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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 Attempt Support as Bitcoin Falls Continue

Interesting divergence at play in markets. Indices attempted to recover Thursday's losses to varying degress of success, but Bitcoin was excluded from this party.

The weakest index was the Russell 2000, but Friday's buying surge has pushed it towards a relative performance advantage against peer Nasdaq and S&P indices. Technicals are still net negative and the index still trades below support, but Friday's buying registered as accumulation. The real test won't come until it hits declining resistance.

The S&P staged its rally at support, but didn't enjoy the same percentage gain as the Russell 2000. The bearish red candlestick still dominates, but it was enough to see a new 'buy' trigger for On-Balance-Volume. The measured move target is still in play, but it would take a move above 6,900 to negate. Until then, action between 6,550 and 6,900 is really just noise.

The Nasdaq may be the more interesting play for Monday. Friday's finish was classified as a neutral "spinning top", at converged support of rising trendline, and October swing lows. The S&P and Russell 2000 suggest they will go higher on Monday, but if that doesn't happen, then look to the Nasdaq to lead lower - and if that happens - it could get ugly. Another interesting aside, there was no accumulation volume to Friday's trading. Watch it for leads. Bulls won't start feeling comfortable until the index returns above 23K.

The one asset not to blink in its downward rout was Bitcoin. Thursday's volume looks like capitulation on a bullish hammer. Friday's easement into the spike might offer a nice reversal trade (buying) opportunity, but it's unlikely to be a trade that will last very long - maybe up to the 20-day MA at best. If this was to happen it would likely be good news for the Nasdaq.

The Semiconductor Index is hanging on to the October swing low. The spike low shows there is buying demand. The problem is, if this spike low is undercut, there is not much alternative support to lean on.

For Monday, we will likely see a fresh attempt at the bounce. The original ones initiated at 50-day MAs quickly failed. This next one will probably be a last chance before 200-day MAs beckon.

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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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