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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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Bitcoin Struggles as Dow Industrial Pushes To Test Highs

We are seeing a technical bounce at moving average support, but how its evolving is subject to intrepration. On the bullish side, we have the Dow Industrial Average making a new closing high (but not absolute high), while bears have staged an aggressive attack against Bitcoin at its 20-day MA. It's not great that tech-bro loving Bitcoin is taking hit on what looked to be a workable low, and its left to defensive (old-timer) Dow Industrials to lead the bullish charge.

The one to watch is Bitcoin. A 3% loss on the day is not great, particularly for an asset that has acted all "grown up" since the days of its wild swings. It was notable it reversed from its 20-day MA in what looked like an algo-driven short attack. If it loses psychological support of $100K, then it will likely take tech and semiconductor indices down with it. The lack of Tech leadership from the likes of Elon Musk, Mark Zukerberg and now, Bill Gates, just shows how money can't buy smarts. Unfortunately, these individuals have too many enablers to suggest there will be a change for a better. The Y2K crash was driven by false economics, the next crash will be driven by the wilful ignorance of the facts of this world.

What Bitcoin is to bears, the Dow Industrial is to bulls. If this can continue tomorrow it will be the first index to make new all-time highs. This will be a timely reversal as the index has been underperforming relative to peer indices for most of 2025, but this may be about to change. The key disappointment is the lack of buying volume.

The Russell 2000 ($IWM) could go either way. Today's small change helped negate the bearish black candlestick from Monday. I think this is set for a gain tomorrow, but if this banks a loss, it would return the 50-day MA as resistance. Note the lack of buying volume today and yesterday (although it was enough to generate a 'buy' trigger in On-Balance-Volume).

The S&P finished near its high, and is ready for an opening gap higher tomorrow. I like the upturn at mid-level stochastics [39,1], and the relative performance gain against the Nasdaq. I also like the upward trend in On-Balance-Volume. It's bullish, but maybe not as much as the Dow Industrial Average.

The Nasdaq wants to be bullish, but Bitcoin is weighing on it. Technicals are mixed, but intermediate stochastics [39,1] are bullish - having bounced off the midline - this is important for the index. Relative performance has been running sharply in its favor. Today's candlestick finish looks bullish, but if we see a gap higher and a 'black' candlestick, then it might be a bulls last hurrah.

When studying technical analysis, one can't be guided by personal opinions as to what may (or may not) happen. I detest the current American administration (as an American), but markets care little for opinion, which is why I depend on historic relative performance to 200-day MAs and #sectorbreadth analysis for determining tops and bottoms, as thes are a pure numbers game. In this regard, we are close to a top, but maybe not *the* top. I think American political incompetence and corruption will come back to bite the market (hard), but we are not there yet. We need to see how markets react to the test of October highs, which is likely coming off this bounce.

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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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