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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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Indices Gap Higher But Fail To Build On Opening

It was a bit of a so-so day for markets. The Russell 2000 ($IWM) had the best of the action as it negated a nasty bearish engulfing pattern from Friday, and now has a new opportunity to make a run at the $225-7 zone that delivered the October reversal. It will need an improvement in supporting technicals for the challenge to succeed as the MACD, On-Balance-Volume and +DI/DI all on 'sell' signals, along with an underperformance relative to the Nasdaq.

The S&P was unable to clear the narrow 'bull flag' it looks to be shaping - as long as the 20-day MA remains as support. There is a worrying expansion in the 'sell' trigger for On-Balance-Volume, indicating a shift towards distribution that price action has yet to confirm. The MACD is on a 'sell' signal, but this signal has occurred well above the bullish zero line, so it's not a strong signal. ADX and Stochastics are firmly bullish, so broader momentum still lies in bulls favor. However, I would like to see a solid white candlestick tomorrow, because this apathy will only lead to downside.

The Nasdaq finished with a bearish 'black' candlestick just below resistance. It's still on a 'sell' trigger on the MACD, but this trigger has effectively flatlined. Other technicals are positive, feeding into the possibility of a break to new highs soon. Despite today's trading, I still think a break higher is in the works.

With U.S. elections next week there is a "wait-and-see" aspect to current action, although in J.C. Parets latest newsletter, he is of the opinion markets have priced in a Trump win. If Harris wins, then can we expect a "sell off"? Or will see a general sell-the-news in markets on election results.

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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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