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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 Shift Net Bearish As October Lows Undercut

The early November bounce triggered from tests of 50-day MAs is starting to fade. Many indices are actually trading below the start of that bounce, leaving a large area of overhead supply. While indices are struggling below the band of September-November trading, it will leave a large area of overhead supply when buyers make their return.

The Russell 2000 ($IWM) finished with an accumulation day that returned On-Balance-Volumme back to a 'buy' signal after turning net bearish yesterday. Watch for a test of converged resistance of the declining trendline and $237 resistance.

The S&P drifted lower after undercutting its 50-day MA. However, it has yet to test October lows, which leaves it in a position where it may be able to successfully test and bounce from this level - ultimately shaping a sideways trading pattern. Technicals are not net bearish after today, and trading registered as a bearish distribution day.

The Nasdaq is starting to feel the heat, although the index succesfully tested the rising trendline. It's not yet out of the woods, but technicals are net bearish, although no technical distribution. The candlestick was not one that suggested the selling is done, but if we get a bullish candlestick on the rising trendling then we may get another bounce to the 20-day MA.

The selling in the Semiconductor Index didn't stop at the 50-day MA after Monday's finish had the potential to be a (reliable) bullish harami reversal off the moving averagae. The next support level is down at 6,000. Technicals for this index are also net bearish.

If you are looking for a long trade, Bitcoin might offer a bounce opportunity. The bounce may not last long, and if it made it back to $100K it would probably be time to take profits. The 'Death Cross' between 50-day and 200-day MAs also points to a long term bearish reversal. Risk:reward is measured against a loss of the spike low ($89.3K).

We are getting to a point when the dominant red candlestick from October will likely be influencing things again. It has already happened in the Russell 2000 ($IWM) to the point anyone holding a long position above $237 - all trading action for the past month - will be holding a losing position. Watch what happens when the Russell 2000 gets back to $237, because if it stalls out, then look for other indices to quickly undercut the corresponding lows of their comparable early October long red candlestick. I want to see tests of 200-day MAs, but indices (other than Bitcoin) are a long way away from them.

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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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