Modest losses keeps indices near highs
The earlier 'bull trap' risks look safely put to bed as today's losses just dipped into yesterday's gains.
The S&P moved into a period of outperformance relative to the Russell 2000 ($IWM), although it came with higher volume (distribution) selling. The MACD is still on a 'sell' trigger, although it has flat-lined for most of 2024.
The Nasdaq is working through a more substantial 'bearish engulfing pattern', but without the higher volume distirbution of the S&P. It has 'sell' triggers in the MACD and On-Balance-Volume to work off, in addition to a relative underperformance to the S&P (but not the Russell 2000).
The Russell 2000 ($IWM) is perhaps the index most vulnerable to further selling given it has finished on breakout support. The breakout remains intact, but further losses and a loss of the 20-day MA would signal something worse; a move back to $190 would seem to the most likely outcome on a loss of breakout support.
The Russell 2000 ($IWM) is the index that typically leads bull and bear markets. At the moment, it's still on the bulls side, but if there is a loss of breakout support before the end of the week then play it more cautious for the Nasdaq and S&P.
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Investments are held in a pension fund on a buy-and-hold strategy.
