring the S&P and Nasdaq along with it,  When in doubt, stick to the weeklies. 

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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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"Bull Traps" For S&P, Nasdaq and Bitcoin

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So, in one fell swoop, the S&P and Nasdaq undid all of the work of 2026 with nasty gaps lower. In the case of the Nasdaq, the ascending triangle breakout reversed into a breakdown with new 'sell' triggers in the MACD, On-Balance-Volume and +DI/-DI. The relative performance of the index to the Russell 2000 ($IWM) showed an acceleration lower after last year's declines. Only stochastics (momentum) is holding on. If one was to be more honest of what's happening, we are likely broadening out to a trading range and it will take a loss of 22K to really flag a concern for bulls. Things are a little more problematic for the S&P. There is a definite 'bull trap' in play following today's significant gap down. Volume rose in confirmed distribution, so this wasn't some fake out to get weak hands out of their positions. As with the Nasdaq, the twin lows of October/November at 6,550 carries greater significance, and we are still a long way from a test...
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