For Wednesday, See Sunday

There isn't a whole lot to add from what was said over the weekend. Intraday daily ranges have been tightening as markets move further away from April swing lows, and get closer to resistance defined by March lows.

Technicals have returned to bullish net technicals for the Russell 2000 ($IWM) despite an underperformance relative to peer indices and a return to more normal trading volumes. A test of the 50-day MA still looks the preferred action for the coming days, altough short term stochastics are overbought, so it may ease back today/tomorrow before making a final push to the 50-day MA.

The S&P is trading bang on resistance and hasn't reversed as it I thought it might have by now. The move to resistance has acted more bullish than I expected with the 50-day MA just above. A kick on to the 50-day MA would likely trigger a wave of short covering and return technicals to a net bullish state.

The Nasdaq will likely be the first index to test its 50-day MA, although it hasn't yet returned to a net bullish state. Unlike the S&P it's edged just above the March swing low, but the outcome for both of these indices is likely to be similar.

The S&P and Nasdaq have reached a decision point. If we have a long term swing low in place, then I would expect these indices to push higher over the next few days, even if there is a modest loss. Going on what has passed the last few weeks, and with the next round of Trump decision tariffs a few weeks away, I think markets are going to push higher.

---

Follow Me on Twitter


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

Popular posts from this blog

Farcical Market Reaction to Trump's Tariffs

Image
What were traders thinking? That Trump's tariffs were possibly going to be a good thing for markets? Why did markets close higher over the three days leading into today? Trump is all fault, but the introduction of tariffs was no surprise; he did it in his first term, he ran on it for his second term, and he didn't shy away from his "Liberation Day", and yet markets shed $2tn in value on its release! And, as I said during the credit crisis, where were all the Ivy League business school boffins and corporate leaders to stop any of this from happening? Corporate America was silent (scared? lazy? too rich to care?) and could have done so much more to have stopped this. When Trump is relying on ChatGPT to draw up his tariffs - and imposing tariffs on uninhabited islands - it's clear America's problems run deep, and most of those problem areas lean Republican. And yet, not one word of complaint or action from those who have influence (hello Elon Musk). As for Democr...
Read more

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

Friday's gap downs bring indices close to support. Semiconductor Index at 200-day MA.

Image
Friday's big gaps lower have the potential to become breakdown gaps, but for now, the near term oversell has for a possible move into the gap price vacuum. The index most likely to achieve this in the coming days is the Russell 2000 ($IWM). The Russell 2000 ($IWM) finished with a neutral doji, just above its 50-day MA and in a thick band of support between $207.50 and $210 marked by the summer swing highs. Technicals have followed price action with new 'sell' triggers in On-Balance-Volume and ADX, but intermediate term stochastics haven't reached the mid-line that is typical support in bull markets. Aggressive bulls can look for a move to test the underside of the 20-day MA. The S&P was unable to hold its 50-day MA on Friday's open, and instead found itself toying with the May swing high. More significant support is likely to be found around 5,265, so if there is an undercut of Friday's low then this will be the next port of call. More concer...
Read more

Archive

Show more