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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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S&P Equal Weight to S&P Ratio breaks below 2009 lows

I was going through my charts and came across one I don't normally look at, but I thought it was interesting. The S&P ratio of equal weight, $RSP, to the S&P, $SPY, has reached a value below that of the 2009 bottom. I'm not sure of the significance of this yet as the S&P ($SPY) hasn't reached any capitulation low, but if there is a long trade, then this is one such opportunity.

The S&P has drifted back to breakout support, but it's no capitulation as the previous chart would suggest. Selling volume rose to register as distribution. Technicals are still net positive, although the index is underperforming relative to the Nasdaq. If there is any early morning selling then look to the 20-day MA as a buying opportunity.

The Russell 2000 ($IWM) gapped below its rising wedge, undercutting its 50-day MA in the process. Volume rose as distribution with 'sell' triggers in the MACD, On-Balance-Volume and ADX. The March 'bull trap' was the rally killer, what's happening now is action within a trading range and carries less weight.

The Nasdaq dodged the selling experienced by the Russell 2000, and the S&P to a lesser degree. Today's loss was minor, but remains well above support. On-Balance-Volume is whipsawing across a trigger line, but other technicals are good. Unlike other indices, this is still in a bullish trend.

For tomorrow, we will want to see the S&P hold breakout support and perhaps benefit from the capitulation low in the $RSP:$SPY ratio. The Russell 2000 ($IWM) will drift in its trading range for the coming days and its unlikely to offer much guidance. Likewise, it will take a big loss in the Nasdaq to reverse its bullishness. Let's see what tomorrow brings.

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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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